From the desk of Malcolm Hyland………..

A rare occurrence……….The normally secretive Fair, Isaac Co (FICO) gave us a momentary glimpse recently, of how they calculate and alter your credit score (downwards) for certain events in your financial life. Here are some of those scenarios:-

Maxing out a Credit Card Score decreases by 10 – 45 points.
30 day late Credit Card payment Score decreases by 60 – 110 points.
Debt Settlement Score decreases by 45 – 125 points
Foreclosure Score decreases by 85 – 160 points
Bankruptcy Filing Score decreases by 130 – 240 points

FICO also stated that , “ The higher your score – the more points you will lose!”

Clearly, any of the events listed above should be avoided, if at all possible. The demonstration of personal integrity and it’s effect on your Risk Profile has never been as necessary or important as it is today, and this will be even more true tomorrow and out into the future!

From the desk of Malcolm Hyland………….

If you pay your bills on time, live within your means, budget your household, and generally are thrifty in your approach to your financial life, then these words are not for you!

Sadly, a large sector of people only adopt one or two of those maxims, and then the problems begin!

If you don’t pay your bills on time, your credit report will start to reflect your tardiness, your scores will drop, the cost of borrowing will increase, and available credit will become harder to find.

If you are unable to live within your means, for any reason, the only way to continue is to borrow money. In many instances that usually involves the immediate usage of a Credit Card. Most people fail to understand that every time you use a Credit Card, you are effectively taking out a loan. Sooner or later, loans become due, with attendant interest and fees that need to be paid!

The vast majority of people operate and pay their household expenses, without a budget. The failure to document expenses in this area means you are “flying blind”. Under these circumstances, expenses often exceed available money, and out comes the Credit Card again. Need I say more………

You only see what you want to see. All home owners have have had the experience of visiting a Title Company for the Closing of their Real Estate loan, whether it be a purchase or a refinance. In recent years, prior to the financial “meltdown”, refinances exceeded purchases, and with the latitude being allowed by most lenders, “cash out” was the favorite choice of many borrowers. At the closing, all borrowers have to read and sign all disclosures. Did I say read – I have to be joking! Even when the disclosures were fully explained to the borrowers, little or no attention was paid. One disclosure relates to the total cost of the loan (principal and interest) as a total cost over the life of the loan. This often astronomical figure, is usually disregarded by the borrowers, simply because they do not want to identify with what is a daunting figure in their lives. The simple act of taking a shorter term for their mortgage, could have a phenomenal and beneficial impact on the total cost of the loan, but no – they soldier on regardless.

Finally, let’s look at a scenario that is becoming more and more of a factor in peoples lives. Debt = Stress. Stress can equal poor health, which in turn can impact your ability to earn a steady and full income, which can lead to medical bills, which can lead to more debt, which can lead to more stress – need I say more. The downward spiral continues.

Clearly, leading a responsible fiscal life has huge advantages, and all it takes is SELF DISCIPLINE – perhaps one of the toughest roads to travel alone – which is one of the reasons why CFAB’s plans and programs for managing your Liability Portfolio are so successful, because we ensure that you are no longer alone!

From the desk of Malcolm Hyland………………..

You will recall my article on the new offering of a Credit card with an interest rate of 79.9% that I posted in mid December, 2009.

The latest news from Miles Beacon, CEO of Premier Bankcard, who did the test market for this card, is that the response has been “phenomenal”. Their typical response in terms of applications is 1% – 1.2%. but this new offering actually doubled their normal response, to 2%.

The question is, if you had poor or no credit, and you received this offer in the mail, would you apply?Perhaps more to the point, would you handle the card responsibly and pay off the total balance every month?

The new Credit C.A.R.D. Act coming into force next month may well modify the fees associated with this card, but not necessarily the interest rate!

In my wildest dreams, I did not see this card being well received, even by the “sub prime” sector of the market that it is targeted at.

How wrong can I be…………..

From the desk of Malcolm Hyland………….

I want to shock you with a direct quote from Kenneth Clayton of the American Bankers Association -

“Roughly 10% of banks’ card loans are not being paid back, which will directly affect the price consumers have to pay for their credit!”

My understanding of that comment is that it is the consumers’ fault that the Banks/Credit Card issuers have made bad or poor decisions with regard to the credit issuance to a consumer. In other words, the Banks take no responsibility for their poor business acumen, and simply pass along their “losses” to other “innocent” consumers, by way of rate increases and/or additional fees!

ABSOLUTE NONSENSE!!

I doubt that there is any other legitimate and ethical business trading today that uses that thinking to make a profit. Every business has losses, slow payers, and non payers – all for a variety of reasons, but no business that I can think of, that trades ethically, tries to make their customers pay for their mistakes, errors, or pure bad luck in terms of their normal day to day trading. If they did – I suspect that they wouldn’t last long – and good riddance to them!

The Banks have already demonstrated that GREED is part of their strategy, and the taxpayer had to bail them out!

The time is NOW for the Banks/Credit Card Companies to take a long hard look at their questionable and often deceptive business practices and “clean house”. The new Credit C.A.R.D. Act, coming into effect in February, will help to eliminate some of these questionable practices, but more protection for the consumer is needed, and SOON!

From the desk of Malcolm Hyland………

Jobs, homes, retirement savings all gone, and the excuse is that the current financial crisis caused the problems that many Americans now face.

What nonsense! Most of their problems are as a direct result of the “inertia factor”.

Most people faced with these problems, have no one to blame but themselves!

They have steady incomes, and still continue to live paycheck to paycheck. They carry credit card debt, neglect their credit records, do not save anything for their retirement, and continually put off the financial fixes they need to make – hence the “inertia factor”.

This state of denial is not financial planning. Many people believe that they are powerless to fix their own problems, believing that some miraculous solution will come to their rescue! The end result is that they gave up control of their financial destiny.

Commencement of the action plan is simple, and does not take courage, just common sense!

Start saving some amount every payday – and stick to it! This simple act will slow down the process of digging the hole deeper, and start to level out the ship!

Stop making excuses – you are the only one who believes them!

Put the savings you make in a separate account and call it “Your emergency fund”. This will become the buffer. When a real emergency surfaces, such as replacement of a water heater, or an increase in your premium for car insurance, you will be able to cope!

Start focusing on your credit score(s). The credit card companies have increased rates, lowered available credit, and closed accounts. Many people have taken the wrong lesson from this, and got rid of their credit cards. It is imperative that you obtain and use credit wisely to receive the best rates on the larger purchases in life such as a home or an automobile. Remember, you don’t have to carry debt to have good credit scores!

Promise yourself this – NO new debt!

Understand this – you may well live longer than the standard retirement age. The sooner you start saving for retirement – the better off you will be!

You may have tried fixing your financial life before – and failed! Quite simply – think outside of the box! You may need to change career paths, move to a new location or even start a business. Anything is possible, and no one ever got injured by new and radical thinking!

The moral of this story is – DO SOMETHING – otherwise the “inertia factor” will get you every time!

From the desk of Malcolm Hyland……….

Here are a few New Year’s resolutions for 2010

I will pay my credit card bill, on time, every month.
I will not exceed my limit.
I will read all notices from my credit card company, even if they look like junk mail.
I will not use Convenience Checks, as supplied by my lender(s).
I will endeavor to pay more off my principal balance.
I will use my credit card wisely.
I will live within my means.
I will need to get my financial house in order.
I will need help to do so.
I will need to maximize my success, both cost effectively and efficiently.
I will call CONSUMER FINANCIAL ADVISORY BOARD
I will remember their toll free phone number – 866-642-5186
I will have a good year!

From the desk of Malcolm Hyland…………

Congress failed us! The Credit Card Reform Act scheduled to come into force on February 22, 2010, could have become law on December 1, 2009, had Congress not blocked the earlier date!

Credit Card Companies have time now to inflict even more pain and suffering on their customers!

Clearly angry at lawmakers, Credit Card Companies are taking every opportunity to increase rates, lower credit limits and close accounts, regardless of the customers’ credit scores or payment histories.

They appear to be oblivious of the fact that this can be a counterproductive move. Smart customers, will simply take their business elsewhere. Others will be forced into default.

If nothing else, the general public will now start to see how devious, untrustworthy and disloyal these companies are. In the past, bad tactics such as these, were dismissed as “business as usual” especially when the focus of their business was aimed at people with bad credit. Now, it is no longer the case. Everyone who has a credit card is at risk!!

Here are three instances of this type of behavior:-

Bank of America promised to stop raising interest rates, (in advance of the new C.A.R.D. Act),
then promptly started adding annual fees to accounts, which was a direct contradiction of its pledge made in October, to stop “re-pricing” accounts!

Citibank carries on raising rates, by promising to rebate a portion of the interest back to the customer, given that the customer continued to charge a certain amount each month. The reality is that as long as you keep digging a deeper hole of debt, Citibank would give you a small reward back!

HSBC actually lowered one customer’s credit limit because he resided in California!

The madness continues, at least until February 22nd, when the new law comes into effect, but you can guarantee, that the Credit Companies, with their teams of highly paid lawyers, sales and marketing executives are all burning “the midnight oil”, figuring out new ways to gouge their customers and be “legal”!

We can only wait with baited breath – and hope!

From the desk of Malcolm Hyland…………

We are about to enter 2010 with renewed hope! Can this be the year that everything financial gets back on track?

Will the banks start lending again? Will the economy rebound? How many new jobs will be created?
Certainly all the signs are there for the recovery!

Perhaps the most pressing issue for the majority of consumers in the United States is to begin managing their Liability Portfolio

We acknowledge that budgets, attendant discipline with regard to spending, savings are areas that most people do not fare well in, so here is the solution:-

If you feel that you are alone against the system. If your Credit card rates are being increased. If you find that your available credit is being reduced, (if not removed), if you feel that you are drowning in debt – there is a solution.

Ask CONSUMER FINANCIAL ADVISORY BOARD for help!

Here’s why – Consumer Financial Advisory Board specializes in assisting people who want to better manage their Liability Portfolio.

If you are reading this, you are already on the website – www.mycfab.com

Call now for a confidential complimentary Consultation – you will be pleasantly surprised how easy we make the transition from your present situation, to a professionally managed scenario that achieves interest rate reductions, and faster debt payoff.

CALL NOW TOLL FREE 866 – 642 – 5186 FOR YOUR COMPLIMENTARY AND CONFIDENTIAL CONSULTATION.

HAPPY HOLIDAYS…………

From the desk of Malcolm Hyland…………

The holiday season brings it’s own risks of damaging your Credit score. Falling behind on bills, approaching or exceeding you credit limit, opening too many new accounts, all contribute to the lowering of your personal FICO score. Paying your bills on time represents 35% of your FICO score. That’s significant to say the least. A repeat “offender” with continued late payments across several cards creates the worst case scenario. Remember late payments stay on your file for seven years.

Holiday shoppers should be aware of the “instant” discount offered on merchandise, when linked to an application for the store’s card. Even with the 15% to 20% discount on purchases, interest rate charges, time frame for repayment, and the addition of one or more cards to your portfolio, can quickly cost more than the initial discount.

Credit scores can range from 300 to 850, although there are not too many people with the highest score.
Certainly the economic downturn has caused diminished scores. If you enjoy a stellar score, you can take steps to manage it, and still have access to the best rates and terms.(Beware of acquiring too many new cards too quickly!)

Many of the top financial institutions are considering offering “free” credit scores to their on-line customers. When you access your on-line account, you will be able to see your score, and an explanation. Consumers should be wary of scams in this area – “free” offers are actually a subscription to a credit monitoring product.

If you are frustrated with your credit card company, because they increased your rate, and changed the terms – don’t rush to cancel the card. Be aware that it reduces your amount of available credit, and does not reduce the outstanding balances. All this does is to increase your “utilization rate”, which could hurt your score.

The message is clear….

Only use credit when absolutely necessary. Pay your bills on time, and avoid those short term “credit card savings” offers.

HAPPY HOLIDAYS TO ALL…………

12/18/09
From the desk of Malcolm Hyland…….

No – you are not looking at a typo – this credit card’s interest rate is 79.9%.

First Premier Bank, a sub prime credit card issuer, is trying to get around the new regulations, that curb abusive practices in the industry. The chilling thought is that others may follow their example!

An analysis of their fee structure is stunning. For a credit line, in the first year, of $250 – the fees are $256!!

The new Credit C.A.R.D. Act that becomes law in February, 2010 will cap these fees at 25% of the credit line. Sadly, this new law does NOT set a cap on interest rates, and the rate of 79.9% will be viable, (raised from 9.9% previously).

It should be noted that First Premier Bank targets people with bad or poor credit. This group of people are unlikely to get approved for Credit cards elsewhere, and they tend to lean heavily on credit, and will probably accept the steep interest rates and fees, with hardly a murmur.

When challenged about the rates and fees, First Premier Bank stated that the offer is just a test, and it was too early to know whether it would be continued………

The bank also stated that the product was priced, based on the risk associated with this type of market!!

Premier Bankcard (the servicing company) is the sister company of First Premier, and is the 10th largest issuer of Visa and Mastercard in the country, and has more than 3.5 million customers.