The National Foundation for Credit Counseling’s (NFCC) December online poll asked consumers to rank their 2012 financial resolutions.   This poll was conducted at their web site from December 1 to 31, 2011 with 2319 individuals responding to it.  The same poll was also conducted in December 2010. Decrease debt was the number one priority for the majority of those responding in both years.

Survey question

The question asked was: What was their number one financial New Year’s resolution for 2012?  The four choices were: decrease debt, improve credit score, increase savings, and decrease dependence on credit cards.  Here is how they responded: read more »

Some believe that if a bill is charged-off, it is no longer due. That is not the situation, the bill is still owed.   If the creditor is unsuccessful in getting the account paid, it is written-off their books as a loss.  This is usually after the bill is 180 days or more past due.  The creditor has now categorized this account as late stage delinquency, and is often handed over to a third party collection agency for them to collect.  The creditor hopes to get a portion of the money back.

Collection agency

The next step is the collection agency will contact you for payment of the bill.  Now you are dealing with the collection agency, which is usually more aggressive than the creditor. They will call you and send you a verification of the bill.   Per the Fair Debt Collection Practices Act (FDCPA), they aren’t permitted to harass you to get the bill paid.  I have mentioned your rights in this blog in the past. If the collection agency is unable to get timely payment of the account, they could contact an attorney to sue you. read more »

This almost turned out to be the shortest article ever, one word…”none.”  Prepaid cards are not reported to the three major credit reporting agencies (CRAs) – Equifax, Experian and TransUnion.   I found three prepaid loadable cards that state they report to credit reporting agencies.  The three cards are Prepaid Visa RushCard, READYdebit Visa and AccountNow. They don’t report to the three major companies, but to Payment Reporting Builds Credit (PRBC).  Ever heard of them?  I didn’t think so. read more »

In November 2011 I discussed CoreLogic’s new consumer report, the CoreScore Credit Report.  CoreLogic made this report available to lenders on December 7, 2011.  CoreLogic is another consumer credit reporting agency. They collect credit reports from the three major credit reporting agencies – Equifax, Experian and TransUnion – clean up the reports, merge them and sell them to the mortgage industry.  Now they have added proprietary and other data to the reports.

CoreLogic Credit Report

Approximately 100 million U.S. consumers will have a credit report at CoreLogic compared to 200 million at the three major credit bureaus. The CoreLogic credit report combines the traditional credit report data from the three major credit reporting agencies, along with CoreLogic’s proprietary data which includes: read more »

I have discussed strategic defaulters in previous blogs.  To refresh your memory, strategic defaulters stay current with their debts but default on their mortgage because they have negative equity or are “upside down.”  They can afford to pay their mortgage, but choose not to do so.

FICO study

FICO conducted research on strategic defaulters compared to those that go delinquent (90 days or more late).  They identified the following characteristics:

Strategic defaulters have a higher FICO score and have had good payment history.

They haven’t used much of their credit limit on their credit cards, so their utilization is low. read more »

The U.S. Department of Justice (DOJ) released the results of their annual identity theft survey – Crime Victimization Survey (NCVS).  They surveyed approximately 46,000 heads of households nationwide, asking about their households’ experience with identity theft. Identity theft has increased substantially between 2010 and 2005.

Number impacted

Approximately 8.6 million U.S. households had some type of identity theft in 2010 compared to 6.4 million households in 2005, which was a 34 percent increase.  According to the Department of Justice, “identity theft is the unauthorized use or attempted use of an existing credit card or another type of existing account, the unauthorized use of personal information to open a new account or for another fraudulent purpose, or a combination of these.” read more »

I have discussed payday lenders in previous blogs and how much of a rip-off they are. Did you know that some banks and credit unions offer short-term loans to compete with payday loans?   These loans have many different names such as short-term, emergency, direct deposit advance and account advance loans.  They are usually for a short period of time and let you borrow up to $500.

Banks and credit unions don’t usually lend money to customers for emergency purposes.  Now there are more consumers without credit cards or savings accounts, who don’t have the funds to pay for an emergency. Banks and credit unions are offering these loans more than in the past. read more »

In what might win the award for most boneheaded public relations move of 2012, on Monday January 9^th the world woke up to the announcement that Suze Orman, host of the popular Suze Orman Show on CNBC, had partnered with The Bancorp Bank to introduce and endorse The Approved Card, a pre-paid debit MasterCard.  Pre-paid debit cards have very poor reputations and are generally believed to be among the worst financial services products.  They’ve also attracted marketing partnerships with other notable finance experts such as Russell Simmons, Kimora Lee Simmons, the Kardashian sisters, Lil Wayne and Alex Rodriguez (sic).

The primary criticism of pre-paid debit cards is the fee structure, which is usually extensive and complicated, regardless of the particular pre-paid card.  The fees are normally spread out over a large number of consumer actions, such as asking about your balance or requesting a paper statement.  The Approved Card, for example, has a fee attached to 20 different consumer actions and they vary from as low as $1.00 (Bill Payment Fee using a paper check) to as high as $30.00 (Bill Payment Fee – payment inquiry.)  There’s a $3 fee just to get the card and a $3 monthly “account maintenance fee” as well.   This sets up a virtual minefield of fees that consumers may not be able to avoid.

The Approved Card’s 20 “billable” consumer actions is on the high end when compared to other pre-paid cards.  The RushCard, Russell Simmons’ product line, has 17 consumer actions that generate a fee and Lil Wayne’s prepaid Discover card has 7.  The GreenDot card, another common pre-paid product, has 9.  American Express only charges one fee for their pre-paid card, which is a $2.00 ATM fee (the 1^st ATM use each month is free, according to Amex).  This is why the Amex pre-paid card is widely regarded as the best of breed in the pre-paid environment.

After The Approved Card was announced a flurry of media activity took place covering the new product and its pros and cons.  And with most online media articles, consumer comments were allowed.  As you can imagine, the consumer feedback hasn’t been great.  I’ve reviewed the consumer comments from 5 different online articles* about the new card; The New York Times, The Huffington Post, Yahoo Finance, The Consumerist, and CNNMoney.  Here’s what I came up with…

* I didn’t consider off topic comments

Another troubling aspect of prepaid debit card marketing is the suggestion that using them is going to somehow improve your credit reports and credit scores.  This is absolutely incorrect.  Prepaid debit cards, debit cards and stored value cards of any type are not reported to the credit bureaus because they’re not credit products.  They will do nothing at all the help your credit, period.  The marketing of this card is, unfortunately, no different.  What would you think if you saw this:

If you’re like several media outlets that have covered this new card then you might think that this is a suggestion that the use of the card is going to be reported to TransUnion and end up on your TransUnion credit report.  That’s a reasonable, if not the desired assumption.  The problem is you’d be wrong.

If you search around on the card’s website you’ll find this language, “This data will not appear on your TransUnion credit report at this time.”  And from an article written by Jeanine Skowronski with MainStreet.com, “It is important to understand that this data will not appear on any TransUnion credit report at this time” says Colleen Tunney-Ryan, a spokeswoman for TransUnion.  Hmmm.

The bottom line is this…if you are desperate to have a slice a plastic in your wallet and you simply can’t get any bank to give you a credit card, debit card or secured card then go for it and get yourself a prepaid debit card.  But be prepared to pay terribly high fees on most of the products and, at the same time, do nothing to get your credit back in shape so that you don’t have to pay to have access to your own hard earned after tax money.

Credit Damage Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

In late 2011 FICO, the company behind the ubiquitous FICO credit score, conducted research on score trends from October 2006 to April 2011 using a random sample of 10 million U.S. consumers with credit reports.  I have discussed this research in previous blogs and FICO has conducted more research to provide answers to the following questions:

How much has consumer credit behavior changed over these years of economic stress?

Do shifting levels of delinquencies reflect changing behavior?

How much impact is mortgage pressure having on bad credit behavior? read more »

TransUnion, one of the three credit reporting agencies, analyzes their consumer database quarterly to determine how credit active consumers manage mortgages, credit cards and auto loans.  This analysis is called the “TransUnion Trend Data”; the latest study was from third quarter 2011 (Q3 2011).  Credit card delinquencies and the average credit card balance increased from the prior quarter, while delinquencies and debt decreased from a year ago.

Delinquency rate

The national credit card delinquency rate (more than 90 days past due) was .71 percent in Q3 2011, compared to .6 percent in Q2 2011 or an 18.3 percent increase. This was the first increase since fourth quarter 2009.  The Q3 2011 delinquency rate was a decrease of 14.46 percent from the .83 percent rate a year ago. read more »