.comment-link {margin-left:.6em;}

Money

The www.FedPrimeRate.com Personal Finance Blog and Magazine

Sunday, July 11, 2021

Beware of LendingTree® Loans

www.FedPrimeRate.com: Beware of LendingTree® Loans

So, I decided to try and consolidate my credit card debt via a LendingTree® loan.

Bad idea. I did not get approved.

========

They lure you in with words like "No hidden fees," "No points," "No collateral required," and "Borrow up to $35,000."

Then, when you initiate the loan request at LendingTree.com, you'll be asked to submit all kinds of personal information, like:

  • What's your employment status?

  • What do you need the money for?

  • How much do you want to borrow?

  • Estimate your credit score

  • How quickly do you need the money?

And they'll want you to submit your most sensitive personal information too, like your Social Security number, your address, your current and former employers, etc.


You'll be presented with a list of potential lenders and their terms (maximum loan amount, interest rate, monthly payment, etc.) 

So, despite having a very good FICO® credit score (780), the bank I chose, First Midwest Loan (www.firstmidwest.com) did not approve my application.

Why?  Well, 1) They did not like the fact that I am self-employed and 2) They asked me to submit 2 years of tax returns, which I did not have (The online tax preparer I used promised to save all my returns, but they didn't.) 

So, If you're going to apply for a loan online, be sure you are ready to submit your tax documents.

And if you are self-employed: good luck.

========

Of course, applying for this loan resulted in a hard inquiry, so my credit scores will almost certainly experience significant dings.

========

Does LendingTree sell your personal / sensitive information?

Well, there's a link at the bottom of the First Midwest Loan homepage that reads, "Do Not Sell My Personal Information."  When you click this link, you are taken to a page that says:


"...Residents of California have certain rights regarding the sale of personal information to third parties. First Midwest Bank, our affiliates, and service providers use information collected through cookies or in forms to improve the experience on our site and pages, to analyze how our site is used, and to present personalized advertising.

At any point, you can opt-out of the sale of your personal information by selecting Do Not Sell my Personal Information.

You can find more information and how to manage your privacy choices by reviewing our California Consumer Privacy Disclosures located on our Privacy information page by following the link on the bottom of any page..."
In other words, unless you visit the bank's opt out page and waste a significant amount of time filling out the opt out form, your personal / sensitive information can be sold to...Whoever....

========

Borrowers: Beware

========

Labels: , , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Sunday, May 31, 2020

Transunion and Equifax Credit Score Update - May 29, 2020


Transunion and Equifax Credit Score Update - May 29, 2020
Transunion and Equifax Credit Score Update - May 29, 2020


I'll be doing a lot of traveling soon, and I was feeling quite insecure about my Dell laptop.  Still works, but the hard drive started to get noisy -- a strong signal of impending drive failure -- and it does this sputtering lockup thing often enough to be totally annoying. So I decided to buy a new one.

I bought another Dell for a bit over $800.  I put the purchase on my favorite rewards credit card, which has the highest credit limit in my card arsenal ($30K), with plans to pay it down to zero within two or three months.

Credit scores still looking OK.  Stay tuned.

================

New Dell Laptop with Sony Wireless Headphones

New Dell Laptop with Sony Wireless Headphones



================

Labels: , , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Thursday, September 14, 2017

Equifax Data Breach: Reason for Bizarre Credit Score Declines?

Seldom do I use my one and only personal credit card, provided by Citi®, so I was thinking that maybe the reason my TransUnion® and Equifax® credit scores, which use the VantageScore 3.0  scoring model, both experienced sudden and precipitous declines was because I was being penalized for:

  • Too Few Accounts Currently Paid As Agreed: FICO® Scores consider the number of accounts that are paid as agreed. Your score was impacted because the number of these accounts is too low, or because you've missed payments recently on some of your accounts.
  • No recent revolving balances: FICO Scores consider whether a person’s credit report shows recent balances on revolving accounts. Your FICO® Score was impacted because you are not currently demonstrating active revolving credit management.
 
Seems unreasonable to me that a consumer should be penalized for avoiding revolving credit, but that's the system folks (The above bullet points are from Citi / FICO / Equifax Bankcard Score 8.)

So, on a recent check, my scores bounced back to 800+.  A glitch in the system, or related to the Equifax Data Breach?


Credit Scores: TransUnion and Equifax VantageScore 3.0
Credit Scores: TransUnion and Equifax VantageScore 3.0

And my Citi / FICO / Equifax Bankcard Score 8 score skipped higher, from 820 to 822.


FICO / Equifax Bankcard Score 8 credit score
FICO / Equifax Bankcard Score 8 credit score

Click here for the latest news on the Equifax Data Breach.






Labels: , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Tuesday, September 05, 2017

Recent Test of AnnualCreditReport.com

So, according to both CreditKarma.com and CreditSesame.com, my VantageScore 3.0 credit scores from TransUnion® and Equifax® dropped more than 80 points, and for no reason.

Credit Scores: TransUnion and Equifax VantageScore 3.0
Credit Scores: TransUnion and Equifax VantageScore 3.0

So I visited www.AnnualCreditReport.com to check my credit reports from the 3 major bureaus: TransUnion, Equifax and ExperianTM:

  • TransUnion: I was able to access and download my credit report.  I found no problems.
  • Equifax: Fail; online delivery not available (see image below.)
  • Experian: Not available.


Equifax Fail; online delivery not available
Equifax: online delivery not available


Success with only 1 out of 3  www.AnnualCreditReport.comWhat's up with that?

I'm still investigating this.

Stopped by the Citi® website and checked my FICO® score there.  My Equifax® Bankcard Score 8 score was 820 out of 900.

I'll update this when I get answers. Stay tuned...

FICO / Equifax Bankcard Score 8 credit score
FICO / Equifax Bankcard Score 8 credit score


Labels: , , , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Sunday, February 14, 2016

Free Credit Score with Credit Sesame

Credit Sesame - Free Credit Score
Credit Sesame - Free Credit Score

Just signed up with Credit Sesame (www.CreditSesame.com +Credit Sesame Inc. ) to see if they offer anything unique in the free-credit-scores game.

Not much to report here.  Very similar to Credit Karma, which I use often, but in this duel of free-credit-score websites, Credit Karma wins, because the site offers free access to both my +TransUnion and +Equifax scores, while Credit Sesame only gives me the Equifax version.

You can pay for premium services at Credit Sesame (see image below), but for me these extras don't offer much value.



Labels: , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Thursday, February 11, 2016

Just Tried FreeCreditScore.com

Just tried www.FreeCreditScore.com ( +freecreditscore.com ) to see what the site is offering. The site is owned by +Experian.

The site gives you free access to your Experian PLUS Score (pictured) but this score doesn't have much meaning, because lenders don't use it.  My PLUS score, 717, is not even close to my FICO®-based scores.  Meaningless.

If you want access to your FICO credit score -- the score all lenders recognize -- the site will ask you to pay $1 for it.  Feels very much like a bait-and-switch to me, therefore I am still recommending Credit Karma for free credit scores.

Labels: , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Monday, October 26, 2015

Updated Credit Karma Credit Scores: Looking OK, But I Can Do Better...

TransUnion and Equifax credit scores, provided by Credit Karma
Updated Credit Scores

Just got my updated +TransUnion® and +Equifax® credit scores from the +Credit Karma® website; 806 and 810 respectively.  These scores are based on the VantageScore 3.0 scoring model.

I'm hoping that one day soon, Credit Karma will offer free scores from +Experian® too.  Two out of the Big 3 for free, seems like an awful tease to me!

Both figures translate to an "excellent" rating, but I can do better.  I am going to get my free credit reports right now, then I'm going to dispute a nasty item in my Equifax report.  I will post again when I get a response from the offending party.  Stay tuned...

Labels: , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Saturday, August 01, 2015

Citi® Offering Free Credit Scores

Citi® is offering free credit scores now.  I have a rather aged +Citibank US credit card, which has never let me down.  My current FICO® credit score, according to Citi and +Equifax is 806.  Not bad...

 
Citi Free Credit Score
Citi Free Credit Score


Please feel free to show off your credit score in the comments section below!

Labels: , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Thursday, August 21, 2014

Update on My TransUnion and VantageScore Credit Scores

TransUnion Credit Score - CreditKarma.com
TransUnion Credit Score - CreditKarma.com
The Philadelphia Family Court is still trying very, very hard to ruin my life, but my credit scores are still not too bad.

An "Excellent" rating with TransUnion, and a disappointing "B" rating with VantageScore.

Do I need more credit?  No way!  But I tested my ability to get more credit by applying for 2 new cards.  Both applications were rejected!

Oh well.  Lawyers will be lawyers...Bankers will be bankers ... :o)

VantageScore Credit Score - CreditKarma.com
VantageScore Credit Score - CreditKarma.com

Labels: , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Monday, December 08, 2008

Chase Cancels My WaMu Credit Card

Chase canceled my WaMu credit card!I hadn't used my WaMu credit card since the first quarter of 2006. Back then, it was a Providian credit card. But then Washington Mutual (WaMu) bought Providian, and, just recently, Chase bought WaMu.

Now, the reason I wasn't using this card is because a) it didn't have a competitive interest rate for purchases and b) the rewards program attached to it wasn't anything special. I had plenty of cards to choose from, so why would I choose one with a high APR and a very ordinary rewards program? I used this card to take advantage of an attractive 0% balance transfer deal, then, when the interest-free period expired, I paid the card down to zero. I kept the account open because the $11,000 worth of credit available to me with this account was helping to keep my credit score high.

Another reason I liked having this account was because I had free access to my Bankcard FICO credit score (provided by TransUnion.) No other card in my wallet (and I have plenty) offered this unique benefit.

Last month, I received a letter in the mail informing me that Chase was closing my WaMu credit card account because I hadn't used it in more than 12 months. The letter was short and to the point:


Chase closes my WaMu credit card account
I wasn't happy about this. First of all, my FICO® credit score would likely drop due to the decreased amount of credit available to me. Second, I liked having free access to my credit score. Who wouldn't?

So my first reaction was to try and use the card to see if Chase had deactivated it yet. I tried to buy a song from Amazon ($0.99) but the charge didn't go through.

Next, I called the customer service number on the back of my card. Despite the late hour, I was able to talk to a customer service representative (CSR) right away. I asked the CSR to reactivate my card. I told him that I wanted to do some Christmas shopping with it immediately (which wasn't a lie. I would have spent some money on the card to keep it open.) The CSR said he couldn't do it (listen to the MP3 audio here.) He explained that WaMu had closed 1.3 million inactive accounts. The CSR anticipated that I would complain about the negative effect this action would have on my credit score, so, before I could say anything, he went on to say that this action, "will not appear as a negative mark on your credit bureau report." I complained a bit, then he explained that because the account was closed due to inactivity, and because my account had a zero balance, I had nothing to worry about.

I did not see any point asking for a supervisor, but I did call back a few hours later (their CSR's are available 24/7) to see if I would get a consistent response to my reactivation request. The second CSR gave the same canned response to my appeal for reactivation, but also added that I could apply for a new WaMu credit card account if I wanted to (MP3 audio here.) This suggestion made sense to me even though I wasn't happy about it. The "don't worry about it" nonsense that CSR #1 gave me was insulting, because we both knew that my score will be affected. I'm just going to hope that the ding to my score is a mild one.

My credit score is 804 right now and I want it to either stay there or rise. So, should take my time and find a really great credit card and apply for it?

Having thought about it for a few seconds, I've decided to apply for another WaMu (Chase) card, because I want my credit score to stay high and I want free access to my score. According to the WaMu website, all WaMu cards still provide free access to the accountholder's FICO.

I found that I can still login to my WaMu account online, so I visited WaMu to see if they had any credit card offers ready and waiting for me. I found no offers in there.

I will try to find a good WaMu card and apply for it. I'll post again after my application is processed.

So I may end up with another WaMu credit card account after all this, which would be a silly waste of time and resources (paper, plastic, phone calls, etc.)

Labels: , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Thursday, November 20, 2008

FICO® Credit Score Holds Steady At 804

There are plenty of things I could complain about in my life. My credit score isn't one of them. My FICO® credit score has held steady at 804/805 since May of this year:

My FICO credit score - November 2008 - 804

I was hanging out in a CNBC forum the other day and came across an interesting thread. The user has a FICO credit score of 788, but is still worried about a comment in his credit report that reads, "amount owed on revolving accounts is too high." I know this comment well. I posted about this back in the summer of 2006 when my credit score hit 719. Yeah, it looks bad, but, in my opinion, that's just the FICO system's way of telling you that if you want to have a score of 800+, pay your revolving accounts down to zero. It's nothing to panic about. This note disappeared from my report when I paid all my personal credit card balances down to zero.

The fact that I still had a balance on one of my business credit cards at the time did not matter, since healthy business credit card debt is reported to business credit rating systems like Dun & Bradstreet's Paydex or Experian's Intelliscore service.

Now, if I ever get into trouble with one of my business credit cards and default (God forbid), the issuing bank(s) will almost certainly report the negative item(s) to all consumer credit monitoring agencies (TransUnion, Equifax and Experian.) They have the right to do this since I signed a personal guarantee when I opened my business credit card accounts, which is standard practice.

Even with my current score of 804, I'm seeing the following notes in my report as reasons why my score isn't higher than 804:

  • "The time since your most recent account opening is very recent
  • The length of time your revolving/charge accounts have been established is too short"

The top one I can understand since I only recently stopped chasing 0% credit card offers. But I find the second note quite funny since I have accounts so old that I'd even forgotten they existed.


Avoiding Interest Charges on My Main Business Credit Card

There is a certain balance on my business credit card that I have been targeting. This target balance allows me to have enough cash to save to for retirement (Roth IRA, of course!), pay my bills and child support, and have a little left over for savings (I wouldn't have a balance at all if the credit crisis never happened, but that's life.) Now, with this particular target balance, finance charges are applied every month. However, I've managed to avoid having to pay any interest by using the rewards points I earn each month to "purchase" a statement credit of $50.

My target balance is $4,000. Since this business card has an APR of 9.99%, the daily periodic rate for purchases is:

  • 9.99/365 = 0.02737%
  • 0.02737% is the same as 0.0002737
So with my preferred target balance, I am charged $4,000 x 0.0002737 = $1.0948 interest per day. This makes the interest I owe each month in the $34 range, which gives me some breathing room since I can't predict the exact amount that I'll purchase on this card every month. As long as the finance charges are $50 or less, I'm good.

How do I manage to stay close to my target balance? Easy! I login to my account at least every other day and check my balance. When my balance is looking too high, I schedule and online payment. Quick and easy. Whenever I make a major purchase, i.e. over $500, I make an online payment immediately, so that I don't mess up my average daily balance.

So, if you've been paying attention, your next question is likely, "so how much do you have to spend each month to get a $50 statement credit?" Easy. A $50 statement credit requires 5,000 rewards points. I get 1 rebate point for each dollar I spend on the card. So I have to spend $5,000 per month. In other words, it's a 1% cash back rewards program.

During the good times, when I'm able to pay my balance to zero every month, my points accumulate and roll over, which gives me plenty to play with during the bad times (I had about 28,500 points stored up when the credit crunch took a serious turn for the worse a couple of months ago. Converted all those points to statement credits.) However, my points do expire if I don't use them within two years, which is quite reasonable in my opinion.

So, with this technique, it would seem as though I could have a 0% business credit card forever, just as long as I keep spending and avoid having an average daily balance above the $4,000 threshold (this card has no annual fee.) But the reality is a "fixed" rate of 9.99% can disappear without much notice. That's because credit card issuing banks invariably reserve the right to modify the terms of each credit card account whenever they wish, as long as they give you warning of an impending rate increase and the option to opt out of it. Citi and American Express have plans to raise APR's for millions of their credit card customers.

This technique requires that I do a lot of spending on this card each month, which has worked out fine since I've been buying a lot of advertising lately. Even as business improves and I'm able to pay down my balance a bit, I have another statement credit tier to work with: I can get a statement credit of $20 in exchange for 2,500 rewards points. As you can see, this tier isn't as equitable as the top tier I described above, but I can still work with it. Maintaining an average daily balance of $2,500 would produce an interest charge of about $21.21, so I'd need to keep my average daily balance at around $2,200 (interest would be $18.67) and spend at least $2,500 per month.

Of course, I'd much rather end this game and return to the good old days of paying my balance in full each and every month. Yes, I'm taking full advantage of my card's rewards program -- and I enjoyed 0% on new purchases and a transferred balance for a year -- which is great. But by having a revolving balance, I'm playing right into the hands of my bank. Bottom line: this scheme could easily blow up in my face if my business has a really bad month.

Some credit cards offer up to 5% cashback on everyday purchases like gas, travel, home improvement, dining out, etc. The Discover More card is the perfect example. For some reason, I wasn't able to get a Discover More card, despite having a good credit score when I applied. When I submitted my application for this card, my FICO score was in the upper 700 range, yet my application was rejected. I checked my credit reports after that rejection, and found nothing wrong. Go figure. If you can get this card, do it. If you already have one, cool. The rewards are peerless in generosity, it comes with 0% intro APR on purchases and balance transfers and the "goto" APR isn't that bad (as low as 10.99%, variable) when compared to competing consumer cards in the American market.

But I'm not complaining. I like my flagship business card. It's a business purpose card, which enables me to have credit card debt and a high personal credit score simultaneously. Plus, the process that my issuing bank has setup for claiming statement credits is efficient and stress free. I just login to my account and within a few clicks of my mouse I've traded my points for a statement credit. Lovely. My other business cards either have APR's that are too high for my taste and credit standing (so I keep them for building credit and emergencies only) or, as is the case with my newest business card, the credit limit is way too low.

Discover has some relatively new business credit cards on the market now, and the rewards are quite generous, though not as generous as the Discover More consumer credit card I noted above. I'd love to apply for this card, but I'm gun shy as a result of my previous rejection.

So, why I am not recommending my favorite business credit card here? Good question. The answer is simple: it's not available anymore. A victim of the current credit crisis. In fact, I just visited the issuing bank's website to see what other business credit cards they have on offer, and found none. The market for business credit card receivables dried up last month (a receivable is any debt owed to a company/corporation that is not paid in full yet.)

Before the onset of autumn this year, my bank could take my $4,000 business credit card balance, bundle it with other credit card receivables and sell the debt to Wall Street. But investors don't want to buy that kind of debt right now because credit card defaults are rising, even with accounts held by prime borrowers.

Want to know when global credit markets will improve? Stay tuned to the TED spread (the TED spread is the difference between the yield on the 3-month Treasury Bill and the 3-month LIBOR yield; it's a reliable indicator of banks' willingness to lend.) Once it falls below 1.00 percentage point, banks will start (probably with baby steps at first) lending like they did before this decade's housing boom.

Labels: , , , , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Friday, July 18, 2008

FICO® Credit Score Rebounds to 804 After Hard Pull

Here's an updated chart of my FICO® credit score, provided by the folks at TransUnion:


Updated Chart of My FICO Credit Score - July 2008: 804


Here's a real life example of how applying for credit can affect your credit score. A dip of 8 points; a minor downgrade that lasted 2 months.

Earlier this year, I decided to open a new business credit card account, not because I needed the credit, and not because I needed to do a balance transfer to avoid paying interest. I opened up the new account because the credit crunch that began last summer and still persists today started to make me a bit nervous last winter. My business has suffered as a result of the economic slowdown, and no one knows for certain when a) the economy will return to substantial growth and b) when confidence will return to the banking system. So the new account is just a little insurance in case my situation gets really bad.

My understanding was that the ding associated with a hard pull on a credit report would last for about 6 months, so there's a chance that the reason my score rebounded so fast was due to some other unrelated improvement to my credit profile. Perhaps the rule is that a hard pull inquiry into my personal credit history for a business credit card application causes heartburn for only 1 or 2 months, whereas if it was for a personal card the ding would last longer. Just conjecture on my part: there's no way for me to know for sure.

Though applying for credit did cause my personal credit score to drop for a spell, the new account may bolster the credit rating of my business, because it's a new line that I most likely won't tap (debt to credit ratio is a big deal to lenders and, therefore, credit rating agencies.) I think I made the right decision, even though I read recently that having too many unused lines can have the opposite effect. My nascent business credit card account will lower the average age of my business credit lines, which can in turn hurt my business's credit rating. Hopefully, my other credit lines are old enough to provide enough weight to balance out the new account.

The credit line on my new card is generous -- much more than I was expecting -- but the interest rate associated with making new purchases is higher than I'm used to. Of course, it's a trade off, because if I need to use this card at some point, the debt I would incur would be unsecured, and that's something I really like. None of my personal or business assets are at risk, though if I hit rock bottom and defaulted for some reason, the bank would most certainly ruin both my business and personal credit ratings, in short order.

During my recent research into credit scores, I learned that:

  • There are many different types of soft pull inquiries.

  • Some banks perform credit-score-damaging hard pulls on credit reports when a customer applies for a checking and savings account. A commenter at CreditBloggers.com complained that his bank performed a hard pull every time his CD rolled over. Yikes!

Labels: , , , , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Saturday, February 23, 2008

No News Is Good News: Fico® Score Holds At 803

My FICO® credit score was updated recently:


Updated Chart of My FICO Credit Score - February 23, 2008: 803 - sideways


For the fourth month in a row, my score has moved sideways, which is just fine with me since I'm happy with my score. I'm expecting a small increase soon, since I recently paid off my student loan debt. I doubt I'll get more than a 5 point bump, but that's OK. I paid off my education loans because of the 8% interest I was being charged and not for any credit score benefit that may result.

For those of you who are paying down student loans, I've recorded one of the sweetest things you will ever hear over the phone. Click here to listen to the MP3.

Labels: , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Friday, January 25, 2008

Can You Really Buy a Great FICO Score?

With every great industry comes subindustries; the housing industry is no different. From the traditional mortgage lending industry emerged the subprime mortgage industry. However, now that subprime lending is mainstream, companies who offer quick FICO fixes for individuals who have further damaged their credit through subprime borrowing abuses or other poor credit usage are now coming to the foreferont.

Yes, you can buy a good FICO score these days.

However, you might not be able to do it for long. These kinds of companies use legal loopholes to cosmetically establish good credit scores, and neither the Fair Isaac Corporation nor mortgage lending industry leaders are happy about it. These quick credit fixes are achieved by essentially attaching individuals with poor credit to the loans and credit accounts of others with good credit - and it's legal! This, opposers argue, will inevitably lead to more woes in mortgage lending scrutiny and foreclosures because people who really should not be approved for loans will be.

Furthermore, many think it to be unethical, as it is a false positive of sorts concerning one's creditworthiness. Fair Isaac is already changing it's formula to exclude some of these slick maneuvers from counting toward FICO score calculation. Industry whistleblowers are calling for further regulation. It seems like this 'insta-credit' subindustry might be of the "fly by night" sort with this level of opposition.

But what do I know - upon seeing the first episode or so, I predicted that the Power Rangers would flop, and I was absolutely sure that "Friends" wouldn't last.

Go figure...

Labels: , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Tuesday, January 22, 2008

FICO Credit Score At 803: Still Moving Sideways

My FICO® credit score has been updated. Here's the latest snapshot:


Updated Chart of My FICO Credit Score - January 25, 2008: 803 - sideways


Still moving sideways, and I'm OK with that. This journey began back in 2004 when my FICO score was 628, so 803 is fine with me.

I am not expecting any movement for my score until March; that's when my car loan payoff should be firmly entrenched in all my credit reports. At my next FICO update, we'll see what paying off a car note can do for one's FICO score, in real world terms. And since I'm preparing right now to payoff my student loan, I'll be able to report -- by April -- on what annihilating student loan debt can do for one's score. Stay tuned!

Labels: ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Friday, December 21, 2007

Fair Isaac's Revamped Credit Scoring System: FICO 08

So, I may not have to write a letter to Fair Isaac complaining about the FICO credit scoring system after all. Fair Isaac is in the process of rolling out a new version of FICO called FICO 08.

Here are two clips from a WSJ article:

"...Higher-risk borrowers may find it tougher to get credit, while those with less-risky profiles -- though they may have gotten approved for credit accounts in the past -- will start to get better deals from lenders.

Two people with the same FICO score currently could see their scores diverge under the new system. One possible reason: FICO 08 gives more points to consumers who maintain a variety of credit types, such as credit cards, a mortgage and auto loan, because it shows they can manage payments on different kinds of loans. On the other hand, the new scoring system penalizes to a greater degree borrowers who use a high percentage of their available credit.

FICO 08 also will draw greater distinctions among different borrowers who are at least 90 days late in making a loan payment, known as a serious delinquency. Traditionally, many credit-scoring models grouped subprime consumers into one general category. But Fair Isaac says its new model will give a higher score to a borrower in arrears if they also have a number of other credit accounts in good standing. Conversely, a person's score could drop if he or she has multiple delinquent accounts.

'Overall, more consumers will see their FICO scores go up slightly than will see their scores drop,' says Tom Quinn, vice president of global scoring solutions for Fair Isaac..."

"...FICO 08 also aims to curtail the growing business of allowing people to polish their credit by "piggybacking" on someone else's good credit history. In recent years, credit-repair Web sites have sprung up that arrange for subprime consumers to boost their scores by becoming authorized users on accounts held by strangers with better credit. When scoring a consumer, FICO 08 won't take into consideration credit-card accounts for which that person is an authorized user. But the move also will hurt legitimate users: People who give a credit card to a child or a spouse as an authorized user to help boost their credit score..."


FICO_08: examples of how the new scoring models could affect consumers.  From WSJ Online

Labels: ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Saturday, December 01, 2007

Credit Score Peaks At 826, Then Dives to 803

So here's the latest snapshot of my charted, FICO® credit score, provided by TransUnion® :

Updated Chart of My FICO Credit Score - December 1, 2007: 803

I don't have enough room to fit as much time as I would like, but you can see that my score peaked at 826, then dropped 14 points, then went sideways for several months, and is now at 803.

I like the FICO scoring system. In my humble opinion, the system works. It's not perfect (see my gripe below) but if a guy like me -- someone who has had serious problems with debt in the past -- can go from having a truly terrible score to 826, that's proof enough that the system is reasonably fair. I went from 697 to 826 in one year, and I think that's pretty cool.

Ok, now here's what I don't like about the system: you have to continue playing the game if you want your credit score to remain high.

What's the game? You borrow lots of money via credit cards and pay it all back over time -- with no late payments, of course. You let the banks make money off you, and, in exchange, you get to borrow a lot more money, and you get much better interest rates. That's the game. Play the game right, and you can live in a nice house, consume lots of junk, drive a nice car, etc. Play the game wrong and life can get really hard, really fast.

So, yes, I borrowed a lot, and paid it all back. But now I have to continue to use at least one of my credit cards on a regular basis if I want my credit score to remain in the 800+ zone. If I don't use my cards at all, my score will decline steadily over time, and that's not fair. In essence, I am being penalized for not using credit cards, even though I am still a very responsible consumer. I still have debt that is being reported to the credit bureaus, but student-loan and car-loan debt doesn't carry as much weight as credit card debt in the eyes of Fair Isaac.

Here's what Fair Isaac has to say about it:

You have no recent revolving balance information being reported

The score evaluates the types of credit currently in use, or that you have used in the past, and will consider the mix of retail cards, bankcards, and installment loans appearing on your credit bureau report. In general, moderate and responsible use of revolving credit accounts will boost the score slightly. Research shows that consumers with very moderate usage of revolving credit accounts (charging low balances and repaying them on time) have slightly better repayment risk than those who do not use revolving credit at all.
So, Fair Isaac expects me to swallow that? That I have to maintain a small balance on my credit card in order to be considered an exemplary credit consumer? I mean, how much is "very moderate usage" anyway? $5? $25? $200? Yuck! That leaves a nasty taste in my mouth. Come on, Fair Isaac, you can do better than that! Seems to me that it's just an excuse to give the banks a shot of making some interest income off me. Seems to me that this is a classic case of conflict of interest, since banks pay Fair Isaac for their services. Yes, Fair Isaac makes money from many different sources, but here is a quote from the Fair Isaac website:

"Fair Isaac clients include...99 of the top 100 US banks and half of the top 50 banks in the world..."
Hmmm...

So, what are my plans? To be fair, I'm going to see if my score drops below 800. If it does, I'll write to Fair Isaac and complain. You never know. My arguments may be cogent enough to convince the firm that tweaking the FICO scoring algorithm is the right thing to do. Or maybe not, but I won't feel right if I don't try.

Labels: , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Tuesday, March 06, 2007

FICO® Credit Score Hits 791

A nice jump for my FICO® credit score this month: up 31 to 791. How did I do it? I made a payment of $2,000 (exactly) on my Citi® credit card some weeks ago. This is cool: I'm just 9 points away from my goal of being in 800+ territory by 2008.

Just as soon as I'm done writing this blog entry, I'm going login to my Citi account and make another large payment -- $3,916.74 to be exact -- a payment that will eliminate my personal credit card debt completely! That's a significant milestone for me since I've had personal credit card debt for as long as I can remember.

A $2,000 payment caused my FICO score to leap from 760 to 791. So what will a $3,916.74 payment do for my FICO score? My guess is that my score will jump to at least 805. If you care to make a guess, please feel free to do so in the comments section below.

Will I be able to refrain from using credit for my personal needs? Yes, I'm quite confident that I will. I have some major purchases to make:

  • A new car stereo. It's not a self-indulgent upgrade! My radio went dead a month ago and I haven't been able to fix it. I may be able to spend less than $100 by simply replacing the head unit, but if I have to spend more, I will. I love to drive, and I can't stand driving without a good mix of NPR news and my favorite driving tunes.

  • A washer and dryer. An investment really, since I'm just making the owner of my local laundry center rich by washing my clothes there. Plus, I'll save time by washing my things at home.

  • Some car repairs. I've been hearing a strange and worrisome noise in my car's front end. It's been bothering me for many weeks, and it's time I got it fixed. Suspension work is often expensive, but I'm hoping the repairs won't cost more than $1,000.

But I've been saving up for the above list of expenses, so my personal credit cards won't see any action any time soon. Yup: my personal credit cards are going to experience some serious neglect from now on.

As for the status of my two business credit cards: I'll be paying the balance on my Citi business credit card down to zero later tonight, and I'm also going to make a large payment on my Bank of America business card, a payment large enough to reduce the balance by at least half.

I'm excited about all this debt reduction going on in my life, especially because it means that I'll be shelling out less money each month.

That's it for now.

I usually close with an updated chart of my FICO credit score. Don't worry: the tradition continues. I recently created a new spreadsheet with my FICO data, and from that spreadsheet I created a new chart which I hope is clearer and easier to read. So here it is: my FICO credit score from June, 2005 to the present:

Updated Chart of my FICO® Credit Score - March 6, 2007: 791

Labels: , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Tuesday, January 30, 2007

FICO Credit Score Back Up to 760: Big Yawn...

Some good news and some bad news this month. First, the bad news.

The mother of my child moved out into her own condo, so, even though I am enjoying the extra space, stress relief and the freedom, I have agreed to pay $300 per month in child support.

$300 per month is too high, in my opinion, considering the circumstances. First of all, the mother of my child has a full time job with excellent benefits. She doesn't have to make car payments on her car (as I do), because she owns it, thanks to me. When her car broke down a couple of years ago, I gave her my very reliable and well-maintained car, and I bought another used car for me. Her insurance payments are very cheap as well -- less than $500 per year.

Now, don't get me wrong: I'm not trying to make a big deal out of my car donation, because it's really not that big a deal to me. I'm just laying down the facts here, and I think it's important to note the source of her assets.

Another reason why I feel that $300 per month is too much: our child -- I'll refer to her as TK from now on -- is in preschool, and I am paying for her tuition, which is $135 per week, or $540 per month.

Furthermore, it's not like TK is with her mother all the time. I pick up TK from school, and she spends all day with me every Friday (her preschool is 4 days per week), and she stays with me every other weekend.

Now, considering all these factors, I thought that $200 per month plus TK's tuition payments was fair. We debated the issue for about half an hour -- without any shouting, which was a welcome surprise -- and, in the end, I acquiesced and agreed to $300 per month. The way I see it, the bottom line is that we are in a critical transition period right now, and I really don't want to do anything to exacerbate the tensions that inevitably manifest themselves when a home is newly broken; my daughter can be surprisingly mature at times, but she's also very sensitive. My baby girl means a lot to me, so as long the money I'm providing is being used for food, clothes, weekend outings and trips to the hairdresser, I'm OK with it (I don't think I'm being a miser, but if you think I'm just being a cheap bastid', then feel free to post your comments below. I'm open to all rational arguments!)

So I'll be paying TK's mother by check tomorrow, and from February on I'll be making payments via a prepaid debit card, so that I can track all spending online. I'm not just being paranoid. When TK's mom was living with me, she would order stuff from QVC and the Home Shopping Network sometimes. Did I have problem with the spending? No, not at all. What did bother me, however, was the way she would spend money on items, then totally trash them or even throw them away a few weeks later. That kind of nonsense just boils my blood. That kind of spending is, in my opinion, a sign of a serious psychological problem -- possibly depression -- but that's a subject for a another blog.

I was hoping to fatten my savings account this year, as I'm getting too old to have such a puny balance in my savings account. But I guess I'll just have to work harder, and chase the dollar with even more zeal in order to maintain myself and my obligations.

One way I'm saving money is by using space heaters instead of the electric heating system that's installed in my place. My apartment's built-in heating system is a real hog at 8 kilowatts. When I got my first electric bill back a few years ago, it was a staggering $600 (December used to be a cold month in the Northeast U.S.) so I was highly motivated to find another heating solution (I was also motivated by my breathing problems, which are almost always exacerbated by built-in heating systems, no matter how well they are cleaned.) I turn my space heaters on when I need them, or when the nights are really cold, and this works very well for me. My heating bill now averages about $157 during the winter months, much less during the warm months, which is pretty darn good considering that I work from home (my computers actually produce enough heat to keep my home office toasty most of the time; of course, my office gets a bit too sticky during August, and I sometimes have to (grudgingly) power up my portable air conditioner.) I usually turn all my space heaters on full blast when my daughter is staying with me, as she has a habit of stripping down and running around the house with just her panties on.

I have to laugh at myself sometimes when I'm home alone. I'm so keen about saving money that my office is often the only warm room in the house during the cold months. This makes for some very eye-opening trips to the bathroom: who needs coffee when you've got freezing cold floors and toilet seats.

It's funny: when I was in high school, I never imagined that I would grow up to become the kind of person who thinks about money every day, but that's who I am now. I don't think an hour goes by without me thinking about ways that I can boost my income by another $10,000 per month, or ways that I can reduce my daily living expenses. Oh well.


OK, and now for the good news.

One of my businesses did surprisingly well during the holidays, so for February and March (it takes a while for my earnings to filter through to my bank account), I'll have some extra cash to play with.

As noted above, I don't think I'll be able to play catch-up with my savings situation, because my pending windfall has already been earmarked. I'm going to

  • Maintain a decent quality of life.

  • Take care of my familial responsibilities.

  • Pay down my personal and business debt.

  • Send my father $1,000 (he recently had surgery and needs some cash. I can empathize: I had a tonsillectomy back in April of last year.)

  • Maybe, just maybe, take a small, working vacation (my last real vacation was in 1999.)

Putting money into savings now doesn't make sense to me. My savings account is at a great bank, but the yield is not very competitive, as is the case with most brick-and-mortar banks. Putting money into saving while paying an average of 8% on my debts isn't the smart way to go, in my opinion. Overall, I would still be "leaking money" via interest payments if I opted to go with such a plan.

But I am very tired of my personal credit card debt. I'm bored with it. I'm sick of it!

My FICO® credit score, provided by TransUnion, jumped back up from 753 to 760 last month, and it stayed at 760 this month (boring!) My credit score hasn't experienced a serious jump since September, 2006. I'm itching for the kind of fix that only a 10+ point jump to my FICO score can provide.

Yep, my credit score is good enough that I could easily qualify for yet another 12-15 month 0% balance transfer offer, which would allow me to avoid paying interest on my personal credit card debt for another year or so. But, the bottom line: transferring my debt via a 0% APR deal is just moving my debt around, and I'm tired of it. The banks and credit card companies have made some good money off my debt, but it's time to turn off the music and kick everybody out: the party is over. I now have the power to eliminate all of my personal credit card debt and some of my business credit card debt, and that's exactly what I'm going to do.

Here's what my current debt situation looks like:

My Debt: January, 2007


Paying off my personal credit card debt should give my FICO credit score a huge boost, and should get me to my goal of an 800+ credit score sooner than I had originally planned (If bringing a personal credit card balance of $5,800 down to zero doesn't boost my FICO score above 800, then I will certainly lose faith in the system.)

At first, I was thinking of paying off my car loan. It would feel great to own my vehicle and get my title back into my fireproof safe where it belongs. It would also be great to get rid of the almost $390 per month I pay on my car loan; that's money that could ease the stress of my nascent $300-per-month child support payments. But the APR associated with my car loan is 6.25%, which is pretty good considering that the national Prime Rate is 8.25% right now. I'm paying higher than 6.25% on some of my other debts, so paying off my car loan is out, for now.

I then considered paying off my student loan debt. When I consolidated my student loan several years ago, I got an APR of 8.25%. Lots of people are consolidated at half the APR I'm paying these days, which makes me feel like I'm getting ripped off. But my student loan payments aren't stressful, and my credit card debt is more of a priority for me.

So, by March of this year, I will have completely wiped out my personal credit card debt, wiped out the debt on Business Credit Card #1, and made some major progress (i.e. cut the balance in half) with the debt on Business Credit Card #2. Business is kinda' slow right now, but if my new marketing push is successful, I plan on making some large payments toward my student loan and my car loan, so as to eliminate at least some of the interest I'll pay on those loans.

That's it for now. Remember: comments are always welcome.

Here's an updated image of my charted credit score:

Updated Chart of my FICO Credit Score - January 30, 2007: Back to 760

Labels: , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--

Friday, November 24, 2006

An Unexpected Dip for My Credit Score: FICO Score Now at 753

Two weeks ago, I logged into my Citibank consumer credit card account -- the only consumer credit card account I have with a balance right now -- to find that the good folks at Citi had recently given me a credit line increase, and a substantial one at that. My credit limit was around $13,000; now it's close to $22,000. 22K is the highest credit limit I've ever been granted. Not even my strongest business credit card has a credit limit that high.

Of course, I was very pleased about the credit increase, because it means that the balance on this particular card is now a smaller fraction of the account's credit limit, and that looks good to my current and potential creditors.

Funny thing is, my FICO® credit score (provided by Transunion), which had been hovering at 760 for the past two months, has dropped to 753. Now, I realize that the best way to get my FICO score to rise is to pay down my consumer credit card debt: the bigger the payment, the bigger the bump to my score. But since the balance on my Citi consumer credit card is now close to a third of my total credit line, my thinking was this would cause at least a small increase for my score.


Unexpected Decline for My Credit Score: Must Be Identity Theft!


Since I was expecting a small rise for my FICO score this month, as soon as I noticed the lower score, my immediate reaction was to order a free credit report from each of the 3 credit bureaus. I had to rule out the possibility that someone had gained my sensitive info and used it to open one or more accounts in my name. Under federal law, you are entitled to one free copy of your credit report (also known as a "credit file disclosure") every year from the 3 majors -- Transunion, Experian and Equifax. I had never exercised my right to a free report, so it seemed like the perfect time to take advantage of the new law.

I stopped by the www.Annualcreditreport.com website to order my free reports (Congress mandated that the 3 bureaus create the Annualcreditreport.com website. It's the site you need to use to get your free annual credit report from the 3 majors, or you can call 877-322-8228. If you contact any of the credit bureaus directly, you'll probably be asked to pay a fee.) After bypassing all the extra stuff the credit bureaus tried to sell me, I was able to get a free copy of my report from each agency quite quickly. I reviewed all the data carefully, and found nothing out of order.

Was I being paranoid for assuming that someone had stolen my identity? I don't think so! And here's why: Last month, I performed a virus scan on all my computers and the virus scanner found a keylogger installed on my primary workstation. A keylogger! I was floored by the discovery. With all the precautions I take -- virus scanner, firewall, etc. -- someone was still able to get a keylogger program installed on my computer. Unbelievable. I am not going to do the idiots who create these programs any favors by posting the name of the trojan here, but I will share this: the trojan almost succeeded at collecting many of my usernames and passwords -- and the corresponding website URL's! Had the trojan succeeded, it would have sent my many credentials to the criminals who probably know exactly how to exploit them for maximum gain, or maximum damage.

So remember to run a virus scan regularly, and remember to keep your virus definition files up to date!

A Downgraded Credit Score: It Feels Like I Failed A College Midterm.

So, why did my FICO score regress? I haven't opened any new accounts, or performed any balance transfers lately. For all my personal spending, it's been all cash (or debit card) for some time now. My understanding was that as your accounts age and you pay down your balances, you score goes up. Maybe the scoring algorithm was recently modified in some way. Maybe it was a simple correction. Whatever the reason, the decline in my score has certainly rubbed me wrong, and I plan on making a $900+ payment to my Citibank consumer credit card next week, which I'm hoping will boost my FICO score above 770. Wish me luck!


Always Negotiate -- Even Your Rent!

I do have some good news to report. I recently renewed the lease for my apartment and was able to get a favorable deal. The folks who manage my apartment complex wanted to raise my rent by $250 per month. I realize that a rent increase is quite normal for a place like mine, but $250 was simply not reasonable. I met with the property manager and negotiated (I brought my baby girl along to the negotiating table; gotta' use all the tools God gave me!) In the end, the property manager agreed to raise my rent by $20, which I calculated to be considerably lower than the rate on inflation, so I was OK with it. It's like Frederick Douglass said, "Power cedes nothing without a demand."

Here's an updated image of my charted credit score:

Updated Chart of my FICO Credit Score - November 24, 2006: Retreats to 753

Labels: , , , , ,


--> www.FedPrimeRate.com Privacy Policy <--

--> SITEMAP <--


bing

bing

FedPrimeRate.com
Entire website copyright © 2024 FedPrimeRate.comSM


This website is neither affiliated nor associated with The United States Federal Reserve
in any way. Information in this website is provided for educational purposes only. The owners
of this website make no warranties with respect to any and all content contained within this
website. Consult a financial professional before making important decisions related to any
investment or loan product, including, but not limited to, business loans, personal loans,
education loans, first or second mortgages, credit cards, car loans or any type of insurance.