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Ask Savvy: Should I Apply For a Personal Loan?

SavvySugar — Tue, 07 Oct 2008 12:30:51 -0700

Dear Savvy,

I've been meaning to take a $5,000 personal loan. However, as you may know, my bank WaMu was bought by JP Morgan Chase. I'm not sure what kind of effects this would have on me or my bank. Should I hold off or go to different banks? Also, since we are in economic crisis, will it harm me in the future if I do consider going through with this?

See my answer when you

How to Protect Yourself as Lenders Lower Credit Limits

SavvySugar — Wed, 01 Oct 2008 09:30:59 -0700

Back in June, I mentioned that lenders were beginning to reduce credit card limits, especially for customers living in areas suffering from the housing crisis, those who are self-employed with businesses in troubled industries, and customers that have large debts. The effects of loose credit became even more evident over the turbulent Summer, and now consumers with good credit are also seeing their credit card limits cut.

According to Carol Kaplan, spokeswoman for the American Bankers Association, "Most banks are cutting their credit limits. They're doing it to everyone." The Wall Street Journal suggests five tips for protecting yourself as this new lower-limit trend spreads. See what they are when you

Three Ways the Wall Street Crisis Affects You

SavvySugar — Fri, 26 Sep 2008 09:30:38 -0700

Sorting through the news lately has been an emotional, stressful experience that has everyone worked up. While it's important to understand how things came to be and the who's who of what's happening now, it's just as worthwhile (and maybe more so) to know how the Wall Street mess affects you and me. Here are some points to consider when trying to make sense of the various moving pieces.

Employment: Hiring has slowed and employers are cutting back — employers that are hiring are holding more rounds of interviews and being more selective. Layoffs lead to a decrease in consumer spending, which can cause businesses to cut back even more, and so on. If you have a job, it may be more difficult to get a raise because your employer feels the pinch of a weakened economy.

Discover how borrowing and cash are affected when you

Savvy ATM: Credit Score Anatomy

SavvySugar — Mon, 15 Sep 2008 08:00:19 -0700

The fact that a cloud of inconsistency hangs around credit scores makes knowing your exact number nearly impossible, but all scores based on the FICO system consider the same factors to generate your magic number. Knowing these five components gives you an idea of the areas that are hurting your score and makes some sense of how your score came to be. Find out what they are when you

How Money Are You: What Do You Know About Credit Scores?

SavvySugar — Wed, 10 Sep 2008 12:30:17 -0700

Credit scores are what lenders use to determine the creditworthiness of consumers looking to borrow money. Your score should be on your radar so you can be aware of any issues that have hurt your score and you can begin taking the steps to improve it.

The higher your score, the better interest rates will be offered to you by creditors. What else do you know about credit scores?

Source

Savvy ATM: Credit Scores Aren't Always Accurate

SavvySugar — Wed, 03 Sep 2008 12:30:30 -0700

Just as there are several companies and agencies capable of generating your credit report, there are many sources that offer credit scoring services. The September issue of Consumer Reports describes how The Consumer Reports Money Lab spent $130 to determine how the scores may vary, and the results proved the point that scores from different sources can seem like they belong to different people! See the details of their experiment and what it all means to you when you

Your Two Cents: Have You Ever Made a Late Payment?

SavvySugar — Wed, 03 Sep 2008 06:30:21 -0700

Making punctual payments on your debts has a huge impact in maintaining (or achieving) a high credit score, and tardy payments can leave a negative dent in your credit. Have you ever been late in making a payment? Source

Your Two Cents: Have You Ever Made a Late Payment?

Yes, I've been late in making a payment.

I've been late but it was an isolated event.

No, I've never made a late payment.

How Zero-Interest Cards Could Harm Your Credit

SavvySugar — Mon, 25 Aug 2008 15:30:37 -0700

Best Buy's "featured offer" seems like a no-brainer for buying brand-new electronics — two years with no interest comes across as a great way to buy it now and pay later without punishing interest charges. If you're not turned off by the notion of being accountable for yet another credit card, then here's something else to consider that might make you think twice about financing your new TV with a store's zero-interest proprietary card.

You know that a credit inquiry can temporarily shave points from your score, but the low credit limit on these store cards may have a more negative impact. Your credit-to-debt ratio makes up a large part of your overall credit score, and The Wall Street Journal emphasizes that "credit bureaus look at how much of all your available credit is borrowed as well how much you've used on each card." The article uses the example of purchasing a $2,000 TV on a card with a $2,500 limit; that's utilizing 80 percent of available credit, which doesn't do any favors for a consumer's credit score.

Source

Definition: Piggybacking

SavvySugar — Fri, 15 Aug 2008 15:30:50 -0700

Piggybacking is the practice of adding someone with poor or no credit as an authorized user on a credit card belonging to a person with excellent credit. There are two types of piggybacking, one involves strangers and the other involves family members.

The practice of one stranger piggybacking on another stranger's credit has FICO in a rage. Certain online businesses are profitable by playing the system: They earn their fees by finding consumers with good credit to take on those with bad credit. The bad-credit consumers pay the company a hefty fee, and the company pays the good credit consumers a much smaller fee.

Many parents use piggybacking as a way to build credit for their children. By adding them as authorized users to one or more cards, the parents' credit history for the particular card appears on the child's credit report. The child is able to build a healthy credit history without even having her own credit card. When it comes time for her to apply for her own card or rent an apartment, chances are she won't need a cosigner because of her established credit history.

Source

Hard Credit Inquiries vs. Soft Inquiries: How Money Are You?

SavvySugar — Wed, 13 Aug 2008 09:30:39 -0700

Checking your credit report is as easy as visiting a website and entering your personal information, and other parties can access your report when a loan or credit is involved. There are two types of credit checks: hard and soft. Do you know the difference? Take the quiz!

Source