Credit Ignorance: What You Don't Know CAN Hurt You

 

Consumers remain in the dark about how the credit-scoring system works in obtaining mortgages, insurance and credit cards, costing individuals as much as $28 billion each year, according to a recent survey.

 

Credit scores are a vital but often overlooked part of people's financial health. The number, also known as a FICO score, determines interest rates on credit cards and is being used increasingly by insurance companies to set rates, as well as by prospective employers in hiring decisions.

 

Taking steps such as paying bills on time and not maxing out credit cards will improve scores. Scores also can be improved by paying off debts, rather than moving balances between accounts. Paying more than the minimum due on credit cards also improves your FICO score. Missing a single payment by more than 30 days may lower your score by 25 to 50 points.

 

One of the most important steps individuals can take is to obtain their reports from one of the main credit-rating companies: Equifax Inc., Experian Group Ltd. and TransUnion. An easy way to do this is through the www.annualcreditreport.com Web site the three companies run together. Consumers can obtain one free credit report each year.

 

According to Stephen Brobeck, executive director of the Consumer Federation of America, "People responding to the survey didn't understand that credit scores are based on payment histories and how they've used credit in the past. Many respondents said factors such as income, age, marital status, and education levels influence credit scores. They don't."

 

A low credit score means you'll spend more money to borrow. Raising a credit score by 30 points translates into an annual credit card finance-charge saving of $105, according to Anthony Vuoto, president of Washington Mutual Card Services. If all consumers raised their scores by that margin, he said the savings would reach $28 billion.

 

Have you obtained a copy of your credit report since they became free once a year? If not, you should. Getting a copy of your credit report is also a good way to detect identity theft, because there will be evidence of anyone trying to open new accounts or obtaining credit cards in your name.

 

 

 

Fears Grow Over Mortgage Giants

 

Stocks of Fannie Mae and Freddie Mac are being hammered as the housing slump spreads, but the Bush administration says it's not planning a federal takeover of the mortgage giants.

 

Here's the latest on the growing fears of Fannie and Freddic from AP reporter, Mark Smith…. (Video runs 2:00)

 

Do you think the Federal government should intervene, or stay out of it? Tell us what you think by clicking on the comment link below and sounding off on this subject. Your email address will never be published here…

 

 

 

Home Prices Rise Four Straight Months - Is Anyone Listening?

 

Amidst the gloom on Wall Street about housing someone forgot to check the stats. The National Association of Realtors® has now reported four straight months of rising housing prices, but it seems no one is listening.

 

According to NAR statistics, the median home price has fallen from a high of $230,200 in July 2006 to a low in February 2008 at $195,600, a drop of 15%. Since February, however, it has risen steadily every month. By May the index had risen to $208,600, up $13,000 and a full 6.6%. Another indicator, the mean home price (otherwise known as the average home price), has also shown strength and has risen from a low of $242,000 also in February of this year to $253,100, a rise of $11,100 or 4.5%. It, too, has risen every month since February of this year.

 

So why the crisis? Why the continual gloom and doom reports? Is this the bottom?

 

No one can know for sure until we all look back and can clearly define where the bottom was, but the hard data is clear. The median price has risen four straight months. The average American is out there taking advantage of bargains in their local real estate market. They are not listening to Wall Street but following their own belief that the best time to buy is when no one else is, and they are out there buying. If this keeps up, February may prove to have been the low in prices.

 

What do you think? Have we passed the bottom of this mess? Use our comment link below to sound off and give us your opinion. Your email address will never be published here to protect your in-box from too much mail.

 

 

 

Wedding Insurance: Is It For You?

 

Most people have insurance for their car, their home, their health, their life. But who thinks about getting "Wedding Insurance" ? And exactly what does such a policy cover anyway?

 

Summer time usually means more people are getting married than any other season of the year, and your wedding should be the best day of your life, so why not insure that things turn out perfectly?

 

Money Editor Stacy Johnson explains in this short (1:42) video…

 

 

 

Recession-Proof Your Life

 

Unemployment is on the rise, the stock market is hitting lows and prices are increasing on everything from a gallon of milk to a gallon of gasoline. Here are a few ways you can protect yourself:

 

1. Tighten your belt

Cut down or reduce spending that isn't essential. Pay down credit card debt - which can add hundreds to your annual household budget. The average American household with at least one credit card has nearly $9,200 in credit card debt. And often that interest rate is in the mid to high-teens. Scale back any household renovation and pay down any home equity line of credit you may have.

 

2. Protect your job

The economy has shed 438,000 jobs since the beginning of the year. To make sure yours is not one of the next ones to go, make sure your boss knows your value to the organization.

Volunteer to help with any tasks left unfinished due to layoffs. Raise your profile with trade groups or professional organizations that could help you find a job in the event you lose yours. And update your skills by taking a class at a local college–consider it a career investment.

 

3. Talk to the family

Tweens and teens can easily push your household budget into the red. Enlist their help in curbing spending. Lead by example - share your savings plans and realities with them. If you are carpooling let them know it; show them your brown bag lunch. Practice what you preach.

 

4. Set aside a just-in-case fund

You always hear about the importance of setting aside an emergency fund of three to six months worth of savings - and the scenario today is the reason why - a slow economy poses extra risks and costs to the average family. Even if the high price of gas has you struggling to save, set aside some money on a regular basis.

 

The good news is that banks are desperate for deposits and paying more than they otherwise might for your money. Some banks are offering introductory rates as high as 4.65% on money market accounts.

 

Is the economy in a recession? Tell us what you think. Sound off about it using the "comment" link below. Your email address will never be publish here to protect your privacy. We'd love to hear what you think.