Category Archives: News You Can Use
News about credit, finance, and the economy that affects your personal life and how you can use it.
Reflections on the IRS and Ashley Madison Data Breaches
We covered the IRS data breach earlier this week, but I haven’t mentioned the hacking incident of Ashley Madison, a website that facilitates adultery. Last month, hackers managed to steal the user names, passwords, and even credit card info for 32 million users of the site. Here’s an article from Wired.com.
Given that the “social network” is a hub for cheating spouses, this will have ramifications far beyond the usual identity theft.
IRS Hacked: 400,000 Compromised
This will lead to many, many instances of identity theft.
In case you haven’t heard, the IRS was hacked. The number of taxpayers affected keeps changing, but right now it’s at about 400,000. It may go up further as more information comes out.
Here’s a decent write-up of what happened.
And here’s what you can take away:
- As I’ve written before, identity theft is going to be a fact of life for most people. Looking back at the data breaches that have happened over the past year (Target, Anthem, and the IRS off the top of my head), no one can seriously believe that his personal information is safe.
- While you can’t keep your info out of identity thieves’ hands, you can and should prepare by monitoring your credit regularly and having an action plan for if and when your identity is stolen.
- Since this latest hack may have exposed tax returns, expect identity thieves to choose juicier targets, i. e. wealthier people. But no one is exempt from worry.
Incorrect Address Lowers Woman’s Experian Score 80 Points
Of all the things that go into a credit score, a discrepancy in mailing address often gets overlooked. It’s important that your address be correct, current, and consistent among all 3 of the major credit bureaus. The Guardian features one woman’s story of what happened due to a lag in public records:
I have no skeletons in my financial cupboard so was surprised to see that in April my Experian rating had dropped from “excellent” to “good” – a massive fall of 80 points. It appeared that Experian had never received details of my address at the time. It explained this was down to the way the local authority updated its electoral roll.
Facebook Developing Own Credit Scoring Model
Score based on credit scores of your friends
There’s a bit of conventional wisdom floating around that each of us is the average of his five closest friends. The point, I suppose, is that we are influenced by those we spend time with. Either that, or we choose to associate with those most like us. Either way, we are judged by the company we keep, and that is not an altogether unfair way of judging.
Taking this to the extreme, Facebook has announced it has created a new credit scoring model based on friends.
Long Article on Car Title Loans
The LA Times with an extensive look at car title loans. Worth a read.
Auto Loans Reach All-Time High
Experian released a report on auto loans today. Here are the high points:
- The average credit score for a new vehicle loan dropped slightly, going from 714 in Q1 2014 to 713 in Q1 2015. The average used vehicle score moved slightly higher, from 641 in Q1 2014 to 643 in Q1 2015.
- The average used vehicle loan was $18,213 in Q4 2015, up from $17,927 in Q4 2014.
- The average interest rate for new vehicles was 4.71 percent in Q1 2015, up from 4.54 percent in Q1 2014. Similarly, the average interest rate for used vehicles increased from 9.01 percent in Q1 2014 to 9.17 percent in Q1 2015.
So interest rates have inched up, along with car prices. Elsewhere in the report, they mention that the length of loans is increasing as well. Some people are even taking out 84 month (!) loans for used cars.
Real Student Loan Delinquency Rate 30%
Official Student Loan Delinquency Rate since 2007
I posted recently that student loan delinquency rates have climbed to 18%. But with new data just released, the real picture looks much worse.
New York City Bans Credit Checks for Job Seekers
From CNN Money:
Job seekers in New York City can now rest assured that their credit history won’t impact their employment prospects. The New York City Council passed legislation that bans most employers from discriminating against job applicants and current workers based on credit history.
This is an interesting development for a few reasons. First, the original intent of credit scoring was to identify a borrower’s chances of defaulting on the loan. Under the law, companies were really only supposed to be able to check your credit score for the purpose of extending you credit (i. e. loaning you money). Now of course, credit checks are used for everything from apartment leases to job applications.
Shock Poll: 27% of Student Loans in Default
We knew it was bad, but now it looks even worse than we thought. Twenty-seven percent of student loan borrowers are a month behind on their loan payments. Keep in mind, this debt cannot be discharged in bankruptcy; these borrowers are stuck with it no matter what.
…if we adjust the delinquency rate to consider that only a fraction of the borrowers have payments due, this level of delinquency is very concerning: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency rate of 27.3 percent for borrowers with loans in repayment. This level of delinquency is much higher than for any other type of debt (credit cards, auto loans, mortgages, and so on).