Sunday, July 29, 2007

Effects of Credit-Based Insurance Scores

Having bad credit can do more than affect your ability to get credit, it can determine what you pay for car insurance.

The Federal Trade Commission has released its report on the effect of credit-based insurance scores and automobile insurance. Credit-based insurance scores are calculated based on a consumer's credit history and insurance companies use them to predict the number and cost of claims consumers are likely to file. These predictions are then used to determine premium.

The FTC report found that credit scores did effectively predict the number of claims consumers file and the total cost of those claims. The report states that the use of credit-based insurance scores are likely to make the price of insurance better match the risk that consumers pose. Higher-risk consumers pay higher premiums and lower-risk consumers pay lower premiums.

The scoring system can definitely benefit those whose credit is blemish-free but will cost those whose credit history is poor.

Credit-based insurance scores are another good reason to keep yourself informed on what is contained in your credit report and work on ways to improve your credit rating.

FTC Releases Report on Effects of Credit-Based Insurance Scores

Sunday, July 22, 2007

Congress Helps Students With Loan Debt

Low-income college graduates who are overburdened with debt from government student loans could get a break from Congress as a plan to reduce payments for certain student borrowers passed the House this month. There are differences to be worked out between the House and Senate bills but once reconciled the measures will make it easier for those with lower incomes to repay their student loans.

Payments on government student loans would be capped at what the borrower could afford, with some provisions for outright debt forgiveness for those who pursue certain public-service careers.

They hope that by allowing borrowers to make lower payments there will be fewer defaults and the end result will be that the government collects back more of the monies loaned.

Tuesday, July 17, 2007

Don't Fall for Credit Card Insurance Scams

One day, not too long ago, I finished up a transaction at an ATM and because I was concerned about the amount of cash I had in my possession, I hurriedly sealed it away inside my wallet. What I didn't realize until I was at a store several miles away, is that I had been so caught up in putting the cash away where it couldn't be seen, that I had left my credit card hanging out of the ATM machine slot and walked away.

If you have lost your credit or debit card you know the fear. Anyone finding it may have the means to empty your bank acount or run up huge debts on purchases. The first thing to do if you fear your card is lost or stolen, is to notify the issuer of the card as soon as possible. Under US law, once you have notified the credit card company that your card is lost or stolen, you are not responsible for unauthorized charges. Your liability for charges on a lost or stolen card is limited by law to $50.

Despite this protection under the law, unscrupulous scammers continue to bilk money from consumers for worthless credit card protection insurance. Often they operate through telemarketing schemes. They may tell consumers that the law has changed, and they are no longer protected against responsibility for unauthorized charges on a lost or stolen card.

This is simply not true. Your best defense is always knowledge. Know the terms and conditions of your credit card account and the procedures to follow if it is lost or stolen. Never give your account number, social security number or personal information to anyone over the phone unless you know the company you are dealing with.

I was lucky. No one took my card. When it wasn't removed from the slot after a few moments, the ATM retained the card where bank staff were able to retrieve it and return it to me.

Monday, July 16, 2007

Avoiding ATM Fees

Did you know that banking fees account for 56% of bank income? ATM fees, bounced check fees, and account maintenance fees all take a bite out of your income.

Some banks allow free ATM transactions but only if you use ATMs at bank branch locations. Use another bank's ATM and you will pay a fee, probably not only to the owner of the ATM but in some cases, your own bank will impose a fee for using a foreign ATM. Going into the bank isn't always the best solution, as some banks have instituted fees for using tellers to transact banking business.

The best way to avoid fees when you are far from a bank branch ATM is to take cash back at the register. Most retail outlet swipe machines at supermarkets, department stores and even convenience stores offer you the choice of adding some cash back to your purchase. There is no fee charged for this transaction. There are limits on the amount you can get in cash back at the register, and these vary from store to store, but if you need some cash in your pocket it's a smart alternative.

Sunday, July 15, 2007

Credit Report Bait for Phishing Scams

As readers of this blog know, everyone is entitled to one free credit report per year from the three major Credit Reporting Agencies. Still, credit report scams abound, usually used in "phishing" expeditions that aim to secure your personal information for exploitative purposes.

Often, these scams come in the form of an email that offers to provide a free credit report and the recipient is directed to a website. In completing the application form for a credit report, the consumer reveals all the personal information the scammer needs to commit identity theft - name, address, social security number.

If you receive an email or see an internet offer for free credit reports, be very wary about giving out personal information.

The only website authorized by the Federal Trade Commission for the purpose of securing your annual free credit report is

Mind your money by minding your sensitive information and avoiding identity theft.

It's All Mine!

Tomorrow is Monday, July 16, 2007 and it will be the start of the first full week so far this year that American taxpayers will be keeping their paychecks.

According to Americans for Tax Reform, July 11,2007 was "Cost of Government Day", the day when taxpayers have earned enough to pay for government taxes and regulations.

Cost of Government Day came two days later this year than last.

How does it feel to spend 191 days out of the year working to pay for government spending?

Thursday, July 12, 2007

Credit Scores - What They Mean

What is a credit score and how is it calculated?

The three major CRA's (Credit Reporting Agencies) gather information about your credit history, payment history and debt load. This information can be found in your credit report and are some of the factors used to determine your credit score. The formula used to determine your score is called FICO (named for Fair Isaac Corp).

This is the information used to calculate your credit score and what percentage of your score it represents:

35% - Payment History

30% - Outstanding Debt

15% - Length of Credit History

10% - Number of Inquiries on your report

10% - Types of Credit you have

Credit scores range from the lowest score of 300, to the highest score of 850. A low score means higher interest rates or even denial of credit. To get the best rates your score needs to be 720 or higher.

FTC Issues Warning on Email Scam

The Federal Trade Commission has issued a warning about scam emails puporting to come from the FTC. The emails have been sent to consumers, as well as executives of both corporations and banks with a personalized greeting that uses the recipient's name and the name of their business. The email states it is a response to a consumer complaint to the FTC and asks the recipient to download the copy of their complaint which is attached to the email.

What is actually attached to the email is malicious spyware that will be downloaded onto the victim's computer if he opens the attachment.

The agency warns consumers who get this e-mail that purports to be from the FTC:

* Don’t open the attachment.
* Delete the e-mail.
* Empty the deleted items folder.

Wednesday, July 11, 2007

What's A Credit Report?

Many times people wait until they are contemplating a big purchase, like a home, to find out what's on their credit report but by then it could be too late. Prospective employers and landlords may also check your credit report.

But what will they find on your credit report and how will that affect you when seeking to rent, buy a home or even apply for a job?

A credit report contains information is gathered by a Credit Reporting Agency (CRA) on all your credit activities such as loans, mortgages, and credit card accounts. They also keep track of your balances and your payment history. In addition to your credit balances and payment history for the last two years, the report will contain personal information such as date of birth and social security number.

When a creditor requests a copy of your credit report it is recorded. If a prospective creditor sees many requests for your report, it could negatively affect your ability to get credit.

Liens and court judgments against you will also be recorded on your credit report. Most information will remain on your report for seven years, but a bankruptcy will show for ten years before
being removed from your credit report.

Everyone is entitled to one free copy of their credit report each year from the three main Credit Reporting Agencies: Experian, Equifax and TransUnion. To find out how to receive your free credit report, go to

Tuesday, July 10, 2007

Sprint Disconnects Complaining Customers

Sprint wants to keep the customer satisfied and so they are cutting off service for over 1,000 subscribers who have filed too many complaints. Sprint has sent letters to customers who have logged more than the usual number of customer service calls, advising them that their wireless contracts will be terminated as of July 30, 2007.

Customers have until that date to choose a new wireless service provider if they want to carry over their phone number and Sprint is not charging them the customary Early Termination Fee.

What Sprint doesn't say is why they believe these customers are dissatisfied with the service or have so many issues that Sprint can't resolve for them. Apparently it is either too costly to address their issues or too costly to man customer service call centers to take their calls.

Additionally, Sprint is applying a credit to these accounts to bring their balances to zero. Obviously, Sprint doesn't even want to spend time on bill collection activity.

It seems that in these days when most telephone inquiries are handled by what I call Robo-operators - those strangely pleasant voices whose automated responses are finely adjusted to make you feel that you are getting real feedback - customers who tie up the resources of real employees are too costly to keep.

Monday, July 9, 2007

Feds Say No Receipt Required Under $15

As everyone knows, the best way to mind your money is to know where it goes. Debit cards are a quick way to swipe yourself poor as many people don't keep receipts or forget to enter them into their checkbook register.

But if you're the conscientous type who always records every receipt religiously, you are going to have to find another way to track your money on small purchases like coffee and gas.

The Federal Reserve Board has made transactions of $15 or less exempt from Regulation E of the Electronic Fund Transfer Act. Regulation E formerly required that receipts be made available to consumers on all transactions made with debit cards. The new ruling is intended to make it easier for retailers to accept debit cards in cases where it may not be cost effective or practical to provide receipts.

So, mind your money - and your debit card purchases.

Federal Reserve Board Press Release

Sunday, July 8, 2007

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