Survey shows consumers still in the dark about credit
WASHINGTON, D.C.
May 15, 2012
Consumer knowledge about credit scores has improved significantly over the past year, including awareness of who collects information on which most scores are based, the importance of checking this information, what good scores are, how to raise them, and what service providers use these scores, according to a survey in April.
But that’s about where it stops.
Most consumers still do not know how costly low scores can be, when multiple inquiries hurt their scores, and the risks of purchasing credit repair services, according to findings of the second annual consumer knowledge about credit scores paid for by the Consumer Federation of America and VantageScore Solutions.
“In the numerous consumer knowledge surveys we have undertaken over the past several decades, I have never seen such improvement from one year to the next,” says Stephen Brobeck, CFA’s executive director. “However, credit reports and scores are so important to consumers that they should try to improve knowledge that remains deficient in several key areas.”
Methodology notes
The CFA-VantageScore survey was administered to a representative sample of over 1,000 adult Americans by phone in late April 2012 by ORC International. The margin of error is plus or minus three percentage points. A CFA-VantageScore survey containing many of the same questions was administered by ORC International in January 2011.
Esteemed Judgment, Debt Attorney Abel L. Pierre Joins The Credit Repair Experts at Better Qualified
PRLog (Press Release) – Apr 30, 2012 -
NEW YORK, NY— Over the past several years, Better Qualified, LLC has developed a proven track record within the credit restoration and Identity Theft services industry. Better Qualified’s unyielding dedication to their customers and integrity has truly set the bar for the industry as a whole. Earlier this month, Better Qualified has raised that bar. In an effort to continuously provide stellar service to their clients, Better Qualified has secured the commitment from prominent debt consultant Abel L. Pierre.
When it comes to credit scores, credit reporting, and debt, Abel L. Pierre has his ear to the ground. A former adjunct professor of law, Abel L. Pierre regularly speaks to community groups, houses of worship and tenant associations regarding a myriad of debt issues from consumer lawsuits, credit reporting problems, foreclosure defense, and debt collection harassment. When a person complains about a unique issue, Mr. Pierre doesn’t just tell them to go to court, he goes with them. Mr. Pierre walks into court with a decade of legal experience as a licensed attorney. Mr. Pierre has recovered monetary awards on behalf of his clients, who have suffered the calamities of the burden of debt.
“We have been providing a great service to our clients and they were happy with our results for the past 6 years but, we realized that having an attorney working for our clients makes us even better,” says CEO Paul Oster. “Abel is an industry expert and his knowledge and expertise should help improve our client’s credit scores so, they can get better interest rates for mortgages, credit cards, insurance premiums, etc”. Mr. Pierre said in response, “Better Qualified’s great reputation speaks for itself. I am eager to help them provide the kind of service to their client’s that some companies only claim to deliver. All too often, you need someone with unique insight and experience into the myriad of laws that debt burdened clients deals with. That’s what I bring to the table.”
Background:
Founded in 2006, Better Qualified has become a leader in credit restoration and identity theft resolution services. Better Qualified is headquartered in Eatontown, New Jersey, with licensees across the country.
Since founded, Better Qualified has maintained an excellent track record of success and offers a 100% money back guarantee. The business has an A rating from the Better Business Bureau.
Contact:
Abel L. Pierre, Esq.
Law Office of Abel L. Pierre
Attorney-at-
Better Qualified, LLC
19 Christopher Way
Eatontown, NJ 07724
Tel: (732) 203-7377
Email: info@betterqualified.com
More consumers have near-perfect FICO credit score
By Pamela Yip
Many consumers are now in the top range of 800-850 of the FICO credit score, which is used by many lenders to determine creditworthiness, according to FICO Labs.
The company said 18.3 percent of consumers have a FICO score in that coveted range, the highest level since October 2008. The FICO score ranges from 300 to 850.
However, the number of consumers with a FICO score between 700-799 hasn’t rebounded, indicating that consumer credit health isn’t yet back to its pre-recessionlevel, FICO researchers said.
The percentage of consumers – 15.5 percent — in the 700-749 range is the lowest that FICO has seen since the company began tracking this information in 2005
And the percentage of consumers – 19.4 percent — falling between 750-799 is the lowest that FICO has seen since April 2009.
“There has been a clear shift,” said Rachel Bell of FICO Labs. “Many consumers have moved into the top tier of the FICO score range by redoubling their efforts to maintain an excellent credit profile. Other people have fallen into lower tiers, most likely due to the financial stress that many households have been feeling.”
Despite this shift, more than half of Americans with a FICO score in the U.S. are between 700-850, “which means they have managed their credit well despite the economic downturn,” she said.
The research by FICO Labs was conducted on a national sample of 10 million consumer credit profiles as of last October.
Credit history helps shape insurance premiums, but relationship between credit and claims a bit murky
George Altman, Capital Bureau
MONTGOMERY, Alabama — Is a storm more likely to damage your home if you are late paying credit card bills? Most insurance companies think so, and they charge accordingly, according to industry experts.
Spokesmen for State Farm Insurance Cos., the state’s largest property insurer, said that the company’s statistical models demonstrate a clear link between elements of a person’s credit report and the risk that he represents in homeowners and auto policies.
“The fact that the correlation exists is beyond dispute,” said State Farm’s Dick Luedke.
The tie between credit history and insurance claims is strong for auto, fire and theft insurance, Luedke said. It even exists, to a lesser extent, for catastrophic damage from hurricanes or tornadoes, he added.
When asked how those could be related, he said, “We would admit that that is not totally clear.”
Some aren’t buying it.
“I don’t know how many of you all know how your credit score, your FICO score, plays into purchases of insurance, but it is abused, and it needs to be addressed,” Carl Schneider, vice president of Mobile-based Schneider Insurance Agency Inc., told the governor’s insurance commission last week.
The Alabama Department of Insurance is considering action to address the situation, whether by state law or department-issued regulation, according to Charles Angell, acting deputy insurance commissioner.
“It’s totally common. Certainly every large insurance company does it, for both automobile and homeowners insurance,” Angell said.
The FICO credit score is a number between 300 and 850. A higher number indicates a better credit history. The score is based on several factors, including how much credit a person has available, how much is currently borrowed, how many credit accounts a person has, how many late payments the person has made, how many accounts are in collections, how long of a credit history a person has, and how recently the person sought additional credit.
Luedke said that State Farm doesn’t consider a person’s FICO score but instead uses certain elements of the credit report to create a different score. That number is based particularly on the number of late payments that a person has made, the number of accounts a person has in collections, and the number of credit accounts a person has, he said.
Luedke declined to estimate how much of a difference that credit history can make on the total cost of a State Farm premium. Schneider said he has seen credit alter premiums as much as 200-300 percent for some companies.
Representatives of Alabama’s second- and third-largest property insurers, Alfa Mutual Group and Allstate Corp., did not respond to questions about their use of credit information in policy premiums.
Angell agreed that there is a “very strong statistical correlation” between credit history and some types of insurance perils, such as fire. But he described the connection between credit and catastrophic wind risk as “slight.”
Currently, insurers combine all property insurance risks to come up with the premium, so credit history is lumped in with all of the perils. That’s what Angell wants to change.
“We would like to see the wind premiums shown separately, calculated separately, on a policy from the nonwind premiums,” he said. “We would like to see credit scoring applied appropriately to the two pieces, or maybe not applied at all to the wind piece.”
Angell hopes that the Legislature will establish such a requirement. Otherwise, the department could write its own regulation, he said, although there is a downside to that approach. “The industry could take us to court,” Angell said.
Additionally, a change in state law is more permanent than a department-issued regulation, which can come or go at the desires of the insurance commissioner.
Angell and State Farm spokesman Roszell Gadson both said that it often helps consumers for insurers to consider credit history.
“If someone has a very good credit score, but they live in a high-risk area, for instance, then there’s going to be a benefit for them,” Gadson said.
Does a Good Credit Score Mean Cheaper Car Insurance?
It’s no secret that nowadays your credit score is almost as important as your social security number, but can having a good credit score lead to cheaper car insurance? Although insurance providers may not willingly divulge the information on exactly how your deductibles and premiums are calculated, but it’s almost a guarantee that your current credit score is thrown in the equation.
Why you may ask? Instead of using your FICO score, insurers examine what’s referred to as an “insurance score” to determine whether or not you’ll be a potential risk for filing claims – a lower credit score, according to some experts in the industry, means that a customer with a low credit score will be a higher risk than those with higher digits. Ultimately, cheaper car insurance premiums do depend on your current credit score.
Affordable Car Insurance and Good Credit Scores
The recent statistics from a study conducted by CarInsurance.com are promising for individuals with credit scores of 750 save on average $783 each year on lower car insurance. The 40% of customers with a credit score over 750 can expect to save almost $23,000 on cheaper auto insurance costs over the span of an adult lifetime.
For teen drivers between the ages of 16-24, credit scores aren’t really significant in factoring cheaper auto insurance because the majority of teens don’t yet have established credit; however consider the following statistics for teens with established credit:
• Credit scores above 750 pay an average of $2,515/yr
• Credit scores between 650-749 pay an average of $2,387/yr
• Credit scores between 500-649 pay an average of $2,692/yr
• No credit pay an average of $4,191
Young adults between the ages of 25-34 with credit scores over 750 and a clean driving record qualify for lower vehicle insurance and pay an average of $1,155 annually, compared to $1,938 to the same population with credit scores below the magical 750. Other statistics revealed the average driver between the ages of 25-34 with:
• Credit scores between 650-749 pay an average of $1,658/yr
• Credit scores between 500-649 pay an average of $2,023/yr
• No credit pays an average of $2,182/yr.
Ways to Boost Your Credit Score to Become Eligible for Cheaper Car Insurance
Even if your current credit score is less than perfect, there are ways to improve your credit to take advantage of lower vehicle insurance premiums.
• Routinely check your credit score from the 3 major credit reporting agencies
• Immediately report any errors.
• Always make payments on time.
• Never allow coverage to lapse.
• Establish credit in your name.
• Don’t hesitate to compare insurance quotes; doing so doesn’t affect your insurance score.
Remember that maintaining a good driving record as well as a credit score of 750 or above are the most effective ways to enjoy the benefits of lower auto insurance! While it may take some effort on your part to be responsible, consider cheaper car insurance premiums a well-worth investment into your future!
Related Links to Cheap Car Insurance
NJ Identity Theft Victims Offered Help With Credit Repair Process
Identity Theft topped the Federal Trade Commission’s list of consumer complaints in 2010, accounting for 19% of the 6.1 million complaints received, and 2011’s totals are expected to be even higher.
ID theft is now an estimated 37 billion dollar crime. Victims of identity theft can face out-of-pocket costs of $3,000 or more plus be left with hundreds of hours fighting creditors.
Most cases of credit card fraud involved misuse of existing credit card or other accounts, while 1.8 million found that new accounts were opened, or other frauds were committed, using their personal identifying information.
How does ID theft affect the average victim?
- 47% have trouble getting credit or a loan as a result of identity theft
- 19% have higher credit rates
- 16% have higher insurance rates because of identity theft
- 11% have had a negative impact on their ability to get a job
- 70% have trouble getting rid of (or may even never get rid of) negative information on their credit records
- 40% have experienced stress in their family lives as a result of displaced anger and frustration over the identity theft
The odds of becoming an identity theft victim increase considerably if you are a young adult or a small business owner. The reason people in these demographics tend to be more exposed to identity thieves based on the normal behavior they need to engage in to survive in today’s world.
Young NJ adults, especially those away at college, are likely to use shared library or dorm room computers. New Jersey small business owners tend to complete financial transactions by mail or over the Internet, often using their personal accounts and home addresses to aid in processing them. More than 1 out of 3 businesses have been hacked by thieves putting your personal information at risk.
- 29.1% are Medical/Healthcare,
- 16.2% are Government/Military,
- 10.5% are Banking/Credit/Financial,
- 9.2% are Educational institutes.
These are types of companies we all use every day.
It makes sense to trust an experienced firm like Better Qualified, LLC to follow up so you know you are covered. Even if you are a victim who has been offered help by a company that has had its accounts hacked by thieves, you should consider hiring someone to represent YOU.
If all this concerns you, contact us today to learn more about BQ IDShield, identity fraud services.
Credit Scoring: A Consumer’s Perspective
It is no secret that insurance companies use the credit scores of individuals as one tool in the approval/disapproval process and in establishing premiums.
Most courts allow this process as long as the scoring is uniformly applied to all insureds and is consistent with the purposes of the individual state’s insurance code. But just because credit scoring is legal does not make it right.
Insurers contend that there is a clear correlation between credit scores and the risk of loss; that is, the lower the credit score, the more likely that the insured will file a claim. This may be statistically correct, but I wonder if insurers take into consideration the fact that the credit-scoring companies often make mistakes. And, what is even worse, the credit-scoring companies don’t admit mistakes or when they do, it takes months and even years to make the corrections.
That is not going to help any potential insured get coverage when it is needed.
Insurers want to attract and retain low-risk customers since this is a way to make a profit, but many state insurance codes have the express purpose of making insurance available and affordable for everyone. Turning away a potential customer or charging the customer prohibitively high premiums because of some anonymous crowd of pencil-pushers using subjective standards does not seem to me to be living up to that express (and grand) purpose.
Plus, I just find it irritating that these credit-scoring agencies have so much power over the daily lives and operations of citizens (and even countries as the effect of the downgrading of the U.S. credit rating shows).
Now, before anyone thinks I am complaining because I have a low credit score, the fact is that I don’t. And I realize that an insurer needs to make a profit to continue in business.
But credit scoring still seems to me to be a crude, unfair, overly subjective way to set underwriting standards. There has to be a better way to establish the insurance-worthiness of a potential customer.
Those in the insurance business are intelligent people, and ignoring credit scores or at least downgrading their importance when it comes to the approval/disapproval process and establishing premiums cannot be that hard a task.
David D. Thamann
David D. Thamann, JD, CPCU, ARM, is managing editor for FC&S Online.
12 myths about bankruptcy
Will you lose your house and retirement savings? When will you be able to borrow money again? Get the facts on these questions and more.
Like most big, bad scary things, bankruptcy has a reputation based on a few tidbits of truth and a lot of embellishment. And like most creepy crawlies, it’s not nearly as frightening once you know the truth.
With a mind toward declawing the monster, here are a dozen misconceptions about bankruptcy:
1. Everyone will know I’ve filed for bankruptcy. Unless you’re a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it’s true that bankruptcy is a public legal proceeding, the number of people filing is so massive that very few publications have the space, manpower or inclination to run all of them, although some local newspapers do print the names of those who have filed in that community.
2. All debts are wiped out in Chapter 7 bankruptcy. You wish. Certain types of debts cannot be discharged, or erased. They include child support and alimony, student loans, restitution for a criminal act and debts incurred as the result of fraud.
3. I’ll lose everything I have. This is the misconception that keeps people who really should file for bankruptcy from doing it, says Chris Viale, the chief operating officer of Cambridge Credit Counseling in Massachusetts.
“They think the government will sell everything they have and they’ll have to start over in a cardboard box,” Viale says.
While bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing.
“For most people, they’ll pass through a bankruptcy case and keep everything they have,” says John Hargrave, a bankruptcy trustee in New Jersey. If you have a mortgage or a car loan, you can keep the property as long as you keep making payments (like the rest of us).
4. I’ll never get credit again. Quite the contrary. It won’t be long before you’re getting credit card offers again. They’ll just be from subprime lenders that will charge very high interest rates. “There are innumerable companies that will provide credit to you,” says California bankruptcy attorney and trustee Howard Ehrenberg.
“I don’t advise any of my clients to run out and run up the bills again, but if someone does need an automobile, they can go and will be able to get credit,” he says. “You don’t have to go underground or something to get money.” (Do you know your credit rating? Take MSN Money’s quiz for an estimate.)
5. If you’re married, both spouses have to file for bankruptcy. Not necessarily. “It’s not uncommon for one spouse to have a significant amount of debt in their name only,” Hargrave says. However, if spouses have debts they want to discharge that they’re both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn’t file.
6. It’s really hard to file for bankruptcy. It’s really not. Technically, you don’t even need an attorney — you can do the paperwork without one. However, going through the procedure alone is not recommended.
7. Only deadbeats file for bankruptcy. Most people file for bankruptcy after a life-changing experience, such as a divorce, the loss of a job or a serious illness. They’ve struggled to pay their bills for months and just keep falling further behind.
8. I don’t want to include certain creditors in my filing because it’s important to me to pay them back someday, and if the debt is discharged, I can’t ever repay them. Bless you for even thinking about such a thing. You’re no longer obligated to repay them, but you always have the opportunity. If your conscience won’t let you sleep because you didn’t pay your debts, there’s nothing in the bankruptcy code that prevents you from doing that once you’re back on your feet. But it is nearly impossible to leave any account with a balance out of your list of creditors. In general, all creditors receive notification of your bankruptcy filing, whether they are listed in the petition or not.
The Bankruptcy Business
9. Filing for bankruptcy will improve my credit rating because all those debts will be gone. Filing for bankruptcy is the worst “negative” you can have on your credit report. Unlike other negatives, which stay on your report for seven years, bankruptcy can be there for 10 years, but you do get to rebuild your credit eventually.
10. You can’t get rid of back taxes through bankruptcy. Generally speaking, this is true. However, there is such a thing as tax bankruptcy, says tax educator Eva Rosenberg, known on the Web as TaxMama.
11. You can only file for bankruptcy once. The truth is, you can file for Chapter 7 bankruptcy only once every eight years, says Justin Harelik, Bankrate’s bankruptcy adviser. For Chapter 13 reorganization, you can file more often than that.
Of course, that doesn’t make it a good idea.
“Multiple bankruptcies are really bad,” Rosenberg says. “Many people get into the habit of once they’ve done it, it becomes a way of life. This is not good for your karma.” Or your credit rating.
12. I can max out all my credit cards, file for bankruptcy and never pay for the things I bought. That’s called fraud, and bankruptcy judges can get really cranky about it.
NJ Credit Repair Company Helps Establish Restore Business and Personal Credit
Better Qualified, a leading NJ credit repair company, can help restore personal and business credit in as little as six months.
According to Better Qualified, many consumers have erroneous information on their credit report that is hurting their score. The Public Interest Research Group (PIRG) conducted an independent study and found that 79% of credit reports surveyed contained either serious errors or other mistakes of some kind. These mistakes can cost consumers hundreds or even thousands a year.
The Freedom Package from Better Qualified has been the credit repair solution many have been looking for. This package consists of a comprehensive six-month program that includes NJ credit repair services, identity theft resolution, education services and much more. This popular program has helped thousands of consumers with bad credit and the company’s superior customer service has earned them an “A” rating with the Better Business Bureau.
Better Qualified’s superior customer service is evident online, where many have given the NJ credit repair company top ratings.
NJ Credit Repair testimonials
Jason W. writes “Better Qualified found mistakes on my credit report and began cleaning negative marks immediately. At that time they also suggested that I take initiative with their help to separate my personal credit and business credit so that I would not have future complications. A year later my credit score has risen and my business credit is established with multiple creditors. I highly recommend that everyone use Better Qualified for your personal credit and if you own a business. You will not regret it.”
Jeff V, an employee at a mortgage firm in NJ, praised Better Qualified for helping his client with his tarnished credit score. Jeff writes, “On behalf of myself and my client, we wish to thank you for successfully getting his credit score from 644 to 688 in under 45 days. By getting his score up, we were able to avoid the 1.5% add-on for a credit score under 649 and get him a 4.25% rate…essentially leading him to $4,861 in savings and $57 savings every month. You guys are the best and I’ll be sure to refer anyone else I know to you!”
Additional Better Qualified credit repair testimonials can be found online.
Better Qualified takes a time tested, legal approach to restoring bad credit. The NJ credit repair company will challenge all disputable information on a credit report and will work to have any erroneous information deleted.
To learn more about their services call (888) 533-8138.
How Balance Transfers Impact FICO Scores
By Eva Norlyk Smith, Ph.D. October 25, 2011
Need money for a small home remodeling job, or to make much needed car repairs? Or do you simply want to use a 0 percent balance transfer offer to pay down high-interest credit card debt?
Before you apply for that new balance transfer card, make sure you know the ins and outs of how balance transfers impact FICO scores so you can minimize potential disadvantages.
Taking out a balance transfer may lower your FICO score in the short-term. But it can also help boost your score over time. Here are the three ways in which taking out a balance transfer will impact your credit score.
1. Opening a new account will shorten the average length of your credit history.
Any time you open a new credit card, it will shorten the average length of your overall credit history.
“About 15 percent of your FICO score takes into account the length of your credit history,” says Kim McGrigg, Community and Media Relations Manager at Money Management International. “Part of that average is all your accounts, so when you open a new account, obviously it affects the average length of credit history. If you close the old credit account, it will impact scores even more.”
The good news is that the impact on credit scores from opening a new account is small and relatively short-lived, as long as you follow good credit management practices on the new account. The key is to keep that old account open and use the card occasionally so it’s still active.
2. Credit inquiries will ding your FICO score.
Each time you apply for credit, a lender will check your credit history to determine if you’re a good credit risk. This will show up on your credit report as a “hard inquiry,” which can lower your score.
According to FICO, one credit inquiry every once in a while will have minimal impact, shaving as little as four to eight points off credit scores, and the effect, again, is relatively short-lived. However, frequent credit inquiries affect FICO scores proportionately more and the impact lasts longer.
3. Your credit utilization rate will suffer or improve, depending on how you use your balance transfer.
Next to paying bills on time, your credit utilization rate, or debt-to-credit ratio, is one of the most important components of your FICO score. It makes up a full 30 percent of scores.
And when you take advantage of a balance transfer offer, it can hurt or help your credit utilization rate, depending on how you use the loan.
For example, if you open a 0 APR balance transfer credit card in order to fund a small home remodeling project or large purchase that you plan to pay off gradually, your debt-to-credit utilization will increase, lowering your score. The impact may be blunted by the fact that your overall credit limit will also increase. However, if the loan is large enough, your score will still be negatively impacted until you pay down the loan.
On the other hand, if you take out a balance transfer to pay off existing high-interest debt on another credit card, your overall utilization will decrease. The amount of debt that you have will stay the same, but with the new credit card, you will have a greater overall credit limit, so the total debt-to-credit utilization will improve.
In addition, your within-card utilization may also improve, which help boost your score. For example, let’s say you apply for a new balance transfer credit card and get a card with a $10,000 limit. If you transfer $5,400 from a card with a $6,000 credit limit to a card with a $10,000 limit, you will lower your overall credit utilization — and you will lower the within-card utilization as well (from 90 percent utilization to 50 percent).
Your credit score may be temporarily dinged by opening a new account. However, because credit utilization accounts for a full 30 percent of your score and opening new accounts only affects 10 percent of your score, the overall impact will still be positive.
However, with that said, be aware that having extra credit available could also turn out to be a credit score liability if you’re not careful, warns McGrigg, especially if you keep your old account open and active.
“It’s true that if you don’t close the old account, you might actually have a chance to improve scores,” says McGrigg. “However, that’s only true if you don’t charge the account right up again. For many people, having an account with a zero balance is too tempting, and they might end up twice as much in debt as before.”
It’s also important that you don’t get complacent, warn experts. Transferring your debt to a lower interest balance transfer card may be a step in the right direction — but there’s still more work to be done.
“So many people think that [by] moving to a better account with a better interest rate, their problems are solved,” warns credit repair expert and financial literacy advocate Harrine Freeman, “But they’re really just moving money. Don’t get fooled by tricks and gimmicks. You don’t know what will happen in another year; you could move, you could lose your job. It’s best to just pay your debt the old-fashioned way.”
