Tag: Credit

You Are Your Credit Score

Your credit score is you!

It is used for shelter acquisition, transportation buying, employment, etc.

Very little accomplishments in life mean nothing but your credit score is there for you to live or die.

For those that do not pay attention to such menial things….

Companies use a mathematical formula – called a scoring model – to create your credit score from the information in your credit report.

Some factors that make up a typical credit score include:

  • Your bill-paying history
  • Your current unpaid debt
  • The number and type of loan accounts you have
  • How long you have had your loan accounts open
  • How much of your available credit you are using
  • New applications for credit
  • Whether you have had a debt sent to collection, a foreclosure, or a bankruptcy, and how long ago

Companies use credit scores to make decisions such as whether to offer you a mortgage, credit card, auto loan, or other credit product. They are also used to determine the interest rate you receive on a loan or credit card, and the credit limit.

Keep in mind there is no “one” credit score. It is important to know that you do not have just “one” credit score and there are many credit scores available to you as well as to lenders. Any credit score depends on the data used to calculate it, and may differ depending on the scoring model, the source of your credit history, the type of loan product, and even the day when it was calculated.

Usually a higher score makes it easier to qualify for a loan and may result in a better interest rate. Most credit scores range from 300-850.

In other words accomplishments in life mean nothing….it is all about the math.

Did you know that if you join one of the many credit score people you can add points to your score?

It has nothing to do with your ability to pay or not….just that you have spent money to access your “score” at any time.

Now that I have set the stage I would like to tell my better half’s story.

She owed a house for about twelve years and recently sold it….she got enough to pay off her mortgage and a SBA loan that she took out to do repairs that her house had been given by Hurricane Katrina in 2005.

She had a great credit score…..she had credit cards and such…but after she sold her home and got her new score she learned that it had decreased by about 100 points.

The moral of this story is that you are supposed to be in debt to retain your “good” credit score.

Learn Stuff!

I Read, I Write, You Know

“lego ergo scribo”

How Long Will We Use Cash?

I recently wrote a post talking about our use of money….a sort of historic perspective…..

Source: Why Use Money? – In Saner Thought

Then I went on to talk about how it seems that there is a movement to replace cash with a plastic card of sorts…..the first I heard of it awhile back when Great Britain was replacing some of the their paper money…..

The prospect of living in a cashless society has grown steadily for decades but it might have now reached tipping point, after cards became Britain’s number one payment method for the first time.

According to data released by the British Retail Consortium (BRC) on Wednesday (12 July), cards now account for over 50% of payments processed in the UK for the first time. The landmark achievement was largely driven by a boom in contactless payments, which now account for approximately a third of all payments, compared with 10% in October 2015.

The so-called “tap and go” cards were introduced a decade ago in the UK and after a somewhat unimpressive start they appear to have finally won over British shoppers. An increase in the number of stores accepting “tap and go” payments has also contributed to the sharp rise in popularity of contactless cards.

Source: Beginning of the end for cash? Cards now UK’s preferred payment method

When I first read about this I thought that it was an interesting experiment…but how far would it really go?

I had to ask, huh?

Looks like the IMF (I never thought the IMF was all that important) has a program in place……

The International Monetary Fund (IMF) in Washington has published a Working Paper on “de-cashing”. It gives advice to governments who want to abolish cash against the will of their citizenry. Move slowly, starting with seemingly harmless measures, is part of that advice.

In “The Macroeconomics of De-Cashing”, IMF-Analyst Alexei Kireyev recommends in his conclusions:

Source: IMF Tells Governments How to Subvert Public Resistance Against Elimination of Cash – Rigged Game

If this attempt is successful then you will be at the mercy of the government…..I do not like that feeling…..I like the feel of CASH!

Any thoughts?

Paper Or Plastic?

Are you a person that cares about the environment?  If so, then this post has nothing to do with the environment.

You have heard this question in grocery stores….but there is another sector where this could be the question asked…..

The money in your wallet……

The Bank of England introduced a five-pound note Thursday that marks the beginning of the end of a three-century run for paper money in the UK, reports the Guardian. This particular note is made of a thin plastic and designed to last more than twice as long as its paper counterpart. It features the queen on the front and Winston Churchill on the back, and it goes into circulation in September. The current five-pound paper note will remain in use for another year. Next up comes up a 10-pound plastic note featuring Jane Austen in 2017 and a 20-pound note featuring painter JMW Turner by 2020.

The unveiling comes ahead of Britain’s crucial vote on whether to exit the European Union, and Bloomberg notes that both sides of the debate have claimed none other than Churchill to be in their camp. Asked on Thursday about how Churchill might view the question, Bank of England Gov. Mark Carney opted to play it safe. “It’s not for me to make any inference about that,” he said.

Libertarians should be watching this….I mean they are against paper money….will they embrace this experiment?

How long before this makes it to the shores of the colonies?

Will That Be Cash Or Charge?

My regular readers know that I have a tendency to find stuff that just pisses me off….and to the point that I must rant…..and I found an absurd report…..

Until recently, I had always paid cash for just about everything I bought…you know computers, groceries, everything…..but all that changed after I was badly hurt after Hurricane Katrina….I was forced to retire with a disability and had to have my check direct deposited…..I have NEVER been one to use a lot of credit cards….I guess I am from the old school of economic thought…..if I wanted something I bought it when I had the money to cover the cost….I still pay cash but it is in the form of a debit card and not a pocket full of greenbacks…..

I had a rude awakening when I went for pain management…..they did not take cash!  I had to be insured or NO help……my leg had been crushed and I now have about 70% use of it….I was not insured because NO company will insure a broke person, both physically and monetarily, and I am not old enough for medicare….all of it has been resolved but a recent story I read made me think about the ordeal from the past….

I know we are told by the government that we should be on the lookout for any suspicious behavior….but really?

It seems that cash is still a dirty word and could make you a person of interest to the authorities if you pay in cash…..I know…what the Hell am I talking about?

the White House announced a community-based approachto combating terrorism in the United States, the FBI and other agencies are asking managers of surplus stores to spy on their customers, watching whether they pay in cash, make “extreme” religious statements or purchase products such as waterproof matches.And the request from the government also is going to gun shops, fertilizer suppliers, motels and hotels, authorities say.

Earlier this month, the Obama administration announced a new plan titled “Empowering local partners to prevent violent extremism in the United States.” In it, Obama wrote, “Communities – especially Muslim American communities whose children, families and neighbors are being targeted for recruitment by al-Qaida – are often best positioned to take the lead because they know their communities best.”

“The best defenses against violent extremist ideologies are well-informed and equipped families, local communities, and local institutions. Their awareness of the threat and willingness to work with one another and government is part of our long history of community-based initiatives and partnerships dealing with a range of public safety challenges,” the report says.

So once again….if you pay cash for stuff you could be deemed a “suspicious” person and subject to an FBI check and harassment…..
Why is cash a dirty word?  Could it be because few make any profit off the transaction?  There is NO service charge for using cash….at least for now!

The Economic Engine Of The US

From the VOMITORIUM

It is all so much BS!

We have hear all the attacks on the Prez and his jobs agenda….all the crap about it is small business that creates all the jobs and that small business should be a priority for the Obama admin……you have heard it all…….the Dems are failing the American people by NOT emphasizing small business and the creation of jobs…..

But wait!  The Repubs have a better idea right?

From the AP:

Senate Republicans in the United States blocked a bill to increase small business lending Thursday, dealing a setback to the jobs agenda of President Barack Obama.

The bill would create a $30 billion (U.S.) government fund to help community banks increase lending to small businesses, combining it with about $12 billion in tax breaks. Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping loosen tight credit markets.

Then if small business is the engine of our economy, why would they block a bill to help loosen up credit for the small businesses in this country?  Good question…..

Much of the bill had bipartisan support, but Senate Republican leader Mitch McConnell of Kentucky said Democrats were blocking GOP amendments.

What would those amendments be?  Glad you asked……

GOP amendments included measures to beef up border security, impose a government spending cap and lower the estate tax, which is scheduled to return next year with a top rate of 55 per cent on estates larger than $1 million.

One Republican amendment would repeal a new tax reporting requirement for businesses that was included in the massive health care overhaul enacted last spring.

The amendments have NOTHING to do with small business….if the GOP is so hot for the small businessman then why would they scuttle a bill that would help the businesses and jobs?  It is an easy one to answer……politics…..nothing short of politics…it is NEVER about loosening credit for small business…it is about seeing that the Dems have nothing when it comes election time…..this screwing of small business helps Repubs and does NOTHING to help the American people…..Can you see the game for what it is now?

You want an idea of how the deficit expands so rapidly?  Earmarks!  You know those add-ons to bills…..the pork……what does border security have to do with small business?  What does a spending cap mean when you add on so much new spending?

Special interests and pure gamesmanship and small business is just a pawn in this elaborate game of politics…..

2009 Anal-Ocity

I admire the Pres. for his oratory, but unfortunately he is NOT above making an anal statement.  And he has done just that, in my opinion.

In LA at a fundraiser, Obama was talking about the economy and how we have pushed back from the brink of disaster.  His rosy scenario was all well and good but he then said:

“We can’t return to a bubble-and-bust, borrow-and-spend economy based on maxed-out credit cards, over-leveraged banks, and financial profits that were only real on paper,”

But if you take a long hard look at what is being done with the economy, we are doing just that–returning to borrow and spend and a push to make credit more readily available, which in turn could return the maxed-out cards.

Sorry dude—anal is anal.

Credit Card Companies Still Win

Big News–the US Congress has finally come to the aid of credit card holders–we may all take a moment to rejoin and say a small prayer.

As of 21 May 2009 the credit card bill has been approved and passed by the House and the Senate and now awaits the official signing ceremony.  But what does the law require the companies to do?

Good question!

Basic provisions of the new credit card law.

  1. • Companies are prohibited from raising interest rates on existing balances unless a cardholder is 60 days past due.
  2. • Card companies can’t raise interest rates for the first year after an account is opened.
  3. • At least 45 days’ notice is required for a rate hike.
  4. • No over-the-limit fees except for cardholders who sign up for programs allowing transactions that would put them over their credit limit.
  5. • Consumers under age 21 would only be able to get a credit card with a cosigner or proof they can pay their bills.
  6. • Card bills must explain how long it would take to pay off the balance and how much interest would be paid by cardholders who make only the minimum monthly payment.

All looks pretty good, huh?  Take a closer look, people.  After about 45 days the companies are allowed to return to screwing you into poverty.  It will protect underaged people from the predatory pracxtices of the past, which will mean less monetary kick backs to the colleges.

This whole exercise is in futility–the companies will not lose that much revenue from this laand the people will still have to keep a jar of Vasoline handy.

Credit Card Crisis: Part 2

The more the recession deepens, the more concessions the banks are getting from the government.

President Obama held a meeting with prominent credit card industry executives during which he gave them some friendly advice that they should moderate their most egregious practices so as to deflect additional damage to their public image among the mass of the population. The executives listened politely, but gave no indication that they intended to follow Obama’s advice.

The banks remain determined to continue to exploit this, one of their few remaining sources of profits. Fitch Ratings reports that US credit card delinquencies and charge-offs exceeded record levels last month as a result of the economic crisis. Nevertheless, yields to the card issuers increased, indicating that terms are being manipulated to squeeze borrowers even more tightly.

The “scissors effect” between payment defaults on the one hand and rising interest rates and fees on the other is becoming ever more pronounced. The Washington Post reports, “Already some credit card issuers are seeing close to double-digit charge-offs. For example, Capital One Financial said its charge-off rate spiked to 8.4 percent in the first quarter, up from 5.85 percent in 2008 and 3.72 percent in the first quarter of 2007. The company said it expects further increases in its US credit card charge-off rate through 2009 as the economy continues to weaken.” Charge offs are losses that the companies remove from their balance sheets because they have no hope of collecting what is due. The amounts of money involved are substantial. According to Time, analysts predict credit-card defaults could total more than $75 billion this year.

Credit cards are a form of “predatory lending” as was the whole range of risky mortgages and mortgage-related “instruments” that have already blown up into a major financial crisis. Credit card debt has been “bundled” and sold off by the banks in a manner similar to what was done with subprime mortgages. For years, both of these investment categories were virtually unregulated mechanisms for banks and similar institutions to realize large profits by selling and reselling the same assets at increasingly inflated prices and with less and less relation to real value.

The credit card industry is raising the claim that government regulations, especially via legislation rather than the more easily reversed moves by the Fed, would simply result in greater restrictions on the availability of credit to “good” borrowers, making them pay for the mistakes of “bad” borrowers. The hypocrisy of such statements is colossal given that the banks are already engaged in a major triage of credit holders after having practiced outright usury on a massive and uncontrolled scale.

Tied to this is the myth of “good” verses “bad” debtors—the former being those who pay their bills on time, maintain balances below the maximum and don’t behave in ways that the banks consider “risky.” Good debtors deserve the government’s help, but bad debtors don’t. This mythology is intended to justify the ruthless behavior of the banks by demonizing people who are being hit by the economic crisis. As a consequence, cosmetic changes can be heralded as restoring “fairness” for the good debtors, while the banks are pretty much left to do what they like. Of course, as the crisis deepens, more and more people will be driven into the bad debtor category.

But yet there is a paradox here.  We argue that the credit companies are screwing the consuming public, but are they?

Credit Card Crisis–Part 1

Banks have gotten more money than God has and still the credit that was promised to loosen up, is still ceased up with little hope of relaxation anytime soon.

A crisis in credit card debt is likely to be one of the next major shocks to the US banking system. Many large institutions, such as Bank of America and Citigroup, already effectively insolvent but for billions of dollars of bailout money from the federal government, will now see their financial positions deteriorate even further.

Personal debt, primarily in the form of home equity loans and credit cards, has been one of the principal mechanisms whereby working class families have attempted to counteract the decline in real income since the 1970s. Indeed, much of the consumer spending that has buoyed the US economy over the last few decades was facilitated by credit cards and other forms of personal debt. At the same time, the provision of “credit” has become one of the most substantial sources of income for banks in the face of an increasingly frenzied drive to raise profitability. However, this situation is now undergoing rapid change.

As banks have suffered major losses in mortgages and other “toxic assets,” they have continued to make money on credit card debt by increasing interest rates and fees and through a range of deceptive practices that are being imposed on card holders abruptly and with little or no justification. The growing anger over these practices, which affect working class and also more well off middle class people, has been receiving increasing attention in the media; so much so that bills have been introduced in both the House and Senate to address the issue.

One such bill is the Credit Cardholder’s Bill of Rights:

Ends Unfair, Arbitrary Interest Rate Increases
•    Prevents card companies from unfairly increasing interest rates on existing card balances – retroactive increases are permitted only if a cardholder is more than 30 days late, if a promotional rate expires, if the rate adjusts as part of a variable rate, or if the cardholder fails to comply with a workout agreement.
•    Requires card companies to give 45 days notice of all interest rate increases or significant contract changes (e.g. fees).

Lets Consumers Set Hard Credit Limits, Stops Excessive “Over-the-Limit” Fees
•    Requires companies to let consumers set their own fixed credit limit that cannot be exceeded.
•    Prevents companies from charging “over-the-limit” fees when a cardholder has set a limit, or when a preauthorized credit “hold” pushes a consumer over their limit.
•    Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction – some issuers now charge virtually unlimited fees for a single violation.

Ends Unfair Penalties for Cardholders Who Pay on Time
•    Ends unfair “double cycle” billing – card companies couldn’t charge interest on debt consumers have already paid on time.
•    If a cardholder pays on time and in full, the bill prevents card companies from piling additional fees on balances consisting solely of left-over interest.
•    Prohibits card companies from charging a fee when customers pay their bill.

Requires Fair Allocation of Consumer Payments
•    Many companies credit payments to a cardholder’s lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt.  The bill bans this practice, requiring payments made in excess of the minimum to be allocated proportionally or to the balance with the highest interest rate.

Protects Cardholders from Due Date Gimmicks
•    Requires card companies to mail billing statements 21 calendar days before the due date (up from the current 14 days), and to credit as “on time” payments made before 5 p.m. local time on the due date.
•    Extends due date to next business day for mailed payments when the due date falls on a day a card company does not accept or receive mail (i.e. Sundays and holidays).
Prevents Companies from Using Misleading Terms and Damaging Consumers’ Credit Ratings
•    Establishes standard definitions of terms like “fixed rate” and “prime rate” so companies can’t mislead or deceive consumers in marketing and advertising.
•    Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.
Protects Vulnerable Consumers from High-Fee Subprime Credit Cards
•    Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.

Bars Issuing Credit Cards to Vulnerable Minors
•    Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated.
Requires Better Data Collection from Credit Card Industry
•    Requires reports to Congress by the Federal Reserve on credit card industry practices to enhance congressional oversight.
Swift Implementation of 45-Day Notice Requirement
•    Requires card companies to send out 45-day notice of interest rate increases 90-days after the bill is signed into law; the remainder of the bill takes effect 12 months after enactment.

But will this be enough to protect the credit consumer from the predatory practices of the credit companies?

Others See A “Lost Decade” Approaching

Recently I wrote a post on the website, Eyes on Obama, (go to blogroll and click on site, it is an excellent site) where I said that there was the possibility that the US could have a Japanese style “lost decade” with the way we are handling our banks and the problems they are having.  And I am not alone, which makes me feel pretty good in an egotistical sort of way.

The U.S. economy is in for a “lasting slowdown” and could face a Japan-style period of relatively low growth coupled with high inflation, billionaire investor George Soros said on Monday.

Soros, speaking to Reuters Financial Television, also warned that rescuing U.S. banks could turn them into “zombies” that draw the lifeblood of the economy, prolonging the economic slowdown.

The healing of the banking system and housing markets is crucial to recovery. “The banking system, as a whole, is basically insolvent,” Soros said.

What’s more, the Treasury’s Public-Private Investment Fund is going to work but it won’t be enough to recapitalize the banks in a way that they are able to or willing to provide credit.

“What we have created now is a situation where the banks who will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy,” he said. “Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive. This is the zombie bank situation.”