Auriemma Consulting Group conducted an online survey of 509 U.S. adult credit card users in September 2011 regarding payment priorities. Payment priorities shifted from credit cards to mortgages; credit cards were the number one priority in 2009 and 2010, but moved to number three in 2011.

Highlights

When the responders were asked their top financial obligations,  83 percent said credit cards,  59 percent  said utility payments, and 51 percent said mortgages or rent.  Payment priorities did not match their financial obligations. When asked about their highest priorities, 77 percent of respondents selected mortgage payments as the first, 52 percent selected utility payments next and 38 percent selected credit cards as third. Compared to 2009, credit cards were the first priority, mortgages were the second and auto loans were the third. The percentages were not given by Auriemma for the 2009 survey. read more »

You may have noticed businesses that offer title loans, or at least you’ve seen or heard advertising for them. Some of these businesses not only offer title loans, but also check cashing and pawn loans.  These are what I called “2nd tier” loan options, and they are becoming more popular than ever.  Here’s the low down on these options…

Title loans

What are title loans? Car title loans use your car as collateral for a loan, but you must own your car free and clear.  You hand over the car title and extra set of keys, and if you don’t pay, they can take your car.  Since there is no credit check, only income verification, those with poor credit are more prone to get these loans.

High interest rates

Title loans are marketed as emergency loans, similar to payday loans. They are usually for 30 days with amounts usually ranging from $300 to $2,500. The interest rates can be 30 percent a month, which is 360 percent annually. The lender usually lets you borrow up to 50 percent of the car value, which is substantially lower than its value.  The borrower signs loan papers, with the terms which include the car as collateral. read more »

Recently a study was conducted by researchers from three universities – Louisiana State University, Texas Tech University and North Illinois University – to determine if there is any correlation between credit scores and personality and job behavior. Their finding were that there was a correlation between credit scores and personality, but not with credit scores and job behavior.

Credit scores and personality

According to the research being agreeable or friendly is related to those with a low credit score. In other words, nice people have lower scores. The explanation is that someone who is nice is more likely to co-sign for a credit card or loan for a friend or family member. They don’t turn down the sales clerk who asks them to apply for a credit card. read more »

I get on my soap box this time of year to remind you to get free copies of your credit reports from all three credit reporting agencies – Equifax, Experian and TransUnion. You are entitled to receive a free credit report from each company every twelve months, according to the Fair Credit Reporting Act (FCRA).  Have you ordered any this year? If not, go to www.annualcreditreport.com to get your free report.   Did I say free?  Unfortunately free scores are not included.

Free from certain states

In addition, seven states have laws that give you one free credit report annually from all three companies.  The states are Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey,  and Vermont. If you are a resident of one of these states, you get one for the federal law and one for the state law, which is two a year per company, or six free a year.  Georgia is two per year. read more »

Consumer Reports National Research Center conducted a nationwide survey from July 1 to 10, 2011 of 1,258 adults 18 years and above regarding credit cards. Over one third of responders had at least one problem with their credit card company in a year and saw slight improvements in how they were treated by credit companies this year compared to last.

Credit cards are one of the lowest-rated services that Consumer Reports has analyzed with only 51 percent of responders highly satisfied with their credit cards in 2011 compared to 45 percent in 2010.  Thirty five percent of responders had at least one credit card problem in the last year, such as new annual fees, higher interest rates, lower credit limits, or limits on rewards.  The number of responders that experienced unwelcome news about lower credit limits decreased from 37 percent in 2011 from 47 percent in 2010.   Taking this into account, it is surprising that only 12 percent of responders said their credit card companies had treated them unfairly in 2011.  The proportion decreased from15 percent in 2010 and from 22 percent in 2009. read more »

In October, I discussed FICO’s report on the national distribution of FICO® 8 Scores comparing before, during and after the recession from 2005 to 2011.  FICO is the creator of the ubiquitous FICO credit scoring system, the most commonly used credit score. Pre-recession score distributions had movement to the lower and higher scores, while during the recession more scored in 550 to 649 range.  A majority paid their bills well so that the overall distribution didn’t change drastically, but the individual scores did change more.  FICO issued additional information on how individual scores changed in two points in time –  during the recession (2008 to 2009) and post recession (2010 to 2011). read more »

A reloadable prepaid card has cash preloaded on it. It is not a debit card, gift card or credit card.

How do they differ? A debit card is connected to your checking account. A gift card is for a particular amount and usually for a particular merchant; it is not reloadable. A credit card allows you to buy now and pay later for the purchase and it is included on your credit report. A reloadable card is money loaded on a card, it is considered cash, and can be used anywhere.  The card does not have to be thrown away and can be reloaded again. Many reloadable prepaid cards are affiliated with MasterCard, Visa or American Express. They are meant for long term use and for those who don’t have bank accounts or credit cards, especially high school and college students. read more »

Experian, one of the three major credit reporting agencies, conducted their second- annual State of Credit list of cities with the highest and lowest credit scores.  The data from this report was based upon data from January through June 2011 and used the VantageScore.  The VantageScore was developed jointly by the three major credit reporting agencies – Equifax, Experian and TransUnion. The scores range from 501 to 990, a score in the 700 range is considered average or a “C”; a score is the 600’s is considered a “D”.   The average VantageScore before the recession was 754, was 748 in 2010 and was 749 in 2011.  There was a one-point gain in 2011. read more »

From September 9 to 11, 2011, GfK Roper conducted a nationwide phone survey for Visa of 1,000 adults over 18 years regarding credit scoring.  Many didn’t understand what was included in a credit score or what information counts the most. Approximately 42 percent of the responders didn’t check their credit score regularly.

Key Findings

They were correct on three items that were included in a credit score – payment history, debt and bankruptcy. read more »

This is one of the scoring myths that may be hard to believe. When you pay off an installment loan, there may be a slight positive impact to your FICO credit score, but very little.  And, in many cases your score won’t change at all.

Installment loans are usually auto and mortgage loans, and you pay a fixed amount per month for a specified number of years. The loan amount is usually thousands of dollars, secured either by your car or home.  Installment loans don’t have a large impact on your score, since borrowers tend to pay these loans before their credit cards. They don’t want to lose their home or car.  The amount of the loan compared to the balance remaining, does not impact the score as it does for credit cards, because it takes years to pay off the loan and reduce the amount owed.  For a mortgage loan, there is very little reduction in principal for many years. read more »