Tag Archives: credit

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Credit Bureaus Change the Way They Handle Disputes

Big news out of the New York Attorney General’s office. From CNN:

Experian (EXPGF), Equifax (EFX) and TransUnion, the three main agencies that track your credit, have agreed to follow new guidelines to handle disputes on your reports, according to a settlement announced Monday by the New York Attorney General.

This is huge news. Disputing information on credit reports is a big part of credit repair, and if you’ve ever gone through it, you know it can be frustrating to watch the credit bureaus acting in seemingly incomprehensible ways to simple requests like “this account isn’t mine; please delete it.”

It’s not clear at the moment how this will affect people in other states, if at all. The settlement could prompt action from other states’ attorneys general in a piecemeal fashion. The feds could even get involved in the form of the CFPB.

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Identity Theft Top Complaint of 2014

Identity theft was the top complaint reported to the FTC in the last year, beating out even debt collectors. From CNN:

There’s no doubt it’s a scary situation when it happens. If a criminal gets his hands on some personal information, it can wreak havoc on your life. You might find mysterious charges on your credit card. Or a thief could file a tax return in your name, getting a bogus refund before you even know it.

None of this is a surprise. Massive data breaches that could lead to identity theft keep coming and, most recently, hackers hit insurance giant Anthem, stealing information on tens of millions of customers.

Hackers are almost always one step ahead of cybersecurity. And besides, there’s enough low-hanging fruit in the form of businesses that have your personal information on file, but don’t even bother to invest in top-of-the-line security to safeguard it. If you haven’t had your identity stolen yet, you probably will. Identity theft is increasingly becoming just another part of modern life that people will have to deal with.

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Americans Saving Up Record Amount for College

From CNN Money:

They amount of money in the savings plans grew to a record $248 billion in 2014, about 9% more than the previous year.

People are starting to save for their children earlier than ever. About 31% of the savings plans are opened by parents when their child is barely a year old, or before, according to the College Savings Plans Network.

Given the poor quality of most people’s saving habits, this is worth celebrating. Although, I do question how good of an investment a college degree is for many people.

There has been talk recently about doing away with tax-beneficial 529 Plans. The government wants all the money it can get. I’d say this is more likely to happen than doing away with IRAs or 401(k)s, but still pretty unlikely, especially in light of how many people are taking advantage of them.

If you have kids, a 529 savings plan (NOT pre-paid tuition) is a good option for saving up for college. Money is about possibilities, so even though college isn’t right for everyone, you want to have the possibility to buy it for your kids should they so choose. And without saddling them with student loan debt they’ll never be free from.

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How Much Will Auto Loan Rates Increase if Fed Raises Rates?

With interest rates at a historical low right now, it’s only a matter of time before they go up again. Maybe next month, maybe next year, but it will eventually happen. These things are cyclical.

If you’re in the market for a new car, now is a pretty good time to take out a loan. If the Fed raises rates, however, what will happen? This is the first I’ve seen someone put a concrete figure on it:

…should interest rates rise later this year, some households and corporations may find themselves overleveraged as interest rates and borrowing costs rise. When looking at interest rate sensitivity by loan product, we see that auto loans rates are the most sensitive to changes in the fed funds target rate. In addition, we can see that for each one-percentage point rise in the fed funds rate, the interest rate on a 48-month new car loan rises 0.61 percentage points.

So that’s the magic number. Expect a larger increase for longer loans and used car loans.

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Credit Tightens, But Not by Much

Credit numbers are out for the last quarter of 2014. Here are the highlights from ZeroHedge:

Housing Debt

  • Originations, which we measure as appearances of new mortgage balances on consumer credit reports and which includes refinanced mortgages, increased slightly, to $355 billion, but remain low by historical standards.
  • About 122,000 individuals had a new foreclosure notation added to their credit reports between October 1 and December 31.
  • Mortgage delinquencies improved, with the share of mortgage balances 90 or more days delinquent decreasing slightly; 3.1% of mortgage balances were 90+ days delinquent during 2014Q4, compared to 3.2% in the previous quarter.

Student Loans, Credit Cards, and Auto Loans

  • Outstanding student loan balances reported on credit reports increased to $1.16 trillion (+$31 billion) as of December 31, 2014, representing about $77 billion increase from one year ago.

And the kicker:

  • Student loan delinquency rates worsened in the 4th quarter. About 11.3% of aggregate student loan debt is 90+ days delinquent or in default in 2014Q4, up from 11.1% in the third quarter.
  • Auto loan delinquency rates worsened. The 90+ days delinquency rate is now at 3.5%, up from 3.1% in the previous quarter.

That’s a lot of deliquency. Nearly 1/8 of all student loan debt is 90+ days late. And that debt doesn’t go away.

 

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Tragic Story of Latest Powerball Winner

From Marketwatch:

“I don’t have to worry about the word ‘struggle’ no more, and neither do they,” she said. “I just want them to understand that money doesn’t change you, but it can help you, so they don’t have to worry about debt, none of that. They can go to college; they don’t have to worry about nothing. And I’m glad that I can do that for them.”

Such a strange juxtaposition. On one hand, she says money doesn’t change you. True. But then she said that her children won’t have to worry about debt any more. That’s false. If money doesn’t change you, and you’re in debt now, then you’ll find a way to get back in debt even after a $100 million+ payday.

Without the right mindset and habits around money, you will always be living paycheck to paycheck–no matter how big that paycheck is.

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Consumers Pocket Gas Savings

Despite what you may think, Americans aren’t rushing out to spend all that money we’re saving on gasoline at the pump.

From ZeroHedge:

How can we explain this disconnect? It seems that consumers are saving some of the windfall cash from lower gasoline prices, with the personal savings rate increasing to 4.9% in December [my note: this personal savings rate they are talking about does NOT mean people are literally putting cash in savings accounts]. Another factor is that our data may be skewed by consumers with credit cards who are not as budget constrained as those who spend predominately with cash. Looking at a breakdown of spending by key sectors, we find a pick-up in sales at home improvement stores, restaurants and grocery stores, but a slowdown in lodging and furniture sales.

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Playing the Game of Saving Money

When you think about it, there are lots of ways to put money into savings:

You could deposit money into a savings account manually.

You could automate the process so that part of your paycheck is put into a savings account each month.

Et cetera.

Here’s my favorite way. (It could actually be thousands of different ways: it’s an open-ended invitation)

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Identity Theft Your Credit Monitoring Can’t Detect

When people talk about identity theft, they usually mean one thing: someone getting your name, birthday, and social security number. With this information, they then apply for credit in your name. They keep the money, and you’re stuck with the bill (and the bad credit).

That’s the fastest way for identity thieves to make a quick buck, and your credit monitoring is your first line of defense. With credit monitoring, you’ll get an alert every time someone applies for credit in your name.

But there are other kinds of identity theft that don’t show up anywhere on your credit report and can be just as damaging. Here’s what you need to know: