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Why It’s Important to Teach Kids About Credit
Posted by: | CommentsMillions of Americans are still struggling financially, but likely do not want to pass the kind of money problems and related stresses they feel onto their kids. One of the best ways to help youngsters avoid these problems in the future is by taking the time to instill good, basic advice about money while they’re young. Even if consumers have had trouble sticking to what they know to be good credit practices in the past, it can still be extremely helpful to kids to learn the basics of smart account management at a relatively young age, according to a report from Tulsa, Oklahoma, television station KJRH. Taking the time to sit down with kids, whether it’s regularly or just once or twice, and explain the best ways to handle a credit card account when they’re grown up so that they don’t wind up with large amounts of high-interest debt can have a significant positive impact on their financial lives. [Credit Score Tool: Get your free credit score and report card from Credit.com ] One of the most important things for kids to learn about credit card use is the importance of keeping their balance low, the report said. As a consequence, it might be a good idea for parents to teach them that it’s vital to keep spending so low that the balance on their card can be paid off in full every month. This is important because it won’t lead to interest charges that end up costing them more money, but will still grant them significant financial flexibility. Further, parents should educate their kids on the importance of making sure all bills are paid on time and in full, the report said. While credit card users should always try to make more than the minimum payment on their account as a means of more quickly reducing their balance, sometimes it’s not always possible. However, this should never be the reason that cardholders miss a due date or don’t meet the minimum payment required, because this will likely lead to costly penalty fees and interest rates being applied to their balance. [Featured Products: Compare credit score, report, and monitoring plans at Credit.com ] Finally, it might be a good idea for parents to talk to their kids about the importance of shopping around for credit cards instead of taking the first one offered to them. This will help them identify the best possible accounts available to them and put them in a good position to borrow responsibly.
Are Americans Getting Smarter About Their Credit?
Posted by: | CommentsIf it seems like everyone’s talking about credit scores these days, it’s probably not your imagination. Consumers appear to be getting smarter about credit scores. At least that’s what the results of a survey of 1000 consumers by the Consumer Federation of America (CFA) and VantageScore Solutions
Millions Underwater in Debt – What Went Wrong
Posted by: | CommentsThese days, many people are getting their finances in order as the economy continues to improve and the effects of the recession fade, but millions of families got themselves into trouble so deep that they’re still struggling significantly under the weight of massive debts. Millions of families are considered “underwater” with their mortgages because they owe more on their loan than their home is worth. Additionally, millions more are also underwater when it comes to their non-collateralized debt, which can be more troubling, according to a new study from the University of Michigan . In all, about 20 percent of all households nationwide owe more in non-collateralized debt (which can include credit card balances, medical bills, student loans and the like) than they have in savings and other liquid assets. [Free Resource: Check your credit score and report card for free before applying for a credit card ] “Some families have not been able to make substantial headway,” said Frank Stafford, an economist at the University of Michigan Institute for Social Research, who co-authored the report with researchers Bing Chen and Robert Schoeni. “Even if they’re not underwater with their mortgages, they are struggling to save money and reduce their debts.” In all, the number of consumers who carried $30,000 or more in non-collateralized debts increased significantly between 2009 and 2011, rising to 10 percent of those surveyed from 8.5 percent, the report said. Meanwhile, the number of people who said they had no such debt at all slipped, though marginally, to 47.4 percent from 48 percent. At the same time, the number of families with no liquid assets or savings rose to 23.4 percent from 18.5 percent. On the other hand, the researchers found that a good portion of non-collateralized borrowing increases were the result of spikes in student loans, which can lead to tens of thousands of dollars in debt for those who receive a four-year degree, the report said. [Credit Cards: Research and compare credit cards at Credit.com ] Of course, many of the economic problems people ran into during these times came about through no fault of their own. Millions of families were laid off and increased credit card borrowing as a means to make ends meet when other sources of income were not available. Further, these troubles also made it more difficult to pay their various bills, and some prioritized mortgage payments over other types of borrowing to keep their homes. Image: miquelsi , via Flickr
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Millions Underwater in Debt – What Went Wrong
Kids With Credit Reports a Growing Problem
Posted by: | CommentsChildren are not supposed to have a credit report in their name, but new studies have found that the number of those who do is growing considerably, which can pose major problems for affected kids. People under the age of 18 who have a credit report in their name are almost certainly the victims of identity theft , and this is a large and growing problem nationwide, according to a report from the Columbus Dispatch . Some studies have found that large amounts of kids have been a0ffected by identity theft, in which the crooks open large amounts of credit in their name and steal tens of thousands of dollars or more, and leave their young victims to carry the blame. [Credit Score Tool: Get your free credit score and report card from Credit.com ] Often, this type of crime is carried out when a thief gains access to a kid’s Social Security number, the report said. Sometimes this can happen as a result of data breaches at hospitals or schools, and other times, their relatives may steal their identity. These youngsters are usually targeted because they will have no credit history and, since parents wouldn’t normally even think to make sure their son or daughter has a credit report in their name, the crime is unlikely to be discovered for a long time. “These kids’ Social Security numbers are particularly valuable to thieves because they can go years without detection,” Bo Holland, chief executive of AllClearID, told the newspaper. “Because of privacy restrictions, the credit bureaus can’t share with parents what they find in their (child’s) files. So they don’t know who is using the Social number or what accounts were opened.” The most common way a child who has been victimized by this type of crime discovers the problem is when they turn 18—sometimes even older—and apply for a line of credit, the report said. To their dismay, they may learn that they’re saddled with significant debts, such as those for auto loans , credit cards and sometimes even mortgages , that have gone long periods of time without payment. [Featured Products: Research and compare Identity theft protection plans at Credit.com ] One thing parents who are concerned about this type of crime can do is contact the credit reporting agencies and ask them to put a freeze on their kids’ credit until they turn 18 and are capable of obtaining some types of loans on their own.
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Kids With Credit Reports a Growing Problem
Borrowers’ Rights Get Boost From FTC
Posted by: | CommentsThe Federal Trade Commission (FTC) affirmed a consumer right on Thursday that has big implications for the loan industry. The FTC was asked to review the “ Holder in Due Course ” rule, commonly referred to as the Holder Rule, by the National Consumer Law Center (NCLC) and several other consumer rights organizations. The rule, which protects consumers who make purchases through a merchant using a line of credit , had come under fire recently after several court decisions put into question whether a consumer could try to regain payments made on a purchase through the lender if the merchant has sold a defective product. [Credit Score Tool: Get your free credit score and report card from Credit.com ] An example of a situation in which a consumer would encounter this problem is an auto loan , the NCLC says. Perhaps a car dealer sells a vehicle that is defective to a consumer, who uses a car loan to pay for the vehicle. The FTC’s ruling on the Holder Rule means that consumers can make a claim to the lender to stop paying the loan instead of having to make a claim to the merchant while continuing to have to repay the loan to the lender. The result, the NCLC says, is a more efficient and consumer-friendly process for disputing purchases. “The FTC Rule on the Preservation of Consumers’ Claims and Defenses is a cornerstone of consumer
Consumer Agency Begins Work on Mortgage Point Rules
Posted by: | CommentsThe Consumer Financial Protection Bureau (CFPB) gave consumers and lenders a first look last week at a number of new mortgage regulations it could be proposing officially later this year. Mortgage points are the main target of the new rules, and the CFPB will now talk to consumers and industry representatives in addition to assembling a small business panel to further define the rules before the agency formally proposes them. (Want to learn more about points ? Here’s a quick rundown.) “Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” said CFPB Director Richard Cordray in a press release Wednesday . “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.” [Credit Score Tool: Get your free credit score and report card from Credit.com ] Specifically, the CFPB is mulling several possible rules for how mortgage points are presented to consumers. The first is a regulation of discount points, which are essentially fees that consumers pay to have their mortgage interest rates reduced. The CFPB is considering whether to make discount points standardized throughout the industry, so there would be a minimum interest-rate reduction that lenders would be required to give borrowers when borrowers pay a discount point. Another proposal is being considered to eliminate origination fees often called “origination points,” which vary based on the size of the loan and can often be confused with discount points, according to the CFPB. For borrowers, this means that there would be flat origination fees only. The CFPB is also discussing a rule that could require lenders to offer a no-points loan to make it easier for consumers to compare different loans from different lenders. “It would be great for mortgage shoppers to be able to compare offers from different lenders,” Credit.com expert Gerri Detweiler says. “Comparing similar loans—loans with no discount points to other loans with no discount points, as the CFPB has proposed—may help. At the same time, though, trying to craft rules in the complex market of mortgages, where prices can change from one moment to the next, is going to be a challenge.” Detweiler went on to say that consumers will still need to shop carefully and work with trusted lenders. [Featured Products: Research and Compare Mortgage Rates at Credit.com ] Points aren’t the only target of the new proposals being considered. Loan originators could possibly be seeing new regulation from the federal level that would standardize the multiple and varying state and federal regulations currently in place that determine who is qualified to be a loan originator. If you’re interested in giving the CFPB your comments or ideas about the rules, the agency asks that you email
Want to Make More Money? Move!
Posted by: | CommentsA new report on economic mobility,
5 Credit Card Rules for College Grads
Posted by: | CommentsIt’s that time of year when tassels are turned and graduation caps are tossed into the air. And ready or not, a new group of young adults venture out into the real world. If you just graduated, you might be looking forward to managing money on your own. Certainly, it’s deliciously liberating. But it can also be tricky, especially with credit cards because it’s so easy to spend like a
The Smart Way to Use a Credit Card for Bad Credit
Posted by: | CommentsMillions of consumers across the countries saw their credit scores take a dive during the recent recession, but now lenders are stepping up efforts to market specifically to those who have a damaged borrowing history. Major credit card lenders are now significantly increasing their efforts to market to consumers who have subprime credit scores, in hopes that they can convince borrowers who have been unable to gain access to other lines of credit since the recession. A number of studies have recently shown that more than a million borrowers with severely damaged credit ratings are now opening credit card accounts every month. However, lending to subprime borrowers still hasn’t begun to approach levels seen prior to the recession. [Free Resource: Check your credit score and report card for free before applying for a credit card ] Nonetheless, this new trend puts many consumers who previously ran into credit trouble in an interesting position: Should they accept the new card and start rebuilding their credit, or ignore the offer to avoid racking up debt again? The simplest answer is that there’s no overarching right answer. Each person is different, but consumers who want to open such an account need to exercise caution. Credit cards for consumers with bad credit typically carry higher rates and fees than many borrowers may have been accustomed to when they still had a healthy credit rating , meaning the cost of keeping an account will likely be quite high, especially if they carry a balance from one month to the next. For this reason, it’s important for those with bad credit to borrow as little as possible on these accounts, and then pay off their balance in full every month. This will improve their payment history, and will also keep balances low so that credit utilization remains at its peak levels. As these are the two most important factors in determining a credit score , making sure they are as strong as possible will, over time, have a significant positive impact. [Credit Cards: Research and compare credit cards at Credit.com ] Further, once a consumer trying to rebuild his or her credit has had this type of card for a year or so, they may be in a position to graduate to a new card with better perks and fewer fees. However, when doing so, they might not want to close their bad credit credit card unless it carries a costly annual fee. Image: Lara604 , via Flickr
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The Smart Way to Use a Credit Card for Bad Credit
