Are You Prepared For An Economic Slowdown?


Beware of Credit Score Inflation

America’s credit scores have improved along with the improving economy. Compared to 2006, there are approximately fifteen million fewer Americans with credit scores below 660 and a corresponding increase of fifteen million Americans with scores greater than 740.

That’s good news, with a potential downside. Federal Reserve research suggests that we’re experiencing credit score inflation, similar to grade inflation in college. The economy is doing so well that the true risk of marginal borrowers may not be properly represented. Analysts are concerned that today’s consumer with a credit score of 660 – considered the boundary for subprime lending – may reflect higher risk than a consumer with a 660 credit score a decade ago.

Consumers may be doing okay now with a 660 score in a strong economy, when they are more likely to have a decent paying job – but what happens in tougher times? Are they properly prepared for an ec…

Why You Don’t Want To Be “Credit-Retired”


You’ve reached a point where you don’t have to use credit cards anymore. Your home is paid off. You don’t have other outstanding debts. You must be an excellent credit risk, right?

As strange as it sounds, creditors do consider you a risk when you’ve become “credit-retired.” If you haven’t been using credit for some time, you don’t have any recent information in your credit report – which is the primary method lenders use to assess your risk. If lenders can’t assess your risk, they won’t extend credit.

Why do you care about credit ratings if you have resources to pay for everything? For one reason, you can’t count on those resources lasting – consider a stock market crash, an expensive medical condition, or other event that could rapidly drain your resources. You could eventually be in a situation where you need credit again for a large purchase – such as replacing your car or downsizing to a new home – and cash simply isn’t feasible at the time….

Credit Score Limits Dropping For Mortgages


If you’re in the market for a home, a high credit score is key to qualifying for a mortgage loan and getting the lowest interest rates possible. What do you do if your credit score is toward the lower edge of qualification?

The March 2019 Chartbook from the Urban Institute’s Housing Finance Policy Center has good news for you. Median FICO credit score limits dropped from 730 to 727 from November 2018 to February 2019 – not much of a change, but every point matters when you’re near the edge.

The housing crisis drove qualifying FICO credit scores for mortgages up significantly. Median scores for mortgages rose from 700 pre-crisis to 733 in 2013, but at the 10th percentile – generally the lowest acceptable credit score to qualify for a mortgage – borrower scores rose from less than 600 to just over 650 in 2013. As of February 2019, the 10th percentile borrower credit score was at 642, well above pre-crisis levels.

Potential homebuyers…

45% Of People Who Lose Their Wallets Have To Spend An Entire Day Or More To Undo The Damage


You reach for the bill, and then realize that your wallet is missing. You mentally retrace your steps, add up how much cash was in there, and stress over whether someone will use your credit cards and try to steal your identity. Besides all the time it will take to cancel your credit cards and debit cards and get a new driver’s license, how much is this fiasco going to cost you?

Says Greg Scott, IT professional and identity theft victim, “Think about replacing a driver’s license, Social Security card, insurance cards, all your credit cards, your blood donor card, changing your locks so nobody can use the spare key you kept in your wallet, and everything else you found important enough to carry all the time.”

In an exclusive MoneyTips survey, we asked 509 Americans in November whether they had ever lost or had stolen their wallets, purses, pocke…

These Crooks Got 25,000 Credit Cards For Non-Existent People


It’s bad enough when someone steals your identity and opens accounts in your name. What happens if thieves steal part of your identity and use it to create a non-existent person?

Synthetic identity theft occurs when criminals “synthesize” a false identity using made-up Social Security numbers and other personal information. Sometimes, synthetic identity thieves start with a single piece of real information – for example, a child’s stolen Social Security number – and fill in the rest with false information. Once the false identity has been created, thieves rack up huge bills under the identity and simply disappear, sticking creditors with the losses.

When criminals pool their talents, synthetic identity theft can reach astonishing scale. According to the

How Does Your Credit Score Compare To Your Neighbors?


Few things get people more fired up than rivalries between states. State lines become battlegrounds over sports, economics, culture … and credit scores?

A credit score comparison may not have the same intensity as a college football game, but we’re Americans. We make everything a competition.

So, who’s number one in high credit scores? According to the latest Experian State of Credit report, Minnesota tops the list with a 709 average on the VantageScore scale (ranging from 300 to 850).

The report, released in 2018 using data from 2017, shows strong regional blocks of credit score trends.

Nine of the top ten credit score states are located in either the upper Midwest or the Northeast. Behind Minnesota, the top credit scores are Vermont (702…

Credit Card Debt At Record $870 Billion


What’s your credit card balance right now? If it’s zero, congratulations! You aren’t contributing to America’s record $870 billion in outstanding credit card balances.

According to Q4 2018 data from the Federal Reserve, we have just over $1.05 trillion in total revolving debt, with $870 billion of that as credit card debt. We’ve topped the previous credit card peak set in late 2008, thanks in part to a proliferation of new cards. Almost 480 million credit cards are in circulation as of the end of 2018 – over 100 million more than when total credit card accounts bottomed out in 2010.

Credit card balances increased by $26 billion in the fourth quarter of 2018, the highest quarterly increase of all the household debt categories including mortgages, student loans, and auto loans. Total credit card debt remains below the other three categories, but the increase merits attention – because we aren’t handling our credit card debts as well as we could.


50+ Million Of Us Never Change Most-Used Credit Card


You’re happy with your favorite credit card. You’ve used it for years and years. Why would you consider changing to a different one?

Card loyalty is a popular attitude in America, according to a new poll from Approximately 3 in 10 Americans – nearly 53 million consumers – have never changed their primary credit card. Another 16 million consumers haven’t switched cards in the last ten years. Only one-third of cardholders have changed their most-used credit card in the last three years, and only 15% swapped out their most-used card within the past year.

Credit card loyalty is getting stronger. The previous year’s poll found that nearly 49 million consumers (29% of Americans) never change their primary card

Debt Spiral Method Of Paying Off Debt


If you’re dealing with credit card debt, you know high interest rates make it difficult to get ahead. Even when you’re staying on top of your minimum payments, it can take a long time to make a dent in your principal.

Financial gurus usually promote one of two approaches to paying off debt: the Debt Snowball and the Debt Avalanche methods.

The Debt Avalanche method prioritizes paying down the debt with the highest interest first, while the Snowball method focuses on paying the smallest balance first. The Debt Avalanche method results in greater savings, but the Debt Snowball method brings a psychological “win” that can be quite motivating.

A lesser-known approach, the Debt Spiral method, combines the benefits of each.

The Debt Spiral Method: How it Works

Rather than …