Debt Help

FICO
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http://www.debt-education.org/fico.html

The FICO score is used to make billions of credit decisions each year, including more than 75 percent of mortgage loan originations. In addition, more than 40 of the nation's 50 largest financial institutions rely on the FICO score to determine an individual's credit risk.

About Fair Isaac Company

Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. The company's predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power more than 25 billion mission-critical customer decisions a year. Founded in 1956, Fair Isaac helps thousands of companies in over 60 countries acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses and enter new markets more profitably. Most leading banks and credit card issuers rely on Fair Isaac solutions, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies.


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A consumer-credit report is a factual record of a person's credit-payment history. Legislation governs who has access to a person's credit history, but typically it is open to lenders who need a quick and objective way to determine whether to grant credit.

Your credit history is a record of how you handle your finances, especially how well you pay back your debts. This credit history is reviewed based on a generally well-established scoring system.

Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the U.S. are produced from software developed by Fair, Isaac and Co. They developed a confusing mathematical formula to determine how high a risk you are as a credit applicant.

There are other credit bureau scores, but FICO is used most often by creditors. With FICO, a higher score is desirable. Be aware that other credit bureaus may evaluate credit worthiness differently, and a high score may mean a consumer is a bigger risk.

FICO considers these factors (the approximate weight of each is in parentheses):

Payment history (35 percent) - Your score is negatively affected if you have paid bills late, had an account sent to collection or declared bankruptcy. The more recent the problem, the lower your score. For instance, a 30-day late payment today hurts more than a bankruptcy five years ago.

Outstanding debt (30 percent) - If the amount you owe is close to your credit limit, that likely will have a negative effect on your score. A low balance on two cards is better than a high balance on one.

Length of your credit history (15 percent) - The longer your accounts have been open the better.

Recent inquiries on your report (10 percent) - If you have recently applied for many new accounts, that may negatively affect your score. Remember, promotional inquiries don't count.

Types of credit in use (10 percent) - Loans from finance companies generally lower your credit score. FICO says this is most important when there isn't a lot of other information upon which to base a score.

Keep in mind that some companies may consider factors other than these when determining credit worthiness.

YOU are the original source of all this information. When you fill out an application, the creditor reports activity on that account to the bureaus. You can reduce errors by filling out the identifying information accurately and consistently.


The typical credit report includes four kinds of information:

· Identifying information, such as your name and date of birth.
· Public record information, such as whether you have filed for bankruptcy in the past 10 years
· Credit information, which includes your history of paying off loans and the amount of credit you now carry.
· Inquiries, which indicate whether you have been applying for a lot of credit lately.

So, what legally can be included in your credit report?

· Your identifying information.
· Your employment history.
· Your credit information.
· Delinquent child-support payments, and court action that has been taken against you as a result.

There also information that cannot be included on your credit report. This includes:

· Your race.
· Your religion.
· Your driving record.
· Notice of a Chapter 7 bankruptcy that is more than 10 years old.
· Debts that are more than seven years old.

So who has access to your credit report?

· Potential lenders.
· Landlords.
· Insurance companies.
· Employers and potential employers (usually only with your written consent).
· Companies with which you already have credit so they can monitor your account.

So you've applied for credit and discovered you have a low FICO score. Why might that have happened? The top 10 most common reasons are:

· Serious delinquency, and a public record or collection filed.
· Derogatory public record or collection filed.
· Time since delinquency is too recent or unknown.
· Level of delinquency on accounts.
· Number of accounts with delinquency.
· Amount owed on accounts.
· Proportion of balances to credit limits on revolving accounts is too high.
· Length of time accounts have been established is too short.
· Too many accounts with a balance on them.

http://www.debt-education.org/fico.html

Some little know statistics:

http://www.debt-education.org

Did you know that if you make minimum payments to cover a $20,000 debt on your credit card charging 18 percent interest, it would take 28.5 years to pay it off, and actually cost you $68,000?

Did you know that Debt Settlement can help you become debt-free in 24 months or less by negotiating down your debt?

Did you know that American consumers have more than $700 billion in credit-card debt?

Did you know a bankruptcy filing stays on your credit history for up to 10 years and could have a damaging impact on your effort to get new jobs, insurance and credit?

Did you know credit counseling is successful only between 30 percent and 50 percent of the time in getting consumers out of debt and on the road to being investors instead of debtors?

Did you know that 92 percent of the people who take out consolidation loans to pay off credit-card debt find themselves in twice as much debt within just two years?

Did you know that 83 percent of divorced people surveyed said debt and financial distress was the No. 1 factor in the disintegration of their marriages?

Did you know that 90 percent of Americans slide into poverty after they retire?

Did you know that half the people who file for bankruptcy each month - 50,000 Americans - should not have done so because less drastic measures would have helped them get out of debt?

Did you know that if you're paying 18 percent interest on a credit card, your debt would double in just four years?

http://www.debt-education.org/debt-questions.html

Debt Consolidation Loan
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sponsored by Debt-Education.org
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Until recently, a debt consolidation loan was the only way to handle your debt in a monthly payment. You apply to a bank or credit union for a debt consolidation loan to pay off your creditors and your debts are rolled into one monthly payment. You pay the bank loan back, and for many people, the single monthly payment is easier for them to manage.

Depending on your income and debt ratio, you may be apply to a financial institution for a debt consolidation loan. This debt management loan could be either secured (backed up by collateral) or unsecured. Talk with a loan officer or a financial planner about your options. You can also talk to other financial institutions to find if they offer a better deal before signing on the dotted line.

When considering a debt consoludation loan, keep in mind that it is very common for consumers to continue to use their credit cards after they have consolidated their old debt. This results in increasing their total debt load and severely limiting their ability to repay all outstanding debts. Statistics show that most people who use consolidation loans to resolve their debt issues will find themselves right back in the same deep debt rut within two years. If you choose this option for managing you debt, you must back it up with practical budgeting and expenditures.

There is a very real down side to considations loans that most people don't take into consideration. A consolidation loan will mix your secured debt (debt which is secured by assets) with your unsecured debt (debt which is not tied to any assets). Since statistics show that debt consolidation as a financial solution is so prone to failure, you need to understand that you are really taking a big risk on yourself. You are agreeing to take debt that can't be tied to your assets (unsecured) and make it all secured debt. And then, if you default on any of it, you will loose the asset(s) and possibly face bankruptcy.

Most financial planners are not going to recommend consolidation loans to you if you've shown a financial spending pattern that indicates you probably won't be able to get yourself out of debt.

Most bank lenders are going to be more than delighted to take your application for a consolidation loan and won't address the pitfalls. Buyer beware!

What if you really wanted to get a debt consolidation loan, but were denied? You still have a few debt options. Dealing with debt will come down to your ability to pay and get mind-set that you are going to be creating a budget, and you're only chance out of debt is to stick to it religiously.

You need to speak with a financial advisor (not paid by the banks) or credit counselor (paid by the banks) who will give you ideas for working with your budget to payoff your debts. You can ask whether Debt Management Plan could work for you.

Equal Credit Opportunity Act
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sponsored by http://debt-education.org
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Congress paaed a law thats purpose is to ensures that all consumers will be given an equal chance to receive credit. The Equal Credit Opportunity Act says it is illegal for creditors to discriminate against applicants on the basis of their sex, marital status, race, national origin, religion, age or because they get public assistance income.

Creditors can use factors such as income, expense, debts, and credit history to judge applicant's credit worthiness.

The law protects you with regard to creditors who extend credit: banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. The law also covers real estate brokers who arrange financing and protects businesses applying for credit.

Things a credit cannot in taking your application for credit:

• Discourage you from applying because of your sex, marital status, age, national origin, or because you receive public assistance income.

• Ask you to reveal your sex, race, national origin, or religion. A creditor may ask you to voluntarily disclose this information if you are applying for a real estate loan. This information helps federal agencies enforce anti-discrimination laws. A creditor may ask what your residence or immigration status is.

• Ask whether you are divorced or widowed.

• Ask what your marital status is if you are applying for a separate, unsecured account. A creditor may ask for this information if you apply for a joint account or any account secured by property.

• Ask you for information about your husband or wife. A creditor may ask about your spouse if: your spouse is applying with you; your spouse will be allowed to use the account; you are relying on your spouse's income, alimony, child support income from a former spouse or if you reside in a community property state.

• Ask about your plans for having or raising children.

• Ask if you receive alimony, child support, or separate maintenance payments. A creditor may ask for this information if you are first told that you don't have to reveal it if you won't rely on it to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.

Things a creditor may not do in deciding to give you credit:

• Consider your sex, marital status, race, national origin, or religion

• Consider whether you have a telephone listing in your name. A creditor may consider whether there is a phone in your home.

• Consider the race of the people who live in the neighborhood where you want to buy or improve a house with borrowed money.

• Consider your age, with certain exceptions:

• If you are too young to sign contracts. Generally, this applies to those 18 and under.

• If you are 62 or over, and the creditor will favor you because of your age.

• If it is used to determine the meaning of other factors which are important to credit-worthiness.

• If it is used in a scoring system which favors applicants age 62 and over. A credit-scoring system assigns different points to your answers to application questions.


Things a creditor may not do in evaluating you for credit:

• Refuse to consider reliable public assistance income in same manner as other income.

• Discount income because of your sex or marital status.

• Discount or refuse to consider income because it is derived from part-time employment or from pension, annuity, or retirement benefit programs.

• Refuse to consider consistently received alimony, child support, or separate maintenance payments. A creditor may ask you for proof that this income has been received consistently.

You Also Have The Right...

• To have credit in your birth name (Mary Smith), your first name and your spouse's last name (Mary Jones), or your first name and a combined last name (Mary Smith-Jones).

• To get credit without a co-signer, if you meet the creditor's standards.

• To have a co-signer other than your husband or wife, if one is necessary.

• To keep your own accounts after you change your name, marital status, reach a certain age, or retire, unless the creditor had evidence that you are unable or unwilling to pay.

• To know whether your application was accepted or rejected within 30 days of filing it.

• To know why your application was rejected.

What you can do if you think a creditor has broken the law:

• Complain to the creditor.

• Check with your state's Attorney General's office to see if the creditor violated state laws.

• Bring a case in Federal district court.

• Join with others to file a class action suit.

• Report violations to the appropriate government agency. If you are denied credit, the creditor must give you the name and address of the agency to contact.

For more information contact the Federal Trade Commission.

The above information should be understood to be a general discussion of the subject matter and does not constitute a legal opinion about the situation. For further information please consult a qualified professional.

http://debt-education.org

Tips on Re-establishing Credit

Develop a money management plan or budget. Your plan should include savings, housing, food, clothing, medical, insurance, auto and transportation, childcare costs, entertainment and other expenses. Buy reasonably priced items of real need with payments that fit easily into your budget.

• Pay as promised, on or before the due date.

• Put some money away each month. Establish a savings account. Creditors consider this evidence that you can handle money. Use it, if necessary, as security to borrow against.

• Establish a personal contact with the branch manager or loan officer of the bank or credit union where you maintain your accounts.

• Contact creditors whose accounts you have paid off earlier. They may consider reopening a line of credit. Points they may consider are how regular your payments were before problems arose and how long it took to resolve your problems.

• Do not make several applications for credit within a short time. Creditors sometimes look upon this unfavorably. Apply to one creditor and allow your repayment record to establish itself before applying elsewhere.

• Accept offers for pre-approved credit cards, but be aware of high interest rates.

• Accept offers from dealers who sell and finance their own merchandise. Take advantage of 90 days same as cash.

• If you must borrow money, offer security such as a car, savings account or other valuable property.

• If necessary, ask a relative or friend who has good credit standing to co-sign a loan application and share your liability.

• Avoid so-called credit repair clinics which charge high fees for doing what you can do yourself. The FFI's resource centers section on credit repair can provide information on the procedure to follow.

IF CREDIT IS DENIED

• Ask the creditor to furnish, in writing, the reason credit was denied.

• Check with the credit-reporting agency listed as the source of the adverse report to determine if the information reported is accurate. If the report is in error, you can have the incorrect information removed.

• Do not apply for credit elsewhere until the reason for the denial has been resolved.

• Keep in mind that the creditor is also looking at other factors such as length of time on the job, length of time at one address, and the percentage of income owed out of "take home" pay excluding housing cost. For most people, this should not exceed 20% excluding mortgage and car payments.

http://Debt-Education.org

Women and Retirement
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Sponsored by: American-Debt.com
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Women receive smaller retirement benefits than men.

Among retirees age 55 and over, 55% of the men received pension benefits in 1994, versus 32% for women.11 The median benefit received by newly retired women was half of that received by newly retired men. In hard dollar terms, women 65 or older in 1995 who received benefits from an annuity and/or an employment-based pension plan, averaged $6,684 in benefits. Men pensioners averaged $11,460.12

Because the pension benefit picture is bleak for many women, the majority of older widows end up relying on Social Security benefits as their primary source of income, says the Administration on Aging.13 But here, too, retirement income disparities exist. According to the Social Security Administration, 58% of all adults receiving monthly Social Security benefits in 1998 were women, versus 42% men. Slightly more than 50% of the women received retired-worker benefits, versus more than 80% of the men, and those retired women workers earned an average monthly benefit of $676, versus $877 for retired male workers.14 Women who received survivor's benefits based on another person's work record (slightly less than a quarter of the women receiving Social Security benefits) received higher average benefits than male survivors ($750 versus $549).

Women live longer than men.

The average life expectancy at birth today for a woman is 79 years, compared with 72 years for a man, according to the Administration on Aging. The overall life expectancy for men and women is likely to increase during the 21st century. Furthermore, women tend to marry older men. Consequently, seven out of ten Baby Boomer women are expected to outlive their husbands. Many of those women will be widows for 15 to 20 years.15 Women who reach age 65 have an average life expectancy of slightly over 19 years, taking them to age 84. That's roughly four years longer than the average life expectancy of men turning 65.16

Women are poorer in retirement than men.

The financial impact of living longer than men is profound. According to the Administration on Aging, older women:17

Are twice as likely as men to live in a nursing home
Are more than twice as likely as men to live their retirement years in poverty
Will spend more years and a larger percentage of their lifetime disabled
Make up three out of four persons over the age of 65 who receive Supplemental Security Income

Especially significant, notes the Administration on Aging, is that over half the elderly widows now living in poverty were not living in poverty before their husbands died.18 The picture is even worse for older women in many minority groups.

Women are more conservative investors than men.

Studies and statistics regarding women and their investing habits, versus those of men, tend to be somewhat contradictory. On the one hand, women generally have been viewed as more timid, or conservative, investors than men. A Charles Schwab study of clients— total investment portfolios found that, while 73% of women owned stocks, 86% of men held these higher-risk securities. Conversely, 26% of women owned certificates of deposit (a safe but low-yielding investment vehicle), versus only 18% of the men.19

Interestingly, when it comes to investing for retirement, women actually contribute a higher percentage of their annual earnings to their retirement plans than men.20 However, they invest more conservatively. A General Accounting Office study in 1996 found 17.3% of women ages 51 to 61 held stocks as their primary investment in retirement plans, versus 31.8% for men.21 The 1997 study by Dreyfus and the National Center for Women and Retirement Research showed that women investors were more worried than men about running out of money in old age, preferred more conservative investments, wanted fixed/steady returns, were more unnerved by stock fluctuations, and worried more about investment decisions.22 The study also showed that women are three times more likely than men to not know what types of investments offer the best returns.23

The 1999 Women's Retirement Confidence Survey found that just as many women as men are saving for retirement (around 70%), though far fewer women actually have estimated how much income they will need once they retire.24 Furthermore, women say they are less confident than men about their financial preparation for retirement, and they admit they are more conservative than men in their investments for retirement. Only 27% of the women versus 42% of the men in the confidence survey said they were willing to take substantial financial risks for substantial gain.

On the other hand, many women who invest seem to do well, despite their more conservative approach. It's been well publicized that all-women investment clubs earn significantly more on average than all-men investment clubs, or those mixed including both genders. The National Association of Investors Corporation, which represents investment clubs, attributes the success of all-women clubs to the fact that women research more before investing, are less emotional about their investments, and stay on course better. Men, on the other hand, are less patient, more willing to take risk, and jump in and out of the market more often. However, the average value of the men's clubs is nearly four times that of the women's clubs because women invest less money on average each month.25

As these statistics underscore, the financial barriers and challenges faced by women are real and formidable. As one incubator participant put it, "Women are frozen in the headlights, caught in the dilemma of , ‘I know I should be doing something, but I don't know what to do.'"

http://www.nefe.org/pages/innovative.html