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Apache is functioning normally

May 23, 2023 by Brett Tams

This is a republished post from 9/11/21, the 20th anniversary of the 9/11 attacks. In it, I give my remembrance of where I was on that day. I’d love to hear your own recollection in the comments.

Today marks the 20th anniversary of a sad day in our country’s history, a day when 2,740 Americans and 236 people of other nations lost their lives in a horrific terrorist attack.

For my generation, September 11th has often been compared to Pearl Harbor, or the Kennedy assassination in the fact that if you ask anyone where they were on that day, they’ll each have their own remembrance and story of what happened to them on 9/11.

While we’ve been fortunate that we haven’t been hit by another attack of that magnitude since that day, I think it’s a good idea to never allow ourselves to forget the horror that was unleashed so that we can remain ever vigilant against those who hate our way of life, and the freedom that we enjoy here in America.

September 11th, 2001

Twenty years ago today I was working at the same company that I work for now, but at the time our offices were in another city 10 miles away from where we are now.   I remember waking up to a beautiful September day, looking up at the unusually blue skies, and thinking what a beautiful early fall day it was.   I got ready for work just like any other day.

I was driving to the office, and was just pulling onto the street where I work around 7:50 am central when the first reports of the first plane hitting the tower came through.  I remember the station I was listening to breaking into the broadcast with some confused reports of a small plane hitting one of the World Trade towers, and that they weren’t certain at this point as to what exactly had happened.

I remember thinking at the time about a story I had recently read about a military plane that had crashed into the Empire state building in dense fog during World War II.   I thought to myself how it must have been something similar to that happening here.   There must have been bad weather or fog out in New York, and a small plane must have gotten off course or had problems with its instruments.

I parked my car and walked into my office building and went into the warehouse office space that I shared with 3-4 other people.  I sat at my desk and began to get down to work, checking my emails.  A few minutes later I remember one of my immediate superiors coming into the room to tell me that a plane had also hit the second tower of the Trade Center.   I remember thinking that this probably could no longer be categorized as an accident.  Both towers of the World Trade Center had been hit.  This was an attack of some sort!  There was no way two separate planes would hit the towers by accident.

My boss told me that my co-workers were all in the front conference room watching the coverage on the big screen TV if I wanted to join them.

Watching The Towers Fall, The Pentagon Attack, And Plane Crashes

I walked into the conference room where someone had turned on one of the local NBC affiliate.  They were showing footage from a news helicopter, showing smoke pouring out of the windows.    We all watched in horror as the buildings smoked, and we talked about how many people probably worked in those buildings. 20,000? 30,000? How many had probably already been killed in the fires?

At some point later, it seemed like 20 minutes or so, there was word that there were more hijacked planes, and that possibly one of them had flown into the Pentagon.  This was war.  Who would want to do this? Terrorists?  China/Russia?  Iran or Iraq?  It didn’t make sense.  Looking around the room everyone just had looks of shock on their face, trying to figure out what all of this meant.

We continued watching until around 10 am, all of a sudden the south tower started to collapse.  I heard an audible gasp in the room where we were watching the coverage.  It seemed to be only a matter of a few seconds and the building was completely gone.  I watched in horror and utter disbelief as the huge cloud rose into the air, and I realized that thousands of people had probably just lost their lives.  We then heard the news about another plane crashing somewhere in Pennsylvania.  How many planes had been hijacked, and how many more crashes would we see on this awful day?

We continued watching as the second tower continued to smoke, and we wondered if it would fall as well.  The news was reporting that the second tower seemed to be leaning a bit and probably wasn’t stable, and about 1/2 an hour later the north tower fell as well.  I remember multiple people gasping and one saying “Oh my God!”.  Others were choking up.  All those lives were snuffed out in an instant.

The dust and debris cloud rose from the north tower as well, and it was just shock and disbelief in the room at what had just happened.

We continued watching the coverage in a daze for a while, and slowly people started filing out of the room to try and get some work done and process what had just happened.

Processing The Disaster

Firefighter Outfit From World Trade Center

I remember working on some things that day, but I wasn’t really able to focus on anything.  In the end, I remember surfing the web a good deal of the day reading news reports and accounts of what had happened.

I left work at the normal time that day or a bit early and then headed home to watch the news reports to try and figure out what happened.  I sat in front of the TV watching the news until the wee hours of the morning.  I had a sick feeling in my stomach, I knew thousands of lives had been lost that day.

The next day I just wasn’t up to going to work, so I called in sick and then sat on the couch the entire day watching the coverage. I remember that they didn’t completely know what had happened yet, although some were speculating that it was a terrorist attack from radical Islamic groups.

I remember being outside that day and it was so weird that there were no planes flying overhead.  Normally we hear a lot of planes in the house where I lived because we were on a flight path heading into the Minneapolis/St. Paul International airport.  We wouldn’t hear those planes again for some time. It was an eery silence.

I also remember hearing at some point that my cousin who lives and works in New York was OK.  She had been in Manhattan on that day and had been able to walk across one of the bridges to get off the island and get to her home.

20 Years Later

All these years later thinking about that day still gives me that sick feeling in the pit of my stomach, thinking about all those people that lost their lives, and the fear and pain they must have felt before they died.

In 2010 I was in New York City for work and had the chance to visit the site of the World Trade Center disaster for the first time.  I saw the empty holes where the towers once stood and the construction of the new tower as it progressed.  Watching the new building go up did give a sense of hope.

Daddy In Heaven

While there I also visited a World Trade Center museum where they house artifacts, remembrances, and tributes to loved ones who died that day.

One wall had thousands of photos hanging on it, showing pictures of people lost on that day.  One art piece hanging on that wall caught my eye. It was a heart (see above).

When I saw what it said it brought tears to my eyes.  It was from a small boy named Kevin who had lost his father that day.  He made the heart for him, hoping he was having a “great time in heaven”. That truly brought home the human impact of the day for me.

Psalm 46:1-3 God is our refuge and strength, an ever-present help in trouble. Therefore we will not fear, though the earth give way and the mountains fall into the heart of the sea, though its waters roar and foam and the mountains quake with their surging.

While time does seem to heal wounds to a certain degree, we’ll always have a scar on our hearts from that day, one that we’ll remember until we die.

Where were you on September 11th?  Were you in or near New York City on that day?  Where were you when you heard, and what is your remembrance of that day? Tell us your story in the comments.

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Apache is functioning normally

May 23, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

It’s been drilled in our heads for the last 36 months: “lender’s standards are going higher, while our FICO scores are headed lower.”

This divergence in underwriting standards and scores is bad news for a whole lot of people, roughly 70,000,000, who now score below 650.  And those of you who are smart have made some effort to increase your scores so you can enjoy the most “shopper friendly” credit environment in 20 years.

If you’ve already found yourself in the land of the 780s, it’s time to take your foot off the accelerator because you’re good — really good.  Any further efforts have you officially beating a dead horse and attempts to take the magic number any higher could land you back in the land of the 720s.

Here’s what you need to hear (though you may not want to):

There is no incremental value to being higher than 780

Other than bragging rights, there’s really no reason to stress out about your scores if they’re already over 780.  Even in today’s credit environment a 780 puts you about 20 points to good and you’ve now found yourself squarely among the credit elite.  You will likely get whatever you’re applying for at the best rates and terms the lender or insurance company has to offer.

As of September 2010, a 780 FICO score gets you a credit card at 7.9% (issued by a credit union).  It also gets you auto financing from a captive lender (the manufacturer’s finance arm) for as low as 0% on selected models.  And even if captive financing isn’t an option for you, a 780 gets you rates as low as 5.2% for a new car.  And if you’re trying to buy a home, a 780 (along with satisfying other non-credit criteria) gets you a rate around 4%, which is crazy low.

The point is, your rates, premiums and terms will be no better at FICO 810, 830 or 850 than they are at 780.

You can do more harm than good

If I’ve said it once I’ve said it 1000 times…credit scores move like water.  They’re going to take the path of least resistance.  That means a score of 780 is easier to turn into a 680 than it is to turn it into an 800.

This is especially true for people with young (age) or thin (number of accounts) credit files.  The good people at Mint.com have told me that many of their MintLife readers are in their 20s.

Something that you won’t see from reading online stories about credit scoring models is the fact that young people generally have younger credit reports (duh).  That’s determined by calculating the average age of the accounts on your credit reports by looking at the “date opened” of your accounts.  And the younger the credit file the more volatile the score.  In English this means your scores are going to react to changes in your credit data more significantly than someone who has had credit for decades.  So this story is especially meaningful to Mint readers because of their age and their younger credit files.

If you apply for and open a new account, apply for a credit line increase, max out a credit card, miss a payment, have a collection show up on your credit report, or experience a variety of other credit incidents, your scores are likely to be damaged disproportionately to someone who has a well-aged credit report.  This is because you don’t have as much positive compensatory information to offset the bad stuff.

Yes, your scores can actually be too high

Some lenders don’t want an abundance of customers whose scores are too high.  Stratospheric scores, those well into the 800s, generally belong to people who don’t use credit.  And those who don’t use credit don’t generate income.

For the first time ever there’s now a sweet spot, credit score wise.  You really want to fall between 760 and 810, give or take a few points in either direction.  The 760 means you’re a very good credit risk.  It also means you’re probably using credit, have credit card balances, and have installment loans.  This means you’re generating revenue for your lenders and credit card issuers.

If you score too high it means you are probably not using credit cards.  You’re a very good credit risk but that’s not good enough in today’s credit environment.  The lender wants and needs to make some dough and if your score indicates that you’re a great credit risk but have poor revenue potential then they might just decline you.  Yes, you can get declined for having too high of a score.  It’s called a “high side override”, meaning you scored higher than the lender’s low-end criteria but they still declined you.

So for those of you who are at 760-780, your journey has ended.  Sit back and enjoy the view from atop the FICO score mountain!!

For The Haters

Save it.  This isn’t score obsession.  As long as lenders, insurance companies, utility companies and landlords use credit scoring to determine rates, premiums, deposit requirements and terms (and employers use credit reports as part of employment screening) it’s something we have to take seriously, and you should regularly check your free credit report to keep tabs on your financial health.

You can’t “choose” to not be under the influence of your credit reports and credit scores.  That’s not possible.  Having good credit reports and scores, and paying less for things (your mortgage, your car loan and your insurance) is a “Top 5” wealth building tool.  Trying to earn a great FICO score is no different than checking the performance and allocation of your investments. The minute credit reports and credit scores cease to have importance, I promise I’ll start writing a weekly knitting column.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

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Apache is functioning normally

May 23, 2023 by Brett Tams

Home mortgage rates are lower than they’ve ever been right now. 

A lot of people are thinking about refinancing their home in hopes of dropping their rate and payment significantly.

I’m one of those people.

If you’re in the middle of the process of trying to find a good rate on a mortgage, one thing you’re probably doing is staying on top of your credit score. If you want to get the best rate possible it’s important to keep tabs on your credit score and make sure that it’s as high as possible because if it’s not, it can cost you thousands of dollars in interest via a higher rate. 

Not sure what a good credit score is? 

To get the best possible rate you’ll most likely need somewhere in the range of a 750-850 credit score.

Use The Credit Sesame App To Check Your Credit Score

Credit Sesame

There are several ways to check your credit score for free right now, and one of my favorites is Credit Sesame. 

I wrote a review of Credit Sesame a while back where I gave several reasons why I like using their site, including:

  • Free credit score! You can get your Experian credit score for free once a month. Better than paying to get your FICO score!
  • You can check your score regularly: Since they update your score every month, you can check it every month and see how your credit trends using their pretty graphs.
  • Better mortgage options:  Credit Sesame will look at your loans and search for better deals.  You can apply for a new mortgage or a refinance right through their site.

Now with the new Android credit score app from Credit Sesame, it’s easier than ever to stay on top of your credit score.

Credit Sesame Mobile Credit Score App

The new Android Credit Sesame credit score app is a great way to stay on top of your credit while on the go (The iOS version has been released for a while). 

If you’re in the middle of trying to refinance like we are, it’s an easy 2-3 click process to check your credit score before you send in a mortgage application.   Here’s a quick look at the app itself on my Android phone:

So what are some things you can do within the app? Let’s take a look.

Check Your Credit Score On The Go

Credit Sesame Android app

The first and main thing you can do with the app is check your credit score on the go.  

You just open the app, login with your 4 digit pin or fingerprint login, and then click on the “credit score” button.

Within the app you’ll see what your credit score is, the last time your credit score was updated (it updates once per month), and then it will show you a trending graph showing you how your credit score has trended the last few months.

If you’ve been making changes to try and improve your score, this would be a good place to go and see if the changes are having an effect.

The credit score section will also show you how much of your credit you’re utilizing, and show you the trend on that as well so you know how much you’ve used over time.

Check Your Credit And Total Debt

Credit Sesame App -  Credit And Debt

The second page in the app is the “Analysis” section where you can view your “My Credit” tab, or your “My Debt” tab. 

In the “My Credit” section you’ll see your credit history, and a credit score breakdown.

The “My Debt” tab will show all your loans and debt that you currently have. It will show your credit cards, your home loans and any other debt that you’ve incurred. 

In addition to the total debt number shown it will also give you an indication if your debt is going up or down.

Within the total debt section there is also a “total monthly payment” screen where it will show you your total monthly minimum payments on your debt. For me that mainly just includes our home mortgage. For others that have credit card debt, student loans and more it will show one large number for all of those, and then break it down by the individual debts. Nice way to keep track of your debts and stay on top of them.

Home Value And Equity

The third tab in the app is for the “home value” section.   When you click into that screen it will show you the value of your home, based on an automated valuation pulled from DataQuick.com. If you’ve entered your own manual home value within the Credit Sesame website (or from within the app) that will show here as well.  I entered my own value as I felt the estimate was off by a good $30,000.  You can then also see the trend of your home’s value over time. Ours unfortunately has gone down quite a bit.

In the second section of the home value tab you’ll find the “home equity” area.  This will show you how much equity you’ve built up in your home since you bought it. Our number is pretty low since values in our area have dropped significantly since we bought.

Offers & Savings Advice

The last section in the app that we’ll mention is the “savings advice” tab.  While I think you’re better suited to check out this information on the full website, it’s pretty simple to see here in the app as well.

Credit Sesame will look at your current financial situation and find ways for you to optimize and save money. If you have a home loan it will give you refinance offers that you can take advantage of, and you can even apply for the loans from the app.  Simple.

Conclusion

I love Credit Sesame’s website and service because they make it free and accessible for most people to get a peak at their TransUnion credit score.  That makes the process of searching out and finding a home mortgage or refinance that much less stressful.

Now that they’ve also got a mobile app for Android in addition to their iOS apps, it’s that much easier.

I’d highly recommend everyone to check it out, especially since it’s free. Sign up through the link below!

Get Your Free Credit Sesame Account And Mobile Credit Score App!

What are your thoughts on the app? Have you tried it, and did you like it? What things could they add to it?

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Source: biblemoneymatters.com

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Apache is functioning normally

May 23, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

If you’ve applied for credit recently – maybe for a store card over the holidays – you may have come across the term “inquiry.” Even if you’re not familiar with credit inquiries, it’s critical to understand what they are, how different ones work, and what they mean. Fortunately, we have answers to your credit-inquiry questions here.

What’s a credit inquiry?

A credit inquiry is a credit check. It’s a request to view your credit by lenders — retailers, financial institutions and others who are legally allowed to see your credit report.

Types of inquiries: hard and soft.

A hard inquiry happens when a potential lender looks at your credit report and uses that information to decide whether to offer you credit and what the terms of the offer might be. Think of hard inquiries as the types of credit checks that happen when you apply for credit, whether it be a credit card, mortgage, car loan or other type of financing. Hard inquiries must be made with your permission and in connection with specific transactions.

A soft inquiry, on the other hand, is more of a routine credit check that doesn’t need to be done with your permission. Importantly, soft inquiries won’t show up on the credit reports potential lenders request to evaluate your creditworthiness. Soft inquiries can happen for a variety of reasons. One example is when potential lenders check your credit report to determine whether to make you eligible for any pre-approved offers. Another happens when one of your existing creditors checks your credit to make sure you’re still creditworthy. A soft inquiry is also triggered every time you check your credit.

One other thing to note: if you would like to see credit reports listing all your inquiries, soft and hard, check your free annual credit reports at AnnualCreditReport.com.

Why inquiries matter.

The first thing you should know is the kinds of credit reports potential lenders see will only list hard inquiries, not soft ones. In that sense, hard inquiries are the ones that “count.” That’s because credit scoring models usually factor in the number of hard inquiries you have when they’re calculating your credit score. Generally, credit scoring models tend to associate a high number of hard inquiries, especially if they’re made within a relatively short period of time, with a high credit risk. It’s important to watch the number of hard inquiries you make because too many of them may affect your ability to get credit at the lowest-available rates.

Do inquiries remain on your credit report forever?

In short, no. They are automatically removed 2 years from the date they first show up on your credit report. As with other aspects of credit, the more time that passes, the less effect hard inquiries may have.

Loan shopping and inquiries.

Let’s say you’re shopping for a mortgage or car loan and want to find one with a good rate and other terms that work best for you. After all, especially with big purchases, you want to make sure you get the best financing you can. But every time you apply for credit, a hard inquiry happens. Does that mean you shouldn’t shop around for a loan?

Fortunately, no. Credit scoring models tend to account for this kind of activity. Generally, credit scoring will count several inquiries made over a relatively short period of time, like 45 days, as one single inquiry. That way, you won’t necessarily get penalized for causing several hard inquiries while shopping for one loan.

Bottom line.

Inquiries are a key, and often misunderstood, part of credit. But they aren’t everything. While you want to pay attention to how frequently you apply for credit, credit health encompasses much more than just hard inquiries. Keep an eye on your hard inquiries, but don’t lose sleep over them, especially if you’re paying your bills on time, not using too much of your available credit, and otherwise practicing healthy credit habits. In other words, keeping your hard inquiries in check should be just part of a healthy-credit new year’s resolution!

About TransUnion
At TransUnion, we believe in Information for Good. Whether it’s creating web-based financial products or sharing expert tips, insights and news on our blog, our mission remains the same: putting powerful tools and resources in your hands to help you know your credit, protect your identity and more effectively manage your financial picture.

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Apache is functioning normally

May 23, 2023 by Brett Tams

By Peter Anderson 1 Comment – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited September 5, 2013.

About 2 weeks ago my wife and I closed on the sale of the house we had lived in for the past 7 years.  We loved our old house, but we knew it was time to do a slight upgrade since the rates were starting to go up, and we had an opportunity for my in-laws to build us a custom home on a beautiful tree lined lot, in a neighborhood we loved.  We would also now have a yard, which was something we didn’t really  have at our old house.  So this summer we built that new house and then closed on it the same day as we sold our old house.

When we started the process of trying to find a new home loan with which to buy the new house, we realized that we would want to make sure that we stayed on top of our credit situation, that we only did things to maximize our credit score, and that we got the best rate possible on the house. For the most part we were able to do that, and we got the lowest possible rate at the time because our excellent credit scores put us in the highest tier for the best rates.

Now that we’ve closed on the house, and we don’t anticipate using any further credit anytime in the near future, should we even care about or keep track of our credit scores?

Maintaining And Improving Our Credit In Preparation For A Home Loan

Checking our credit scores on a regular basis was something we did through the spring and summer this year as we prepared to buy a new house. Some of the places that we checked our credit scores and got our credit reports include:
FreeFicoScore.com

FreeFicoScore.com

  • Credit Karma: They will give you your TransUnion credit score for free, along with a suite of other credit tools.
  • Credit Sesame: They will give you an Experian credit score for free, along with a bunch of other financial, credit and loan tools.
  • Quizzle: They’ll give you an Experian credit score, along with your full credit report for free!
  • Equifax: Get your Equifax score for free by signing up for a free 30 day trial. Don’t forget you’ll need to cancel.
  • MyFICO: Get your actual FICO credit score and credit report with a free trial. Just don’t forget to cancel!  I almost did!
  • AnnualCreditReport.com: Get your credit report annually for free from each of the big three credit reporting agencies.  If you want to, you can pay a little bit and get your FICO score as well. (Or just do a free trial at MyFICO to get it for free)

We stayed on top of our credit by doing the things they say to do in order to improve your credit scores. We did things like making sure our payments got in on time, we didn’t sign up for a bunch of new cards, we maintained existing aged accounts, we didn’t over-utilize our credit and we used and paid off several different types of credit.

Home Loan Closed, Best Rate Received

Our hard work over the years means we both had great credit scores, and we knew we would most likely be approved for a loan, in the best rate tier.

We ended up finding and working with a mortgage company that ended up giving us the lowest rate possible at the time, 3.875%. Our credit scores showed we were responsible with credit and were a good risk for them to take – without adding any points to our rate.

Mission accomplished.

Now That We’ve Closed On Our House, Should We Even Care About Our Credit?

should you care about your credit score

should you care about your credit scoreWe’ve now closed on that loan, and we got the best rate available. Since we won’t need to take out any new loans or credit in the foreseeable future, should we even care about or focus on our credit anymore?  Does it even make a difference if we aren’t going to need a good credit score for anything?

I don’t think we’ll be as hyper vigilant about our credit now, but that isn’t to say that we won’t continue our responsible use of credit.

Things A Good Credit Score Can Help With

Here are some reasons you may want to stay on top of your credit:

  • Good credit can help get better insurance rates: You can sometimes get lower homeowners and auto insurance rates if you have good credit.
  • Good credit help you get a job:  Sometimes employers will check an applicant’s credit to get an indication that they’re reliable and responsible.
  • Good credit help you when signing up for new accounts: Some utilities may waive hefty deposits or lower rates if you have good credit, or cell phone companies may offer a better plan.
  • Good credit will help you if you need to move:  If you need to move to a new house, or end up renting, having good credit will help you to get a loan, or to be approved as a renter.

What are your thoughts?  Do you care about your credit score, and do you take steps to ensure that your credit stays good, or that it improves?

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Apache is functioning normally

May 22, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

photo: quaziephoto

Everyone knows the story.  Unemployment is up. FICO scores are down.  Home values are down.  And because home values are down, home equity has disappeared for millions of homeowners.  And since home equity was the financial safety net millions of consumers used to pay off their credit card debt, well, you know the rest.  Let’s just agree that, right now, millions of consumers have no way to pay off all of their credit card debt.

There are a variety of ways to get out of credit card debt, right?  You can budget your way out of debt.  You can file bankruptcy.  You can enroll in a debt management plan (DMP) through one of the member organizations of the National Foundation for Credit Counseling, commonly referred to as Consumer Credit Counseling Service (CCCS).  You can work with your credit card issuer directly and seek help through one of their hardship programs.  You can attempt to settle the debt on your own.  Or you can enlist the services of a debt settlement company.

Opinions vary on these options.  They all have their pros and cons.  The purpose of my article isn’t to explore each option.  I’ll do that soon.

The purpose of this article is to explore debt settlement as an option.

Settlement is quite an easy concept to understand.  You agree to pay your credit card issuer an amount of money less than what you really own them and they consider the debt to be paid in full.  So, if you owe John Ulzheimer’s Bank $10,000 and I agree to accept $5,000 as “full payment” then you have settled your debt with John Ulzheimer’s Bank.  The bank reports the settlement to the credit reporting agencies and sends you a 1099 for the forgiven amount.  Settlement, incidentally, is considered one of FICO’s Seven Deadly Sins.

Settlement can be accomplished by working directly with your bank.  You do not have to hire someone to do this for you.  That’s a myth. In fact, many credit card issuers won’t even work with debt settlement companies so you have no choice but to deal with them directly.  This is okay because all creditors have their version of a “Remediation” department, which is where you’ll likely end up if you call them asking for a settlement deal.

Now, let’s move on to the debt settlement companies.  You’ve all seen their commercials.  Distraught couples staring at their credit card statements magically turning into happy families playing with puppies in their front yard, all thanks to ye ole friendly debt settlement company.  Heck, there’s even a version that has excerpts from one of President Obama’s speeches and a picture of a government building in the background.  It’s clearly intended to come across as a governmental program.  Of course, it’s not a government program.

Here’s how they work.  First they find out how much debt you have.  This is to determine if you’re even worth doing business with.  If you have too little debt then they won’t make enough money working with you.  That’s why their ads contain statements like “If you have more than $10,000 in credit card debt call now…” If you have enough debt, in their eyes, then they’ll sign you up.

When you sign up they’ll tell you to stop communicating with your credit card issuers.  I’m not kidding, they really tell you this.  That means no more payments and no more return calls.  The hypothesis here is to get your credit card issuer so desperate for payment that they’ll accept a settlement offer.

At the same time you’ll be asked to make monthly payments to the settlement company.  Why?  Because you’re creating a war chest that serves two purposes.  First, this is where their fees will come from.  Second, this is where the settlement offer will come from.

After several months, or longer, there will be enough money for them to make some sort of offer to the credit card issuer.  The issuer may accept the offer, or they may decline the offer.  Either way, your fees to the settlement company have been paid.

So what happens during the period of time you’re paying the debt settlement company (and ignoring your creditors)?  Well, since that’s not a part of the commercials I’ll have to be the one who breaks the bad news.

1. Your credit will be trashed.

The credit card issuer will report the ascending level of late payments to the credit bureaus, which remain on your credit file for seven years.  Now the debt settlement guys will say “well, your credit is probably already trashed so no big deal.”  Wrong, new (and numerous) late payments help to lock in lower scores for additional time.  And it gets worse…

2. The card issuer will likely enlist the services of a 3rd party collection agency to collect the debt.

This means a brand new collection will be reported to your credit files. Again, this remains for seven years.  And, these guys can pull your credit reports to find you and determine your ability to pay them.  That means you’ll have to explain collection inquiries.  You’re supposed to ignore these guys as well.  And it gets worse…

3. That knock at your door…yeah, that guy is called a process server. 

Your credit card company or a collection attorney has sued you for nonpayment of the debt.  You can’t ignore him like you’ve been ignoring your credit card issuer.  If you do choose to ignore the summons you’ll lose by default for not showing up to court.  This is called a default judgment.  And yes, the judgment can show up on your credit report for seven years.  And it gets worse…

4. Become familiar with the term “Writ of Sequestration.”

In English this is either legal garnishment of your wages or seizure of your assets.  If your wages are garnished your employer will now be made aware of your defaulted debt problems because they’re the ones who will hold back a portion of your salary.

You’ve totally lost control of the situation because you chose to ignore your creditors, at the request of a company trying to profit off of your debt situation.  Smart?  Or not?

And, just to tie a nice bow on the top of this one, the Attorneys General in the states of Florida and Alabama have shut down major debt settlement networks because, and I quote, “they’re a scam because consumers get no value for their fees.”  I’ll write soon about the DSCPA (Debt Settlement Consumer Protection Act), which will put most of these guys out of business.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and the author of the “credit history” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

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Apache is functioning normally

May 22, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

You’ve likely heard about the benefits of refinancing a home loan. With today’s low interest rates, those who have enough equity in their home and the credit required for a refinance could lower their monthly payments considerably.

But did you know that, similarly, you could lower your car payments by refinancing your auto loan?

A common misconception about auto refinancing is that it is similar to home refinancing in complexity and requirements, says Phil Reed, the senior consumer advice editor at auto information website Edmunds.com. The process is actually much simpler, in terms of both qualification criteria (there is more emphasis on the applicant’s credit than on the balance and value of the car, according to Reed) and the time and costs involved.

Here’s what you need to know about auto refinancing and how to determine whether it could help you save.

Are you a good candidate?

Thanks to today’s low interest rates, anyone who purchased and financed a car a few years ago could potentially find an auto loan with a lower rate. A few general guidelines:

* Is your current interest rate significantly higher than what you could get today?

In the fourth quarter of 2008, a 48-month new auto loan issued by a commercial lender averaged 7.06%. Today, the average rate on a 36-month used-car loan is 5.47%, according to Bankrate. And the average rate on a 48-month new car loan is 4.89%.

“Most people aren’t aware of the interest rates’ impact to their monthly payment,” says Reed. Edmunds and other online resources offer basic calculators that allow you to quickly determine just how significant a lower interest rate can be on a monthly loan payment.

* Has your credit score improved?

You could save even more if your financial situation has changed for the better – and your credit score is higher — since you took out that original car loan.

As with any loan, you do need good credit to qualify for auto refinancing. However, the criteria is far less stringent than that associated with home loans, says Reed. According to FICO (the company that calculates the widely-used FICO scores), you need a FICO score of 720 or more to qualify for the best auto loan rates. On a $25,000 36-month loan at 4.784% (the national average as of March 30, 2011), your monthly payment would be $747. On that same loan, you’d have a $828 monthly payment if your FICO score was between 620 and 659, which would put you at an average 11.762% interest rate, according to FICO.

* Are you in a lengthy loan (five- to eight-year term)?

Jack Nerad, executive editorial director and market analyst for Kelley Blue Book advises anyone in a lengthy auto loan (with an original five- to eight-year term), to research auto refinancing.

Many people only pay attention to their monthly payment when purchasing a car and have no idea how much of that payment is interest. The longer the term of the loan, the more interest you’ll fork over to the bank until it’s paid off, even if your monthly payment seems low. Refinancing into a loan with a shorter term will lower the total amount of interest you’ll pay, even if it doesn’t considerably lower your monthly payment.

Avoid Refinancing Your Auto Loan If:

* Your existing loan has a prepayment penalty or the new loan is fraught with fees that would negate the potential interest savings.

Anyone seeking an auto refinance should completely understand the details behind the new and existing loan terms, says Reed.

* Refinancing will extend the life of your loan.

Unless you’re seriously in danger of missing payments or defaulting on your loan altogether, avoid refinancing into a loan that would extend your current one. Your monthly payment may go down, but you’ll end up forking more money to the bank or dealer’s financing arm over the life of the new loan.

How to Get Started

Unlike refinancing a mortgage, auto refinancing is quite painless, according to Reed. It can often be handled online, and might take just one or two hours to complete. The first step is to understand your current loan terms (check your monthly statements for the interest rate, remaining balance, and payoff amount) — which you already should have done to determine if you’d benefit from refinancing to begin with.

Reed also advises informing your current lender that you are actively seeking a better deal. They may be willing to refinance your existing loan and save you from switching to a new a lender. As with any rate-based loan, negotiation is always an option, but Reed acknowledges that particularly when dealing with large banks, auto refinancing interest rates may be fairly fixed. Further, the person you are dealing with may not be authorized to make sweeping changes to your loan agreement.

Where to Look?

Ready to get started? Shop around on sites like Bankrate.com and eLoan.com, where you can find current rate information and lender referrals, if necessary. Reed recommends Capital One Auto Finance as another potentially good option. You can use Mint’s loan calculator with amortization table to determine how long a payoff period to expect with a refinanced loan.

Don’t ignore dealer finance programs, either. They are currently subsidized by auto manufacturers, making them a potentially competitive resource, according to Nerad.

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Apache is functioning normally

May 22, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

photo: TheTruthAbout…

What’s the difference between a credit report and a credit file?  Is there a difference between a credit score and a FICO score?  And what’s a consumer-reporting agency?  Is that the same as a credit-reporting agency?

Many media outlets and people who pretend to be credit experts have made a living off of improperly using credit terms interchangeably.  By far the most prevalent example is the confusion between the terms “credit report” and “credit score”, especially when it comes to their use in employment screening.  Here’s a hint: credit reports are not credit scores and credit scores are not credit reports.

Here are seven pairs of seemingly interchangeable credit terms that are most often misinterpreted by consumers and even “experts.”

Credit Report vs Credit Score

A credit report is a collection of information memorializing most of your financial liabilities.  This includes your auto loans, mortgages, credit cards, student loans, collections, judgments, liens and bankruptcies.  A credit score, which is not a permanent part of your credit report, is the interpretation of that data on your credit report.  Think of it this way: one is the test and the other is your grade on the test.  They’re two very different things.

Credit Report vs Credit File

A credit report is a fully compiled list of information that matches your identity and is maintained by a credit reporting agency.  Think of it as a final product, which is scored and delivered to lenders and anyone else who has a right to see and use it.  A credit file is the “universe” of information floating around the credit bureau’s databases waiting to be compiled into credit reports.

Credit Reporting Agency vs Consumer Reporting Agency

“Consumer reporting agency” is a legal term.  It means any organization that regularly compiles information about a consumer for the purposes of selling it to a 3rd party.  A credit reporting agency is an example of a consumer reporting agency, but isn’t the only type of consumer reporting agency.  I wrote about LexisNexis, another consumer reporting agency, here.

Credit Score vs FICO Score

A credit score is a category of products.  It’s like saying cars, beer, shoes, or soft drinks.  FICO is a brand of credit score.  It’s like saying Ford, Budweiser, Nike, or Fresca.  If it doesn’t say “FICO,” then you’re not getting a FICO score.  Simple enough.

Home Equity Loan vs Home Equity Line

Despite the similar names these are actually two very different credit product types.  A home equity loan is an installment loan, meaning you have a fixed payment for a fixed number of months.  A home equity line is a revolving line of credit, just like a credit card.  Your payment is dependent on the interest rate and your balance for that month (like a credit card).  The only similarity between the two is the fact that the loan/line is secured by equity in your home, which means if you default on your payment obligation you could lose your house.

Credit Card vs Charge Card

Again, very similar names but very different credit products.  A credit card is a revolving account, which means you have a variable payment depending on your outstanding balance for the month.  It’s a perpetual account as long as you and the credit card issuer agree to keep it open.  This means it could be open indefinitely.  A charge card is a “pay in full” credit product, which means you can’t “roll” a balance from one month to the next.  If your balance is $300 you have to pay $300 to exhaust the full balance.  The American Express Green Card is a good example of a charge card.

Chapter 7 vs Chapter 13

These are both types of consumer bankruptcies under the U.S Code.  A Chapter 7 bankruptcy is referred to as a “straight bankruptcy” or “liquidation.”  Under Chapter 7 any statutorily dischargeable debt is eliminated.  A Chapter 13 is referred to as an “adjustment of debt” or a “wage earner plan.”  Under Chapter 13 the consumer, who has an income, pays into a trustee who then distributes the money to the consumer’s creditors.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit.

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Apache is functioning normally

May 22, 2023 by Brett Tams

Save more, spend smarter, and make your money go further

There are numerous personal finance articles dealing with the perils and pitfalls of the personal loan.  When it comes to lending money to friends or family, the most recurrent piece of advice given is “Don’t.”  That’s not to say that many of these articles don’t offer potential lenders a lot of good advice on how to best navigate what can be a tricky and touchy situation.  Which is why I’m going to focus on the other side of the coin:  The protocol of the personal loan from the borrower’s point of view.

Like every other article on the subject, when it comes to borrowing from friends and family the best advice I can offer is “Don’t.”  The process is fraught with many bumps in the road that can serve to throw the best of relationships irreparably off track.  While philosophically it might be wise to adhere to the advice Polonius gives Laertes in Shakespeare’s Hamlet–

“Neither a borrower, nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry,”

–in reality that may not be an option.  So, you’ve got a big expense and no ready cash to cover it—what do you do?

Exhaust all other options first: spend less, make more

Before ever requesting that anyone sacrifice their hard-earned savings to keep you afloat, you should make sure you’ve done everything you can in making sacrifices of your own.  Be ruthless in trimming unnecessary expenses–and make sure you have a realistic view of what’s “necessary.”  Cable bills, anything other than basic cell phone services, eating out and other entertainment costs should be slashed from your budget.  It’s not cool to expect someone else to fund a lifestyle that is beyond your own means.

Speaking of “means,” effort should be made to increase your income.  Whether it’s negotiating a raise at work or finding a part-time gig to score some extra cash, make sure you’ve explored all options for balancing your expenses with sufficient income.

If cutting costs and increasing earnings doesn’t resolve your deficit, consider scaling back on your possessions.  Yes, it sounds harsh—but consider it from your potential lender’s point of view:  Nobody is going to feel comfortable handing over a nice chunk of change to someone who drives a Porsche and owns a 60″ plasma HDTV or a closet full of Jimmy Choos and Manolos.

At this point if you still need money, here are some steps to take to make sure that “a loan between friends” doesn’t end up being a case of money coming between friends:

Be a good risk.

Let’s face it:  If you were truly loan-worthy, you’d be able to go through the process and get the funds you need from a bank instead of your buddy, Bob.  That being said, you should still ensure that you’re responsible enough to warrant a personal loan.  Going through the process of cutting expenses and getting a second job shows that you are taking charge and holding yourself accountable.  This makes it easier for a lender to take a chance on giving you money.

Make it legal.

Create a formal agreement between you and your lender that specifies the payoff date and a payment plan.  There are various online options you could utilize: LoanBack.com and LendingKarma have customizable loan agreement forms and loan trackers available.  Or you could purchase a template from LawDepot.com.  But given that money is an issue, it’s probably best to just customize a free loan agreement template with the details of the terms such as interest rates, payment schedule, collateral, etc.  Putting it down on paper will ease the mind of the lender as well as making the obligation less tenuous and more tangible for you.

Have a plan.

Make sure you have a way to repay the loan in a timely fashion.  No lender is going to be comfortable with an open-ended “whenever” agreement—even your best buddy, Bob.  Use a loan payment calculator to break your loan amount into manageable monthly payments and come up with a way to free up resources to make those payments in a timely and consistent manner.  Perhaps make weekly or monthly transfers of the money you save by giving up your daily Starbucks latte into your lender’s PayPal account.

Walk the walk.

Once the immediate financial pressure is alleviated, don’t slack off and slide back into the habits that got you into trouble in the first place.  You especially want to make sure you’re not flaunting any frivolous purchases in front of your lender.  After all, if you can’t afford to pay your rent, you shouldn’t be shelling out money for the latest video game release or a new designer handbag.  This is one positive aspect of an impersonal bank loan:  A loan officer won’t be giving you the side eye at Thanksgiving dinner like Uncle Fred over that $500 you owe him.

Foreclose on your pride.

Even if your lender is collecting interest on your loan, the fact that you’ve accepted money from them opens you up to their scrutiny and often-unsolicited advice.   Whether it’s a lecture on how people were more fiscally responsible back in the day by Uncle Fred or a copy of a book by Suze Orman from Bob, it’s part and parcel of the price you pay for a personal loan.

Accept rejection graciously.

Even if your buddy Bob just scored a big promotion, that doesn’t mean he has to use it to stave off your foreclosure.  Recognize that many people are uncomfortable with money issues and the strain they can put on relationships. It’s a personal loan, but it’s not always personal. Bob may have had a bad experience in the past and vowed never again to lend to a friend, no matter how close or trustworthy.

Pay it back.

The most important aspect of receiving a personal loan is to pay it back.  Just about everyone has a story about lending money to a friend that ends up with them losing the money AND the friend.  Don’t be included in that statistic.  Be the happy anomaly that restores faith and trust in a positive outcome when it comes to borrowers and lenders.

Don’t “Lather, rinse, repeat.”

Once you’ve paid off your debt, continue to maintain your frugal tactics to build up an emergency fund so that you won’t find yourself in similar circumstances in the future.  Although repaying a loan proves that you’re a good risk for future financial needs, the real lesson that should be derived from the situation is gain more control over your finances so that you never have to put yourself or your friends and family in the awkward position of asking for money again.

Do you have any personal loan horror stories?  What lessons did you learn from the process?

The Protocol of the Personal Loan was written by Stella Louise, Editor of the Savings.com Blog & Save, a blog for savvy consumers looking to live well for less.

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Apache is functioning normally

May 22, 2023 by Brett Tams
  1. Calculators
  2. Credit Card Calculators
  3. Debt Repayment Calculator

Editorial note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. Read our Editorial Guidelines to learn more about our team.

How to use Credit Karma’s debt repayment calculator

If you’re trying to get out of debt, Credit Karma’s debt repayment calculator can help you figure out how long it could take.

Our calculator can help you estimate when you’ll pay off your credit card debt or other debt — such as auto loans, student loans or personal loans — and how much you’ll need to pay each month, based on how much you owe and your interest rate. You’ll also be able to see how much principal versus interest you’ll pay over the lifetime of the debt.

Of course, it’s important to keep in mind that these are only estimates based on the info you provide. This debt payoff calculator can help give you a sense of timing and monthly payments as you put together a repayment plan, but it doesn’t consider other factors — such as your card’s annual fee (if it has one), late-payment fees or any other fees you might incur. It also assumes you won’t use the card to make any new purchases.

Here are some details on the information you’ll need to use this debt calculator.



Balance owed

Enter the amount of debt you’re trying to pay off. For example, if you’re paying off credit card debt, you can usually find the balance by logging into your credit card account or looking at your most recent billing statement.

If you’re carrying a balance on multiple credit cards, and you’re planning to consolidate those balances on to one card, you could list the total combined balances here. But if you plan to pay the cards off separately, run a calculation for each card separately because they may have different interest rates.

Estimated interest rate

The interest rate is the amount you’ll pay to borrow money, expressed as a percentage. The interest rate on a loan is different from the annual percentage rate, or APR, which includes the amount you pay to borrow as well as any fees. On a credit card, the APR is the interest rate expressed as a yearly rate. Entering an estimated APR in the calculator instead of an interest rate will help provide a more accurate estimate of your monthly payment.

Pay attention to whether your credit card charges different interest rates for purchases, balance transfers and cash advances. If that’s the case, you may be able to refer to your most recent credit card statement to see which rate most of your balance is being charged. If you have two large balances on your card that have different interest rates, you might want to run those balances through the calculator separately.

It’s also important to keep in mind that if you make a late credit card payment, you might get hit with a penalty APR, which could unexpectedly increase your interest charges.

You can usually find your credit card APR by logging into your account and searching for the terms and conditions, cardmember agreement or a recent billing statement. If you have a loan, the APR should be stated in your loan documents.

Expected monthly payment

Whether you plan to make your credit card’s minimum payment or think you can afford to pay a little more each month, enter that amount here to find out how long it could take you to get out of debt. If you’re more concerned with repaying your debt within a certain timeframe of number of payments, keep this field blank.

Desired months to pay off

Enter the length of time (in months) that you’d like to repay your debt. For example, if you want to pay off your credit card debt in the next year, enter “12 months” in this field to estimate how much you need to pay each month to hit that goal.

How do you calculate interest on a credit card?

To calculate your interest charges, you need to figure out what your APR is, how much your average daily balance is, and how many days are in your billing cycle. You should be able to find most of this information by logging into your account.

  1. Divide your APR by 365 (the number of days in a year) to get your daily periodic rate.
  2. Multiply that number by your average daily balance. Your average daily balance is your total balance divided by the number of days in your billing cycle.
  3. Multiply your daily periodic rate by the number of days in your billing cycle to get your total interest charges for the billing cycle.

If you’re carrying a credit card balance, you’ll likely be charged interest. Credit card companies may differ in the time frame they give you to pay for new purchases before they charge interest, though they typically give you about a month to do so.

How do you calculate a credit card payment?

Your credit card issuer will require you to make the minimum payment each month. Whileeach issuer may have a slightly different policy, the common practice is to charge the greater of a certain amount (say $25 to $35), or …

  • 1% of your current balance, plus
  • Any new interest charges, plus
  • Any late fees or past due amounts if you previously missed a payment

You may also choose to pay your statement balance or current balance. The statement balance is your entire balance as measured at the end of your last billing period. After you receive your credit card bill, you usually have a few weeks to pay before it’s due. During this time, any additional purchases you make will be added to your current outstanding balance, which is the total amount you owe right now.

You can avoid interest charges by paying off either the statement balance or current balance by the due date.

How can I pay off large amounts of debt?

Consider these strategies and financial products to help you get out of credit card debt or other types of debt.

Snowball method

With the debt snowball method, you start by knocking out your lowest debt balance while making the minimum monthly payment on everything else. After you pay off that first debt, you put the money you were paying on it toward your next smallest debt. If you repeat this process, you’ll start gaining momentum like a snowball.

Paying off your smaller debts more quickly provides a little extra motivation. But the downside is that you might pay more in interest charges because you’re prioritizing the size of the balance over the APR.

Avalanche method

The debt avalanche method, on the other hand, focuses on paying off your debt with the highest interest rate first. This way, you’ll reduce the total amount of interest you pay on your debt over the long term. But you might not notice your progress as quickly, especially if your higher-interest-rate debt consists of your larger balances.

Balance transfer card

You may find it simpler to consolidate your credit card debt onto one card with a balance transfer credit card. Not only is it easier to focus on one payment, but you might be able to negotiate a lower interest rate to help you save money.

Some credit cards have a low promotional interest rate on balance transfers. This could be ideal for people with good or excellent credit who qualify for the card and expect to pay off their balance within the intro APR period.

Personal loan

If you need more time to pay off your debt, consolidating your credit card debt into a personal loan may offer lower interest rates over a longer period of time. Keep in mind that you’ll need good to excellent credit scores to qualify for the best loan rates and terms. And the longer you stretch out your personal loan term, the more interest you’ll pay on your loan. If you decide a personal loan is your best option for paying off your debt, be sure to shop around and compare loan offers to find the best option for your financial situation.

Source: mint.intuit.com

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