Use Your Credit Card Wisely

As credit card delinquency rates continue to fall from the 26% level last year, it is inevitable that credit card companies will soon put their marketing skills into overdrive. New credit card offers are beginning to flow in from various companies to customers who have maintained a good credit record post-recession. In fact, the 0% card offer is also making a comeback now.

None of these signs mean that you can afford to relax your firm control over spending using this piece of plastic. In this climate of over enthusiastic advertising and tall claims from credit card companies, it is important to be doubly careful of how you are managing your credit card.
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How Filing for Foreclosure Will Affect Your Credit Rating

Foreclosing on your home can be an emotionally difficult experience. What makes it worse is that the foreclosure will also damage your credit rating. The event will influence future lenders strongly and can have a long lasting effect on your finances. [Read more…]

California Approaches Court for Enforcing Subpoena Against Moody’s

Jerry Brown, the Attorney General of California, has said that he will take Moody’s Investment Service Inc., a New York based credit rating agency, to Court as the company is refusing to comply with the state subpoena.

The subpoena asks for certain documents needed for an inquiry into the company’s evaluation of mortgage backed securities, which were seen as a key reason behind the financial crisis. It is suspected that the company indirectly had a role to play in the crisis and the subsequent economic recession. [Read more…]

New Method of Calculating FICO Credit Scores

FICO, the company formerly known as Fair Isaac, developed the famous FICO credit score, which is used by lenders across the country to assess the creditworthiness of borrowers. The company has recently released a new method for calculating credit scores, called FICO 08. [Read more…]

Revised Financial Reform Legislation Made Public

Senator Chris Dodd, Chairman of the Senate Banking Committee, has released a revised version of the financial reform legislation that intends to prevent another financial crisis. The bill has been redrafted after consultations with several Republicans and Democrats who had rejected the first draft.

The revised bill has incorporated many of the suggestions made by the Republicans, which critics argue would make the legislation ineffective. However, despite the changes, the Republicans have once again opposed the bill.

The key proposals of the bill are:

Consumer Protection Agency

The biggest change that Dodd has proposed is that there should be a consumer protection agency to prevent banks from exploiting customers. This is in response to the subprime crisis where lenders extended a huge number of risky loans that brought the whole financial industry close to a collapse. Many economists were demanding an independent agency to look after the interests of the consumers, but Dodd has agreed to Republican objections and has suggested creation of an agency under the Fed umbrella.

Regulation of Credit Rating Agencies

Credit rating agencies like Moody’s had come for severe criticism after they incorrectly assessed the risk on mortgage backed securities, which crashed in value once the housing prices fell. The bill proposes that these agencies should now be made responsible for their actions and they should be regulated by the SEC to prevent similar errors in future.

Limits on Trading Activities of Banks

The bill has also given a nod to the Volcker Rule, which will restrict proprietary trading of banks. Currently banks can invest the depositors’ money in risky hedge fund trades. Such trades brought many of the Wall Street banks close to bankruptcy as the financial crisis unfolded. Regulation has also been proposed on derivatives trading by banks.

Financial Stability Oversight Council

The council’s job would be to identify risks in the overall financial system so that they can be dealt with before they result in a large scale crisis. However, once again the Fed has been given most of the duties, while the council will only sign off on decisions.

The bill looks like a compromise formula, and it will certainly face a lot of opposition from both pro-reform and anti-reform camps. Another problem is that even if it is passed, the success of the legislation will not be tested until the economy faces another crisis, and at that stage it will be too late to make any changes.

Moody’s Says US Credit Rating Under Threat

Credit ratings agency Moody’s has warned that the Aaa credit rating of top developed nations like the U.S., Germany, U.K., and Spain could be under threat as their deficits go out of control.

Moody’s has published a new report on the creditworthiness of these countries and has come out with a gloomy picture. Although it said that currently the ratings are stable and there is no immediate risk of downgrades, it warned that countries like the United States are much closer to downgrades now than they were before the financial crisis. [Read more…]

How to Improve Your Credit Score Rating

If you use the Internet and have an email account then you have probably already been inundated with thousands of spam messages and pop ups begging you to log in to receive your free credit score. While there are thousands of offers out there, there are two things that always remain constant when it comes to your credit score. [Read more…]

What Credit Score Is Good

You may have an outstanding loan application that you need to be approved for the furnishings of your new home. You may be worrying over the financing of that spanking good car you just love to get your hands on. Or you may be praying to the heavens that your student loan be approved or else you won’t afford to take your classes next semester. [Read more…]