To complete college and/or graduate-level study, many consumers took out student loans. According to the Consumer Financial Protection Bureau (CFPB):
"Student loans have now surpassed credit cards as the largest source of unsecured consumer debt... unlike federal student loans, private student loans do not generally have the same borrower protections such as military deferments, discharges upon death, or income-based repayment plans."
More help is available. The CFPB announced that it provides assistance for consumers who are experiencing problems with taking out a private student loan, repaying their private student loan, or managing a student loan that has gone into default and may have been referred to a debt collector:
Before applying for loans, students should read the financial aid shopping sheet. Some consumers have already submitted feedback to the CFPB about what they want in this draft disclosure sheet. The CFPB will use this feedback in crafting future disclosure guidelines for lenders.
Students who already have loans can use the Student Debt Repayment Assistant interactive, online tool to discover new repayment options.
Borrowers who are experiencing difficulties paying loans, managing loans, or loans that have gone into default can now submit complaints at the CFPB website about private student loans. the types of complaints include: payment difficulties, confusing advertising or marketing terms, billing disputes, deferment issues, debt collection problems, and credit reporting issues.
Borrowers can also submit complaints to the CFPB via a toll-free phone number (1-855-411-2372), via fax (1-855-237-2392), and via postal mail (CFPB, P.O. Box 4503, Iowa City, Iowa 52244).
Private student loans are issued by banks, credit unions, schools, and similar lending institutions. If you aren’t sure what kind of loans you have, the CFPB advises students to visit the National Student Loan Database System for Students and select “Financial Aid Review” for a list of all federal loans made to you. Click each individual loan to see who the company is that collects payments from you.
Complaints about federal student loans (e.g., Direct, Stafford, Perkins, etc.) should be submitted to the U.S. Department of Education. The CFPB will automatically forward complaints it receives about federal student loans to the Department of Education.
Pew Internet recently released the results of a second quarter 2011 survey about consumers' usage of social networking web sites and privacy. The survey found that consumers are adapting their usage of social networking web sites given privacy concerns:
63% of survey respondents have deleted people from their “friends” lists, up from 56% in 2009,
58% of users restrict access to their profiles on social networking websites. More women (67%) do this than men (48%),
48% of users have had some difficulty managing their profile privacy settings on social networking web sites,
44% have deleted comments made by others on their profile,
37% have removed their names from photos that were tagged to identify them, and
11% have posted content they regret.
It will be interesting to see how much further adaptation occurs in next year's survey results, since users will have had more time to use features, like the Timeline feature from Facebook. I have talked with consumers who use the Timeline feature to delete harmful archived status messages, since employers now use social networking web sites to screen job applicants, to determine credit worthiness, and to evaluate insurance worthiness.
Some consumers use the new Facebook Profile Preview feature to screen and reject their friends' attempts to tag them in status messages and photographs. That seems very wise since too many users (42% total) don't restrict access to their profiles.
Should companies use social networking websites for financial, insurance, and employment screening uses? That's debatable, but the reality is that companies use the data anyway for screening, and the social networking sites are happy to make more money. My advice: prune your profile of harmful archived posts, and don't post anything at a social networking web sites that you don't want read/shown in court.
Many consumers feel "mugged" by the big banks and their many banking fees, and are moving their money to a community bank or credit union. If you are looking for a credit union, there are a few things you should know. I am looking for a new bank or credit union, given the new debit card fees and poor treatment.
To learn about credit unions, first I visited the National Credit Union Administration (NCUA) website. The NCUA is the independent federal agency that regulates and supervises federal credit unions. The NCUA operates the National Credit Union Share Insurance Fund (NCUSIF), which insures deposits at federal credit unions and most state-chartered credit unions. Deposits are insured up to $250,000 per account.
The NCUA website explains what a credit union is and how they operate. Some consumers like credit unions because they believe all banks will ultimately add fees for checking accounts. Besides offering low and no fees compared to the big banks, the attraction of a credit union is:
"... cooperative financial institution that’s owned and controlled by the members. Since they’re not-for-profit, they exist to serve you, the member. Not for profit, not for charity, but for service is a credit union motto. As a member, you have a say in how the credit union is run..."
I like the idea of having a say, since that is not happening at the big bank where my accounts currently are. At the NCUA website, I used the find a credit union to develop a short list of three or four credit unions located near where I live. The tool delivers summary information about each credit union: name, address, phone, CEO name, credit union type, number of members, charter number, status, and other pertinent data. I found this information useful with creating my custom list of prospective credit unions to apply to.
To join a credit union, you have to apply. Some have specific membership criteria; others do not. You will probably want to find credit unions located near you, since their network of ATM machines is not a broad as the big banks. To me, that is a small consequence to avoid the numerous fees charged by the big banks.
To learn more, you can also follow the NCUA on Facebook. Or you can also visit the National Association of Federal Credit Unions (NAFCU) website. While the NCUA website focuses on the needs of consumers, the NAFCU website provides information for both its members and for consumers. You can also follow the NAFCU on Facebook.
The NAFCU also provides a credit union locator tool to find a credit union, and a compare rates tool, to compare the interest rates by type (e.g., savings, mortgages, consumer loans, and credit cards) at credit unions. I found the compare rates tool not very useful, since it only lets you compare all interest rates in a state by type, or rates by type nationally. The compare rates tool doesn't let you compare rates by type within a state.
To be fair, while I like a lot of the information about banks in articles at Bankrate.com, its compare rates tool includes interest rates for a variety of financial products (e.g., checking, savings, CDs, credit cards, mortgages, auto, student loans) at banks, but lacks relevant checking and savings fees. In 2009, this blog first covered the Move Your Money Project (MYMP) website. At that time, the search tool only included community banks. The search tool was upgraded last year and includes both community banks and credit unions.
The Find a Better Bank (FBB) website lets consumers search across both banks and credit unions. I found many of the questions in the FBB search tool intrusive on privacy, and just wanted the site to simply display a list of nearby banks with their key check/savings interest rates and relevant fees.
What search tool have you used to find a credit union or a community bank to move your money to? If you have used any of the above search tools, please share your experiences: good or bad.
[November 1, 2011 Update: In a Facebook message, the NCUA announced today, "We have launched the completely restructured and redesigned www.ncua.gov and rolled out phase II of our consumer-focused website www.MyCreditUnion.gov. The site www.ncua.gov is now exclusively tailored toward the business aspect of the agency, whereas consumer content moved to www.MyCreditUnion.gov with an identity aimed at attracting web-surfing consumers who either want to learn about credit unions or need help with their credit union. The new site incorporates the latest functionality in web technologies and features."]
Many consumers believe that if you pay your bills on time, keep your (Experian, Equifax, and TransUnion) credit reports accurate, and keep your credit scores high, then all is well. Not necessarily. There are many more companies that track and collect data about consumers financial history.
Chances are, you haven't heard of their names. The Washington Post reported:
"But little attention has been paid to the firms that target consumers outside the mainstream financial system. Often they are students, immigrants or low-income consumers who do not qualify for traditional loans or choose not to use them... they carry particular weight for the estimated 30 million people who live on the margins of the banking system."
Who are some of the smaller firms? Some of them this blog has covered: ChoicePoint, Innovis, RapLeaf, Quantcast, First Data, Acxiom, Intelius, US Search, and Spokeo. Some are data brokers. Some collect website visitation statistics. Others focus on finance or insurance. Some are technology vendors working with ISPs. A prior blog post discussed the variety of brands of credit scores. Some other firms' names you may not have heard about:
"LexisNexis, whose parent company bought ChoicePoint three years ago, handles background checks, tax assessments and criminal histories. Bounced checks can be tracked through Chex Systems, TeleCheck or SCAN. Payday lenders report to a company called Teletrack. Alliant Data compiles information on so-called “installment payments,” industry jargon for recurring monthly fees such as gym memberships. The National Communications, Telecom and Utilities Exchange collects account information for 63 of that industry’s largest firms..."
The accuracy of the information collected by these firms is suspect:
"Arkansas resident Catherine Taylor didn’t learn about the fourth bureau until she was denied a job at her local Red Cross several years ago. Her rejection letter came with a copy of her file at a firm called ChoicePoint that detailed criminal charges for the intent to sell and manufacture methamphetamines. The information was incorrect... Taylor said she has identified at least 10 companies selling reports with the inaccurate personal and financial information, wrecking her credit history so badly that she says she cannot qualify to purchase a dishwasher at Lowe’s. Taylor must apply for loans under her husband’s name and has retained an attorney to force the firms to correct the record..."
And all of these firms do not include social networking websites, advertising networks, and mobile device marketers -- all collect information and profiles about consumers.
Given the long list of companies across several industries collecting consumers' personal information, you could call this a feeding frenzy.
[Editor's Note: This blog post was first published on September 10, 2008. I am posting it again since several banks have decided to sell consumers' debit card shopping habits, and since consumer tracking has increased greatly during the years. Banks have a sacred trust to their customers -- to serve and protect consumers' sensitive personal information, not sell it all. Guest author William Seebeck has written several posts for this blog. "Bill" and I worked together at Lexis-Nexis headquarters in Dayton, Ohio during the 1980's. Bill sent to me his comment below which he also submitted as a reply to the ZDNet blog post by Tom Formeski about First Data Corporation. Bill's message deserves the widest audience possible, and it includes advice First Data, the big banks, and consumers would be wise to listen to.]
I'm sure that it is true, as Mr. Capellas states, that he knows more about what we (the American public) are likely to do next than we do ourselves.
However, I hope that Mr. Capellas also knows that he and First Data Corporation hold a special trust as the guardians of that information as it represents the most private of American consumer information.
Why does First Data know so much?
In part it is because First Data Corporation, now a private corporation, represents both sides of most electronic transactions. It represents more than 50% of the banks and other financial institutions that issue credit/debit cards and other electronic instruments. It also represents more than 50% of all merchants that accept credit cards at their stores, restaurants on the streets of America's towns and cities and also on the electronic highway that transits our Internet community. First Data also represents more than 50% of all the ATM's that Americans use every day.
This means that First Data Corporation has knowledge of your bank accounts, credit activity, purchasing data, and much, much more.
I think most Americans would agree Mr. Capellas that as a result of the role your company plays in all aspects of financial transactions that you and your company are in a very unique and most singular position. You hold a sacred trust it seems to guard the privacy of such transactions rather than thinking up new ways to monetarily benefit from the use or sale of this most private information.
Those of us who are pioneers in the use of electronic information and e-payment services believe that companies like First Data should be much more transparent. It is bad enough that America's consumers feel held hostage by the credit reporting agencies, it doesn't need another company to exploit them.
Mr. Capellas, most Americans don't know that you have access to their bank accounts, their store accounts, their phone records and their Internet activity. I strongly suggest that you keep what you and your company know about what is in those accounts to yourself. Show the people of America what keeping a sacred trust is all about.
This story is a classic example of a "mugging" by a mortgage company. The Huffington Post reported an awful story about a couple facing foreclosure on their home even though they didn't miss a payment.
Yes, you read that correctly. The mortgage company wants to foreclose even though the homeowners didn't msiss a payment. And the homeowners can prove they didn't miss a payment.
How did this situation happen? According to the Huffington Post story:
"...the neighborhood bank that originally issued their mortgage sold the loan, and it eventually landed in the hands of one of the nation's largest mortgage companies... The complex reality of the modern mortgage system was supposed to have very little effect on the Parkers -- they would simply mail their monthly payment to a mortgage servicer... But, along the way, that machinery broke down. No one, the Parkers say, told them their loan had been sold. With no word from the new servicer, New Jersey-based PHH Mortgage, the Parkers sent their first payment to the original bank, which mailed the check to PHH, according according to documents the Parkers provided to The Huffington Post. But that check went missing..."
How does a mortgage company mishandle a payment? After all, collecting mortgage payments seems like a primary corporate task.
The Parkers did everything correct. They kept documentation. They kept submitting mortgage payments. They called PHH to find out what happened. They also sent payments directly to PHH. They sent registered letters to PHH customer service representatives. They spent hours on the phone with the bank and the mortgage servicer. They even contacted both the CEO of PHH and their state attorney general's office for help.
You'd think that PHH would want to quickly correct the problem, since they want to continue receiving payments from a willing and financially-able homeowner. The Parkers worked with the local bank to correct the problem at PHH. They hired an attorney to help them communicate messages and payments properly given the foreclosure threat:
"It appears Metropolitan National Bank forwarded proof that that original payment had been sent to PHH Mortgage, and asked the Parkers for proof they'd made all the subsequent payments, which they forwarded to PHH Mortgage... In November, 90 days after that first payment had gone missing, the PHH Mortgage refused the fourth payment, returning the check with a letter that explained the account was in arrears..."
I guess that bureaucracy and incompetence got in the way at PHH. PHH sent the house into foreclosure on December 29.
Consumers lose their home after one mishandled payment by a mortgage company? That is not right, on so many levels. Where is the honesty? The corporate responsibility?
I checked the Better Business Bureau website to see it's rating of PHH. While the BBB listed PHH as B+, there are 362 complaints about the mortgage company. 33 percent (120) of those complaints were for billing and collections issues, and 35 percent (128) were for contract issues. While 93 percent (336) of complaints were resolved, consumers still had to experience the hassle of getting their complaint resolved. It seems thtat the Parkers' experience with PHH is one of the unresolved.
I wonder how frequently this crap happens. A company mishandles checks and paperwork; and the consumer suffers the consequences. Where is the executive and corporate accountability? This kind of crap will stop only when bank and mortgage executives go to prison for this type of consumer abuse.
Lately, it seems like many websites are offering free credit scores. Some of those websites, like FreeScore.com, I have reviewed in this blog. But there are others. Consumers should know that there there are different brands of credit scores. Here is what you need to know about credit scores:
1) A credit score is a three-digit number banks and lenders use to decide whether or not to give you credit. Examples of credit are mortgages, bank loans, auto loans, and credit cards. A variety of companies use credit scores, including banks, credit card issuers, telephone companies (e.g., landline, cellular), landlords and utilities (e.g., gas, electric companies).
2) You should check your credit score before you apply for a loan. Why? It will give you a good idea of your chances of being approved for a loan or credit. According to About.com:
"People with credit scores lower than 620 find it harder to get applications approved and are left with higher interest rates."
3) Not all credit scores are the same. If your credit score is 802, that means one thing if the high end of that credit score brand is 850; and it can mean something different if the high end of that credit score brand is 990. Knowing both the brand and range the of credit score is important. You may encounter the term "FAKO score." That terms refers to any credit score that is not the myFICO brand credit score.
4) Several events will negatively affect your credit score. When credit score producers cacluate your credit score, they look at your credit history. Examples of events that will lower your credit score include: paying late, defaulting on a loan, high balances on your credit cards, and a personal bankruptcy. See this page at About.com for the list of 15 events that negatively affect credit scores.
5) You need to know which credit reports and credit score brand your bank or lender uses to evaluate your credit worthiness and risk. You don't want to buy a credit score brand you don't need. You don't want to buy credit score brand X while your bank or lender uses brand Y.
6) Some sources, like the credit reporting agencies, will sell to you both their credit score brand and other credit score brands. You may or may not find this helpful. Compare prices and see #5.
7) If you are a victim of identity fraud, then criminals have both stolen your identity information and obtained credit (e.g., loans, mortgages, services) fraudulently in your name. Obviously, the criminals don't plan to pay off the loans they have obtained in your name. When they fail to make payments, it will negatively affect your credit scores. Plus, the lenders will come to you looking for payments. So, it is important to protect your identity information, check your credit reports for fraudulent entries, and correct any fraudulent entries.
8) Your credit score isn't the only factor that matters. You still need to review your credit reports for accuracy. Fraudulent entries can lower your credit score. Your credit utilization ratio (the balance on your credit card as a percentage of the card limit) matters more to some lenders than your credit score. If you max out your credit card limits every month, that will reduce your credit score. Experts suggest you keep your credit utilization ratio below 50% -- ideally at 30%.
Since there are several credit score brands, to stay organized I compiled a list:
CreditKarma.com (offers the TransRisk credit score based on your TransUnion credit report)
Vantage Score® (developed jointly by the three major credit-reporting agencies: Equifax, Experian, and TransUnion)
I am sure that there are more. What credit score brands have you used? Share your experiences below in the comments section. I've Been Mugged readers want to know.
If you hadn't heard, October 17 - 23, 2010 is National Protect Your Identity Week (PYIW). About 10 million consumers were victims of identity theft and fraud last year. And the problem isn't going away anytime soon.
The ProtectYourIDNow site contains events for consumers by state. I visited the website to see the types of events available. Most of the events are sponsored by local organizations and governments, and many events are access to portable shredding resources for consumers who don't have at-home shredding machines. Other events include workshops about how to avoid scams, or tips about credit scores and credit reports. Many of the events are free. I encourage readers to find a PYIW event near you.
I found this report very interesting. The Experian State of Credit report ranked cities in the United States by consumers' average credit score. Residents in these cities had the highest average credit scores:
Minneapolis (MN): 787
Madison (WI): 785
Cedar Rapids (IA): 781
Green Bay (WI): 780
San Francisco (CA): 780
Boston (MA): 779
Peoria (IL): 778
La Crosse (WI): 778
Seattle (WA): 777
Sioux Falls (SD): 777
The average credit score was based on January to June 2010 inputs by Designated Marketing Area (DMA) from VantageScore and other leading credit reporting agencies. VantageScore is a newer credit-score score brand which competes with the FICO score, produced by the Fair Isaac Corporation. Consumers' VantageScores range from 500 to 990. 16% of the population has a VantageScore between 900 to 990.
The cities with the lowest average VantageScores:
Harlingen (TX): 684
Jackson (MS): 698
Corpus Christi (TX): 700
Shreveport (LA): 701
El Paso (TX): 706
Monroe (LA): 706
Las Vegas (NV): 707
Bakersfield (CA): :708
Myrtle Beach (SC): 709
Tyler (TX): 709
Residents in Harlingen had an average of 1.4 credit cards, $23,500 outstanding credit card debt, and an 11.7% unemployment rate. Residents in Minneapolis had an average of 2.1 credit cards, $25,100 outstandind credit card debt, and a 6.8% unemployment rate. Coincidentally, the Minnesota Attorney General's website provides its residents with good information about both personal finance and credit scores. The website lists these factors that affect consumers' credit scores:
Have you paid your bills on time?
How much outstanding debt do you have?
How long have you had credit?
How often do you apply for credit?
What types of credit are you using?
When comparing credit scores, consumers need to know which brand of credit score they have. Want to learn more? Visit the attorney general or consumer protection website for your state. Also, you may find these related blog posts helpful:
Perhaps you were the victim of identity theft and fraud which wrecked your credit scores and credit. Perhaps, you made made some poor financial decisions. Or maybe you home was foreclosed upon after you lost a job during the recent economic recession. What should a consumer be aware of when trying to improve your credit?
Some consumers seek help from credit repair services. After all, there are ads everwhere online and on television by credit repair services offering to help. Some credit repair services have even posted comments on this blog. What should consumers be aware of? How can you spot legitimate credit repair offers from the scams?
Everyone wants to be a smart, informed shopper. The U.S. Federal Trade Commission (FTC) offers six tips to help consumers spot credit repair scams. Credit repair scams will often:
Demand payment before they provide any services. The Credit Repair Organizations Act specifies that they cannot force you to pay until after they have provided the services promised
Won't explain your rights nor what you can do for free by yourself
Instruct you not to contact the three major national credit reporting agencies: Equifax, Experian, and TransUnion
Promise they can delete most or all the negative information in your credit reports, even when that information is accurate
Instruct you to dispute all the information in your credit reports, even when it accurate
Obviously, before doing business with a credit repair service you should review your credit reports from the three major credit reporting agencies. Know you rights and use the official website to order your free credit reports as provided by law: AnnualCreditReport.com. Like any other serious financial situation, document everything in writing when doing business with any credit repair service.
If you need more help, check the website for the Attorney General's Office in the state where you love. Many provides assistance and advice about credit repair scams. For example, see the Connecticut or Missouri or Florida attorney general websites.
Do an online search using the website address for any company name you are unfamiliar with before visiting the site; especially work-at-home offers. This could turn up links to company reviews or complaints at places like the Better Business Bureau or your state's consumer protection agency.
If a potential employer or recruiter asks you early in the job application process about a credit check, to enter your Social Security number in an online application form, or to pay a fee -- look elsewhere. Chances are, it could be a phishing scam to uncover your bank account information. You shouldn't disclose your SSN unless a job offer is eminent.
Learn how to spot phishing scams. They now circulate on Facebook and Twitter
A recent Associated Press news story on ABC News highlighted a new trend by identity criminals to steal the sensitive personal information of children and teenagers. Why? Because youth have unused Social Security numbers which thieves can resell to people who want to obtain credit fraudulently. Plus, parents (and their children) don't check their chldren's credit reports for fraud.
What should you do? Parents should ensure that their teenager children learn how to spot phishing attacks -- attempts by identity criminals to trick teens into revealing their sensitive personal information.
The Federal Deposit Insurance Corporation (FDIC) advises teens:
"Even if you're too young to have a checking account or credit card, a criminal who learns your name, address and Social Security number may be able to obtain a new credit card using your name to make purchases. One of the most important things you can do to protect against identity theft is to be very suspicious of requests for your name, Social Security number, passwords or bank or credit card information that come to you in an e-mail or an Internet advertisement, no matter how legitimate they may seem."Teens are very comfortable using e-mail and the Internet, but they need to be aware that criminals can be hiding at the other end of the computer screen," said Michael Benardo, manager of the FDIC's financial crimes section. These types of fraudulent requests can also come by phone, text message or in the mail."
To that I would add: don't give out your health care coverage information or account number. Some identity theft includes medical identity theft.
To summarize, teens must learn how to recognize phishing websites, phishing email messages, and phishing posts at social networking sites. You have probably seen the $1,000 gift card scam circulating within Facebook. If it sounds too good to be true, it usually is.
As you have read in the news, the oil gusher has spewed oil into the Gulf for almost three months. Hundreds of regional medium and small businesses, like tourism and fishing, have been affected. Banks and their customers have been affected, too.
"...financial institutions to work with their customers and consider measures to assist borrowers affected by this situation and its subsequent impact on local communities. Substantial business disruption and damage to businesses along the Gulf Coast Region have occurred. In response to this disaster, financial institutions can take measures to meet the critical financial needs of their customers and their communities... if conducted in a reasonable and prudent manner, are consistent with safe and sound banking practice. In this regard, the regulators encourage institutions to consider alternatives for customers who can demonstrate they are affected by the disaster; such alternatives may include:
Temporarily waiving late payment charges, ATM fees, and penalties for early withdrawal of savings;
Expediting lending decisions when possible, consistent with safety and soundness;
Extending or restructuring borrower debt obligations in anticipation of the receipt of funds based on claims the borrower may have filed with BP; and
Easing credit terms or fees for loans to certain borrowers, consistent with prudent banking practice."
Now, there is an opportunity for the FTC and related agencies to issue similar guidelines and reminders for regional businesses to protect the sensitive personal information of their employees and customers. The crisis should not be an opportunity for small businesses to abandon data security.
To its credit, the FTC has issued Consumer Alerts about both oil gusher insurance/charities scams and oil gusher job scams. If you seek a job in the Gulf region, the FTC oil gusher job scam alert helps consumers learn how to recognize these signs of a job scam:
Guaranteed jobs or guaranteed placements
An employer or employment-service firm that wants you to pay for training, certification, or its expenses
Vague offers: the more general the email “job” description, the less likely there is a valid job
You’re asked for your financial information: credible employers don't need your bank account information or credit/debit account numbers to interview or hire you
Companies that charge you for lists of available jobs
Sadly, as ocean current distribute the oil to wider areas, more businesses and consumers will need the above advice.
According to a recent survey by Capital One Financial Corporation, high school seniors benefit greatly from financial education both in the home and at school. Either one alone is not quite enough. The survey found that those seniors with financial education both at home and at school felt significantly more confident about their personal finance skills and knowledge.
The survey also found that nearly half (45 percent) of all high school seniors surveyed said they are unsure or unprepared to manage their own banking and personal finances. Compare that to this: of the students who had a personal finance class 75 percent said they felt prepared to manage their finances. Another 66 percent rated themselves "highly" or "very" knowledgeable about personal finance, compared to only 30 percent for high school students who didn't have a financial education course.
If this is how high school students without a financial education course rated their confidence, the percentage must be similar for those who haven't learned about identity theft and fraud.
Parents Involvement Matters
The survey also found:
20 percent of high school students said that they "frequently" discuss money management and personal finance issues with their parents
45 percent said they "sometimes" discuss money management and personal finance with their parents
34 percent said they never discuss money with their parents, or only when necessary
Of students that reported frequent discussions, 71 percent rated themselves as "highly" or "very" knowledgeable about personal finance, and 81 percent feel prepared to manage their own finances
Having a Job Helps
The survey also found that having a job during high school helps prepare high school students to manage their money and finances. Of the high school student who already had a job, 72 percent said that their job experience prepared them in some way.
To help parents and young adults, Capital One partnered with Search Institute to create a free multimedia financial literacy program at www.bankit.com. The program helps parents and teens learn practical skills together and avoid common mistakes.
Maybe you graduated from college recently. Or, you are the parent (or family member) of a recent graduate.
There are certain things college graduates need to know to be an informed consumer, and not get ripped off or scammed. The U.S. Federal Trade Commission created the "How To Be a Class-Value-dictorian" (Adobe PDF format) alert for college students and graduates. The FTC's advice:
Keep your personal information to yourself
Socialize safely online
Consider the National Do Not Call Registry
Stay away from “guarantees” of scholarships
Don’t buy bogus weight loss products
Understand credit and use annualcreditreport.com
Travel scams turn summer breaks into summer busts
Peer-to-peer file-sharing can be risky
Phishing scams reel in personal information
Some employment services are scams
To this list, I would add the following:
Don't share publicly your friends' private information, especially on social networking sites (some Facebook members are already aware of this)
The Sacramento Bee reported that collection agencies will still pursue homeowners for years after they defaulted (e.g., foreclosed or short-sale) on their mortgages:
"... lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in California have up to four years to make a claim. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages..."
Experts warn that the only options for consumers are to arrange a debt negotiation plan or file for bankruptcy. Note: debt negotiation is not the same as debt consolidation. And, debt negotiation is not the same as debt elimination. The Better Business Bureau (BBB) offers advice for consumers:
"Debt negotiation companies claim that they will negotiate with a consumer’s lenders to lower the total amount of debt owed for an upfront fee. Unfortunately, some consumers who paid for debt negotiation services found out that the company never contacted their lenders, but instead, took their money and ran. Because the debt negotiation company made it sound like they had everything under control, the consumer stopped talking directly with their lenders and ended up slipping deeper into debt. Relying on debt negotiation firms could also put a dent in a consumer’s credit report."
So, talk directly with whomever owns your mortgage: the bank or lender.
So, which payment method is best: cash, credit cards, debit cards, or charge cards? This video below from ABC News offers some practical tips to help you make an informed choice.
If you need to build up your credit history and credit score, paying with cash and/or a debit card won't help. If you have the discipline, charge cards offer several advantages over credit cards including the opportunity to build your credit history/score.
For many years, I had an American Express charge card. I used it to pay for business travel, since my employer promptly reimbursed me for business travel. Later in my career, I simplified both my life and my finances by reducing my use of credit/plastic. Ultimately, I paid off all of my credit card debt and cut back to two credit cards from a high of five credit/charge cards (and a high balance of $18,000). Today, I pay my credit card bills in full every month.
I don't know anything about Filbert, the squirrel in the ad. I have nothing against Filbert either.
At first view, the ad seemed harmless enough. It is wise for consumers to know their credit score, since many purchases depend upon having good credit. To learn more, I visited the FreeScore.com site.
That's when things really got squirrely.
The site is easy to read and easy to navigate. There are huge buttons on the home page to start the registration process to get those free credit scores. Consumers can get "free" credit scores from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion:
The above page copy also inform users that they can get their credit reports when ordering their free credit scores. Further down the page (out of view when the page first loads) is as a huge button for consumers to click to view a sample report compiled with information from the three credit reporting agencies. A sample report is a good thing to view before registering. A more friendly page design would place that sample button further up the page so it is easier to see.
Now, I already know my credit score, so I didn't register for the FreeScore.com service. If you scroll to the bottom of the page, you will see tiny text that is easy to miss, especially if you clicked on any of the large buttons near the top of the page. So, I've repeated the tiny text here:
"FreeScore.com is not affiliated with the annual free credit report program. Under a new Federal law, you have the right to receive a copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under law, you must go to www.annualcreditreport.com.
Translation: while you can get credit reports at the FreeScore.com site, they aren't free. The credit scores are free but the credit reports have a monthly fee. The tiny text explains why there is a monthly fee:
"FreeScore provides you with the tools you need to access and monitor your financial/credit information through the program's credit reporting and monitoring benefits. FreeScore and its benefit providers are not credit repair service providers and do not receive fees for such
services, nor are they credit clinics, credit repair or credit services organizations or businesses, as defined by federal and state law. Credit information provided by TransUnion Interactive, Inc."
Translation: the site is operated by TransUnion, one of the three major credit reporting agencies. FreeScore will help you monitor your credit scores and credit reports, but it won't help you fix them should something bad happen. You are on your own if you need to remove errors in your credit reports, or if you are already an identity-theft victim and thieves have made fraudulent purchases affecting your credit scores and reports.
So, if the credit reports at FreeScore aren't free, how much do they cost? In my opinion, a better design would have displayed the price along with the credit report offer on the home page. Instead, the consumer has to hunt for the price information, which appears on the FreeScore registration page below. The price is in small type in the right column under OFFER DETAILS:
I've repeated the tiny copy here so it is easier to read:
"Simply click "View Scores" on the next page to activate your FreeScore trial membership and claim your 3-in-1 Credit Profile and Triple Credit Score. After your 7-day FREE trial period it's just $19.95 per month for FreeScore. Remember, you can call FreeScore toll-free at 1-800-316-8824 within the first 7 days to cancel, and you will not be charged/debited."
Translation: you get free credit scores only during the seven (7) day trial period. After that, charges apply if you don't cancel your trial membership, which automatically signed up for a credit monitoring service costing almost $20 per month. The trial membership period is awfully short, too.
This offer by FreeScore.com reminded me a lot of the pitch by FreeCreditReport.com, a site that pitches free credit reports but enrolls consumers in a credit monitoring program with a monthly fee if you don't read the tiny text and cancel. Yesterday's post discussed the new Credit Report disclosure rules mandated by the FTC. The FreeScore.com site never pitches free credit reports, so I guess that TransUnion believes that they don't have to comply with the new disclosure rules since they aren't selling free credit reports at the site.
In my opinion, the FreeScore.com site is the same as the FreeCreditReport.com site. Both advertise X (e.g., get something for free) but really offer Y (credit monitoring for a monthly free) and place the important details in small print rather than say so upfront in easier to read type. Both sites use the auto-opt-in method: the user is enrolled in the credit monitoring service unless they cancel in time. To me, this is a sleezy marketing approach. The old "buyer beware" advice definitely applies here.
In my opinion, FreeScore.com is expensive since the price includes credit monitoring and not credit resolution services. And, the FreeScore monthly fee of $19.95 is higher than the FreeCreditReport.com monthly fee of $14.95. So, maybe the cost of those "free" credit scores is baked into the higher monthly credit monitoring fee.
Is FreeScore for you? That's a decision only you can make. You know your credit situation best. Having good credit is critical and monitoring your credit reports is wise to ensure their accuracy. If you are a victim of identity theft and fraud, then monitoring your credit reports for fraudulent purchases is critical, but getting credit resolution service is equally important.
My advice: shop around and always read the FINE PRINT at a Web site; especially sites offering freebies and/or credit monitoring services. Know the limitations of the credit monitoring service you are considering. Be an informed consumer.
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