Personal Credit

Interesting Experian History Most consumers are familiar with Experian. But there are a few interesting tidbits that most people don’t know about the company.  Here are a few interesting facts about Experian. The Experian Group employs approximately 15,000 people in 40 countries, supporting clients in more than 65 countries around the world. Total Group revenue for the year ending March 31, 2012, was $4.5 billion. Although they control the economic fates of millions of Americans, they’re not even a US company. Their headquarters is in Dublin, Ireland and their main offices are in Nottingham, England. Experian was created during a flurry of buyouts and consolidation, getting most of their data from the purchase of TRW Information Services, a 100-year-old credit agency and one of the oldest such firms in America. Since then, they’ve expanded in very telling directions, purchasing email marketing companies, data-mining, and surveillance startups, and several debt consolidations and collection firms. Along with TransUnion and Equifax, the other major U.S. credit bureaus, Experian markets its credit information not only to lenders but also to consumers, who can sign up for a fee-based credit monitoring program. By the Fair Credit Reporting Act, however, these agencies must provide individuals in the U.S. with a credit report, free of charge, once a year on request. You can dispute the information in a credit report; Experian routes these cases through its National Consumer Assistance Center in Texas. At one time, Experian used the credit rating formulas generated by the Fair Isaac Corporation, also known as FICO, to gauge consumer creditworthiness for the use of potential lenders. However, a disagreement between the two companies led to a parting of the ways, and Experian now employs its own scoring method, known as the PLUS score. PLUS scores range from 330 to 830, rather than FICO\’s 300 to 850. Experian does not disclose the formula it uses to arrive at the PLUS score, although the major ingredients are payment history, the ratio of outstanding balances to the credit limit, length of credit history, and number of credit inquiries. Creditors employ many different credit scores to determine creditworthiness, including FICO and VantageScore, which are generated by the three rating agencies in combination. Therefore Experian\’s own PLUS score may not be an accurate gauge of the number that lenders are using to make their decisions. Instead, the PLUS score is primarily designed as an educational and marketing tool, designed to inform consumers about the general state of their credit and to generate revenues for the company through credit-monitoring products. If you feel you may be losing your way or have any questions about what you should be doing right now to support your Credit and Financial Wellness Journey, Click HERE to learn more.

Interesting Equifax History Equifax is the oldest and largest credit bureau in existence today. They were originally founded in 1898, 70 years before the creation of the Trans Union. Two brothers, Cator and Guy Woolford, created the company. Cator actually got the idea from his grocery business, where they collected customers’ names and evidence of creditworthiness.  He then sold that list to other merchants to offset his own business costs. The success led Cator and his attorney brother, Guy, to Atlanta to start what would become one of the most powerful industries in existence today. Retail Credit Company was born, and local grocers started using the Woolford service, which expanded rapidly.  By the early 1900s, the service had expanded from grocers to the insurance industry. Retail Credit Company continued to grow into one of the largest credit bureaus by the 1960s, with nearly 300 branches in operation.  They collected all kinds of consumer data, even rumors about people’s marital lives and childhood.  They were also scrutinized for selling this data to just about anyone who would buy it.  In the late ‘60s, Equifax started to compile their data onto computers, giving many more companies access to purchase this data.  They also continued to purchase many more of their smaller competitors, becoming larger and also attracting the attention of our Federal government. In response, the US Congress met in 1971 and enacted the Fair Credit Reporting Act.  This new law was the first to govern the information credit bureaus and regulate what they were allowed to collect and sell.  Equifax was charged with violating this law a few years later and even more government restrictions were implemented. Equifax was no longer allowed to misrepresent themselves when conducting consumer investigations, and employees were not given bonuses anymore based on the negative information they were collecting, which was standard practice in the past. It is alleged that due to the tarnished reputation all this left on Retail Credit Company, they changed their name to Equifax (Equitable Factual Information) shortly after in 1979.  Throughout the 1980s, Equifax along with Experian and TransUnion, split up the rest of the smaller credit rating agencies amongst them, adding 104 of those to Equifax’s portfolio.  They then continued to grow, taking aligning with CSC Credit Services and another 65 additional bureaus.  Equifax has continued to grow, now maintaining over 401 million consumer credit records worldwide. They also expanded their services to direct consumer credit monitoring in 1999.  Today Equifax is based out of Atlanta, Georgia, and has employees in 14 countries. If you feel you may be losing your way or have any questions about what you should be doing right now to support your Credit and Financial Wellness Journey, Click HERE to learn more

Although it\’s wise to pay off all your credit card debt, it\’s also practical to have one or two good credit cards. When you travel or want to order something online, it makes good sense to have a credit card. Plus, using your card responsibly will positively contribute to your credit score. But which card is the best? The answer can be found in which one best meets your own personal needs. The best credit card for someone else may not be the best one for you. Use these strategies to help you determine which card may best meet your needs: Choose a credit card that has no monthly fee. Never pay a monthly fee just to have a credit card. 2. Avoid a variable interest rate credit card. A variable interest rate credit card has fluctuating interest rates over which you have no control. Make an effort to get a credit card with a fixed interest rate. Also, be leery of any cards that advertise 0% interest for the first 12 months. Find out what the interest rate will be after the initial interest-free period. You may find the interest so high that it\’s simply not worth it to get the first year at 0% interest. Plus, know what can trigger the end of your 0% interest – you might not even enjoy it for one year! 3. Read the fine print. Even though the fine print \”legalese\” is difficult to decipher, it\’s important to be on the lookout for hidden fees and charges. Read the terms and conditions of the card at home when you have plenty of time. Highlight any areas of the terms that you have concerns about or need to clarify. If you\’re unable to get answers to your questions or receive clarifications for a better understanding of the card issuer\’s policies, walk away. You\’re wise to say \’no\’ as opposed to getting stuck with extra fees. 4. See what\’s in it for you. When you\’re selecting a credit card, focus on those that either give you cashback, credit toward travel awards, or reward points toward free items – whichever perk you feel you would get the most benefit or enjoyment from. The cash back cards are, in essence, reimbursing you with \”free money.\” Some cards issue cardholders one check per year for a percentage back on specified purchases. Receiving a check in December between $1 and $1,000 based on your credit purchases is a nice perk. If you\’re a traveler, you might prefer receiving points toward your next flight, car rental, or hotel. The third type of rewards credit card awards you points in relation to the amounts charged on the card. The points can be cashed in to purchase various items such as stereos, portable DVD players, kitchen pots and pans, dishes, and a variety of other items. Shopping for the best credit card takes time and patience. Protect yourself and your financial life by taking every precaution when selecting your credit card. Discover the freedom of using just one good credit card, paying it off monthly, and enjoying its rewards.

Buying a home is exciting. It’s also one of the most important financial decisions you’ll make. Choosing a mortgage to pay for your new home is just as important as choosing the right home. You have the right to control the process. Becoming a homeowner can be a great decision for many people, but it isn’t the right choice for everyone. Homeownership makes sense for different people at different stages of their lives. If you’re not sure whether you should make the move to buy your own home, it makes sense to consider both your personal and financial goals. Buying a home is one of the largest financial decisions most people make and it’s also a big personal decision. Some people buy because they want more space, the freedom to decorate and renovate, or because they want to live in a particular school district. Many people become homeowners because they want to build equity and have stable housing costs. On the other hand, some people rent for the flexibility of knowing they could move if they needed to, or because they’re not ready to take on the financial and maintenance responsibilities that come with homeownership, or because it is more financially advantageous in their circumstances. Here are some common financial considerations to keep in mind as you decide whether or not owning a home is the right decision for you right now. Understand when you will—and won’t—build equity At some point, someone has probably told you that if you rent, you’re “throwing away” money. When people say this, they’re usually talking about the opportunity to build wealth in a home over time by building home equity. If you rent, you won’t build wealth in your home over time. Home equity is the difference between the market value of your home and the amount of money you owe on it. Essentially, it’s the wealth you hold in your home. The equity in your home grows over time as you pay down the balance of your mortgage. If the market value of your home increases, your equity will also increase. If the market value of your home decreases, your equity will also decrease. Buying a home is a long-term financial commitment and you will build home equity by paying down your mortgage over time. In the first several years of your mortgage, you build equity slowly. That’s because your monthly mortgage payments primarily go towards interest in those first years of ownership—not towards building equity. That’s why you shouldn’t depend on being able to sell your home to get out of a mortgage, especially in the early years. If you hold on to your home for many years, the share of your monthly payment that goes towards paying down the principal—and building equity—increases, and the share that goes to paying interest decreases. That means that the longer you’ve had your mortgage, the faster you build equity with your monthly payments. But remember: your home equity also goes up or down as the market value of your home increases or decreases. If you decide or need, to move and sell your home within the first few years of owning it, it’s possible that after paying the transaction costs of selling the home, you will not have any more equity than you started with. In fact, you may even have less equity than you started with. Keep in mind that if home prices go down instead of up—as they did from 2007-2012—you could lose some or all of your equity, including the initial down payment, when you sell. Understand how having a mortgage will—or won’t—affect your taxes You may have heard that owning a home will help you save money on your taxes. For many homeowners, that’s true. But for some homeowners, it’s not. The home mortgage interest deduction allows homeowners to deduct some or all of the interest they pay on their mortgage from their federal income taxes. You can only deduct your mortgage interest if you itemize your deductions. You have a choice when filing your tax return. You can itemize deductions—including the mortgage interest deduction—or you can use the standard deduction. If you take the standard deduction, you won’t get to deduct your mortgage interest. If you already itemize your deductions, you will most likely save money on your federal taxes by adding the mortgage interest deduction, and any applicable state or local property taxes, to your existing deductions. Factoring in the home mortgage interest deduction in making the decision to buy or rent is complicated. While the tax deduction may help make the monthly payment affordable, remember the amount of your interest will go down over the life of your mortgage, and so the tax deduction will also go down. For some buyers, having the deduction will help make the cost of the mortgage more affordable during the first years of the mortgage. For others, if the deduction does not equal or exceed the standard deduction allowed, there may not be a tax benefit. Consult a tax professional for more information. Understand when owning a home is a better value than renting—and when it’s not If you’re using a mortgage calculator to decide how much you can afford to spend on a home, you may be significantly underestimating how much you’ll have to pay each month. That’s because many mortgage calculators only factor in the principal and interest payments. While principal and interest usually make up the majority of your monthly mortgage payment, you will also need to pay: Homeowners insurance Property taxes Mortgage insurance, if applicable Condo or homeowner association fees, if applicable Maintenance costs To make sure you’re making decisions based on actual numbers, research how much you can expect to pay each month for these additional costs. Add those monthly amounts to the principal and interest payment from your mortgage calculator to find out how much you can expect to pay for your total monthly payment. Property taxes and condo fees, in particular, can add hundreds of dollars to your monthly mortgage payment. If you don’t have

First, there are three basic categories of information included in a credit report. These are: Basic Personal Information: This is pretty self-explanatory. Included in your credit report are your full name, date of birth, current address, social security number, and employment information. Collection and Accounts: This is the information most people think of when discussing a credit report. This is usually separated into two buckets of information: All open lines of credit and all accounts that may be delinquent or in collections. Public Financial Records: This can include bankruptcy filings, tax liens, or any judgments that affect your credit status. All three categories of information are collected and applied to credit reports by different methods. Basic personal information is originally reported by the individual borrower when opening his/her first line of credit. This is updated throughout the borrower’s lifetime as new lines of credit are opened. Collections and account information is updated most frequently and proactively – usually monthly – by collections agencies and lenders directly to the credit bureaus. Finally, public records are the only pieces of information that are proactively collected by the credit reporting agencies solely for the purpose of reporting. Now that you know, great! What next? We can help! Credilife™, a program founded on behalf of Real. Credit. Solutions. encompasses solutions for almost any consumer credit-related challenge. Through this program, we work to help you understand how credit-related decisions impact your credit score and your life. It is our goal to provide a foundation that will help you to create new credit healthy habits and to put you on a path that will allow you to maintain an awesome credit rating long after our work is done! Credilife™… Your Credit. Your Life!

If you are struggling with big debt, you most likely are focusing on the financial consequences of your predicament. According to Credit Sesame’s 2016 proprietary data, those who have lower credit scores and more debt are less likely to log in to their accounts than those with higher credit card scores or less debt. The research also showed that those with large debts, $25,000 or more, logged in less frequently, compared to those with $5,000 of debt, logged in more frequently. The reason for this behavior may be due to the fact that people don’t want to face bad news. After all, it’s an economic hardship to have student loans you can’t pay, credit card bills that are overdue or a hefty mortgage that squeezes your monthly budget. Likewise, many Americans who suffer from a low credit rating often hone in on the fiscal ramifications of their situation—like being forced to pay higher interest rates on loans, or being denied credit, and then having to turn to high-cost alternatives, like payday loans. While all these financial problems are no doubt a part of living with high debt and poor credit, it’s also the case that economic woes may be the least of your troubles. Here’s a look at the ways that debit and credit problems take a toll on you—namely by hurting your emotional and physical health, and harming the wellbeing of those you love too. Money Troubles Affect Your Physical Health Various studies have documented the links between financial stress and physical maladies. Money troubles—including issues with credit and debt—can bring on everything from headaches and insomnia to muscle tension and high blood pressure. For example, one study, called “The High Price of Debt: Household financial debt and its impact on mental and physical health,” found that “high financial debt relative to available assets is associated with higher perceived stress and depression, worse self-reported general health, and higher diastolic blood pressure.” These links between debt and stress held true even after researchers controlled for factors like prior physical health, socio-economic standing, psychological, and other demographic factors. This is bad news for a lot of Americans—especially debt-burdened Millennials trying to pay off student loans. Roughly 40% of the members of Generation Y say they’re “chronically stressed” about money and Millennials’ top financial priority is being debt-free (64%), according to the Fall 2015 Better Money Habits Millennial Report. Credit Card Debt Is Linked to Depression The correlation between debt and depression isn’t limited to those in their 20s and 30s or the highly educated crowd. A University of Wisconsin-Madison study published in the May 2015 issue of the journal of Family and Economic Issues also revealed that credit card debt is statistically linked to depression—but this time the correlation was found especially among individuals without college degrees, unmarried people, and those approaching retirement. In fact, the study found that as people’s short-term debts rose, their symptoms of depression tended to increase as well. A separate, more comprehensive report found further evidence of the way in which debt drags people down mentally and they are three times as likely to have mental health issues, compared with those who aren’t in debt. How Kids Are Affected by Parents Who Face a Lot of Debt It’s bad enough to think about the emotional and physical toll that debt may take on you personally. But what may be even more alarming—especially to parents—is the impact that debt has on their kids. Kids are like sponges and are keen on how parents are feeling, especially during times of economic hardship. Children whose parents had either higher levels of or increases in unsecured debt (like credit card bills, medical debt, and payday loans) were likely to experience poorer socio-emotional well-being. Researchers theorized that having so much unsecured debt made parents more anxious and stressed out—diminishing their ability to demonstrate good parenting behaviors, and ultimately affecting the well-being of their children. Interestingly, the study found a stark difference for those with secured debts. Children with parents who had higher levels of home mortgage and student debt actually had greater socio-emotional well-being and fewer behavioral issues than kids whose parents have smaller mortgages and less student loan debt. These findings suggest that children may get an emotional boost from being raised in a setting where their parents are homeowners and are better educated. Regardless of the type of debt you may owe, it’s clear that having excessive debt can wreak havoc on one; physically and emotionally. So ideally, you should keep all debt at manageable levels—or even better, strive to be debt-free whenever possible. LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. The information shown is for illustrative purposes only and is not intended as investment, legal, or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney, or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to, or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company. An article originally posted by Credit Sesame and Lynnette Khalfani-Cox

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