Archives for August 2010

How to Read Your Credit Report

Last week, I told you how to identify a true credit score. Today, I will be telling you what is on your credit report.

Your credit report is a reflection of your financial life Which credit accounts you have, how much credit you have available to use, how you have used, how you make your payments, and any other information that is relevant.

If you have a credit card (notice, I didn’t say debit card) with a bank, this is what it might say:

(Your name) has a credit card with ABC Bank with the account number xxxxxxx-xx and owes $1,248 with available credit of $5,000 The minimum payment is $45 The account was opened 11/02 and the payments are C, C, C, C, -, C

What does that mean? The letter C means that the account was made “current” each month, which means your payment was made on time The dash means no payment was due that month This is a great entry for anyone’s credit report.

Here is another example of an entry on a credit report:

John Doe has a credit card with ABC Bank with the account number xxxxxxx-xx and owes $4,559 with available credit of $5,000 The minimum payment is $65 The account was opened 11/09 and the payments are 2, 3, 3, 3

What does that mean? It means that John Doe is not paying his account on time A 2 means he was 60 days past due and a 3 means he was 90 days past due (A 1 would be 30 days past due.) Do you see the pattern?

John Doe will have a harder time getting another loan or credit card with good terms Credit reports weren’t created to help you and I, they were created to help creditors decide whether to lend someone money Yes, you can look at your credit report, but almost anyone you do business with can run a credit check on you as well That includes landlords, employers, banks, loan companies and insurance companies.

A great credit report entry can help you, but a late payment account can hurt you A history of late payments will tell businesses that you don’t pay your obligations in a timely manner This is definitely something that you want to avoid.

Next week, learn what’s not on your credit report.

Jill interview in the New York Daily News

Back to school season and it’s time for the other big talk: money

BY Jean Chatzky
Monday, August 23, 2010, 4:00 AM
Original Article Link in the New York Daily news
PDF Version

Back to school season in my house, and likely in yours, means a long to-do list. Stock up on school supplies and clothes. Organize binders. Send everyone to bed a little bit earlier. I know: You’re busy.

But this year I want you to add one more thing to your list: I want you to talk to your kids about money. Many parents are intimidated, yet what you need to teach them is not something they’re likely to learn in school.

“Parents tend to feel that they’re not comfortable with the information, that they don’t have enough expertise or that they themselves have made mistakes,” said Laura Levine, executive director of the Jump$tart Coalition for Personal Financial Literacy in Washington. “But it’s important to understand that kids really do see them as a primary source of information about money.”

When it comes to teaching your kids about money — just like when you’re helping them study for a test — you can’t expect to know it all. I don’t, nor do I pretend to. When one of my kids asks me a question that I don’t have the answer to, we look it up together and discuss what we find. It’s so much better than putting the discussion off altogether because the earlier we start teaching our kids financial basics, the less likely they are to fall into traps.

To encourage people to talk, I’ve joined with American Express to create resources for the first National Money Night Talk, set for Sept. 16.

To take part, parents pledge to talk to their kids about saving, budgeting, credit cards and credit scores. Visit moneynighttalk.com for free tool kits I created to give you the talking points, questions, answers and exercises you and your kids can do together. There’s one for middle school-aged kids, another for high schoolers and another for college students.

Here are a few key concepts to keep in mind when you have your talk.

HOW MUCH TO SHARE

A reason many parents shy away from a big money discussion is that they don’t want to share their own financial information — salaries, debts — with their kids. That’s okay, you don’t have to, but you also don’t want to send the message that money shouldn’t be discussed, said Jill Russo Foster, author of “Cash, Credit and Your Finances: The Teen Years.”

“I’ve taught classes and asked how many kids know if their parents own or rent their home. If they don’t know, I send the question home and I’ve had parents who wouldn’t answer. I’m not asking you to tell them how much you make each week, but this is a basic question,” Foster said.

I like real-life examples, but it’s okay to pick ones that aren’t so personal. Kids want to know how much it will cost to live on their own. Pick ones you feel comfortable discussing: How much you spend on groceries each week, the phone bill, the cost of a MetroCard and the percentage of your salary you try to save.

THE GREAT RECESSION

Today’s teens know they’re experiencing tough times. Maybe a parent or a friend’s mom or dad lost their job, or there were foreclosures in the neighborhood. They may be wondering about the impact on you and your family but have been reluctant to ask.

This is a good way to work in lessons about living within your means, saving money and creating an emergency fund in case of a layoff, unexpected expense or emergency.

SET AN EXAMPLE

This year, try a different approach to your back-to-school spending: Tell your kids you’ll be spending a set amount of money. (Decide how much you can afford before the talk.)

Together, make a list of what you need to buy. Then pick a day to go shopping and let them budget their money.

If they pick out a pair of $100 sneakers, help them figure out what they still need to purchase — and whether they can afford the pricey kicks.

Your Money columnist Jean Chatzky is financial editor of NBC‘s “Today” show, a contributor to “The Oprah Winfrey Show” and the author of seven books, including, “Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved.” Check out her blog and learn about her Debt Diet Online at jeanchatzky.com.

Are you getting the correct credit report?

How do you know if you are getting your correct credit score? This is a dilemma for many people.

Fair Isaac and Company, known as FICO, is what the lenders and creditor use when you apply for credit This is one of the factors that you are judged as creditworthy or not A while back, people tried to introduce a new credit scoring system That wasn’t successful in over taking FICO as far as lenders where concerned.

But when you as a consumer want to know your credit score, you may be getting something totally different Many companies, including the credit bureaus may be selling you a score calculated differently and on a different scale than FICO FICO uses a scale that tops out at 850 If you have a score of 760 or higher, you have an A+ FICO score With others use scales that go well into the 900’s, that 760 or above score isn’t A+ like you are thinking You would be considered a B You see how this is confusing.

To top it off, when you order your FREE credit report form www.AnnualCreditReport.com, you don’t get your credit score To get your FICO credit score, you will need to go to www.MyFICO.com and pay a fee to see your credit score Remember that each of the three credit bureaus, have a score and they are not necessarily the same number at each.

Guarding your personal information

I have been double checking my personal information and making sure that I have opted out with the companies I am dealing with That got me thinking about what happens to my information when a company closes.

So I started to do some research and don’t seem to find any answers I wanted When a company is open and they have your personal non-public information on file (name, address, account number, checking account number etc) most companies are required to comply with the Gramm Leach Bliley Act to protect your personal information They are required to disclose to you what they do with your personal non-public information Then you have the right to opt out so that they don’t share your information with non-affiliated third parties.

With that said, what happens when that company closes? Not much Recently a company that had your personal non-public information on file to expedite you clearing airport security closed There don’t appear to be any requirements of what to do with all the information they have on file.

At this point, the only thing you can do is to check your credit report and accounts on a regular basis to give yourself piece of mind.