Credit Cards

Discover Card 5% Gas Cashback Through June

April 21, 2006 By Jeffrey Strain 3 Comments

Discover card 5% cashback on gas purchases With the price of gas continuing to climb, Discover Card has timed their current promotion well. If you have a regular Discover Card, you can take advantage of it at no cost. Discover is running a 5% cashback program on gas and some related auto products for all their current card holders, but you must sign up for the free program to receive the benefit. From their website:

Take care of your car and get 5% Cashback Bonus on up to $1,000 in gas and automotive purchases through June 30, 2006.

5% Cashback Bonus

Gas
Car Washes
AutoZone®
Firestone Complete Auto Care™
Midas®
Pep Boys
Sears Auto Center
To sign up, log in to the Account Center or call 1-800-DISCOVER (1-800-347-2683), then just use your Discover Card to get 5% Cashback Bonus.

This is a no brainer if you already have a Discover Card. Make sure to call right away to get these benefits and make the increasing prices of gas a little less painful compared to what you have been paying.

The High Cost of Bad Credit

March 29, 2006 By Jeffrey Strain 3 Comments

high cost of bad credit I put together an article called The Cost Of Bad Credit – More Than Credit Cards Rates because it seems when people talk about bad credit scores, it’s mostly about credit card rates. While these certainly cost people with poor credit quite a bit of money with higher interest rates and extra fees that credit card companies charge to those with poor credit, having a bad credit score will hurt you in a lot of other areas as well. These include getting other types of loans such as mortgages and car loans and will also cost you more with insurance rates. I put together a bit of an estimate of what the poor credit may cost, but I really need to go through and make some estimates to give a better overall idea.

I also know that I’m missing quite a few areas where those with poor credit scores get dinged and have to pay more (if you know some areas I missed, feel free to leave a comment) – would like to expand those too and try and put a dollar value to them too. It’s a good start and foundation on information, but I’d like to dig deeper and make it a quality resource page.

New Credit Scoring System

March 15, 2006 By Jeffrey Strain 1 Comment

VantageScore scoring system - Equifax, Experian and TransUnion Here’s a bit of interesting news. The big three credit reporting agencies (Equifax, Experian and TransUnion) have come up with a new scoring model that is uniform between the three companies. Up until now, each company had their own unique model for scoring an individual meaning that the scores were sometimes quite different. The new scoring system should be more consistent and objective than the three separate models each had before.

The new scoring system is called the “VantageScore” scoring system. If there are differences in the credit score for an individual, it is because the different reporting agencies may have differing data on the individual, but the way the data and interpreted is scored is consistent.

“VantageScore” has a range from 501 to 990 with scores of “A” (901 to 990) “B” (801 to 900) “C” (701 to 800) “D” (601 to 700) and “F” (501 to 600). For more information visit the Web sites of the three major credit bureaus. The score is currently only available to businesses, but will be available to individuals later this year.

It seems to me that this new scoring system will, over time, likely replace the individual scoring systems each of the credit reporting agencies currently has. From a business perspective, it makes more sense comparing the scores on a consistent criteria rather than various ones when the exact criteria aren’t known in the first place.

It should also give consumers some good hints on exactly how the credit scores are scored. If you look at your three reports and two are the same and once has an extra piece of data, you will be able to determine exactly how much that extra piece of data is worth due to the difference in score. Up until now, any difference could have simply been from a different scoring methodology. My prediction is that in time this new service will enable everyone to know more accurately how different pieces of your credit report affect their credit score.

Sunday Funnies – Credit Card Fraud

March 5, 2006 By Jeffrey Strain 2 Comments

While not trying to play down the the basic steps that people should take to prevent credit card fraud and identity theft, I think that this man may have some more important issues that should be of more concern than credit card fraud. Hope you’re having a wonderful day and this gives you a bit of a laugh!

Video may load a bit slow – if so, replay once it has fully loaded (27 seconds)

Bankruptcy Risk Score – The Credit Score You Don’t Know About

February 21, 2006 By Jeffrey Strain 7 Comments

It seems that most people are now aware that their credit score can have a large impact on the financial aspects of their lives. Many, however, have no idea that institutions checking their credit often use another score that is sometimes referred as the “hidden credit score” – your Bankruptcy Risk Score.

While your credit score is a score assessed to you based to a large extent on your history of obtaining credit and paying off debt, the Bankruptcy Risk Score measures how likely you are to file bankruptcy. The Bankruptcy Risk Score is exclusively for lenders provided by the credit reporting agencies and not available to individual consumers.

This bankruptcy score is supposedly a complex mix of your credit score plus your spending habits (yes, all that information of how you use your credit card, shopping cards and any other way they can assess what you buy with it is likely factored into this score). The credit agencies and those that use this report (and have contributed to creating it) have been reluctant to reveal exactly how the the model works and what it is based upon because they see it as proprietary information. They spent a lot of time and money developing it and if they explain it, they are giving away part of it’s value. Therefore little is said about this report (and why you have never likely heard of it before).

Bankruptcy Risk Score - little is still known about this hidden credit score

One of the credit bureaus (Experian) has said that it is considering making its Bankruptcy Risk Score available to consumers, but hasn’t made any commitment to when this might happen (or if it ever will). There have just been glimpses for the public that the score exists. For example, Experian revealed a study last July which ranked which states had consumers who were most likely to file for bankruptcy within the next year. Texas was number one on that list.

While the exact mechanics of what makes up the score are not publicly known, insiders say that the Bankruptcy Risk Score is scored the opposite of your credit score. Unlike your credit score where you want the highest score possible, your want the lowest possible score for your Bankruptcy Risk Score. Apparently this score goes from negative numbers to approximately 2000 (2000 being the worst high risk of bankruptcy level). Experts guess that many of the same things which improve your credit score such as paying your bills on time and not over applying for credit will also improve your Bankruptcy Risk Score.

Since information on this score is still fairly limited, it will pay to keep your eyes open for news about it – especially if you watch your credit card score closely.

Source: Saving Advice

Prosper.com – Applying For A Loan

February 17, 2006 By Guest Writer 12 Comments

I’d like to welcome Liz from Everyday Goddess as my first guest writer here. She has put together some excellent information about her experience of setting up and placing a Prosper.com loan request on auction (I also highly recommend her blog if you’re in need of getting away from personal finances for awhile). Enjoy:

As a personal blogger, I blog about my romantic life, my childhood traumas, my bad days and the band that’s playing downtown this Saturday. I’m sure a whole lot of it seems really, really intimate. But what’s truly the most intimate, what I find most difficult (read: terrifying) to blog about, is my finances.

See, I’m not in the best financial situation (read: debt-ridden). I struggle to make good choices and to learn from my mistakes. I have credit cards and loans and school debt. Sometimes, I screw up. Sometimes, I have a small financial success. And I blog about it because I’m betting that I’m not alone.

Sometimes, I blog about it because high-interest rate credit cards are evil. Oh, I’ve stood at the edge of the whirlpool. In fact, it’s still right over there.

The trick, of course, is lower interest rates. You know, those great rates all those financially solvent people get? They make it MUCH EASIER to actually pay off debt. Ever so slowly, I’ve been trying to roll all my debt into lower-interest rate loans.

Prosper.com a good place to consolidate credit card debt?

So I was particularly interested in prosper.com.

The premise being, individuals funding individuals. Adding a level of personal connection. Bypassing the corporate behemoths.

I decided to check it out, and I decided to give it a try. As a borrower, of course.

The first thing I did was extensively check out the site. It all seemed simple enough. Most important, I learned that the loans are all three-year loans. So you have to borrow an amount that you can afford to pay off within three years. I also did the basic site registration (just setting up a user name/password). And I learned that payments are made through automatic monthly deductions to your bank account. Cool.

Next, I explored the “groups” on Prosper. This is one of their basic concepts. That people will form groups, and overtime, groups will gain a good payback reputation and therefore earn lower interest rates. Also, groups will provide a personal connection which creates social pressure for people to pay back their debts.

That all makes sense, but I couldn’t really find a group. First of all, it’s not like I know anyone in any of the groups. Still, maybe if there was one for my school, or a professional organization that I belong to. But it’s new, so there’s not, and I’m not interested in forming my own either. Further, I thought, a good group leader would probably call me, and I didn’t want to talk to anyone! A group that just accepted me without contact – probably destined to not be a good group. This is also why I didn’t want to start a new group. Because to do it right, I would want to really talk to anyone before accepting them, and I don’t want to deal with that.

So, I decided to stick my toe in the water on my own. Onto the real registration I went. Social security number. Driver’s license. Income.

And before long, I had a big, fat “C” rating, and I was looking at my 27% debt-to-income ratio. “Wow. I totally suck,” I thought.

To make matters worse, my highest financial priority is to roll a debt that is currently at 10%. There’s an account opened long ago! See, it has an ex-boyfriend on it, and it’s not his debt. But because my situation is much worse than it was back then, any opportunities I’ve had are at higher rates. They’ve closed the account for me, but they won’t remove his name (read: his liability). So, I chip away at it every month. And I’ve got three more years to go.

I took my “C” rating, and my hefty ratio, and I decided to lead with that. I like to aim high.

Creating the listing was quite easy. I even went back and forth between the various steps a few times to change things. At first, I listed at 10%, but with the Prosper fee, it became more like 10.6%, so I went back and changed it to 9%, so that it’s closer to 10% in actual. You’re given the opportunity to add pictures, but I wasn’t sure how I felt about putting a picture of myself up with it, so I used a dragonfly graphic. (I did wonder if pretty girls get better rates!) Best of all, you get to write out your request and talk about what you need and why, etc. I thought about linking to my blog – kinda like, hey, you’ll know where I live – but, for this go ’round, I didn’t. Honestly, it was a bit of wanting to stay more anonymous on the site. Of course, then I went and blogged about it on my not-private blog. That’s personal bloggers for you!

So my dream listing is up. As of writing this, I have a nibble! And twelve days to go on my listing.

The site is brand new, and I really like that. Getting involved and jumping on and participating helps get it rolling. Plus, if I can get a loan at this early stage and start paying on it, as the site matures, I assume that my good payment habits will look good for me. I can build a history. Maybe join a group. And just like on ebay, I got my user name locked in. Yeah, baby!

Finally, it is my hope that someday I will turn the tide, and I will have the ability to be a lender on Prosper. Because it’s brand new, and already it feels more like people than behemoth.