What's My Credit Score

Update on Haiti Relief Effort - Help for Orphans International

2010-01-27T20:11:00.000-08:00

Dear Friends and New Friends,

This is my personal update that I want to share with you today. If you didn't read my email from 2 days ago it is at the bottom of this one.

Help for Orphans International has a volunteer named Jonathan on the ground in Haiti right now. He is a pilot, personally using his own plane. I hear directly from Jonathan everyday.

He said there is a BIG need for morphine here in the hospitals (or at least oral narcotics). They are doing amputations without it. That might be the single most important item to distribute now. Apparently there are quantities in Port Au Prince but the army has taken over and distribution is very slow. Pass the word.

As I mentioned before, Jonathan has this knowledge because he has the only small aircraft on the ground in Haiti right now, which is shuttling in supplies and help. Due to his tireless efforts he has been able to bring medical personnel, supplies, food, water and medication directly to the people who need it most. It is because of the money we raise that enables him to continue to pay for fuel and supplies.

I want you to think about this for a minute. Can you imagine if your child, your brother, or your grandchild was in severe pain for days on end, with no medical care? Can you imagine your child losing ALL the family they have ever known and left to fend for themselves on the streets, surrounded by decomposing bodies? This is the situation for so many in Haiti.

These children need our help. I realize I may be sounding very dramatic here but this is the honest truth. I need every one of you to understand and pass on how severely help is needed there. Most of us, if not all, take for granted the food and water we have at our disposal. So many lives are being lost in Haiti – today - because they are lacking the simple essentials.

So, please, give whatever you can. A few dollars from everyone reading this will make a huge difference. Give up the Starbucks for just one week.

Text "support orphans" to 20222 to give $5 on your cell bill.

To make a larger contribution go to www.helpfororphans.org and click “Donate now" and most of all PLEASE spread the word to EVERYONE you know!

See our Press release released early this morning: http://www.prweb.com/releases/2010/01/prweb3505184.htm

Thank you again from the bottom of my heart!!

Love,

Josie Dobin

917.704.2131 mobile

Help for Orphans International

YouTube Video

How To Help Haiti

2010-01-24T20:10:00.001-08:00

Hi,

I am urging you to please read this message and respond accordingly and then to please forward this on to all your contacts.

As you may know, I am fortunate to be working for Help for Orphans International, a charity founded by Sarah Ehrlich four years ago. She has done a lot of work helping orphans in Kenya and is now solely focused on helping the orphans affected by the earthquake in Haiti.

I don't like to spread bad news but we have a volunteer from our organization who's been on the ground there since over a week ago. Words cannot describe the devastation that he has described to me. Imagine a little child losing ALL their family, wounded, no place to live and with little food/water. This is TRULY the situation.

Sarah and myself are going to Haiti in the next few days to raise awareness and to strategize HOW we are most effectively going to help. We will also be purchasing food/formula/diapers in the Dominican Republic to bring to the most hard hit areas.

Our volunteer there named Jonathan flew his 4 seater aircraft 2000 miles from Sag Harbor, NY and is shuttling back and forth between neighboring areas bringing supplies and medical personnel to the most desperate areas. Today he texted me that he was enroute to bring saws and morphine to a medical unit there.

The only way we can keep him doing this is to continue to send him funds.

Do NOT think that they have ENOUGH help because they don't. What we are doing IS making a difference! Jonathan says that he has the only small aircraft shuttling that he has seen. Additionally, because his aircraft is so small he has been cleared to land at Port au Prince airport.

We can NOT continue to do what we're doing without more donations! There's just NO way! Sadly, the surrounding areas have taken advantage of this tragedy and the cost of fuel and food etc.. has skyrocketed! All your donations are 100% tax deductible and you can know that we are actually USING your money RIGHT NOW to make a difference! Anything helps!

Here's how to donate:

1. Click this now Help For Orphans, then select "donate now" on the top left navigation.

2. Text 20222 from you cell phone and type "support orphans" and you will be charged $5 on your next cell phone bill.

3. Call me at 917.704.2131.

More about us:

Help For Orphans

Thank you from the bottom of my heart. If you would like to be kept updated PLEASE email me directly and I will add you to our list!

Love,

Josie Dobin

Tonight: Trade Secrets of a Multi-Million Dollar Guru

2010-01-05T23:30:00.000-08:00

Wow! I just finished reading the power points for Wednesday's webinar with my friend the ex-fund manager.

And, I've got to say, that in all my years in the trading business, this is the most content rich webinar I have ever seen. No hype, only hard core trading truths that not everyone is going to like.

Things like the fact that he and his hedge fund buddies used to hunt stops. Now he's teaching "civilians" how to make money off those hedge hunters.

If you are new to trading, this hour could save you thousands of dollars over the school of hard knocks.

Those who don't get information like this risk having their whole investment account being wiped out, before they've really had a chance to trade.

Don't miss out - Click here to register for this Free ETF and Money Management Seminar.

Exchange Traded Index Funds

For trading veterans I can guarantee you that the advanced position sizing tip is a golden nugget you'll use for increasing profits and decreasing risks in the years to come. This one tip could double your profits regardless of what your entry system is. The one tip alone can turn any average system into a winning system.

We'll cover:

- How to maximize your winners.

- Why most traders have it backwards when it comes to risk.

- How to eliminate 95% of trading stress and emotion.

- Why most traders have it backwards when it comes to winning percentages.

- Even how to become a professional money manager and raise millions, if you so desire.

That last one really surprised me. Because I know that if you really want to make millions in trading the fastest way is to use leverage with other peoples' money, when you are ready.

There are so many reasons to attend this F.R.E.E webinar Wednesday at 9pm EST. I honestly believe you're missing the boat if you don't take advantage of this opportunity. It won't be a waste of your time! I love sharing high quality content with my subscribers and this is going to be one of the best.

Our host has worked trades as large as $50 million during his money management career. He will share a little of his story, but most of the hour will be spent teaching you how to improve your trading.

See you then,

Exchange Traded Funds

Cheers,

Ave Ramel

P.S. That's right, $50 million advice, f.r.e.e, and a chance to win a free 1 year mentorship with a professional trader just by showing up.

*** Pay attention while our guest explains how you can make more profits with less risk trading the markets.

The Big Boys Are Working Against You - And I Can Prove It!

2010-01-04T23:29:00.000-08:00

Have you ever had that feeling ... after you were stopped out and the market went back in your original direction, that a bank or large fund had hunted your stop and stolen your shares?

Well, that's because it's true!

My guest on our Wednesday night webinar, a former big fund manager, used to do just that. In small markets like penny stocks his firm could do it all by themselves.

In larger more liquid markets they would team up with other hedge funds. He says even some banks would do it.

So what can you do about it? Learn to either stay out of the market when the hedge funds are hunting stops, or profit from it.

We'll talk about how to survive the hedge fund hunters during his complementary webinar Wednesday at 9pm EST.

Go ahead and reserve your slot now - with over 217,000 invitations and only 500 spaces, you'll need to register and opt in early to get on the webinar.

Click here to register:

Exchange Traded Index Funds

In addition to the long list of topics I listed in yesterday's email, he will also be discussing:

- How some hedge funds hunt stops and a simple trick to avoid getting caught, most of the time. Yes, hedge funds, brokers and other individuals (not the "market") really do hunt your stops.

- One of his four proprietary profit target strategies. He'll just give you this valuable tip for listening in Wednesday.

- How to avoid being vague with your entries and stops (like those "gurus" who say, "Buy a few cents, ticks, or pips above ___.")

- A little known, no cost, scanner tool that can help you improve your trades, now.

- A complementary excel sheet that does ALL the math for you. You'll be able to easily see the optimal position size and risk vs. reward ratio on all your trades.

I promise it won't be a waste of your time. My trader friend really did do trades as large as $50 million before he left the world of money management. He will explain how he learned these tricks-of-the-trade, but most of the hour will be spent on teaching you how to be a better trader. I like to share useful content with my subscribers and this is a big chance to do just that.

Click here to register for your free seat at the Wednesday night webinar.

Exchange Traded Funds

Hope to see you there,

Cheers,

Ave Ramel

P.P.S. Don't place another stop before you hear how the hedge funds are gunning for your profits!

P.P.P.S. In only 1 hour, you'll be handed years of hard won experience from a big time trader (who's willing to spill the beans). Plus his 1 year mentorship offer will be unavailable after Friday December 4th. He is the type of teacher who likes to support his new students and doesn't need to keep selling courses.

How The Pros Make More Money With Less Risk

2010-01-02T23:28:00.000-08:00

This Wednesday, January 6th at 9pm EST, join me for a free session with an ex $50 Million dollar fund manager when he reveals the secrets professional money managers use to:

- Risk 1-2% per trade and still make great returns.

- Instantly remove 95% of your trading emotions (as you know, fear and greed are the successful traders' enemy) with two simple tricks.

- He'll also show you how to reduce risk using his unique position sizing technique.

- A combination of a percentage risk stop and a technical stop.

- Plus an advanced tip using this concept that can instantly double your returns regardless of what system or markets you trade.

- He explains why trading is not a "zero sum game" and what this really means for you.

- How you can make profitable trades in only 10 minutes per night.

- Plus how Warren Buffett, Jim Rogers and others became great traders and investors.

- And, what the "gurus" selling hype trading courses are hiding from you and an easy way to spot a counterfeit "trading teacher" from a mile away.

- Much more.

Sound like a good use of an hour of your time? I hope so… in fact, since this invitation is going out to over 237,454 people and we've only got 500 seats, I'm sure it's going to "sell out" even though it is f.r.e.e.

So, if you think you can make it, go ahead and click here to reserve your spot.

Exchange Traded Index Funds

He will share a little of his story, but most of the hour will be spent showing you how to improve your trades. I like to share valuable information with my subscribers and this is a great opportunity to learn from a pro – for f.r.e.e.

He told me the other day that he could take even an average breakeven system and turn it into a profitable one by changing the money management and position sizing of the trades.

Now, what if you do that, on top of having a great system? You get long term consistent results; that's what.

To hear it straight from the expert, go ahead and click here to register.

Exchange Traded Funds

I look forward to seeing with you Wednesday night,

Cheers,

Ave Ramel

P.S. I almost forgot to mention that everyone who joins us gets a f.r.e.e bonus just for attending.

A Scientific Breakthrough

2010-01-01T04:30:00.000-08:00

Hi,

At last, have finished the First VitaPlus Tour that will answer

a lot of your questions about this scientific breakthrough in

Health, Wellness, and Beauty.

You may now proceed to: First VitaPlus

The First VitaPlus Tour answers the ff:

- Five Power Vegetables

- Five Little Things You Should Know About First VitaPlus

- Prevention and Maintenance of Diseases

- Availability and Product Sizes

Cheers,

Ave Ramel

***Trust in the Lord with all your heart***

How The Rich are Debt-Free

2009-12-30T09:21:00.000-08:00

Hi,

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

Crisis ???

The Rich are debt-free and do really have

a lot of options in life.

If you want to be rich, you must know

- what kind of income to work hard for,

- how to keep it, and

- how to protect it from loss.

That is the key to great wealth.

Discover this kind of income in:

Rich Dad Cashflow

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

Cheers,

Board Games | Year 2012 End of the World

More on-time credit card payments expected in 2010

2009-12-11T19:23:00.000-08:00

NEW YORK - Consumers are expected to further improve their credit management in 2010, but unemployment will hamper the efforts of many Americans to make their credit card payments on time.

Credit card delinquencies are expected to continue falling through next year, but at a much slower rate than in the past two years, according to a prediction from credit reporting agency TransUnion due out Tuesday.

By the end of next year, TransUnion expects 90-day delinquencies on credit cards issued by banks - mostly those bearing MasterCard and Visa logos - to drop to 1.04 percent.

The rate was 1.1 percent in the third quarter of 2009 and is expected to fall to 1.07 percent by the end of this year.

TransUnion uses payments that are three months behind as its predictor of default, because it would be so difficult for struggling consumers to make up those payments.

While the decline predicted for next year is a positive sign, it would be just a fraction of the drop seen over the past two years. Delinquencies peaked in the third quarter of 2006, at 1.42 percent.

TransUnion culls its figures from data found in more than 27 million individual consumer credit reports.

Ezra Becker, director of consulting and strategy in TransUnion's financial services group, noted that delinquencies lag behind other statistics like the jobless rate. Until more people are back at work, he said, there won't be any dramatic improvements in payments being made on time.

Arizona, one of the states hardest hit by the mortgage crisis and the recession, is the only state expected to see delinquencies rise next year, to 1.34 percent from a forecast of 1.33 percent for 2009's fourth quarter. California, Florida, and Nevada - the other states that felt the subprime meltdown the most - are expected to remain on top of the delinquency statistics. North Dakota and South Dakota will most likely continue to have the lowest delinquency rates.

Becker said the credit card reforms that take effect in February will have a "material impact on the credit card industry" next year. He expects it to be harder to access consumer credit as banks keep a tight rein on lending, but predicts new types of cards and other new products will become available as the industry adapts to the rules.

The new regulations "will force lenders to be more innovative in the products that they offer and how they manage customers," he said.

By EILEEN AJ CONNELLY, AP Personal Finance Writer

Ignore Your Credit Card's Minimum Payment

2009-12-04T21:04:00.000-08:00

Does this article's headline sound like heresy? Does it smack of the worst financial advice of all time?

That's exactly what credit card companies hope you think.

Consumers have been conditioned to pay attention to one thing when they open their credit card bills: the minimum payment due. But that minimum payment is just a smokescreen to distract you from the numbers that really matter -- how much you owe overall, and the interest rate the bank is charging you.

Pay the minimum the bank requires to keep your account in good standing, and when you retire you'll still be paying off that pizza you ordered during your freshman year. Simply doubling that minimum payment can significantly shorten the payoff time - not to mention the price tag of that pizza before it ends up costing you $1,000. Here, use this credit card calculator to see for yourself.

As long as I'm picking apart some old rules of thumb, let's talk about another one that deals with which credit card you should pay off first.

Actually, Ignore the Interest Rate for a Moment, Too

If you carry debt on multiple credit cards, concentrate first on paying down the one that's closest to being maxed out.

Why not pay off the one with the highest interest rate? Or maybe pick off the one with the lowest balance so you can start your debt-payoff plan with a win? Sure, financially and psychologically, both of those tactics make sense, but if you want to improve your credit score -- and who doesn't? -- you first need to pay down the card that's charged up the closest to your credit limit.

The credit world likes to constantly measure how you handle your debts. And when your debt-to-available-credit ratio starts creeping above 30% (e.g., carrying $3,000 in debt on a card with a $10,000 limit), red flags start waving and your credit score takes a hit. That single measurement counts for 30% of your overall score.

So job No. 1 is paying down any debt that's bumping up against the limit. Once you get the ratio down to less than 30%, then start paying down the card that carries the highest interest rate.

Now, you might be wondering exactly where you're supposed to get the money to pay down those maxed-out cards. Glad you asked.

Raid Your Savings Account and Put It to Better Use

Yup, you read that right. I'm not being flippant. I am fully aware that in these tough times, everyone should have a cash cushion for emergencies. But maybe your emergency fund doesn't need to be quite as robust as you think it does.

An emergency may or may not happen. But credit card debt is very real, and very right now. If you have a fully funded emergency account, devote some of it (note that I said "some," not "all") to paying down your credit card balances. And if you have other cash "investments" sitting stagnant and earning just a pittance in interest, there's definitely no better actual investment than paying down a credit card that's costing you 14%-plus interest, as opposed to earning zero-point-something in interest.

Meanwhile, consider supplementing your emergency savings with an "emergency credit card" that has no balance and is set at a low interest rate. Then if an emergency does indeed occur (and we're talking about a legitimate emergency, not a shoe-sale or waxing "emergency"), then you can cover it and not break the bank if you need a few months to pay off the balance. If an emergency doesn't arise, well, then the cash you've put toward paying off your debt in the meantime is an even smarter investment for your future.

In person, Fool.com writer Dayana Yochim isn't as preachy as she sounds in print. Except on the topic of credit card debt.

FICO Reveals How Common Credit Mistakes Affect Scores

2009-11-29T23:07:00.000-08:00

Borrowers already knew that late payments hurt their credit scores, but for the first time, they now know the extent of that damage.

Did you max out your credit card? Expect a credit score drop of 10 to 45 points. Declare bankruptcy? Your score will plummet by up to 240 points, and your odds of getting credit will nosedive with it.

The "damage points" data, unveiled recently by FICO, are part of the most revealing glimpse into the firm's once-secret -- and still mysterious -- credit scoring model. The new information discloses how many points borrowers' scores will drop when they make the most-common mistakes.

'Help People Understand' Scores

"I hope this information will help people to better understand FICO scores and the value for them of avoiding credit missteps. It illustrates key points such as the higher your score, the farther it can fall if you stumble," says FICO spokesman Craig Watts. "Getting and maintaining a good score isn't complicated. We all just need to pay our bills on time, keep credit card balances low and take on new debt sparingly. "

The greater transparency about FICO scores is important because American consumers' ability to get credit rises and falls with the number. FICO, the company that pioneered credit scoring, assigns consumers a three-digit number from 300 to 850, depending on how well they handle credit. Other companies also offer scores, but FICO's version is the most widely used by lenders in determining whether a consumer can borrow, and at what rate.

FICO's credit score has been around for decades, but only within the past decade have consumers gradually gained access to theirs. Though the raw numbers can be purchased, how they're figured remains a FICO secret, as closely guarded as the formula for Coca-Cola. Until Thursday, FICO revealed only broad categories of factors influencing the score, but not the number of points at stake for consumers who fail to pay as agreed. The "damage points" information, revealed in a report by personal finance writer Liz Pulliam Weston, will be made available through its myFICO.com Web site starting this weekend.

FICO's information shows that bankruptcy does the most serious damage to a credit score (up to 240 points), followed by foreclosure (up to 160 points) while maxing out a credit card has the least numerical impact (as few as 10 points).

Those with good or excellent credit -- so-called prime borrowers -- put more points at risk with each mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score -- 780 -- that same delinquency can send a FICO score tumbling by 90 to 100 points.

The Cost in Dollars

In order to show just how badly a drop in your FICO score can hurt your wallet, we spoke with members of the home mortgage, auto and credit card lending industries. We presented hypothetical scenarios of a consumer who decided to apply for a $200,000, 30-year mortgage; a $20,000, five-year auto loan and a credit card. While all the industry insiders stressed that a FICO score isn't the only factor in determining who gets credit and at what cost (other factors they cited include the borrower's debt-to-income ratio and whether they have already established a relationship with the lender), they were able to provide an idea of what a borrower who had the following credit scores could expect.

For a Consumer Who Started With a FICO Score of 780:

Following a 30-day late payment, the consumer's car loan rate would jump nearly 3 percent, costing the borrower $26 more each month.

Following a debt settlement, the consumer would pay as much as $109 more each month on a home mortgage.

For a Consumer Who Started With a FICO Score of 680:

Following a 30-day late payment, the consumer would pay $41 more each month for a car loan.

Following a 30-day late payment, the consumer would pay as much as $95 more each month on a home mortgage.

Following a debt settlement, the consumer would no longer qualify for a credit card.

Some Surprised By the Details

Consumer advocates say it's important for borrowers to know what can damage their FICO scores. "If they know it in advance, they won't go out and step in a pile of doo-doo. They won't go out and do some of these things," says Linda Sherry, director of national priorities with advocacy group Consumer Action. Even experts found some surprises in today's news. "FICO imposes bigger hits than I would have thought for being maxed out or 30-days late just once, reinforcing my view that it is a cruder, blunter instrument than they like to claim. Nevertheless, it is a powerful, widely used crude blunt instrument," says Ed Mierzwinski, consumer program director for the U.S. PIRG consumer advocacy group.

Of course, knowing the impact on a FICO score and actually avoiding these mistakes are two separate things: Amid rising unemployment and other daily financial struggles, paying bills and staying on-track financially becomes a much bigger challenge for many borrowers.

"Some of these things are out of their control," Sherry says of consumers.

Additionally, as Weston points out, consumers with identical FICO scores can have different credit histories. That means the same slip-up -- such as maxing out a credit card -- could have different impacts on consumers who have the same FICO score. In the examples they provided, FICO assumed each borrower had several active major credit cards, a mortgage, car loan and student loans.

Sherry acknowledges the benefit of putting a number to a financial blunder. "I don't think we necessarily knew the numbers that a bankruptcy could apply to a credit score," Sherry says.

Helping You Make Better Decisions

While knowing the numbers may not keep you filing for bankruptcy if given no other choice, the information may help you make the best decision when faced with a bad situation.

FICO scores -- and the access to credit they provide -- are a valuable asset to consumers and supply a safety net when incomes are stretched. It's an asset that needs to be protected, Sherry says, even if job loss or catastrophic illness makes bill paying problematic.

"In that period of time, paying down debt is the last thing on your mind. Paying the minimum payment may also be the last thing on your mind, but you'll be doing yourself a big favor if you do," Sherry says.

by Jeremy M. Simon, CreditCards.com

Latest bank fee is for paying off credit card on time every month

2009-11-23T00:58:00.000-08:00

You floss regularly, yield to oncoming traffic and use your credit cards judiciously, dutifully paying off your balance every month.

You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case.

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

NEW RULE PROPOSED: Fed wants banks to get customer OK to pay debit card, ATM overdrafts

CALCULATORS: How long will it take to pay off your debt?

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

These fees are the credit card industry's response to credit card legislation that will, among other things, restrict credit card issuers' ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.

Curtis Arnold, founder of CardRatings.com, says he expected credit card issuers to raise annual fees after the legislation was enacted. What he didn't expect, he says, "was that good customers were going to be hit."

Fortunately, if you've paid off your balance on time every month, you probably have a good credit score. And when you have good credit, you have more choices.

What to do if your card issuer starts charging an annual fee — or increases the fee you're already paying:

•Call and complain. Check your credit score first to make sure you're on solid ground, says Adam Levin, founder of Credit.com, a consumer website. If you have a good score and you've been a good customer, the lender may be willing to waive the fee to keep your business.

•Weigh the benefits of rewards against the annual fee. The days when you could get a rewards card with no annual fee are numbered, Arnold says. If your rewards card charges a fee, you'll need to figure out whether the value of the rewards exceeds the fee.

That's not always easy to do, particularly with cards that give you airline miles, says Chris Fichera, associate editor for Consumer Reports. Rewards miles often come with restrictions and expiration dates, making it difficult to figure out how much they're worth, he says.

"A lot of airline cards are not the best deal unless you can combine them with a frequent-flier plan," Fichera adds.

If you're not a frequent flier, Fichera says, you're probably better off using a card that gives you cash back. As long as you can estimate how much you spend, it's easy to figure out whether you'll get enough cash back to justify the annual fee.

•Leave. If your card issuer won't waive the fee, you'll have a choice: Pay the annoying fee or close your account. Unfortunately, this decision isn't as clear-cut as it sounds, because closing an account could hurt your credit score.

One of the factors used to calculate your credit score is what's known as the "credit utilization ratio," which is based on the amount of credit you have outstanding as a percentage of your total available credit. When you close a credit card account, the amount of your total available credit shrinks, which could lead to a higher utilization rate. This ratio accounts for 30% of your credit score.

In addition, closing an account you've owned a long time could affect your credit history, another factor used to calculate your score, Fichera says.

Still, if you aren't carrying balances on your other accounts and the card is relatively new, closing your account is worth considering. Even now, there are good deals out there, particularly for card holders with good credit, Arnold says. For example, the Fidelity Rewards American Express card pays 2% of cash back to a Fidelity account, with no limits on cash rewards and no annual fee.

If you don't care about rewards and just want a credit card that doesn't charge an annual fee, consider applying for a card through a credit union. Many credit union cards charge no annual fee and offer below-average interest rates.

Associations, such as the USAA, which provides products and services for military personnel and their families, also offer good deals on credit cards, according to Consumer Reports.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

Bank of America loses $2.24B as loan losses rise

2009-11-19T05:09:00.000-08:00

CHARLOTTE, N.C. - Bank of America Corp. said Friday it lost more than $2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.

The nation's second-largest bank, which lost $2.24 billion after accounting for preferred dividends, said its losses for failed loans came to almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank's total allowance for loan and lease losses sits at $35.83 billion.

Bank of America's results were aided by profit from investment bank Merrill Lynch, including income from bond, stock and currency trading.

Its earnings follow the pattern set earlier this week by Citigroup Inc. and JPMorgan Chase & Co., which also reported more loan losses during the third quarter as consumers struggled to keep up with their credit card and mortgage payments. And on Friday, General Electric Co. reported that its GE Capital business, which includes credit cards, saw an 87 percent drop in profits, although it was also weighed down by commercial real estate losses. Together, the reports depict a financial industry that is still deeply troubled.

Bank of America said it lost $2.24 billion, or 26 cents per share, after accounting for the preferred dividends of $1.24 billion. That compared with earnings of $704 million, or 15 cents per share, a year earlier.

Revenue in the quarter increased 33 percent to $26.04 billion.

The loss was 5 cents more per share than the 21 cents forecast by analysts surveyed by Thomson Reuters Inc. Investors sent Bank of America shares down 97 cents, or 5.4 percent, to $17.13 in premarket trading. Shares closed Wednesday at $18.10.

"Obviously, credit costs remain high, and that is our major financial challenge going forward," CEO Ken Lewis said in a statement accompanying the earnings report. "However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card numbers."

Bank of America is considered particularly vulnerable to unemployment, which climbed last month to 9.8 percent in the U.S. Economists predict the jobless rate will pass 10 percent in the coming months.

The bank's massive portfolio of credit-card loans could help investors determine where the economy is headed and how well the industry at large will fare, said Doug Dannemiller, senior analyst at Boston-based research firm Aite Group.

"As unemployment rates are in the 10 percent range, the results on consumer lending aren't going to improve until that number gets lower," Dannemiller said.

The bank has about 53 million consumer and small business customers, making it vulnerable to delinquencies and defaults, yet also ready to thrive when the economy recovers.

Bank of America's global card services unit loss widened significantly to $1.04 billion from $167 million a year ago.

The loss in the bank's home loans and insurance division grew to $1.6 billion from $54 million a year ago, as credit costs continued to rise.

The bank, which being investigated by federal authorities for its Merrill acquisition, has received $45 billion in bailout funds as part of the Treasury Departments $700 billion financial rescue package. It's not known when it will repay the government.

Lewis, who is retiring at year's end, has agreed to give up his salary and other compensation for 2009.

By IEVA M. AUGSTUMS, AP Business Writer

4 Things You Should Never Do with Your Credit Cards

2009-11-10T17:52:00.000-08:00

Susan McCarthy, a financial adviser in Oklahoma City and author of The Value of Money, lists her top four credit card don'ts:

1. Don't make only the minimum payments. This stretches out your payment and, thanks to the interest, significantly increases your overall cost.

2. Don't carry too many cards. Multiple cards make it easier to rack up debt because it's harder to keep track of your spending. Having lots of cards isn't necessarily bad for your credit, but misusing them is. So limit your plastic to two national cards (store cards often carry higher interest rates) that you manage carefully.

3. Don't miss payment due dates. Not only will you be hit with a late fee-as high as $39 on some cards-but your interest rate could also jump. Sign up for online banking or pay over the phone if you're up against the deadline. (You may pay a processing fee, but it will probably be less than the late fee and the possible interest-rate hike.)

4. Don't take cash advances. These advances generally come with sky-high interest rates and service fees, making them a far too expensive way to get cash. Avoid at all costs.

The Biggest Losers (of Debt): How a Family Shed $106,000 in Debt

2009-09-23T10:17:00.000-07:00

Meet the Hildebrandts; their frugal ways lost debt, won an award

Five years ago, the Hildebrandt family of New Richmond, Wis., was juggling more than $100,000 in credit card and personal debt. Through frugality, determination and hard work, they are now -- other than a mortgage -- debt-free.

At the time, Russell and Kandy Hildebrandts' credit card balances totaled about $89,000, and they owed $17,000 to a family member. While they were current on all the payments, the card companies had begun raising their interest rates, adding hundreds to their minimum monthly payments. Kandy acknowledges that they presented a higher credit risk, given how their balances had ballooned. Even so, with the bump in the required payments, covering the monthly payments was a struggle. "We had to change," Kandy says.

Change they did. For their debt-fighting prowess, the Hildebrandts were on Tuesday night named the winners of the Professional Achievement and Counseling Excellence (PACE) 2009 Graduate Client of the Year Award. This national award, given by the National Foundation for Credit Counseling, recognizes the hard work and commitment they demonstrated in repaying their debts, and their willingness to become effective managers of their money and change their lifestyle. (Disclosure: CreditCards.com Senior Reporter Connie Prater served as a judge in the awards.)

Slow Decline Into Debt

Not that the Hildebrandts' lifestyle was lavish. The couple, along with their twin daughters, Heidi and Holly, lived in a rented 1,000 square foot townhome. Vacations consisted of visits to extended family members in the Midwest. Russell was a chemist with a Twin Cities-based environmental testing laboratory; Kandy was a stay-at-home mom and home-schooled their daughters.

While the Hildebrandts weren't living extravagantly, they also weren't frugal, Kandy notes. They purchased most items, such as clothes for the girls, new. In addition, they had medical expenses related to Russell's diabetes and several miscarriages that Kandy suffered. At the same time, they remained committed to tithing, or giving 10 percent of their income to their church. The accumulation of day-to-day expenses left the family going a bit more into debt each year.

Bankruptcy? No Thanks

Several family friends recommended that they file for bankruptcy. That was out of the question, Russell says. "We were committed to paying off our debts." They also resolved to continue to tithe and home-school their daughters.

To get started, Kandy met with Linda Humburg, a manager with FamilyMeans Consumer Credit Counseling Service (CCCS) in Stillwater, Minn. Linda reviewed their finances, and developed a five-year debt management plan. While the schedule was daunting, the Hildebrandts signed on. "If we didn't make it, we knew that we would go out trying," Russell says.

Several steps were key to making the plan work. Kandy and Russell eliminated discretionary spending. Kandy began buying generic food and frequenting thrift stores for clothing purchases. They stopped exchanging Christmas and birthday gifts with each other and their relatives.

Even with the drastic cutbacks, the Hildebrandts couldn't cover the $2,000 they were sending to CCCS each month to be distributed to their creditors. At that time, the sum amounted to about half of Russell's take-home pay. So Russell took on a second job cleaning a local grocery store several nights a week from midnight to 4:30 a.m. He would arrive home from his day job, eat dinner, catch a few hours of sleep and head to work. After his shift, he would go back home, sleep a few more hours and then get up for his day job.

Slow Progress

The first two years were particularly tough. Russell's work schedule was grueling, while Kandy managed just about everything at home on her own. Moreover, while their credit card balances were going down, the drop wasn't yet noticeable. For about a year, the Hildebrandts made do with one car, until they received a used van from Kandy's family.

Even so, "they didn't let anything deter them from progress," Humburg says. "If the money wasn't available, they simply did without." Equally, important the Hildebrandts kept their goal -- becoming debt-free -- in mind.

After the first few years, the Hildebrandts' efforts finally seemed to be bearing fruit. Their card balances were coming down, and some were getting paid off. As one card reached zero, CCCS would apply the money that had gone to it to the remaining balances. As a result, those cards would get paid off even more quickly.

About this time, Kandy became pregnant with Joey, who's now 3. While recognizing that a new child would mean additional expenses, the couple was thrilled. "The joy he brought to a negative, grinding situation was the light we needed," she says.

Dream Home Appears

By the fall of 2008, the Hildebrandts had one year to go on the payment plan. Russell even started daydreaming about a new home when he saw a three-bedroom rambler for sale in New Richmond. It had all that they were looking for, including a large yard and a separate bedroom for Joey. Russell let a real estate agent know that they liked the house, but added that the family would have to pay off their debts before taking on a mortgage.

Several months later the agent called and asked if the Hildebrandts would be interested in a rent-to-own agreement. The current owner of the house had some health concerns and was eager to move. The monthly rent would be $1,000, which included $200 to be escrowed for closing costs. They could manage it.

Earlier this year, the owner wanted to accelerate the sale process. In April, using the tax credit for first-time home buyers, the Hildebrandts were able to swing the purchase and pay off the remaining balances on their credit cards about six months ahead of schedule.

Now, the Hildebrandts are content in their new home and free of debt, other than their mortgage. Russell has been able to quit his second job and spend more time with his family -- and catch up on sleep.

Frugal Habits Stick

Several things haven't changed, however. Kandy remains a dedicated bargain hunter. Shopping online, she found eight bar stools for their kitchen island and basement family room for $24; at a yard sale, she bought a $2 desk for the girls. The Hildebrandts "had to completely rethink how they spent and what was a need versus a want," Humburg says.

Both Russell and Kandy say that while bankruptcy might have seemed like an easier option at the outset, it would not have been as satisfying. They wouldn't have learned to take control over their money and spending. What's more, with a bankruptcy on their credit record, they wouldn't have been able to purchase a house when they did.

Their advice to others? "Get out of debt," Kandy says. "It's a chokehold."

Karen Kroll, Financially Fit

Debts to Keep; Debts to Pay Off

2009-09-18T05:26:00.000-07:00

Do you have a debt strategy? Before you start laughing and say, "Sure, my strategy is to borrow more," hear me out. Debts can add to your net worth, just as investments can. But you have to be smart. Some loans are worth keeping, even enlarging, if you use the proceeds well. Others waste money or are downright risky.

Mortgages

Some people can't wait to get rid of their mortgage, so they add extra money to their payment every month. The faster the loan is reduced, the less total interest is owed to the bank.

But what's the hurry? If you're young or middle-aged, it's far more important to put the maximum into your retirement plan at work. If you work for yourself, put the maximum into a Keogh or SEP-IRA plan. With a house plus financial investments, you're better diversified.

During the past 30 years, the Standard & Poor's 500 have earned an average of nearly 14 percent annually, according to Ibbotson Associates in Chicago. Long-term investors have a good shot at earning more money in their stock-owning mutual funds than they can save by paying their mortgages ahead of time.

You might have a change of heart, however, when you retire. At that point, your monthly income will probably drop, making a mortgage harder to carry. At that point you can use some of your investment gains to pay off the bank.

Home-Equity Loans

How about borrowing against your house to invest in stocks? A home-equity loan is a second mortgage that you can tap at will for anything you want.

At this writing, home-equity loans cost anywhere from 8 percent to 12 percent, depending on the lender. Those are variable rates, so they might rise. The more your loan costs, the greater the chance that you won't earn enough in stocks to make the risk worthwhile.

Best advice: Save your home-equity borrowing for other things — for example, home improvements, major home repairs, or college tuition (the interest is deductible if you itemize on your return).

You might also use a home-equity loan to pay off higher-cost credit card debt — but only if you truly intend to control your spending. Do not borrow against your home to consolidate your debt if you're likely to run up your credit cards all over again.

Student Loans

Many young people today get out of school with a lot of debt. Usually they want to pay it off as fast as they can. But student loans cost no more than 8.25 percent in interest. What's more, during the first five years that you repay, the interest may be tax-deductible up to $2,000. (This tax break is for singles with adjusted gross incomes up to $40,000, phasing out at $55,000, and couples filing jointly with combined incomes up to $60,000, phasing out at $75,000).

In general, you're better off putting some money into savings rather than speeding up repayments of student debt. You might even consolidate your loans and stretch out the payments if that frees up the money you need for a 401(k). You can prepay your student loan whenever you want — say, when you get a little richer.

A Loan Against Your 401(k)

Are you thinking of borrowing against your retirement plan and putting the money into stocks? Forget about it! You already own stocks if you have stock-owning mutual funds in your 401(k). And in your plan, your market gains are tax-deferred. If you want extra stocks outside your plan, buy them with "play money" — not with long-term retirement money that you've invested for your future.

What if you need the money for some other purpose? The interest rate on a 401(k) loan is currently around 9.25 percent. For cars, a dealer auto loan is cheaper. For education, it's better to choose a student loan or parent loan (federal PLUS loans for parents cost 9 percent or less).

It's cheaper to take out a 401(k) loan than to borrow against your credit cards, but it's unwise to tap your retirement money to finance current consumer spending.

Typically, you repay 401(k) loans over five years. But if you lose your job or leave it, you may have to repay the balance immediately. If you can't, the amount still owed is treated as a withdrawal. You'll owe taxes on it, plus a 10 percent penalty if you're younger than 59 1/2.

Loans Against Your IRA

Sorry, not allowed. You can withdraw up to $10,000, penalty-free, to buy your first home, but it's not a loan. Your IRA simply becomes $10,000 smaller. To me, that's a reasonable use of IRA funds. Owning a home is as valuable as having a retirement plan.

Credit Card Debt

There's nothing useful about consumer debt that's rolled over each month. Try plastic surgery: Cut up cards you can't control. Then set up a plan for paying off everything.

By Jane Bryant Quinn

How To Keep A Perfect Credit Score

2009-09-16T06:22:00.000-07:00

To get the best deal on a loan, you need some new strategies to bump up your score - and keep it there.

Borrowing money today requires impressing an increasingly hard-to-please crowd. With creditors of all kinds more cautious than ever, you need an A+ application to land the best terms -- and that means an A+ credit score, the number lenders use to judge your risk of default.

The most commonly used credit scoring system, called FICO, rates people from a very risky 300 to a pristine 850. And right now we're in the middle of a credit score crunch: "You need a 750 or better today to have the same treatment you got with a 700 two years ago," says John Ulzheimer, president of consumer education at Credit.com.

John D'Onofrio, CEO of Autoloandaily.com, seconds that: "Two years ago a 680 was enough to get a great car loan rate. Today it's often the minimum to qualify at all."

Think you're still in the clear? Don't be so sure. Lenders have been making changes that could cause your score to slip from excellent to average. Improve and protect your number with these strategies:

Learn Your Score. You have three FICO scores, based on your credit reports at the three credit bureaus: Experian, Equifax, and TransUnion. The numbers tend to be in the same ballpark, so pony up $16 to get one representative score at myfico.com. You can get an estimate free at Creditkarma.com. But the FICO score gives you a better sense of what lenders see.

Scout for Mistakes. Your scores are only as good as the information they're based on. And a third of people who've pulled their reports have found errors, according to a Zogby poll. That's good reason to read your report.

When you buy your FICO score, you'll get a copy of the report it was based on. Get gratis histories from the other bureaus via annualcreditreport.com (you're entitled to one free from each bureau every 12 months).

Spot an error? Request a correction, following the instructions on the bureau's website. Let's say the size of a credit line was misstated or an account was mistakenly marked delinquent. Getting the error fixed could raise your score as much as 200 points, says Ulzheimer, who has also worked for Equifax and FICO.

Never, Ever Be Late. As you'll see in the pie chart on the right, the biggest chunk of your credit score comes from your payment history. Just one late payment can shave 100 points off a 750-plus credit score, says Ulzheimer. Lenders can't tattle on you to the bureaus until you're 30 days past due, adds credit expert Gerri Detweiler. But don't risk it. For all your bills, enter recurring due-date reminders on your computer calendar.

Missed a payment? Get back on track within the next 30 days, and you should "get back the lion's share" of points lost, Ulzheimer says. More than 90 days late? The damage can stick for years. If it was a one-off lapse, call your issuer and plea for a good-will adjustment to your credit report. (It's a long shot.)

Remember the Magic 20%. The second-biggest factor in your score is how much you owe vs. how much credit has been extended to you. The part of this that's easiest to finesse is your credit card utilization rate, or your total card balances compared with your total credit limits, as well as each card's balance relative to its limit.

Example: If you've charged $5,000 on cards and have $50,000 in credit, your rate is 10%. For the best score today, 10% is ideal, but you can probably creep up to 20% and keep a high rating.

Unfortunately, with banks lowering credit limits and canceling unused cards, it's harder to maintain such a low percentage. In the previous example, if your available credit is cut to $20,000, your rate shoots to 25%. That could sink your score by as much as 50 points, says Ulzheimer. The lesson: Know your limits, watch for changes, and stay under 20% on each card and in total (0% if you'll be applying for a loan soon).

Already above 20%? Paying down debt is the obvious way to lower your utilization rate, but another strategy is to apply for an additional credit card to increase your overall credit limit. That may cause you to lose a few points in the short term -- so don't do it if you're about to apply for a mortgage -- but it should pay off in the long run.

Keep Oldest Cards in Play. As noted, credit issuers these days are eagerly canceling cards that are not in use. Besides reducing your limit and increasing your utilization ratio, having an account closed can hurt you in another way, especially if it's among your older ones.

See, 15% of your score rides on the length of your credit history. The longer you ably manage revolving debt, the better you look. So don't cancel your oldest cards. And don't let them get canceled on you: Move a recurring charge to each so they stay active.

Already ditched or been ditched? A new card (see previous) can help with your utilization rate, but there's little you can do to help the "history" component of your score, except to keep other old accounts in use.

Accept Fate on the Rest. There are other factors involved in your score, but they're not so easy to manipulate. For example, 10% is based on how well you manage a mix of credit types, such as mortgages, car loans, and credit cards. But you don't want to go out and, say, finance a car just for a score boost; besides, you can easily get 750-plus with just a few well-tended credit cards.

Along the same lines, 10% is based on "new credit," but the effects of a new application can be positive or negative, depending on your history.

In other words, if you want to be among the crème de la credit crème, accept what you can't change, and focus on what you can.

by Carla Fried, CNNMoney.com

Effective Ways to Repair Bad Credit Score

2009-09-13T04:29:00.000-07:00

Having a good credit score rating means everything in today's world. It is something that you should have in order to live life comfortable and as easily as possible. This is why many people work hard in order to have good credit rating score and prevent them from plunging in to a bad credit rating score.

You now ask what kind of things that you can benefit from by having a good credit score. First of all, a good credit score can increase your chances of getting the loan you apply for and secondly, it will help you get certain jobs and programs that will require good credit score. These are the two main reasons why you need good credit score.

However, if you are plagued with bad credit score in the past, you now ask how you can get good credit score again or how you can repair your credit score.

It is important to realize the fact that if you have a bad credit score, you will need to repair it as soon as possible before your credit score becomes much worse.

Repairing bad credit score will require you to have patience and also a little luck. It is something that you should do in order for you to live life comfortably and also a little easier for you and your family.

By repairing your bad credit score as soon as possible, you will never miss out on any more great opportunities that will cross your path in the future.

Before you go on and start repairing your bad credit score, you first need to understand what credit is all about. You have to know how it can affect you life. For example, if you are in need of a loan, lenders will take a look at your credit rating to determine if you can be approved for the loan.

A good credit rating will ensure the lenders that you pay your loans on or before the deadline and thus, will ensure them that you will be able to pay the loan you will apply for. The same applies when you are applying for a credit card.

Now that you know what it means to have a good credit rating, the next thing you need to do is to determine if you have a good credit rating or not.

Surprisingly, not many people know if they have a good credit rating or if they have a bad credit rating. To know about your credit score, you can simply ask for it in several credit reporting agencies.

They will be able to provide you with a numerical indicator of how much your credit rating rates and how much credit risk you are.

If the indicator says that you have a high score, this means that you have a good credit score, if you have a lower score, then it will indicate that you have a bad credit score and will be far more risky to get approved of for loans.

So, if you have a bad credit rating, the first thing you need to do to improve your credit rating is to take care of old debts. By paying all your old debts, this will stop the creditors to stop making negative reports to credit reporting agencies.

This is the first thing you have to do in order to stop your credit score from getting much worse than it already is. By cutting the source of negative credit reports, you will be well on your way to get a good credit score.

However, paying all your debts doesn’t necessarily mean that you will instantly get good credit rating. You have to remember that this will just stop it from getting any more worse.

Your old bad credit score will still be there. So, obviously the next step would be to start looking for ways to make some positive reports on your credit rating.

You can do this by applying for a credit card that is designed for people who have bad credit rating, such as a secured credit card. You should also start opening a new savings account or checking account.

Always remember that you should pay your balance on time in order for you to establish a positive credit report.

Eventually, your old bad credit score will expire in time. Always keep paying your debts on time and your credit history will look better than in the past. However, it will usually take around 5 to 7 years for your old credit report with negative reports to expire. This is why patience is very important.

With patience, you will see that in time, your credit score will rise and get rid of those negative reports that you had in the past. Always remember to keep paying your debts on time in order to continue have a good credit score.

Check your Free Credit Report And Be Wary of Your Score

2009-09-10T04:27:00.000-07:00

Credit check is usually done to verify whether you are eligible for a loan or on any other forms of credit based on your past credit performances. This will reveal your past as well as your previous credit transactions with different lenders and how you deal with it.

Want to know your financial creditworthiness? Have a credit check and determine your personal credit score.

Thus, a credit check is the reflection of your past credit performance. It works like a report card, which reveals whether you have "passed" or "failed" in a particular subject.

Credit checks are done by lending institutions such as credit card companies and banks on individuals who wish to apply for a loan or any form of credit.

In addition, credit checks could also be done by a homeowner whether an individual would be a good tenant or not, as reflected by his or her past credit performance.

Insurance firms also run credit checks on individuals who wish to avail of their insurance policies.

You can obtain your credit report containing credit-related information from any of the three major credit reporting agencies.

Furthermore, you can obtain your personal credit reports for free as stated in the FCRA or the Fair Credit Reporting Act.

Under this Act, every individual is entitled to receive a free credit report from any of the three major credit-reporting companies in the United States once a year - Experian, Equifax, and Trans Union.

Your free credit report contain your personal information (such as your name and address), how you paid your past and previous bills, and any delinquencies you have committed such as late payments as well as if you have filed for bankruptcy.

To obtain your free credit report, you need to fill up the required form through a centralized credit report website on any of the three major credit bureaus in the United States.

You will be required to provide some basic information, which includes your name, permanent address, your social security number, and your birth date.

Your credit report is important in securing yourself against any attempts of identity theft such as credit cards misuse and other forms of fraud.

In addition, you must update your credit report regularly as lending institutions would be using such reports to determine if you are worthy enough to be awarded with the loan you have applied for.

After you received your free credit report, you should read each section carefully. All aspects must be included in computing your credit score.

So make sure you have paid attention to all of them. Check your report for any discrepancies and make sure that you have not missed any payments at all.

Your credit report also comes with the list of individuals or business entities that you have requested credit information from. You may also check to see if such names or entities are familiar with you.

Your free credit report would be used in running a credit check to you when applying for a loan or any other forms of credit. Thus, make sure that it is free of discrepancies or erroneous entries.

Keep in mind that this report will reflect your credit performance - ensure that you do not stumble anywhere so that your loan application would always be a success.

What Is Credit Score and How To Get Yours For Free

2009-09-06T04:24:00.000-07:00

In the United States, your credit score is everything. It is something that you should take care of or if you don't, getting a phone, cable or gas line hooked up in your home can be difficult to do. There are also certain companies that take a look at your credit score first before they even hire you. Even if you are qualified to do the job, a low credit score can ruin it all for you.

Your credit score is also analyzed by creditors, such as banks and credit card companies. Just try to imagine that you need to get a loan to start your own business, with a low or bad credit score, you have a lesser chance of getting that loan approved or you may get it approved but with high interest rates.

The same thing goes when you apply for a credit card. Credit card companies or banks that issue credit cards will first take a look at your credit score before they can get your application approved. A high credit score means that you have a greater chance of getting the best credit card deals with a lot of features and also with low interest rates for your every purchase using a certain credit card.

Even if you are applying for a mortgage, a car loan and other kinds of loans, your credit score will play a very important role in it. This is why it is very important for you to have a high credit score and maintain it that way or increase it.

First of all, you have to understand what a credit score actually is. A credit score will represent a three digit number from 300 to 850. This number will represent a calculation of the likelihood of whether you will pay their bills or not. This means that if you have a high credit score, creditors will be sure that you will pay your bills or your loan.

In the United States, FICO or Fair Isaac Corporation is the best-known credit score model in the country. They calculate your credit score using a formula developed by FICO. The system is used primarily by credit industries and consumer banking industries all across the country.

Credit scores are calculated in the following factors:

* Punctuality of payments – This will be 35% of the calculation. If you pay your bills on time or before the due date, your credit score will tend to be higher.

* Capacity used – This will amount to 30% of the calculation of your credit score. It will contain a ration between the current revolving debts to total available revolving credit. If you use your credit card and if you don’t use its entire credit limit, you will get a higher credit score.

* Length of credit history – This will amount to 15% of the calculation of your credit score.

* Types of credit used – This can affect 10% of your total credit score.

* Recent search for credit or the amount of credit obtained recently – This will amount to 10% of the total calculation of your credit score.

Surprisingly, not many people know their credit score and often end up wondering why they got denied for their loan or credit card application. You can easily obtain a copy of your credit report by requesting for it from FICO or from the credit reporting agencies.

They will be able to provide you with a free calculation of your credit score every year. It is also a great way to find out if there are any errors in your credit report that may be causing you to have a low credit score. You can request it to be fixed in order to let you have a higher credit score than before.

Always remember that your credit score is an important factor of your life. Keep it high and you will get better deals on loans, and credit cards.

Getting Your Bad Credit Rating Repaired

2009-09-03T04:20:00.000-07:00

Your credit score will mean everything in today's society. It is something that creditors and banks will base on whether you are worthy to get approved for the loan you are applying for and it is also something that will determine your credibility to certain employers and also to landlords.

With a good credit rating, you will be able to apply for loans and credit cards easily. It will mean that you will have more chance in getting that loan you need. It will also mean that you will have more chance in getting that certain job you have been applying for and it will also mean that you can pay your bills on time with the landlords when you are applying for an apartment.

Having a bad credit reduces all these opportunities. You may get approved for a credit card or a loan, but it will usually have higher interest rates. This is because creditors aren’t sure that you can pay your bills on time. It is also riskier for creditors to approve you for the loan if you have a bad credit. When it comes to applying for an apartment complex, landlords take a look at your credit score to determine if you can pay your rent bills and utility bills.

These are some of the reasons why having a good credit score is very important in today's society. However, what if you have a bad credit score? If you have a bad credit score, it is very important to repair it as soon as possible. There are several ways that you can repair your credit score.

The first step in repairing your credit score is by stopping it before it gets any more worse than it is already. To do this, you should pay your previous overdue debts right away in order to cut off bad credit reports from creditors. Although this will not improve your credit score, it is the very first step you should take when you want to repair your credit score.

So, this will take you to the next step. The next step is by raising your credit score by opening a new savings or checking account. You should also apply for a secured credit card. A secured credit card will mean higher interest rate, but it is also a good way to control your credit card spending and also a good way to raise or repair your credit score. By paying your monthly credit bills on time, you will be able to raise your credit score significantly.

Ways on How You Can Boost Your Credit Score

2009-08-31T04:17:00.000-07:00

Having a good credit score is very important in today's society. It is something that many people should have and it is also something that people today would consider to be worthy to be doing just about anything to have a good credit score. By having a good credit score, applying for loans and unsecured credit cards is much easier.

If you already have a good credit score, you will want to boost it in order to obtain the best loan and credit card deals possible. For example, if you have a credit score of 688 and the loan company will reduce interest rate if you get a credit score of 690. The two points can mean thousands of dollars in savings from paying interest.

This is why it is very important for you to improve your credit score even if you already have a good credit score. It will mean lower interest rates and also more chances of getting the loans you need.

There are several ways on how you can significantly improve your credit score. Some ways takes time to achieve and some takes only a few weeks or even a few days to do. However, if you start working on it as soon as possible, you will see that it will be worth all the effort.

So, here are some of the ways you can boost your credit score.

The first method for boosting your credit score is to check credit reports for errors. Even minor errors can significantly hurt your credit rating. So, if you ever suspect that your low credit score is caused by an error, you should contact the credit reporting agencies and challenge them about the report. It is part of the law that the reporting agency should investigate and correct the errors within thirty days if there is any.

The next step on how you can boost your credit score is to pay off your balances every month. This can keep you out of debt and save a lot of money on interest rate. Also, this will demonstrate that you can manage your debt effectively and therefore, increase your credit score.

By having only a few credit cards, two at most, will boost your credit score. Having five or more credit cards will in fact, lower your credit score. This is why it is important for you to have only two credit cards.

If you borrowed money before, it is important for you to pay it on time. This will have a positive impact on your credit score because it will show credit reporting agencies and also creditors that you can manage your debt effectively. However, if you have borrowed money before and is long overdue, you should pay it immediately. In time, these old late payments will be deemed unimportant and it will expire.

Another way to boost your credit score is by managing your credit cards effectively. Don't use your entire credit limit on each of the credit card you own. For example, if you have credit cards with a credit limit of 2000, 2500 and 3000 dollars, it is better to use 600 dollars on each card rather than 1800 dollars in one card. Always keep one thing in mind; it is best for your credit score if you only use less than 50% of your credit card limit.

These are some of the methods you can use to boost your credit card score. Following all these will ensure you that your credit score will increase and will result in better opportunities in the future.

Envision a Better Life by Increasing Your Credit Score

2009-08-27T04:12:00.000-07:00

Have you been deprived of getting a loan, mortgage or credit card? Do you know how you can increase your credit score?

Your credit score can make or break your way of living or lifestyle in a lot of ways. Maintaining or keeping a good credit score, especially in times of economic hardships, is really quite extraordinary.

Most lenders looks into the credit score of those applying for loans, mortgage, or for credit cards. As it is part of the business, they want to know and double check the capability of the debtor to pay for the loan being applied for. The lenders are taking a lot of risk when they give somebody the use of their money.

Here are just some of the helpful guidelines in increasing one's credit score:

1. Avoid applying for credit much too frequently. Numerous credit applications will mean inquiry of one's file. A lot of new credit applications can greatly affect and lower the score.

2. Always pay all statement of accounts on time. Paying bills behind of schedule are always recorded in the credit report and can reflect a not so good paying habit. This will definitely lower the credit score.

3. Avoid high outstanding balance or debit in one's credit card and other existing credit can drop off the credit score. As much as possible, keep those debts low.

4. Catch up on missed payments. It's never too late to pay the bill.

5. Avoid closing unused accounts or credit cards. This will not help increase the score.

6. Avoid opening unnecessary accounts with the notion of increasing one's credit score by having a brand new credit card. This strategy will actually lower the score.

7. Having too few or no loan and credit account in one’s name, is also measured as a credit risk to lenders. Maintaining a small number of credit cards showing a good credit standing, having a reasonable balances and limits, can help increase the credit score.

The rate of credit scores will be the deciding factor in the approval of a loan, the extent or amount of credit that will be offered, and the interest rate that will be added to the loan for the period or duration of the agreement.

Credit scores also significantly affect the rates or charges one will incur for the monthly payments. A low score will mean paying a higher interest rate on the borrowed money.

Also, if one wants to create a difference in applying for insurance premiums and employment, debtors must strive to increase their credit scores.

Some employment agencies, firms and industries check the credit scores of applicants and would-be employees before deciding on whether or not they would hire them. They would also look at credit activities, and employment and payment history.

Recently, most insurance companies do a background check especially on the credit scores of their clienteles. Through this, they will determine the cost of the insurance premiums, housing premiums, auto insurance, and others.

Credit reports can provide insights to employers and insurance agents a run-down summary about the attitude and behavior of a person.

Discipline is an important tool to maintain a good credit score. Increasing one's credit score takes time. It can’t be quick and instant.

The better the person deals with his or her credit accounts to have a good and high credit score, the more assurance of saving more money in the bank there is.

Data hints consumers handling credit cards better

2009-08-25T00:31:00.000-07:00

NEW YORK - The rate at which credit card holders fell behind on their payments was far worse in the second quarter than it was last year, but did improve sharply from the alarming level seen in the first three months of 2009.

The shift since the first quarter shows that consumers handled their credit better even as job losses mounted and the recession deepened, according to credit reporting agency TransUnion.

TransUnion said the rate of bank-issued credit card payments that were 90 days or more past due shot up to 1.17 percent for the three months ended in June, from 1.04 percent in the 2008 period.

But the figure was down significantly from the first quarter of this year, when 1.32 percent of card holders were three months or more behind on the payments. That improvement came despite soaring unemployment and other economic pressures.

Long-term data shows that second-quarter payments are more likely to be made on time than payments in the first quarter. Typically, consumers use tax refunds or salary bonuses to pay off debt, often after running up card balances during the holidays.

But while a decrease in delinquencies in the second quarter from the first isn't unusual on a historical basis, it does mark the first improvement in a year. Moreover, the figures show less impact from the weak economy than expected.

"What's interesting about this year's decrease in the second quarter is we're still in a recession," said Ezra Becker, director of consulting and strategy in TransUnion's financial services group.

In addition to higher unemployment - the jobless rate reached 10.6 percent in June - many people who still had jobs earned less, as employers cut back on hours, overtime and bonuses. "Since unemployment is a primary driver of delinquency, you would have expected an increase in delinquency," Becker said.

The fact that second-quarter late payments fell in that climate shows that consumers are handling their cards better, he said. The figures also reflect aggressive moves by lenders to cut back on credit limits and otherwise manage risk.

Not every statistic was positive.

The average debt consumers carry on their bank cards rose in the second quarter to $5,719, from $5,621 in the 2008 period. It declined only slightly from the first quarter, when the average stood at $5,776. Becker said that figure presents more evidence that people continue to rely on their credit cards, even as they may manage their payments better.

TransUnion samples anonymous data culled from about 27 million individual credit files to come up with the statistics. The agency tracks 90-day delinquencies on credit cards because that is considered a precursor to default, since a card holder would have to come up with four months of payments to bring themselves current.

The credit card delinquency decline follows TransUnion data that showed that the pace of growth for mortgage delinquencies also slowed in the second quarter.

Put together, it's reason for "guarded optimism," Becker said.

"A lot of the data on the economy shows that we have either begun a recovery or we're on the brink of recovery," he said. Credit statistics typically lag the economy, he said, so delinquency improvements are a positive sign for things to come.

The statistics indicate "that we're coming out of the woods, even if we're not out of the woods yet," Becker said.

As a result of the improved delinquency rate, TransUnion has scaled back its forecast for credit card delinquencies for the rest of the year.

The agency now expects the 90-day credit card delinquency rate to reach just over 1.2 percent by the end of the year. That's a big revision from its prior forecast for a rate as high as 1.7 percent by year-end.

"Consumers are clearly managing their credit card obligations and lenders are clearly managing the risk in their portfolios," Becker said.

The big question in coming months is what effect new federal regulations on credit cards will have on the industry.

The Credit CARD Act started to kick in last week with rules that require banks to warn consumers 45 days in advance before raising interest rates, and to give them an option to close accounts and pay down balances at the old rates. Banks also have to give consumers 21 days to pay their bills after sending out statements.

In February, further rules will take effect regarding a host of issues, from how often credit card companies must review accounts after interest rate cuts to how cards are marketed to students. The aim is to give consumers more information regarding their credit and reduce surprises about things like interest rate hikes.

Becker said the law will have an impact on how banks lend and how consumers handle their credit.

By EILEEN AJ CONNELLY, AP Personal Finance Writer

7 Ways to Be a Dolt About Credit

2009-08-21T14:06:00.000-07:00

Remember the good old days, way back in 2006, when the streets were paved with credit-gold as far as the eye could see and credit cards rained from the sky? Even the credit-destitute were treated like kings by the credit card companies and courted with lavish offers of unlimited credit.

Here in the future, the world has changed. Banks claim they want to lend money, but really they'd prefer to buy other banks with government money.

Credit issuers aren't sure they want to lend money to people who need to borrow it, a situation somewhat analogous to the Groucho Marx axiom, "I don't want to belong to any club that will accept me as a member."

And woe betide those who ask for loans with glaring blemishes on their credit reports. An unpaid collection is apt to be regarded like a cockroach in the consommé.

These days, wrecking your ability to get credit is about as easy as blowing over a house of credit cards.

7 Ways to Be Credit-Stupid

Making some of the following mistakes can ensure that lenders will need a hazmat suit to handle your credit report.

1. Close Credit Card Accounts

A quick way to guarantee that your credit score plummets faster than Lindsay Lohan's career is to slice away your available credit by closing accounts.

You see, credit scores are not built around common sense. Doing away with unused lines of credit would make sense to most human beings, but not so much to a credit scoring model.

"Many of the things that can lower your credit score are kind of counterintuitive," says Melinda Opperman, counselor and vice president of community outreach for Springboard, a consumer counseling organization.

When you close an account, it no longer adds to your total amount of available credit.

"There is a big chunk of your credit (score) that is factored on the amount owed -- 30 percent of your credit score. So one-third of your score measures the amount of debt against the credit limit," Opperman says.

Without changing your level of debt, lowering the credit available to you throws the ratio of debt to available credit out of whack.

For consumers with very low balances, closing newer credit accounts, slowly, can make sense -- especially if the cards sport high interest rates or charge annual fees.

But having too much credit will rarely be a problem.

"In years past there was kind of a myth that said if you have just way too much credit available, you have the risk of being potentially overextended because you could access that much credit right away," Opperman says.

It's still true that when consumers go to take out a home loan, some mortgage lenders may assess the amount of credit available to them and take that into consideration when evaluating their creditworthiness.

"If someone were planning to purchase a home and it was suggested that they close some accounts, the borrowers would want to do it well before applying for a loan and a few months apart -- and make sure that the accounts that they closed did not have too high of a credit limit," Opperman says. "But in general, having a robust credit file will not be an issue."

Furthermore, only recently opened accounts should be considered for closing. Length of credit history is an important component of the credit score.

According to John Ulzheimer, president of consumer education at Credit.com and contributor to CNBC, the ideal credit customer is one with 20 years or more of credit experience -- and you want that good history on your report. Closed accounts will drop off of your credit report.

"The sweet spot is someone who has 20, 30 or 40 years of credit experience and many, many accounts to look back on," Ulzheimer says.

2. Let Credit Cards Collect Dust

Consumers shouldn't necessarily close their credit accounts, but burying cards in the backyard or hoarding them in a shoebox in case of an emergency also may backfire.

Creditors are loathe to let just anyone have vast sums of potential money at their fingertips. Lately lenders have taken a use it or lose it attitude -- preferably lose it.

Consumers encounter two pitfalls if a creditor closes an account for nonuse: The available credit is pared down and that account no longer contributes to their credit history.

If an open account is unused for a long enough period of time, the company can stop reporting it to the credit bureaus. If the account goes unreported, that account is not contributing to your available credit, which affects your credit utilization ratio.

The FICO score isn't an award or demerit system, but a predictive score that tells lenders what you might do in the future.

"The FICO score looks at how recently the information was reported, so, if say, a credit card trade line (credit card account) hasn't been reported in X number of months, then we will not include that information for certain calculations, basically any calculations that look at dollars," says Barry Paperno, consumer operations manager for Fair Isaac and head of myFICO.com's consumer education and advocacy.

That includes the amount of debt you're carrying relative to the amount of credit available.

Plus, the fact that the creditor took action to close the account is also noted on your credit report.
"Some folks feel that because there is the narrative there, it is less desirable for it to say closed by creditor rather than by the consumer. However, I wouldn't have someone be overly concerned with that because the narrative isn't picked up by the credit score," Opperman says.

"But it would be better if consumers were not going to use an account to either close it themselves, or if they want to maintain that credit relationship, we suggest that people use their cards periodically," she says.

3. Run Up High Balances

If using too little credit sends up red flags to lenders, using too much credit sends up road flares and fireworks.

Like Goldilocks' preference for porridge and sleeping accommodations, lenders want to see people use credit just right -- not too much, not too little.

Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Md., says that the FICO score in particular favors lots of credit that is not utilized too little or too much.

"The FICO '08 score does want to see a lot of credit, but it would rather see many low balances on several cards rather than one large balance," she says.

This can be damaging even to cardholders who run up a high balance every month on one card and then pay it off each month. The FICO score does not take those payments into account.

"For instance, charging $8,000 one month, pay it off. Then charge $10,000 the next, and pay it off. The model does not recognize that -- it just reads that you are constantly carrying a large balance," Cunningham says.

Thirty-percent of the FICO score looks at the amount borrowers owe and then compares it to the amount of credit they have available. This utilization ratio gets unpleasantly skewed when you owe more than 30 percent of what is available to you -- particularly if one card is at or near its limit.

And it's not only irresponsible or desperate spenders who have damaged scores because of large balances relative to their credit limits. It can happen to anyone who carries a balance if a lender decides to chop your credit limit -- in response to market conditions, for instance.

To prospective lenders who view your credit report, it appears that you've maxed out your credit cards rather than keeping what was previously a low balance relative to the credit limit.

4. Apply for New Credit Repeatedly

New credit doesn't mean just a shiny new credit card stretching out your wallet; it means a lower credit score -- at least in the short run. The reasons are twofold.

First, new credit accounts lower the average age of your credit history.

"Say you've had one credit card for 20 years and then five others that you just got because you went to five different stores over the holidays and they offered you rebates to sign up for a card," Opperman says.

"The credit score is going to take the one account you've had for 20 years -- 240 months -- and the five accounts that you've had for one year. That's five accounts times 12 months and it would then average all of those accounts together so it only looks like you've had credit for four years," she says.

Also, applying for credit causes a hard inquiry on your credit report. The alternative to a hard inquiry is a soft inquiry, which is what would happen if you pulled your credit report.

Inquiries aren't extremely damaging to a credit score, but multiple hard inquiries in a short period of time can raise lenders' eyebrows, because of that whole reeking-of-desperation-thing, or possibly being up to something illegal. Most banks or credit card companies try to avoid consumers in these scenarios.

However, credit scores do take smart loan shopping into account. When shopping for products such as auto loans or mortgages, consumers are not dinged for each individual auto or home loan-related inquiry within a 45-day window.

Experts recommend doing all comparison shopping within that period of time if possible to minimize credit dings.

5. Don't Pay Fines or Non-Credit-Card Bills

Skipping out on overdue book fines at the library can hurt more than your book-borrowing privileges. It actually can negatively impact your credit score, as can other seemingly meaningless hassles, such as parking tickets.

"These days, public institutions and municipalities will use credit to get people to pay their fines and fees. So if someone has an old library fine that they never paid, it could be killing their credit score without them knowing it -- which is why it is essential to check your score regularly," Opperman says.

Other business relationships that don't normally report your good payments can turn around and bite you if you decide not to pay as agreed. Any business, from garbage collectors to cell phone companies, can turn to the dark side when it comes to getting what's owed to them, and that means sending your account to collections.

"Normally when you have an account with a merchant that doesn't report directly to the credit bureaus, there is a difference between positive and negative reporting. A lot of service providers don't report positive information. But the minute you do something wrong, they can outsource that debt to a collection agency who will report it," Ulzheimer says.

"If I have a Verizon cell phone and pay $79 every single month for the phone, that information is not on any of my credit reports. But if I was on a contract that required that I pay every month and I don't -- it's really only a matter of time before they send it to a collection agency and then the collection agency will report the past-due debt, or the collection debt, on my credit report," he says.

6. Ignore Mistakes on Your Report

Say what you will about credit bureaus: They do make it easy to dispute inaccuracies on your credit report.

Sure, they may not fix them and it may be nearly impossible to ever speak to a live human being. But sometimes, probably more often than not, it works and it's easy.

In order to dispute something on a credit report, one must, of course, check one's credit report. It's easier than it's ever been, so consumers have unfettered access to their own credit information, a vast improvement over the laborious and time-consuming methods used in the dark ages before the Internet.

Unlike other issues that affect credit scores, mistakes sometimes can be remedied easily and quickly, so it's worthwhile to keep tabs on your report.

7. Make Late Payments or Skip Them Entirely

It seems almost too obvious, but it bears stating that paying late and missing payments altogether are stellar ways to ensure that your credit score will scrape the bottom of the barrel.

Fortunately, as it happens, not all missed and late payments are counted equally in credit scores.
According to MyFICO.com's Paperno, the FICO score judges missed and late payments by several different criteria, including how recently it happened, how severely late the payment was and the frequency of missed or late payments.

The recentness of the incident has the most bearing on the FICO score.

"Believe it or not, a 2-year-old incident of a payment being 90 days late is not as bad as a recent 30 days late (payment). The older one may have been one blemish in a long history but a 30-day this month can lead to a 60, which can lead to a 90," Paperno says.

"The score is a predictor of future risk, and all of the factors that are looked at are viewed as to how well they can predict the future. So the more fresh or recent the information is, the more predictive it is," he says. "Lenders are always looking to spot potential problems as early as possible."

The further back in time the mistakes are, the less impact they have on your credit score. Obviously, the fewer mistakes consumers make, the better for their score. Once the mistakes are several years old, however, they may not affect the credit score at all.

by Sheyna Steiner, Bankrate.com

The Cardholders Are The Real Problem with Credit Cards

2009-08-19T13:49:00.000-07:00

The problem with the credit-card industry isn't just credit-card companies - it's you too.

This week the Senate takes up a bill that would seriously clamp down on some of the industry's most unsavory practices, a piece of legislation that President Obama has said he wants on his desk by the end of the month.

The bill, which builds on rules issued by the Federal Reserve Board and other agencies at the end of last year, would do away with interest-rate hikes on existing balances, prohibit issuers from putting customer payments toward lower-rate balances first and abolish the practice of raising a customer's interest rate because he was late paying a bill to someone else.

Credit-card companies, though, may not be the only ones we need to be protected from. Every penny of Americans' nearly $1 trillion in revolving debt started with someone - some individual person - whipping out a piece of plastic and making a decision to use it. We could consider that free will and just call it a day, but there's plenty of reason to believe the story isn't so simple.

There are piles of evidence that people are bad decision makers when it comes to how they use credit cards. Even when presented with full and fair information, they often make decisions that are not in their own economic best interest - a reality only partly taken into account by the new rules and pending legislation. (Read a brief history of credit cards.)

Consider the teaser rate. More than a third of consumers pick one credit card over another based on which issuer has the lowest introductory interest rate. And yet people often do so in a way that leaves them with higher finance charges over time. In one study, University of Maryland economists Haiyan Shui and Lawrence Ausubel watched people pick a card with a teaser rate of 4.9% for six months over a card with a teaser rate of 7.9% for 12 months. That would make sense if the people then paid off their balances within six months.

But many didn't - the average balance for the year was $2,500, with plenty of folks paying more in interest charges than they would have had they opted for the other card, considering the rates on each spiked to 16%.

It is easy to chalk that up to simple human carelessness. Certain economists, though, have another way of looking at that and similar findings. They see a systematic psychological breakdown - as a species we're just really bad at understanding costs that come later on. Instead, we assign a disproportionate amount of importance to what's immediate and tangible. We lock eyes with that initial low rate and can't look away. (And, yes, credit-card companies get that.)

It's the same thing with that laundry list of fees that come with cards. We think that we're not going to be the ones to go over our credit limit or miss a payment and trigger a penalty rate, so we give those fees little to no weight as we're deciding which card to sign up for - even though they eventually make a big difference in what we pay.

"We don't tend to take into account future costs," says Oren Bar-Gill, a law professor at New York University who has studied credit-card contracts and customer behavior. "Consumers don't really know how much they're paying for their credit card." (See 25 people to blame for the financial crisis.)

Once we've got our card in hand, our behavior becomes riddled with irrationalities. In one experiment, Drazen Prelec and Duncan Simester of the Massachusetts Institute of Technology found that people were willing to pay twice as much for basketball tickets when they were using a credit card as opposed to paying cash. Credit-card spending just doesn't feel like real money.

In another study, Nicholas Souleles of the University of Pennsylvania and David Gross of the consultancy Compass Lexecon calculated that the typical consumer unnecessarily spends $200 a year in interest payments by keeping a sizable stash of cash in savings or checking while at the same time carrying a credit-card balance. In our heads, the two don't line up.

The seeming solution would be to make clear to consumers exactly how much their credit cards are costing them. In fact, over the past few decades, there has been a massive push in that direction, from the Truth in Lending Act to the "Schumer Box," which gives a one-page summary of credit-card terms in a font size dictated by the Federal Government (it needs to be large enough to catch your attention). Credit-card statements that were a page long in the early 1980s now easily run to 30. That's a lot of information.

And yet America's overreliance on consumer debt has happened anyway. Why? Disclosure itself may not be enough considering the well-entrenched forms of human thinking we're dealing with.

"There have been a lot of disclosure policies over the past 20 years, but they've had a limited effect on improving the market," says the University of Maryland's Ausubel. "The problem isn't in the availability of information. The problem is in the processing of the information." (Read "How the Banks Plan to Limit Credit-Card Protections.")

What we need to do, that argument continues, is frame information about how much credit cards cost in a way that really drives the point home. In 2007, a group of Senators introduced a bill that would have required credit-card companies to state on each billing statement how long it would take a person to pay off his balance and how much it would cost in principal and interest should he make only the minimum required payment each month.

(That's another psychological trip-up: having a low minimum payment printed on the statement in a big font ratchets down our perception of how much we should be paying off, meaning we carry higher balances for longer.) That bill never went anywhere, but a similar provision is in the bill currently before the Senate.

The difference is that we'd be telling people not just about a particular credit card's characteristics but about what those characteristics mean in terms of human behavior. It would be similar to Federal Trade Commission rules that require auto manufacturers to say how many miles per gallon cars get whether a person is driving in the city or in the country. Depending on a person's behavior, the cost changes - and that is made clear right on the sticker. (See pictures of stores that are no more.)

Economist Richard Thaler and legal scholar Cass Sunstein, who now heads the White House Office of Information and Regulatory Affairs, think we should go even further. In their book Nudge, they sketch a system in which once a year credit-card companies would be required to break out all the fees, interest and other charges customers paid over the past 12 months. That information would come on a person's statement as well as electronically for easier comparison shopping.

"By knowing their precise usage and fee payments, customers would get a better sense of what they are paying for," write Thaler and Sunstein. Ostensibly, people would then spend more reasonably. When a new sofa goes from costing $500 to $700 - and the pricing is transparent enough for people to realize that - fewer buy it.

The beauty with that sort of system is that it doesn't impose heavy-handed rules on people who don't need them. After all, 42% of households with credit cards pay off their bills in full each month. Telling people the cost of using their credit cards, in a way they can understand and internalize, levels the playing field and lets each person make an informed, unhindered decision for himself.

By Barbara Kiviat – Time