Tuesday
Employment And Your Credit Report
Trapped: It's hard to get a job if your credit is bad
If you're unemployed, falling behind on bills can make it tougher to find work
By Tiffany Hsu June 7, 2009
Dan Denton is stuck in a vicious cycle: He's behind on his bills after losing his job. But lousy credit is spoiling his chances of finding new employment. Recruiters from a St. Louis-based investment company recently rescinded an offer after looking at his credit history, which has been mauled by overdue card payments and an impending foreclosure on his Inland Empire house.
He and his wife, Dana, filed for bankruptcy protection this month to try to hang on to their home."Of course your credit's going to look bad when you've been unemployed for months," said Denton, 60, a former fundraiser for the Crystal Cathedral in Garden Grove. "But what relevance does that have on your performance?"
The credit report is becoming the latest hurdle for unemployed workers in a dismal U.S. job market. Up to half of employers use credit screening to weed out potentially troublesome hires, though estimates vary, and the practice is on the rise.Money woes could signal disorder in an individual's personal life that could translate into slipshod work habits, some staffing experts said.
Companies lose billions annually to employee theft. A sterling credit history, they said, points to a worker who is more likely to be disciplined, trustworthy and reliable. But some experts said that there's no clear link between credit history and job performance and that the reports don't paint a complete picture, omitting details about divorces, medical bills or even identity theft.
Nancy Novak said that when prospective employers check her credit history, they see a mountain of debts and late payments, including $30,000 in credit card bills. What's not evident, she said, is that she accumulated most of it in a failed effort to keep her small business afloat. ......(more)
The complete piece is at: http://www.latimes.com/business/la-fi-cove...
Friday
7 Things NOT To Do
Most children are not trained in how to handle credit by their families other than with vague platitudes like 'pay your bills on time' and 'live below your means.'
Practical knowledge about interest rates, revolving credit and credit scores was often not taught or even understood well by most parents. Instead, we grow up being taught to be consumers, watching our parents struggle with the same concepts we now struggle with. Most people discover these mistakes by making them.
So here is a list of seven common credit mistakes most often made:
7. Closing your paid off credit card accounts
Paid off credit cards are like gold to your credit score. Resist the urge to cut up the plastic and close the account. The unused 'credit available' on that card will contribute to your credit worthiness. Put the cards in a block of ice in your freezer if you need help not using them and keep the accounts open.
6. Lowering your credit limits
Many people have fallen into this dilemma, thinking they are making themselves look more responsible by keeping the range of what they can actually borrow within their ability to pay. This will lower your 'credit available' ratio and lower your overall credit score. Whatever you can show as 'available' should stay available. Meaning, don't use it and don't get rid of it.
5. Applying for multiple cards
Maybe you thought you would juggle credit cards to take advantage of the 0% interest debt transfer. You get these offers in the mail and think, 'Wow, I can transfer my debt off that high interest card to this one and not pay interest for X number of months.' But are you looking for a 1-time way to make headway on paying off your debt? Or are you looking for a way to juggle your debt? Applying for multiple credit cards will lower your credit worthiness, and raise your interest rate. You will pay more in the long run.
4. Using your home equity for living expenses
If you are taking out equity to pay off credit cards and then running them up again, you are in a losing cycle that will eventually leave you with nothing but debt. First, if you can not afford your living expenses, you need to cut somewhere; or earn more to get in balance. If you are using home equity it should be for something that ads value to your home like a new kitchen, roof or bathroom; or to your earning ability, like a college degree. Otherwise you are literally spending the home right out from under yourself.
3. Missing payments
When you don't pay an account for 30 days, 60 days, 90 days, it gets reported as a missed payment to the credit agencies. These can severely lower your credit score and stay on your record for seven years. Get on a schedule and pay the bills on time. Pay automatically online if you can, but check to be sure the payments went through.
2. Not checking your credit reports for errors
Creditors make errors and can falsely report a negative item on your credit that really belongs to someone else. Additionally, identity theft is on the rise and you never know who may be using and ruining your credit. One of the best ways to protect yourself from this is to check your credit report regularly and look for any errors or open accounts you didn't authorize. Dispute the errors and notify authorities if your identity has been stolen!
1. Disputing charges and not paying the creditor
Never stop paying and ignore the creditor no matter now small the amount owed. Your credit score will drop 100 points if you do this. Instead, request an investigation and go through the dispute process. Keep written proof and go to small claims court if you have to but don't fail to pay. This is death to your credit score.
Practical knowledge about interest rates, revolving credit and credit scores was often not taught or even understood well by most parents. Instead, we grow up being taught to be consumers, watching our parents struggle with the same concepts we now struggle with. Most people discover these mistakes by making them.
So here is a list of seven common credit mistakes most often made:
7. Closing your paid off credit card accounts
Paid off credit cards are like gold to your credit score. Resist the urge to cut up the plastic and close the account. The unused 'credit available' on that card will contribute to your credit worthiness. Put the cards in a block of ice in your freezer if you need help not using them and keep the accounts open.
6. Lowering your credit limits
Many people have fallen into this dilemma, thinking they are making themselves look more responsible by keeping the range of what they can actually borrow within their ability to pay. This will lower your 'credit available' ratio and lower your overall credit score. Whatever you can show as 'available' should stay available. Meaning, don't use it and don't get rid of it.
5. Applying for multiple cards
Maybe you thought you would juggle credit cards to take advantage of the 0% interest debt transfer. You get these offers in the mail and think, 'Wow, I can transfer my debt off that high interest card to this one and not pay interest for X number of months.' But are you looking for a 1-time way to make headway on paying off your debt? Or are you looking for a way to juggle your debt? Applying for multiple credit cards will lower your credit worthiness, and raise your interest rate. You will pay more in the long run.
4. Using your home equity for living expenses
If you are taking out equity to pay off credit cards and then running them up again, you are in a losing cycle that will eventually leave you with nothing but debt. First, if you can not afford your living expenses, you need to cut somewhere; or earn more to get in balance. If you are using home equity it should be for something that ads value to your home like a new kitchen, roof or bathroom; or to your earning ability, like a college degree. Otherwise you are literally spending the home right out from under yourself.
3. Missing payments
When you don't pay an account for 30 days, 60 days, 90 days, it gets reported as a missed payment to the credit agencies. These can severely lower your credit score and stay on your record for seven years. Get on a schedule and pay the bills on time. Pay automatically online if you can, but check to be sure the payments went through.
2. Not checking your credit reports for errors
Creditors make errors and can falsely report a negative item on your credit that really belongs to someone else. Additionally, identity theft is on the rise and you never know who may be using and ruining your credit. One of the best ways to protect yourself from this is to check your credit report regularly and look for any errors or open accounts you didn't authorize. Dispute the errors and notify authorities if your identity has been stolen!
1. Disputing charges and not paying the creditor
Never stop paying and ignore the creditor no matter now small the amount owed. Your credit score will drop 100 points if you do this. Instead, request an investigation and go through the dispute process. Keep written proof and go to small claims court if you have to but don't fail to pay. This is death to your credit score.
Sunday
Living Life WITHOUT Credit Can Be Done
And believe it or not, you can be happy.
In a world where credit is painted as the life blood of our society how does one survive without it? Surely our parents didn't have a pocket full of the buy now and pay later little plastic cards to enslave them with a life of debt and now that your credit lines are being reduced or even closed how is one supposed to react? There are no easy answers, especially since we now seem so addicted to the, but there are some suggestions.
There is no doubt the first adjustment you have to make is your mind set. If you are living on this "buy now pay later" system you may very well be heading for financial difficulties. Why not prepare ahead of time before it gets to bad.
I won't bore you with all the budget talk, that comes later in a different article, (you know full well that yoou need one) but you will have to know what condition your assets and liabilities are in and the sooner the better. Why not do it now? Stop procrastinating and take a few minutes - face your fears - and DO IT RIGHT NOW!
Use a debit card for purchases, it has the visa features and it's a good way to convert from credit to cash.
Allocate a fixed amount each week for expenses and slowly try to adjust your lifestyle to that budget. There's that filthy "B" word again.
Take the time to really consider the ramifications that can occur if you don't change and what you might lose. It is human nature to pull away from things that may be painful, so think of how painful bankruptcy or any other debt management program could be.
With a negative savings rate the past (at least) two years and the soft job market many families are not prepared for a cash system. The day of reckoning for the housing market is definitely here, credit cards and other installment debt is right around the corner.
The quicker you can change to cash the better. It is never too late and the best thing to do in these cases is to get all the information you can. This will prepare you when it comes time to make choices and making the right choice will be critical.
Financial problems creates emotional times and thinking clearly is a difficult task when this occurs. In America, the divorce rate is over 50%. Can you believe it? Out of the divorcing couples asked, they cite financial difficulties as the number source of their problems and a major cause of their divorce.
Hmmmmmmmmmmmmmmmmmmmm......................
In a world where credit is painted as the life blood of our society how does one survive without it? Surely our parents didn't have a pocket full of the buy now and pay later little plastic cards to enslave them with a life of debt and now that your credit lines are being reduced or even closed how is one supposed to react? There are no easy answers, especially since we now seem so addicted to the, but there are some suggestions.
There is no doubt the first adjustment you have to make is your mind set. If you are living on this "buy now pay later" system you may very well be heading for financial difficulties. Why not prepare ahead of time before it gets to bad.
I won't bore you with all the budget talk, that comes later in a different article, (you know full well that yoou need one) but you will have to know what condition your assets and liabilities are in and the sooner the better. Why not do it now? Stop procrastinating and take a few minutes - face your fears - and DO IT RIGHT NOW!
Use a debit card for purchases, it has the visa features and it's a good way to convert from credit to cash.
Allocate a fixed amount each week for expenses and slowly try to adjust your lifestyle to that budget. There's that filthy "B" word again.
Take the time to really consider the ramifications that can occur if you don't change and what you might lose. It is human nature to pull away from things that may be painful, so think of how painful bankruptcy or any other debt management program could be.
With a negative savings rate the past (at least) two years and the soft job market many families are not prepared for a cash system. The day of reckoning for the housing market is definitely here, credit cards and other installment debt is right around the corner.
The quicker you can change to cash the better. It is never too late and the best thing to do in these cases is to get all the information you can. This will prepare you when it comes time to make choices and making the right choice will be critical.
Financial problems creates emotional times and thinking clearly is a difficult task when this occurs. In America, the divorce rate is over 50%. Can you believe it? Out of the divorcing couples asked, they cite financial difficulties as the number source of their problems and a major cause of their divorce.
Hmmmmmmmmmmmmmmmmmmmm......................
Friday
Some FACT'S
FACT: It is more difficult now than it was six months to a year ago to qualify for new credit in the form of a credit card.
FACT: It is also way more difficult to obtain a home mortgage or a home equity loan. The days of a 0 percent down payment and a low FICO score qualifying for a home mortgage are gone. That ship has left the dock.
The credit cycle has been tightening for quite some time and the recent activity on Wall Street and the uncertain terms of the bank's bailout has increased it to close their issuing new credit lines.
They have become miserly and scrooge-like in their lending, which doesn't really make sense since THAT is their business.
If you really feel you need access to additional credit with a credit card, I would recommend that you review your finances carefully and ensure that you are protected as much as possible from any negative consequences of this current credit cycle.
Here are some things to consider:
Credit card agreements can be changed by the card issuer for many different reasons. Be aware that many issuers may decide to lower credit limits in an effort to minimize their exposure. What this means for a cardholder is that you will have less access to available credit and your credit score may decrease due to an increase in your credit used versus credit available ratio.
A possible decrease in available credit means you are more vulnerable if you rely on credit for emergencies. If you have not started an emergency savings account, now would be a great time to start. The goal is to have three to six months of living expenses available for unexpected expenses.
If you are using credit to extend your income, stop immediately. Your credit supply may soon run dry and adding to a debt load right now could be disastrous. Create a spending plan and bring your expenses in line with your income. If you need help doing so, contact a reputable credit counseling agency that can review your finances and assist you with creating a workable spending plan.
My advice to anyone would be to tighten your belt and weather the storm. I hope you will refrain from obtaining any new credit cards for the time being.
FACT: It is also way more difficult to obtain a home mortgage or a home equity loan. The days of a 0 percent down payment and a low FICO score qualifying for a home mortgage are gone. That ship has left the dock.
The credit cycle has been tightening for quite some time and the recent activity on Wall Street and the uncertain terms of the bank's bailout has increased it to close their issuing new credit lines.
They have become miserly and scrooge-like in their lending, which doesn't really make sense since THAT is their business.
If you really feel you need access to additional credit with a credit card, I would recommend that you review your finances carefully and ensure that you are protected as much as possible from any negative consequences of this current credit cycle.
Here are some things to consider:
Credit card agreements can be changed by the card issuer for many different reasons. Be aware that many issuers may decide to lower credit limits in an effort to minimize their exposure. What this means for a cardholder is that you will have less access to available credit and your credit score may decrease due to an increase in your credit used versus credit available ratio.
A possible decrease in available credit means you are more vulnerable if you rely on credit for emergencies. If you have not started an emergency savings account, now would be a great time to start. The goal is to have three to six months of living expenses available for unexpected expenses.
If you are using credit to extend your income, stop immediately. Your credit supply may soon run dry and adding to a debt load right now could be disastrous. Create a spending plan and bring your expenses in line with your income. If you need help doing so, contact a reputable credit counseling agency that can review your finances and assist you with creating a workable spending plan.
My advice to anyone would be to tighten your belt and weather the storm. I hope you will refrain from obtaining any new credit cards for the time being.
Thursday
The Pursuit Of Happiness
It’s so American that it’s in our Declaration of Independence, where it’s listed alongside life and liberty as an inalienable right.
But how successful have we been in that pursuit? And now that the global finance system is imploding, how likely is it that we’ll be happy in the coming months and years?
Since roughly the 1970s, Americans have been buying things madly, whether we could afford them or not. We were promised that a bigger car, a more trendy purse, or a flat-screen television would bring us happiness, and we’ve been acting accordingly. We were promised that an ever-growing economy would make us all rich. But while our gross domestic product increased more or less steadily from the 1970s until the onset of the current financial crisis, most of us did not see a rise in our standard of living or our wellbeing. Wages stagnated, while the costs of basic needs -- like homes, medical care, food, and energy -- climbed rapidly. Those in the top 20 percent increased their net worth by 80 percent over the last 25 years, while the bottom 40 percent actually lost ground.
Few families today can make it on a single wage-earner’s income, and a health problem or a job loss can send a middle-class family into poverty or even homelessness.
Yet we continue to buy the products that are supposed to make us happy, driving many of us deeply into debt. Families are carrying an average credit card debt of $5,100, with interest rates that often make payoff nearly impossible. In recent years, home equity reached record lows as people borrowed against the value of their homes. In 2004, the most recent year for which Federal Reserve figures are available, debt secured by real property exceeded $290,000 per household, almost three times what it was only 15 years before.
All this debt makes life more precarious. It also increases our dependence on long work hours, which -- if we can find work at all -- combines with long commutes to eat up the time we might otherwise have for things that research shows actually would make us happy.
It’s easy to fall into the trap of believing that having more stuff will lead to happiness, because there’s an element of truth in the advertiser’s promise. We do need a certain amount of food to live, after all. Shelter is good. We need clothes, tools -- a bit beyond the bare necessities can be nice. And having stuff has always been a way to show that you are successful and entitled to respect. But after the novelty of a new outfit or laptop wears off, we’re left with a hole in our wallets and an empty feeling, which -- advertisers tell us -- we should fill by shopping for yet more new and improved stuff.
Following this advice may keep the corporate economy humming, but has it made us happy?
But how successful have we been in that pursuit? And now that the global finance system is imploding, how likely is it that we’ll be happy in the coming months and years?
Since roughly the 1970s, Americans have been buying things madly, whether we could afford them or not. We were promised that a bigger car, a more trendy purse, or a flat-screen television would bring us happiness, and we’ve been acting accordingly. We were promised that an ever-growing economy would make us all rich. But while our gross domestic product increased more or less steadily from the 1970s until the onset of the current financial crisis, most of us did not see a rise in our standard of living or our wellbeing. Wages stagnated, while the costs of basic needs -- like homes, medical care, food, and energy -- climbed rapidly. Those in the top 20 percent increased their net worth by 80 percent over the last 25 years, while the bottom 40 percent actually lost ground.
Few families today can make it on a single wage-earner’s income, and a health problem or a job loss can send a middle-class family into poverty or even homelessness.
Yet we continue to buy the products that are supposed to make us happy, driving many of us deeply into debt. Families are carrying an average credit card debt of $5,100, with interest rates that often make payoff nearly impossible. In recent years, home equity reached record lows as people borrowed against the value of their homes. In 2004, the most recent year for which Federal Reserve figures are available, debt secured by real property exceeded $290,000 per household, almost three times what it was only 15 years before.
All this debt makes life more precarious. It also increases our dependence on long work hours, which -- if we can find work at all -- combines with long commutes to eat up the time we might otherwise have for things that research shows actually would make us happy.
It’s easy to fall into the trap of believing that having more stuff will lead to happiness, because there’s an element of truth in the advertiser’s promise. We do need a certain amount of food to live, after all. Shelter is good. We need clothes, tools -- a bit beyond the bare necessities can be nice. And having stuff has always been a way to show that you are successful and entitled to respect. But after the novelty of a new outfit or laptop wears off, we’re left with a hole in our wallets and an empty feeling, which -- advertisers tell us -- we should fill by shopping for yet more new and improved stuff.
Following this advice may keep the corporate economy humming, but has it made us happy?
Wednesday
This Is War
In this economy, we don't need the big financial institutions looking to our credit cards to make up for their losses. But right now, the credit card companies hold all the "cards," and they can hike interest rates on our balances or charge us higher fees for no reason whatsoever.
The Senate may vote on a bill that will rein in these abuses. The House has already passed its bill, so real reform is within reach. I just sent my Senators an email in support of this bill. Would you take a moment to do the same?
Among other things, the bill would prohibit credit card companies from arbitrarily hiking interest rates on your card balances, and stop 'bait and switch' clauses that let them charge fees and change interest rates for any reason whatsoever.
The bill will help level the playing field for consumers and help ensure that a deal is a deal when it comes to your credit card company. The more consumers the Senate hears from, the better chance we have at putting Main Street (and the side streets), not just Wall Street, first.
http://www.debtsmart.com/cgi-pl/go/081210_en.cgi?32&22031
The Senate may vote on a bill that will rein in these abuses. The House has already passed its bill, so real reform is within reach. I just sent my Senators an email in support of this bill. Would you take a moment to do the same?
Among other things, the bill would prohibit credit card companies from arbitrarily hiking interest rates on your card balances, and stop 'bait and switch' clauses that let them charge fees and change interest rates for any reason whatsoever.
The bill will help level the playing field for consumers and help ensure that a deal is a deal when it comes to your credit card company. The more consumers the Senate hears from, the better chance we have at putting Main Street (and the side streets), not just Wall Street, first.
http://www.debtsmart.com/cgi-pl/go/081210_en.cgi?32&22031
Tuesday
5 Steps To Successful Budgeting - Your Key To Financial Success In An Uncertain Economy
1. Teamwork
Unless you're Single, then your spouse should be on board with the budget. You both need to have a clear understanding of what the monthly expenses are, where the money flow is headed (to the bills, to your favorite restaurant or bar every Friday night!), as well as who is responsible for physically paying the bills, (writing the checks, clicking the online bill pay, etc).
2. Put it in Writing
Sit down together and make two columns on plain piece of paper. In one column, list all of your expenses, don't forget things like pet care, daycare, even magazine subscriptions. In the other column list all sources of income.
3. Understand Your Income
This sounds relatively easy, but in my experience many folks just don't know what their income truly is. If you get paid on a weekly basis, grab your check stubs, take a look at how many deductions are being withdrawn weekly, insurance expenses, 401K (find out if your work is matching your 401K!) This is an avenue of free money that you could be missing out on. Sometimes, viewing your expenses vs your income in a percentage point of view makes a difference in your spending habits.
For example, If you make $2,000 a month and you want a new truck with payments of $500 a month than 25% of your income is going to your vehicle- and that's not including insurance, excise or personal property taxes, title & registration fees.If you are self-employed and your income is a bit dodgy, figure out how much income you average per month and use that as your guideline for your budget.
4. Prioritize
This is a serious Must-Do. Once you have written down all of your expenses on paper- get a clean sheet of paper and rewrite them in order of Priority. If your house is your biggest priority, put your mortgage at the top. Use a program, such as Quicken, to track your expenses but be sure to print out a copy of your budget once it's completed, tack it up in a place where you AND your spouse can take a look at it everyday. No, this isn't to worry you and make you wonder where you're going to get enough money to pay the bills, this is to remind you of what your expenses are, where your money Needs to go and what your goals are.
5. List your Goals
Most couples don't plan to fail, but many fail to plan. If you haven't discussed with your significant other what your goals are and you are not both in agreement of those goals, you will not reach them. On the bottom of your Budget, Write your Goals down. If your goal is to have your house paid off and be entirely debt free, write it on there. If your goal is to Retire at age 55, put it down on paper.
If you follow these key points, you will be well on your way to creating a successful family budget.
Unless you're Single, then your spouse should be on board with the budget. You both need to have a clear understanding of what the monthly expenses are, where the money flow is headed (to the bills, to your favorite restaurant or bar every Friday night!), as well as who is responsible for physically paying the bills, (writing the checks, clicking the online bill pay, etc).
2. Put it in Writing
Sit down together and make two columns on plain piece of paper. In one column, list all of your expenses, don't forget things like pet care, daycare, even magazine subscriptions. In the other column list all sources of income.
3. Understand Your Income
This sounds relatively easy, but in my experience many folks just don't know what their income truly is. If you get paid on a weekly basis, grab your check stubs, take a look at how many deductions are being withdrawn weekly, insurance expenses, 401K (find out if your work is matching your 401K!) This is an avenue of free money that you could be missing out on. Sometimes, viewing your expenses vs your income in a percentage point of view makes a difference in your spending habits.
For example, If you make $2,000 a month and you want a new truck with payments of $500 a month than 25% of your income is going to your vehicle- and that's not including insurance, excise or personal property taxes, title & registration fees.If you are self-employed and your income is a bit dodgy, figure out how much income you average per month and use that as your guideline for your budget.
4. Prioritize
This is a serious Must-Do. Once you have written down all of your expenses on paper- get a clean sheet of paper and rewrite them in order of Priority. If your house is your biggest priority, put your mortgage at the top. Use a program, such as Quicken, to track your expenses but be sure to print out a copy of your budget once it's completed, tack it up in a place where you AND your spouse can take a look at it everyday. No, this isn't to worry you and make you wonder where you're going to get enough money to pay the bills, this is to remind you of what your expenses are, where your money Needs to go and what your goals are.
5. List your Goals
Most couples don't plan to fail, but many fail to plan. If you haven't discussed with your significant other what your goals are and you are not both in agreement of those goals, you will not reach them. On the bottom of your Budget, Write your Goals down. If your goal is to have your house paid off and be entirely debt free, write it on there. If your goal is to Retire at age 55, put it down on paper.
If you follow these key points, you will be well on your way to creating a successful family budget.
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