November 2009 Archives

The makers of FICO have always been ridiculously secretive about their little formula but now they finally have disclosed part of their calculations. Check out the link below to see how some common credit mistakes might affect your score. Not surprisingly, bankruptcy is pretty much the worst thing you can do for your credit rating. You can expect to lose up to 240 points if you have to file bankruptcy.

CreditCards.com: FICO reveals how common credit mistakes affect scores.

Any person who applied for their first credit card in the 1980s or earlier will tell you that credit cards were much harder to get and offered very few of the perks we take for granted today. With the economy still sluggish and a more tightly regulated credit card industry, could we see a return to more modest credit cards? Many experts seem to think so:

"We are going to see attempts to limit the rewards," at least in the short term...
regulations will probably lead to less lucrative rewards programs in due course."

If you've been looking to get a new card, now is probably a good time to apply, but remember to look out for those high annual fees that are starting to become more common these days.

Wall Street Journal

The government just announced that we have a 10% unemployment rate and recovery seems to be sluggish at best. Yet, analysts over at Bank of American think that losses from credit cards have reached their peak, mainly due to a slight drop of the charge off rate in September. However...:

Most U.S. credit card companies reported defaults fell in September from record highs as consumers used tax refunds and other economic stimulus proceeds to lower debts, but late payments rose, suggesting more troubles ahead in an already battered industry.

Most sectors are talking about the worst being over these days, but I'm not sure if that applies to the credit card industry. If the unemployment rate starts to decline within the next couple of months we might see an improvement in the industry, but if high unemployment persists it'll be a whole different story.

Source: ABC News

For anyone who's every been a member of a credit union this won't be a big surprise, but everyone else might just wonder why they've never even considered joining one. I don't know if it's the lack of advertising or the lack of conveniently located branches in high profile areas, but to anyone who's fed up with their bank's exorbitant fees credit unions might be the right alternative. Even the corporate greed worshipers over at Forbes can't deny the appeal of credit unions:

...interest rates for credit cards issued by the nation's 12 largest credit unions were 20% lower than those for bank-issued cards

The credit unions studied charged a high of 13.75% interest on cash advances, versus as much as 21.24% by banks.

13.75% APR for cash advances?! Sign me up. Search for your local credit union at CUNA