FreeCreditScore.Net

How Much “Good” Student Loan Debt is Enough?

Dan — Tue, 21 Feb 2012 13:22:31 +0000

It’s not surprising that many Occupy Wall Street (OWS) protesters specifically rally against massive student loans. Many of them, belonging to the younger generation, carry over thousands of what is otherwise known as the “good” debt. And it will take them an average of nearly 20 years to pay back everything they owe.

The bleak reality raises an important question. How much “good” debt is enough to obtain a decent degree without getting heavily in debt?

The Number One Borrowing Rule

GradLoans.com has come up with a pretty accurate benchmark when it comes to borrowing for college. The gist is that you shouldn’t borrow beyond your first year’s salary after graduation. Here’s why. Majority of federal loans give students an average of 10 years to repay the loan. If you borrow within the prescribed amount (not more than your first-year income), you will be allotting not more than 10% of your income to student loans.

It’s worth noting that in computing your ideal student debt benchmark, your future income or employment opportunity is factored in significantly. Now let’s take stock of employment issues students will likely face upon graduation.

The Weighty Divide Between Student Debt and Potential Income

Most degrees, no matter how exciting and intellectually challenging they are, won’t get you the highest paying job needed to wipe out student loans of more than $100,000. Be sure to visit PayScale and check which professions pay well.

If your choices are all limited to low-paying yet fulfilling careers, including social work and elementary education, a community college can be a practical option. Don’t forget to take side jobs to ease the burden of paying back loans in the future. Enrolling for two years and moving to a four-year college also makes cost-per-credit-hour more affordable. Just make sure you’re enrolled in an accredited program with transferable credits.

Should you choose a high-income career, check how likely you’re going to land a high-paying job in your first year after graduation. Becoming a lawyer sure sounds lucrative but think, law schools cost a hefty sum and the only way for such amount of loans to get paid in time is when you land a job in a big firm. What are the odds that you’ll get the job? First, you have to attend a top law school and expect to spend at least $150,000. Second, you have to graduate in the top 25% of your class. If your chances are slim, don’t push it. Even lowest ranking law schools would cost you a heft 30,000 or more per year.

Working with Alternatives

Hatching up plan B is a wise course of action. That’s because surviving the new economy requires new rules most people aren’t savvy about. Can you take out a low-interest loan, live with your parents and work side jobs? Can you apply for scholarships? Make your stellar academic grades work for you.

Image by Student Loan Blog

Weekly Credit Roundup: Majority Don’t Like Sharing Credit Card Info on Social Sites

Dan — Sat, 18 Feb 2012 03:25:34 +0000

Most Don’t Feel Comfortable Sharing Credit Card Info On Social Networks [Infographic] (Read Write Web)

Most of us still don’t like giving out our credit card information on social networking sites, according to a poll of 2,630 adults by Harris Interactive for Digitas.

Colorado Bill Would Bar Credit Checks For Some Jobs (CBS Denver)

Sen. Morgan Carroll told lawmakers Monday that the bad economy means more people who are unemployed have built up bad credit and that holding that against them creates a barrier.

Two Credit Card Skimming Machines Found at Long Island Gas Stations (NBC New York)

A victim of the skimming contacted the Gulf Gas Station on Northern Boulevard in Roslyn after finding fraudulent charges on his credit card, which he only uses at that station. The owner of the gas station then had the pump inspected by the company that services the pumps.

3 Reasons I Love My Credit Union (Bargaineering)

Credit unions act and feel more like local small businesses than the mega banks. When I make a deposit, they don’t make me fill out a deposit slip because they know me by name.

Which Credit Card Rewards Does the IRS Care About? (Daily Finance)

Citigroup’s (C) Citibank recently sent recipients of a special frequent flier mile promotion an unwelcome surprise: a 1099 tax form indicating those bonus miles have been reported to the IRS as income.

Credit Builder Loans Can Help Burnish Your Credit Score (NY Times Bucks Blog)

“Credit builder loans are offered as a way for credit union members to do a couple of things: get something good on their credit reports and set aside some money for future use,” said the credit scoring guru John Ulzheimer.

How Well Do You Know Your Partner? Do a Credit Check

Dan — Thu, 16 Feb 2012 15:07:06 +0000

So you’ve gone to a fancy restaurant with your partner to celebrate Valentine’s Day, talked about the state of your relationship and went home feeling you’re almost ready to tie the knot. But what exactly are you preparing for?

In these debt-riddle times, it pays to know the consequence of starting a family with your partner. How well you know him or her, inevitably requires intimate knowledge of his or her financial situation. There’s no better indicator that your partner can support a family than his or her credit score.

What Credit Scores Reveal

While a credit score is not the end-all, be-all of an individual’s success as a parent and partner, it does reveal a pattern of creditworthiness. A poor score from either partners can be a stumbling block for getting loan and credit approvals.

Do credit bureaus mind your individual score even if you’re applying for a joint financial arrangement? Major credit bureaus do check a partner’s credit history. In fact, it makes more sense to safeguard a couple’s financial future by looking at individual histories.

What to Do with Unpaid Personal Debt

Not revealing to your partner the details of your credit card debt and unpaid student loan can make marriage a harrowing experience. An Equifax study revealed a good deal of information about what couples feel about marriage and finance. More than 87% said they would tell their partner if they are unable to repay credit card debt in the future. Almost all, or over 90% of the respondents, expected their partner to “own up” any individual debt.

A more expedient plan of action is to divulge any potential debt problem before the marriage. A snowballing debt especially becomes increasingly unmanageable in time. Add this to the challenge of being a new parent or of a volatile economy and you get a recipe for disaster.

So this month of love, don’t just look at your partner wide-eyed and sweetly. Look into his or her financial situation and try to help as best you can.

Image by nomm de photo

The Adaptu Wallet: Personal Finance Manager in Your Pocket

Dan — Tue, 14 Feb 2012 05:58:22 +0000

Big fans of Adaptu, a premier money management site, are raving about its recently launched iOS app aptly called The Adaptu Wallet.

Just like any other budget finance app, the app boldly promises users to never overspend again. It’s free and neatly designed, two features enough to persuade you to download and join the expanding Adaptu community.

Adding Accounts Manually

Most finance apps that automatically add bank accounts fail in this category. Without the capability of adding accounts manually, many users are discouraged from making full use of the application. The Adaptu Wallet overcame this lack of feature by letting users add accounts from any bank, including those without online access. You can virtually manage all of your bank and credit card accounts at your fingertips.

High-grade Security

Since Adaptu wants you to carry all your financial data including snapshots of membership and credit cards, security naturally becomes a major issue. The company did a good job in addressing security issues. It uses TRUSTe and VeriSign to secure each transaction and requires users to enter in a PIN code whenever they log in to use The Adaptu Wallet app.

Sleek User Interface

Alongside its deftly designed website, Adaptu made its Wallet equally simple and easy to use. Users can track spending with sleek graphs and fine-tune budget and income ranges in just one swipe. Remember Adaptu’s promise to not let consumers overspend ever again? The app has a no-frills feature that lets you see if you have successfully keep your budget and sends alerts as warning.

It seems at first glance that Adaptu has developed a slick piece of a software. Well, it is slick and commendable but has a few quirks that needs to be addressed. For one, sliding or swiping to change the spending limit isn’t convenient at all. It looks good but keying in a number could have make it easier to use.

Weekly Credit Roundup: Best Credit Union Credit Cards

Dan — Sun, 12 Feb 2012 02:15:21 +0000

The Best Credit Union Credit Cards (Main Street)

Credit cards issued by credit unions generally offer lower interest rates than cards from major issuers, but not all of these products are created equal.

1 Million+ Visa Cards Have New Safe Chip & Pin (Credit.com)

There are now more than 1 million credit cards with a new payment storage technology bearing the logo of the world’s largest payment processing company in circulation across the country, less than two years after it announced a plan to step up issuing efforts.

How Criminals Can Steal Your Credit Card without Ever Touching It (Credit Card Processing Blog)

The problem is, as Greenberg reminds us, that RFID card readers can easily and cheaply find their way into the hands of criminals who can then use them to copy your credit card information, even as the card never leaves your wallet, which is “securely” tucked into the inner pocket of your coat.

Are there any credit cards for people with no credit history? (Credit Card Chaser)

Fortunately, there are some available credit cards for people with no credit history. To protect them, many credit card companies deny applications of individuals who have bad or no credit. The good news is that some companies will give you a chance, and even if they don’t, there are other options for building up your credit.

Chase Agrees to Settle Lawsuit on Overdraft Fees (NY Times Bucks Blog)

J.P. Morgan Chase has agreed to pay $110 million to settle a class-action suit challenging the way it charged debit card fees to customers who spent more than what was in their accounts.

SaveUp Wants To Reward You For Saving Money

Dan — Fri, 10 Feb 2012 21:55:54 +0000

There’s a glut of services that pay you back for spending money, from cash backs to frequent flyer miles, and already we’re seeing how beneficial they are. But there’s one startup that’s more than happy to reward you for saving instead. It’s called SaveUp. And the prizes at stake are not a paltry sum of money.

Here’s what to expect when you linked your account to SaveUp.

Effortless Ways to Earn Credits

Once you register for SaveUp with an email address or through Facebook Connect, you can easily start earning credits just by inviting a friend to join (15 credits) or watching a short video on auto loans (30 credits) or linking a bank account to your Facebook profile (200 credits).

A Variety of Rewards at Stake

Credit can be spent on entries into SaveUp’s monthly drawings where you can win a $750 Panasonic TV, a $50,000 personal makeover or $2 million as jackpot cash prize. Or, each valued at $5,000, you can win a holiday fund or New York vacation or car loan payment.

Several Types of Financial Accounts Supported

SaveUp can link to different types of US-issued financial accounts including savings, retirement and student loan accounts. Whenever you save money or pay down debt in any of your linked account, SaveUp will send you credits to spend on its monthly drawings. For instance, every dollar spent on your student loan or mortgage or every dollar saved in your checking account will earn you one SaveUp credit. So the more you save, the stronger chances you have for winning.

Bank-grade Security, and More

SaveUp partnered with Intuit for its state-of-the-art encryption technology. It also uses the same back end technology as TurboTax and is monitored by some of the world’s advanced security technologies such McAfee, VeriSign, and TRUSTe.

User-friendly Web Inteface

The site’s design is easy on the eyes. No ads on the sidebar, no unnecessary pages to click. When you get to the main page, you can easily locate where to input your account information. There’s a page that tracks total money saved and money spent on paying off debts and another page that showcase prizes available at stake every monthly draw.

It’s for Free!

What better way to get you motivated to save than getting rewarded handsomely for free. SaveUp doesn’t have sign-up fees or hidden usage costs, service is 100% free.

What’s more, financial advice is also free. The SaveUp blog is an informational trove, from debt payment to vacation savings strategies.

All in all, it’s one of the few financial web apps worth signing up for. Think of SaveUp as an innovative motivational tool for saving money and paying off debt.

Simple Ways to Rebuild Your Credit Score

Dan — Tue, 07 Feb 2012 03:35:26 +0000

It’s been a rough time since the recession and credit scores are among the casualties badly hit. Unless you don’t plan to take out loans or pay reduced rates on lines of credit, rebuilding credit should be one of your priorities in 2012. Below are some of the not so complicated ways to begin with. They’re simple to follow that you can easily finish four in a week’s time.

No. 1:
Get your free credit score at Credit Karma or Quizzle. Knowing your score will help you keep a sense of perspective of how much damage needs repair.

No. 2:
Get your free credit report every 12 months from major credit bureaus (Equifax, Experian and TransUnion). You can stagger them throughout the year for periodic credit checks. Visit www.annualcreditreport.com or call 877-322-8228 for details.

No. 3:
Pay of credit card debt before anything else. If your income is not enough to clear a significant portion of your debt, start a side job to earn extra money. The rationale behind this is that a mortgage rate or a car loan is often way less than most credit card rates.

No. 5:
Mind your credit utilization ratio. Contrary to popular belief, you don’t have to use all your available credit on a card to strengthen your credit score. In fact, credit bureaus think it ideal to utilize only about 30% of your available credit. It’s a rather small percentage which indicates that you’re not wholly dependent on lines of credit and better able to manage your finances responsibly.

Maintaining an ideal credit utilization ratio means you have to use cash for most of your purchases.

Another thing, you can’t just close credit cards with a high credit card or credit cards held for years. This is in keeping with the ideal utilization rate. Closing a card can increase your rate and dent your credit score.

No. 6: Next to credit card debt, pay off debts on specialty store cards. They often have rates above 20 percent.

No. 7: Be vigilant and watchful. There has been a rise in the number of products of services that promise ways to get rid of debt. They’re often unrealistic, if not downright misleading. So be careful about offerings you get in your inbox.

No. 8: Go back to basics. Spending less than what you earn is part of the basics, and so is saving and investing a big chunk of your income for a rainy day. Get the basics, maintain a debt-free lifestyle, and keep your stellar score handy.

Weekly Credit Roundup: Too Reliant on Credit Cards?

Dan — Sun, 05 Feb 2012 05:06:05 +0000

Too reliant on plastic edition (Creditcards.com)

While my credit and debit cards have been invaluable tools in my personal finance arsenal, I may have to admit (much to my husband’s excitement) that perhaps I really should carry a little emergency cash money.

How to Build Your Credit Responsibly (Credit.com)

If you have a new credit card, one reason you might have gotten it is so that you can use it to finance purchases you might otherwise have had a hard time making. You may also have secured the card to help you rebuild your credit standing.

How to Increase Your Credit Limit with Citi and Capital One (Credit Shout)

This is a familiar problem among credit card users. Just ask any Capital One cardholder who has tried to do so and you’ll get the idea. They feel responsible enough to get a credit limit increase and the issuer balks at their demands. What can be done?

Free Experian Credit Score from Credit Sesame (PT Money)

Forgetting for a second the massive amount of money I plan to spend, I’m going to need the best credit score possible for the best mortgage rate possible. Credit Sesame offers up a free Experian credit score without any cost, and I’ve decided to use them (in conjunction with others) to keep track of my credit.

How to Close a SmartyPig Account (Cash Money Life)

SmartyPig added a social element to saving, and turned it into something of a game. To top it off, they added some of the best interest rates in the nation (at the time), and the opportunity to save toward a goal at high interest rates, then redeem your money for discounted gift cards, which in effect, would increase your savings even more.

Zero Percent Balance Transfer Cards Save You Money (Yes I Am Cheap)

Credit cards carrying a high interest rate can drain your pockets and cost you more than you may bargain for, but a zero interest credit card, even if the rate is valid for a short period, can save you hundreds of dollars in interest every single year.

Using Credit Card for International Travel

Dan — Fri, 03 Feb 2012 08:19:35 +0000

SF9CDYSEER4S

International travel, whether you’re novice or pro, comes with built-in credit card issues on security, cost and convenience. You have to be a little more street smarts when it comes to using credit card abroad. Below are some of the biggest issues you’ll deal with when you’re away for a few days or long.

Security: Prevent Fraud While Away from Home

Check your mail for copies containing credit card information or any documents that may be useful for identity thieves. Shred or store them in a safe or ask someone trustworthy to pick up your mail if you’ll be away for long.

Preempting fraudulent access to your account requires imagination and circumspection. Ask yourself what means and ways identity thieves can possibly use to access data while you’re abroad. And don’t even think about glossing over a security risk no matter how small.

Cost: Reduce Foreign Transaction Fees

Know how much foreign transaction fees (or fees imposed on all transactions made abroad) your banks charge. There are banks that offer credit cards with no foreign transaction fee while most charge up to 3% in foreign fees. For frequent travelers, it’s best to travel with a credit card with zero foreign transaction fees. There’s a growing number of travel credit cards that waive foreign transaction fees and they’re all a boon to business and frequent travelers.

Besides foreign fees, there are also fees imposed on cash withdrawals. They’re costlier than ATM transactions since credit cards have no grace period on cash withdrawals.

Other fees exist though they’re not as common as these two. Check against expensive fees by visiting travel forums and consulting travel guidebooks before you leave home.

Convenience: Use Your Credit Card the Painless Way

False fraud alerts are all too common (and all too annoying) so make sure you notify banks and credit card companies of your trip. This would ensure seamless use of your credit card abroad.

Issues of compatibility are also key to how convenient using credit cards abroad are. If you’re traveling to Europe, for instance, train stations and gas pumps may require cards with the Chip and PIN system and only a handful of credit cards issued in the US are compatible with this system.

Be aware of compatibility issues by anticipating your needs (train stations and gas pumps). This should lessen travel-related hassles and credit card costs abroad.

Want A Better Credit Score? Learn to Say “No” More Often

Dan — Tue, 31 Jan 2012 10:21:29 +0000

When “yes” becomes an automatic response to familiar questions, we forget about meaningful “no’s” that are crucial to keeping good habits and priorities. We can’t help it most of the time. Ads targeted at our consumer-selves are programmed to have us say “yes” to cool gadgets and junk the old ones. Saying “no” gets harder and harder, and so is managing our finances. It’s not surprising Tony Schwartz advocates saying “no” when it comes to setting priorities or goal-keeping.

Saying “no” is also fundamental to improving your credit score. That’s because it requires a degree of discipline and care to manage credit cards, loans and mortgages responsibly. It’s more like forgoing the supersize dessert to keep your calories in check.

Here are just a few say-no circumstances that help improve credit ratings.

Saying “No” in Order to Spend Within Our Means

With limited money to spend and unlimited stuff to buy, spending within our means is often a tug of war between our irrational impulses (to spend on luxuries) and our disciplined approaches to managing resources (that definitely includes saving).

Saying “no” to expensive parties you can’t afford or to takeout lunches while you’re in debt is difficult, especially since the social pressure is high. But say “no” nonetheless and say it with resolve. That’s the only way you can spend within your means and perhaps save enough for early retirement.

Saying “No” to Second-rate Credit Products and Services

We say “yes” to maintain the status quo, no matter how unpleasant that is. At times we’re too lazy to call the credit card company and ask for annual fees to be waived. Our non-doing is another way of saying “yes” to services that cost us money.

Saying “no” is proactive. It’s our way of saying we’re in control of our finances, that we assume total responsibility of our debt and credit situation.

So the next time someone pitch a credit card with virtually zero fees and yet with rules too shady to be missed, give yourself a favor and just say no.

Saying “No” to Debt

Debt is the rich man’s number one enemy. It’s one of the biggest pain graduates are forced to sweat over for years, in the form of high interest student loans. Students are duped into getting one by institutions that exist only for profit.

It pays to realize early on that debt is the biggest money trap to avoid. If you’re a bit late in the game and have assumed multiple loans, organize your finances and try to pay off your debt quickly. Try some tested methods on eliminating debt (such as Dave Ramsey’s Debt Snowball Method) and make becoming debt-free your top priority. That’s step one to achieving financial independence and, of course, to improving your credit score.