by sonya on March 9, 2010
What’s a prescreened offer of credit? Many companies that solicit new credit card accounts use prescreening to identify potential customers for the credit cards they offer. Prescreened offers (sometimes called preapproved offers) are based upon information in your credit report that indicates you meet the criteria set by the company.
How does prescreening work? Prescreening works in one of two ways: Either the company establishes a criteria like a minimum credit score and then asks the credit bureau for a list of people who meet the criteria or the company provides a list of potential customers to the credit bureau and asks the credit bureau to identify the people on the list who meet the criteria.
by sonya on March 8, 2010
One question that I’ve received quite a bit recently is whether its a good idea to close credit card accounts to avoid some of the new fees credit card companies are starting to impose – like inactivity fees – and the impact this will have on a person’s credit score. (Credit card companies are looking for ways to replace the lost profit from the new credit card laws.)
It may seem like closing credit card accounts to avoid the fees is a good idea but closing those accounts could hurt your credit score. Closing accounts lowers your credit score because of the impact it has on your debt to available credit ratio. If you close credit cards you haven’t used in awhile but don’t pay down your debt on your other cards, your credit score will take a hit as your outstanding debt will account for a higher percentage of your overall credit limit.
The best way to handle this catch-22 situation is to pay down your balances on your other credit cards before you close any of your accounts. This will decrease the impact on your credit score. Better yet, just strive to keep all of your credit card balances low as a regular practice. (Do you really need those new shoes?)
by sonya on March 3, 2010
If your spending it somewhat out of control and you’re not sure where your money is going, this week’s recommended book is for you. Michelle Singletary’s book “The Power to Prosper: 21 Days to Financial Freedom” is causing quite a stir.
Ms. Singletary puts us on a 21 day financial fast where you are prohibited from using credit cards and cannot buy anything unless it is a basic need for survival. Doing such a “fast” will teach you about your spending habits and about how to reign them in. Also, early in the book, there is a discussion about using credit cards which is so simple and logical that you will instinctively see the truth of it and wonder why you never looked at things this way before.
The book also quotes Christian scripture to support its points and contains chapters that involve purely religious activities. For some this might be a turnoff but I challenge you to read the book anyway. The advice in the book is so useful, I suggest that you look past the religious aspects if that’s not your thing and make use of the advice and principles the author sets forth so clearly.
by sonya on March 2, 2010
Credit report inquiries are a record of creditors, individuals, and/or businesses that have asked for your credit history over the past two years.
by sonya on February 25, 2010
What to keep up-to-date on my new blog posts as they happen? You can sign up for email alerts when a new entry posts to my blog. Sign up here: http://feeds.feedburner.com/SonyaSmithValentine Just click on “Get Sonya Smith-Valentine – Identity Theft & Credit Expert delivered by email” and enter your email address.
by sonya on February 24, 2010
We all need to work on lowering our credit card debt. If you carry a balance and only make the minimum payments, eliminating the debt will take years. A faster way to erase your credit card debt is to pay the minimum plus a set additional amount.
Don’t know where to start on figuring this out ? Well this week’s recommended resource can help you get started. The website www.Bankrate.com has great payment calculators. To design your own repayment plan, just click on “credit cards” tab across the top then scroll down to calculators and click on the “what will it take to pay off your credit card” link.
by sonya on February 22, 2010
The new credit card reform law takes effect today. The Credit CARD Act of 2009 was a major win for credit card users. Here are the major changes in effect as of today:
1. Credit card companies can’t raise interest rates on an existing balance unless a promotional rate expired, the variable indexed rate increased or you paid late by 60 days or more. Universal defaults will end for existing credit card balances. (Universal default is the practice of punishing borrowers for late payments on unrelated accounts.)
2. Consumers now get 45 days notice before key contract changes take effect, including rate increases. In the past, this was only 15 days.
3. Cardholders will not face overlimit fees unless they opt-in to overlimit transactions. Companies can’t charge more than one overlimit fee per billing cycle. Also gone is the fee banks charge consumers to pay their credit card debt by telephone or internet.
4. Credit card issuers will be banned from issuing credit cards to anyone under 21, unless they have adult co-signers on the accounts or can show proof they have enough income to repay the card debt.
5. The new law bans double-cycle billing, where finance charges are calculated on the current and previous balance. This method (which is now banned)allowed the credit card companies to charge interest on debt already paid off the previous month.
6. Previously, most cardholder agreements included provisions that said payments were applied to lower-rate balances first. Now, with the new law, above-the-minimum payments are required to be applied first to the credit card balance with the highest interest rate.
7. Card companies must now send statements 21 days before a payment is due. The old law required just 14 days notice.
8. The new act stops gift cards from expiring for at least five years. Issuers cannot assess inactivity fees unless the card has gone unused for 12 months.
Consumers should take note that although the reforms are the most dramatic changes in credit card laws in decades, they do not protect consumers from everything. Issuers can still raise interest rates on future card purchases and there is no cap on how high interest rates can go. Business and corporate credit cards also are not covered by the CARD Act. If credit card accounts are based on variable APRs, interest rates can increase as the prime rate goes up. Credit card companies can also continue to close accounts and slash credit limits abruptly. Many banks are already finding ways around the law and launching new fees not specifically banned by the credit card reform law.
by sonya on February 22, 2010
One of the organizations that I believe is trying to help consumers is the Privacy Rights Clearinghouse (PRC). In late December 2009, PRC put out its ten tips for you to minimize your risk of identity theft, protect your personal information and assert your rights to privacy. We should all take a moment to read their alert. While some of the tips are ideas we’ve all heard before, a refresher is never a bad idea. You can read PRC’s article, “Resolve to Be a Privacy Advocate in 2010″, here: http://www.privacyrights.org/resolve-to-be-a-privacy-advocate
Be sure to let me know what you think of the tips by leaving me a comment.
by sonya on February 18, 2010
We all need to take common sense computer safety steps before ordering our credit reports online. There are continuing potential hazards posed by imposter websites, many of which have been aggressively attempting to deceive and misdirect consumers. The imposter websites vary in content. Some false sites ask you to supply your social security number, date of birth and other highly sensitive information. Others contain the words annual credit report in various combinations to send you to for-pay services. Some sites send you to other websites that have nothing to do with credit reports.
Annualcreditreport.com is the only official website for ordering our free annual credit reports. We can request our reports online, by phone or through the mail at annualcreditreport.com. The site was created by the 3 major credit bureaus.
When ordering your free credit reports make sure you are ordering from the official website. Don’t order your reports from a public or shared computer (like at the library). Make sure your internet connection is encrypted and that your computer is not infected with viruses or spyware that could compromise the security of your information.
(By the way, have you checked your credit reports recently?)
by sonya on February 17, 2010
This week’s recommended website/book is a book by Thomas J. Stanley. It’s called “Stop Acting Rich…and Start Living Like a Real Millionaire.” Stanley says the current economic crisis has provided us with an opportunity to cure “pretenders.” Pretenders are folks who are experiencing economic problems because they were pretending to be rich. Stanley lets us know that in order to cure pretender status, you have to take a good look at your life and “determine if you would be wealthier if you stop acting rich.”
The book does a good job of showing that there’s a big difference betwwen income and net worth. Pretenders are good at generating income. But guess what? Many of us in higher income occupations are among the worst at transforming that income into wealth.
Stanley’s research found a few surprising details (at least they were surprising to me):
1. 86% of luxury cars are driven by non-millionaires. 2. Typically, millionaires pay $16 for a haircut. 3. Four in ten millionaires buy wine that costs about $10. 4. In the U.S., nearly 3 times as many millionaires live in homes valued under $300,000 than there are living in million dollar homes.
Will people finally stop acting like their rich and learn to live modestly like most real millionaires? Only time will tell. At least one author has given us a roadmap to how to do it.
