What those in their 20s should know about credit

by Shelton on January 31st, 2015

filed under Credit Scores

If I could relive my 20s again, there are a few things I would do differently. First, I would have called my mom before getting that tattoo. Second, I would have driven right past the animal shelter. And third, I would have paid a lot more attention to my credit. Lucky for you, I learned those lessons the hard way so you don’t have to.

So, after you get off the phone with your mom and finish searching for dog-friendly apartments, read this list of 20 things every 20-something should know about credit.

1. Credit scores range anywhere from 300 to 850.

Your credit score is an indicator of how much of a credit risk you are to issuers. The higher the credit score, the better.

2. You have three credit scores.

There are three major credit bureaus: Equifax, Experian and TransUnion. Each one maintains a separate FICO score for each consumer in its database. As a result, you have three separate scores and three separate credit reports, which leads me to the next fact:

3. Credit reports are not the same things as credit scores.

Your credit score, also called a FICO score, is calculated off the information on your credit report. Your report shows your history of using credit, including every open and closed account you have, your payment history, credit limits and balance owed.

4. Having good credit isn’t just about getting credit cards and loans.

A healthy credit history can help you secure financing and save you thousands on interest rates, but it can also lower your insurance premiums, help you rent a place to live or waive certain deposit requirements.

5. You are entitled to a free credit report from each bureau once a year.

Under the Fair and Accurate Credit Transactions Act, you can get a free copy of your credit report once each year from each of the three major credit bureaus at annualcreditreport.com. However, these reports will not contain your FICO scores. You will have to sign up for services or pay a fee to access those.

6. Bad credit doesn’t have to haunt you forever.

Your credit score is just a snapshot of your current situation; it will change as your history improves or worsens.

7. There are five factors that affect your credit scores.

FICO breaks down your credit history into five categories. The five elements are: payment history (35 percent of the total score), credit utilization (30 percent), length of credit history (15 percent), new credit (10 percent) and credit mix (10 percent).

8. There is no single trick to raising your credit score.

The best thing to do is request your credit scores and look at the “score factors.” Those will tell you the top four reasons your scores aren’t higher.

9. You do not need to have debt to have a credit score.

The scoring systems actually penalize you for having debt. You can pay your balance in full each month to grow your credit score without taking on any debt.

10. Your credit score will not drop if you pull your own reports or scores.

Checking your own credit reports and scores has no effect on your credit.

11. Making minimum payments is the worst way to pay off credit card debt.

For example, if you make minimum payments (say, 2.5 percent) on a card with a $2,500 balance and 18 percent APR, it could take you 204 months to pay off the debt and cost you $3,173 in interest. Yikes!

12. Making a payment that is less than the minimum doesn’t count.

Paying less than the minimum counts as a missed payment, which will bring down your credit score, trigger a late fee and possibly raise your interest rate. If you can’t make your minimum payments, call your credit card issuer ASAP.

13. You must use your credit card to build credit history.

Using your credit card should not be confused with keeping a running balance. A smart strategy is to use the card each month and pay the balance off in full.

14. Be wary of retail cards.

Retail credit cards are usually very easy to get, have low credit limits and very high interest rates. Sure, discounts at your favorite store can be tempting, but are you really saving money if you are more tempted to shop or you can’t pay your bill in full?

15. Maxing out your credit cards damages your credit score.

Even if you don’t exceed your credit limit, running up your bill to the maximum allowed will have a huge negative impact on your credit score. Some experts recommend keeping your balance under 30 percent utilization, but the safest thing to do is just pay your bill in full each month.

16. You can negotiate with your credit card issuer.

It is possible to negotiate the terms, interest rates and payments on credit balances. If you are faced with a large bill you can’t pay, you can sometimes negotiate the total balance of the credit card debt owed. If you settle credit card debt, you will be required to pay the new total in full and you should expect your card to be closed and your credit reports to take a hit. Negotiating your credit card debt should be done only in an emergency.

17. There is a difference between good debt and bad debt.

Borrowing money at a low rate to purchase a home or car isn’t bad debt; you need a home to live in and you probably need a car to get to work or school. Bad debt is expensive debt, including high interest credit card debt or student loans, especially if your post-graduation payments will push you close to the poverty line.

18. Employers can pull your credit reports.

The Fair Credit Reporting Act allows employers to pull your credit reports as part of employment screening. Also, once you have been hired, employers maintain the right to pull your reports at any time during your employment. While credit reports do nothing to determine your ability to perform job duties, they can shed light on personality traits, like responsibility.

19. Prepaid or secured credit cards won’t fix your bad credit.

A secured credit card allows the user to make a deposit, or prepayment, equal to the credit limit. These cards are reported to the three major credit bureaus, but they do very little to help you build credit. These cards are best for people who are establishing credit for the very first time.

20. Having bad credit doesn’t make you a bad person.

The good thing about making credit mistakes in your 20s is that you have plenty of time to fix them.

Village Capital’s Accelerator Programme Seeking Agriculture-Focused Startups …

by Shelton on January 30th, 2015

filed under Cash Advances

Village Capital FinTech for Agriculture: East Africa 2015 is especially interested in ventures that solve problems in agriculture, or for which smallholders or agribusinesses represent part or all of their customer base.

Applications can be submitted via this link and will be accepted through February 25, 2015. The selected applicants will be announced at the end of March 2015.

The best submissions will be innovations that improve access to payments, financial security, accounting, cash management, credit, loans, cash advances, or other financial services for smallholder farmers or agribusinesses; first-to-market innovations in the agricultural sector; Ventures that increase access to financial services in agriculture, or for which smallholders or agribusinesses represent part or all of their customer base and technologies that formalize informal markets, increase the efficiency of the agricultural supply chain, improve business that serve smallholder farmers, and/or build wealth for smallholder farmers, low-wealth households or individuals.

The winning submissions will also need to be innovations that provide affordable extensions of credit, loans, cash advances or other financial services to financially underserved households, smallholder farmers or businesses in the agricultural value chain and technologies that extend traditional financial services (savings, credit, loans, insurance) to financially underserved households, individuals or businesses in alternative ways.

Village Capital sources, trains, and invests in early-stage ventures solving major social problems through profitable business solutions. It connects investors face-to-face with the best entrepreneurs in agriculture, energy, education, health and financial inclusion.

MasterCard Foundation is an independent, global organization based in Toronto, Canada, with over US $9 billion in assets which through collaboration with partner organizations in 49 countries is creating opportunities for all people to learn and prosper. The Foundations programs promote financial inclusion and advance youth learning, mostly in Africa. Established in 2006 through the generosity of MasterCard

Finally, Scot is a founding director of several FinTech companies in East Africa, including Musoni, the first 100 per cent mobile-only/cashless micro-finance institution in Kenya. Musoni runs its operations in Kenya and is expanding across East Africa.

Getting rid of holiday debt

by Shelton on January 30th, 2015

filed under Debt Consolidation

Action News spoke with Visions Federal Credit Union Tuesday which has several programs and solutions to help people become debt free.

One option is to talk with financial advisers who help find a way to easily pay it back.

Vice President Tracey Wheeler said Visions always is prepared right after the holiday season because this is when some people need the most help.

I think that, new year resolution everybody thinks what are they? Well, weight lose or debt consolidation, said Wheeler. Those are the two things usually, so I think that this is a popular time of year that people look to and that is why we are offering some debt consolidation loans this time of year, to help people out.

For more information on the debt consolidation programs through Visions, click here.

German court to rule on Argentina bond repayment terms

by Shelton on January 29th, 2015

filed under Debt Consolidation

There have already been two instances in which German investors successfully took action against the Argentinian government to demand full repayment of bonds. Despite a far-reaching debt consolidation agreement with creditors who agreed to only partial repayment, a Frankfurt court ordered Argentina to pay full face value to the German plaintiffs. A higher court in Frankfurt upheld the ruling, and now one of these cases has landed before Germanys Federal Court of Justice (BGH).

The case is likely to affect all the other Argentinian bonds whose owners refused to take part in any haircut. Taken together, these bonds have a nominal value of $1.5 billion, plus interest accrued since 1996 at an annual rate of around 11 percent.

The bond markets apparently believe the plaintiffs are set to win the case. Since 2013, the market value of these bonds has risen around tenfold, to about 80 percent of nominal value.

Guido Lennà is a lawyer specializing in banking and capital markets. He has offices in Leverkusen and Munich.

Deutsche Welle: Mr. LennÃ, these Argentinian bonds, of which the hedge funds Aurelius and NML Capital hold the largest share, were issued in New York. Therefore, in the event of a dispute,

a US judge has jurisdiction. Why does German law apply in this case?

Guido LennÃ: Without exception, our clients had bond terms in which the application of German law was agreed to. We are therefore referring to these contractual agreements, under which we can sue in Germany on the basis of German law. This is a good starting point for German investors.

The case that is pending has aroused great interest. Does it serve as a test case?

In February the Court of Justice will hear the case of a single plaintiff. Whats special about this case is that Argentina has presented two new legal opinions by German law professors. To put it in simple terms, the defense will try to use them to prove that actions in the various public and financial crises mean it is now general practice for a majority of creditors to be able to force a minority to agree to debt consolidation against their will. They say this practice should now also apply here.

We can certainly describe this as a test case, as there are currently several parallel cases against Argentina that are currently waiting for the outcome of our case.

What is your assessment of these legal opinions?

I have led negotiations in cases dealing with Argentina since 2007. This line of defense has never played a role before, but the case has now gone before the Federal Court of Justice because of this new argument.

It is true that there is now a greater variety of experiences with state budget crises than ten years ago. For us Europeans, a sovereign default is no longer something that only occasionally happens to distant lands.

But Argentina did agree to apply German law. And that does not provide for compulsory debt restructuring. The principle applies that contracts are to be adhered to. There is also an internationally valid clause that now explicitly includes this contentious general practice in bond terms. But it is not included in the Argentinian bond terms. So I do not think the legal opinions are convincing and I expect a successful outcome.

What are the total amounts involved in Germany?

I cant really say much about the total claim amount. There are hundreds of claims, so it will be a matter of several million euros. We have already represented many of these claimants.

5 Ways You’re Gambling With Your Money

by Shelton on January 27th, 2015

filed under Cash Advances

You dont have to play the
lottery or go to Vegas to lose your shirt.
Consumers make risky bets with their money all the time. In fact, you may be a
gambler and not even know it. Here are just a few ways you may be playing a
game of chance with your money.

Deferred-interest payment plans. Youre probably familiar with this
deal: You buy carpet, furniture or another product on a store credit card, and you
owe no interest if you pay the item off within a certain period – often six to
12 months. Medical credit cards often offer these deals, too.

But deferred-interest
plans can be a gamble. Youre betting you can make all of your payments before
the time is up – and if you dont, you will lose money. Maybe a lot.

Katie Ross, education and
development manager at American Consumer Credit Counseling, explains the
financial damage you can do with a deferred-interest payment plan this way:
If you made a purchase of $1,000, and you needed to pay off the balance
within a 12-month period, and you missed a payment or didnt pay in full within
the 12-month period, depending on the [annual percentage rate], you would be
charged retroactively for all 12 months.

Credit card cash advances. Its rarely a good idea to take a cash
advance from a credit card. The interest is usually higher than it would be if you
purchased something for the same amount with your card, and it begins to accrue
immediately. You’ll probably also be socked with a transaction fee, which may
be as much as 5 percent of the cash advance. So if you take a $1,000 cash
advance, you may pay a $50 fee on top of the interest. Essentially, youre
betting that the upfront cash is worth the expense and that you’ll be able to
pay your credit card company back quickly.

Putting off repairs. Its understandable to put off repairs because
you simply cant afford to get something fixed, but depending on the repair, you
might be taking a huge gamble. That’s because delaying repairs for too long
can mean financial devastation later. Consider your car, for instance, which is
probably the second-most expensive item you own, aside from your house.

Jack Nerad, executive
editorial director of Kelley Blue Book, says when consumers put off auto
repairs, the results can be disastrous. He cites an example of not
paying to replace a hose in your car. A blown coolant hose is quick way
to find yourself stranded by the side of the road. At best, youre looking at
an expensive tow. At worst, your
overheated engine might be severely damaged and need to be replaced at a cost
of several thousand dollars, he says.

Dean Bennett, a residential designer and contractor in
Castle Rock, Colorado, sees similar results with homes. Plumbing problems can
be particularly devastating. Bennett says on a number of occasions, he has seen
homeowners put off fixing a toilet thats loose at the base, only to later have
water damage. So you end up paying to rip up the whole bathroom floor,
and maybe part of the ceiling below, to install a new floor and to replace any
furniture or other fixtures affected in the room, he says.

Warranties. When someone asks you if you want to buy a
warranty, no matter what your answer is, youre making a bet. If you purchase the
warranty, youre betting that down the road, your product will probably break. You reason that by spending some money now, youll save far more later. (This may beg the
question: If you think the product probably will break, why buy it in the first

If you decline the warranty, youre betting the product wont break, or that even if it does, youll be pleased you didnt shell out the extra money
for a warranty.

You’ll want to factor in the cost of the warranty, which is usually 10
to 20 percent of the purchase price, according to the Service Contract Industry
Council. You could also hedge your bet and put the amount you would pay for a
warranty into an emergency fund so youre covered, or partially covered, if
something goes wrong with your purchase.

Peer to Peer Lender Harmoney Raises $10 Million as Trade Me Leads with 15 …

by Shelton on January 26th, 2015

filed under Debt Consolidation

Harmoney, New Zealands first peer to peer lending platform, has raised $10 million in new funding to support the companys growth. The decision to raise capital was said to be in response to customer demand that has driven rapid month-on month growth since the launch of the Harmoney platform. Harmoney is the first, and presently only, P2P lender to receive a licence by New Zealands Financial Market Authority.

The funding round was lead by publicly traded Trade Me (NZX: TME)  the largest internet auction  site operating in New Zealand today. Trade Me invested $7.7 million for a 15% ownership stake in Harmoney.  The funding round was described as experiencing strong domestic and international competition to participate.  Existing shareholder Heartland Bank who invested in Harmoney in September 2014 was said to have participated in this funding round as well.  Previously Heartland had taken a 10% stake in the company. Trade Me, a company that shares many similarities to Ebay, claims over 3.5 million active users in December 2014.  Compelling synergies between the two platforms should facilitate lender and borrower growth for the young P2P site.

Harmoney CEO Neil Roberts welcomed having Trade Me as a key investor and strategic partner.

“The investment is a great endorsement for Harmoney but more importantly we gain a strategic partner and distribution channel with deep domain knowledge of building and running an online marketplace.

“Trade Me operates the country’s most popular online marketplace with more than 700,000 domestic browsers visiting it every day. Combining Trade Me’s experience and distribution with Harmoney’s proven ability to bring innovative financial services products to market is the most exciting part of this transaction.”

Trade Me CEO Jon Macdonald acknowledged the growing disruptive shift in consumer finance and that P2P lending were proving sustainable and successful overseas.

“It is early days but we think there’s a lot of potential for P2P lending to work well in New Zealand, and of course consumer finance is a large and well-established industry here. To us it looks like an area of the market that will undergo a long-term structural shift online – and we believe Harmoney is well-placed to take advantage of this.”

“We share a common purpose in that we are both all about providing Kiwi consumers with a safe, trusted, scalable, efficient online platform to undertake a transaction – the Trade Me platform is all about items changing hands, and Harmoney’s platform is all about dollars changing hands.”

Harmony allows individuals to borrower from $1000 to $35,0000.  Interest rates are quoted as starting at 9.9% and Harmoney has followed in the footsteps of other platforms that target debt consolidation and personal loans. Macdonald said the Harmoney team had done an excellent job gaining a foothold in the local P2P market.

“Harmoney has good momentum. It also has a strong team with a lot of experience in and around consumer finance, and we like their plans for the future too. We’re excited about being involved.”

“Since launching Harmoney in September we have experienced exponential growth. This recent capital raising, alongside the strategic partnership with Trade Me and the continued support of Heartland New Zealand means we can rapidly scale our offering, develop new products and gain exposure to a wider range of the New Zealand public.”

Credit card rates hit debtors

by Shelton on January 26th, 2015

filed under Debt Consolidation

Wellington-based mortgage broker Craig Pope said he had not noticed any seasonal spike in debt consolidation, with many people waiting months before tackling their holiday hangovers.

However, he said the Reserve Banks rules had certainly made it more difficult to top up a mortgage for the likes of debt consolidation or renovations.

Rather than adding to the mortgage, it could be a personal loan or something along those lines that becomes the solution, he said.

Pope said borrowers ability to get top-ups without having 20 per cent equity was case-by-case.

For a strong client on a good income, the bank could be lenient on it, he said.

Federation of Family Budgeting Services chief executive Raewyn Fox said debt consolidation might provide short-term relief from high rates, but it was often a much more expensive option in the long-run.

If you put in on your mortgage and pay it over 20 years, its going to cost you 10 times as much, she said.

Many of the budgeting services clients owed money on the likes of power bills, which did not rack up interest and could be paid back over time with negotiated agreements, said Fox.

She said most did not own a house to secure a consolidation loan against, and those that did were usually low on equity.

The people were seeing with a mortgage, theyre mortgaged to just about the whole value of their property.

Fox said it was too early to see how peoples finances had fared over the financially draining holiday period.

Debt hangovers usually peaked in the back-to-school weeks at the end of January and the beginning of February, she said.

Having said that, our freephone line has been busy.


Is Spain’s recovery at risk from deflation?

by Shelton on January 26th, 2015

filed under Debt Consolidation

In the third quarter of 2014, Spanish gross domestic product (GDP) grew 0.5 percent quarter-on-quarter, compared to a euro-zone-wide figure of 0.2 percent.

But despite firm growth figures, the countrys inflation data makes for somber reading. In December, the consumer price index (CPI), which tracks the prices of an everyday basket of goods, fell to -1 percent from a year earlier.

It comes after figures last week revealed that the euro zone slipped into deflation in December, boosting expectations that the European Central Bank (ECB) will initiate a full-scale government bond-buying program in the near future.

While falling prices could be good news for consumers to some extent, deflation can be a double-edged sword for national economies.

There are fears of a deflationary spiral setting in – where consumers delay spending in the expectation that prices will fall further, as happened in Japan – and the real value of both money and debt rises, putting pressure on the economy.

Jonathan Loynes, chief European economist at Capital Economics, said that Spain was particularly vulnerable to deflation, and argued that the latest figures could not be blamed solely on the falling price of oil.

While Spains economic recovery remains solid, its high unemployment and large degree of spare capacity make it vulnerable to a prolonged bout of deflation, he wrote in the consultancys forthcoming quarterly report, yet to be published.

Spain has been one of the euro-zones stronger performers over recent quarters. And timely survey evidence such as the composite PMI (Purchasing Managers Index) show few signs of any significant loss of momentum. But this may not be sustainable.

In the report, Loynes, along with Roger Bootle and Martin Essex at Capital Economics, said that a prolonged period of deflation could hit the countrys debt consolidation and could necessitate further austerity measures — something that Prime Minister Mariano Rajoy, who trails the populist, anti-austerity Podemos (We Can) party in the polls, might well be reluctant to do in 2015, an election year.

How to reduce the cost of your Christmas debt

by Shelton on January 25th, 2015

filed under Debt Consolidation

Suffering from a January financial hangover? The best credit card and loan deals for consolidation, and where to turn for debt advice

Interim CEO of Doctors Medical Center San Pablo to step down due to health …

by Shelton on January 25th, 2015

filed under Cash Advances

She is unable to fly at this point, Zell said. She was so committed and so engaged and did a great job in keeping the hospital open during these challenging times. Shes a national expert on turnarounds and bankruptcies, so this is a really a sad loss for me and the hospital and community.

Gideon has not been seen at DMC for weeks. Zell said that Gideon did not attend the last governing board meeting on Dec. 1; instead, she listened and offered feedback by phone. The recent absence is a stark contrast to Gideons approach over the past few years, when she routinely attended public meetings and delivered remarks and appeared to be in good health.

Zell said that next weeks board meeting will feature fresh proposals for public and private bridge funding through 2015.

The hospital has experienced new hope recently, as the Contra Costa County supervisors last month forgave $12 million in debt owed by DMC on previous cash advances. The Richmond City Council also voted to earmark $15 million for DMC from a Chevron community benefits package tied to a refinery modernization, but that money wont become available until the refinery receives final permission to begin the project.

Meanwhile, the hospital, which has West Contra Costa Countys only public emergency room, was forced to stop accepting ambulance traffic in August due to staffing shortfalls.

Contact Robert Rogers at 510-262-2726. Follow him at Twitter.com/sfbaynewsrogers.