can college students still apply for credit cards?
The credit card reform bill that President Obama signed back in May will make it more difficult for young adults to get a credit card. Beginning February 22, 2010, anyone under 21 years old who can’t demonstrate that they have an independent means of repaying debt will have to get a co-signer before they can get a credit card in their own name. On top of that, any attempt to contact people younger than 21 with unsolicited offers for credit cards will be banned.
But that’s not all! The bill also makes “gifts” that come along with a card illegal if it’s a signup on or near a college campus. That means no more free t-shirts or frisbees just for signing up for a credit card.
There are a few questions still to be asked: what will constitute the ability to repay? The Federal Reserve has to set those rules, and they could look at it several ways. If you’re 19 and a full-time student, for example, you may work part-time and look like you can’t repay a credit card. But you might also get income from parents or other sources on an irregular basis. Will it be enough to say that your parents would help you out if you couldn’t pay? Or will the government require credit card companies to collect W-2s and bank statement information?
Protecting young adults from too much credit card marketing is a good thing. But the earlier you establish a credit history the better; part of your FICO score is determined by how long you’ve been “in the system” with credit in your own name. If you are a parent of a young adult – or a young adult yourself – consider getting a credit card with a low limit now (maybe $500) and using it responsibly. Remember that you should never charge $20 if you only have $10 in the bank: spend less than you earn.
Happy Fourth of July!
You have to love a nation that celebrates its independence every July 4, not with a parade of guns, tanks, and soldiers who file by the White House in a show of strength and muscle, but with family picnics where kids throw Frisbees, the potato salad gets iffy, and the flies die from happiness. You may think you have overeaten, but it is patriotism. ~Erma Bombeck
Michael Jackson and Me
photo credit: Current News Stories
It’s a regular Sunday, but somehow I cannot make myself to do anything. Not because I am lazy, but because I feel kind of blue. My husband is depressed because he finally found a job after being unemployed for the past eight months, but it’s a job that he hates. And I am sad because I still think about Michael Jackson’s death. It’s kind of dumb. But I was deeply touched and shocked when I learned of his death. I was hoping it was a rumor and expected to hear any minute that it’s not true, that he is alive. I don’t know why. I never met the guy. I love his music though.
Like millions of people I was growing up with him. Everybody and their mother danced to his music and I was no exception. I was growing up in the USSR and I didn’t see his video clips since Soviet government prohibited any American TV or influence. That was changed in 90’s.
I was exposed to Michael Jackson’s music for the first time when my father brought an audio cassette (most likely pirated) from Afghanistan where he worked as a civil engeener during the war. It had a picture of MJ on the cover, as I remember he still looked black. My sister, my cousin and I were listening to it non-stop.
There were so many touching and great words said about Michael Jackson since the world learned of his passing. And, of course, he was excentric, even weird and had a tragic life. Do I even need to bother to repeat?
But I know that when I hear him on the radio I am going to remember him by what he probably wanted to be remembered by – his musical creations, his talent, his famous dance moves. I am going to remember with nostalgia my teenage self going at it in the living room of our tiny apartment in a Soviet concrete building. Or maybe I feel a little bit empty inside because I realize that my care-free youth is gone.
Test Your Credit IQ
A good credit score can save you thousands of dollars on a loan, but many consumers don’t know what makes up that three digit number or have any idea what’s in their credit report. Think you’re credit savvy, take this quiz to see just how smart you really are when it comes to this important aspect of your financial health.
Questions
1. What is the average credit card debt?
a. $5000
b. $7000
c. $8000
d. $10,000
2. Many consumers can save ________ in a lifetime through better credit management.
a. $100,000
b. $1 million
c. $500,000
d. $750,000
3. True or False. Debt to income ratio has no impact on a credit score.
4. What component weighs most on your credit score?
a. Length of credit history
b. Credit utilization
c. Total accounts
d. On-time payment History
5. Closing your oldest account may reduce your credit score because it effects:
a. Credit Utilization
b. Length of credit history
c. On-time payment history
d. All the above
6. True or False: Using your credit cards regularly is better than not using them at all.
7. You can improve your credit score by
a. Closing credit cards you don’t use
b. Not using your credit cards
c. Reviewing your credit report regularly and correcting any errors
d. Not paying your bills on time
8. Do credit inquiries impact your credit score?
a. Yes
b. No
c. It depends
9. In today’s economy, good credit is essential when:
a. Trying to secure a home loan
b. Applying for a job
c. Applying to rent an apartment
d. All of the above
10. True or False. A great credit score is considered anything above 690.
Answers
1. C. $8000. The average consumer has $8,000 in credit card debt. Credit cards can be a slippery slope of spending beyond your means if you aren’t careful. Most consumers don’t realize paying the monthly minimum will keep us in debt for dozens of years.
2. B. $1 million – A good credit score qualifies you for better interest rates on home loans, car loans and student loans. Over the course of a lifetime, these interest fees can really add up.
3. True. Length of credit history, credit utilization, total accounts, on-time payment history and credit inquiries are the only components of a credit score. You can learn more about the impact each of these has at www.creditkarma.com/report.
4. D. On-Time payment history. On average, a person with perfect on-time payment history has a credit score over 700. However, make just one late payment and your credit score can drop 50 points.
5. D. All of the above – Credit utilization, length of credit history and on-time payment history are all important components of a credit score. Having a bad grade in one area can have a huge impact on your credit score.
6. True – Credit card utilization is defined as the total credit card debt you have divided by the total available credit on your credit cards. High credit card utilization can be a warning sign of credit risk. According to Credit Karma consumers with a 0% credit card utilization had a credit score 73 points lower than consumer who had a credit card utilization of 1-20%.
7. C. Credit reports are rich with data and often have a error or two. If you contact credit reporting agencies and have incorrect information removed, you may improve your score. Avoiding credit entirely means you’ll have no credit history, which will may it harder to get a loan.
8. C. It depends. Hard inquiries pulled by lenders do have an impact on your credit score, but soft inquiries don’t. When you pull your credit score simply for information purposes through your written authorization, it is considered a soft inquiry and has no impact on your actual credit score.
9. D. All of the above. Employers and renters are more apt to check your credit file before offering you a job or a place to live. To get your credit in top shape, it’s essential to maintain a low debt to credit ratio.
10. False. That used to be true prior to the recession. Currently, the average American has a credit score that comes in right around 690, but, even a 690 credit score provides no guarantees when it comes to getting a loan. With the current state of the economic climate, banks are much less likely to even lend to good credit consumers and when they do it’s often at a higher price.
Analysis
If you missed 0-2 questions, you know credit. You understand the important of being a smart credit use and likely have a high credit score.
If you missed 3-4 questions, you’re doing ok. You likely have an average credit score and understand the importance of paying bills on time.
If you missed more than 5 questions, chances are your credit is in need of improvement and you should start taking steps towards responsible credit use.
Steps to Keeping Your Home and Avoid Foreclosure
A report from the fourth quarter of 2008 shows that a growing number of homeowners are seeking lower mortgage payments through loan modification programs and mortgage refinancing.
In an effort to stabilize the housing market and help millions of American homeowners reduce their monthly mortgage payments, the federal government has launched “Making Home Affordable.” A new effort with Freddie Mac, this program offers some of the most aggressive refinancing and loan workout opportunities for financially strapped borrowers to date.
The program also warns those looking to cut their mortgage payments to beware of foreclosure “rescue” firms. These firms charge fees, but fail to provide solutions. To avoid scams, experts advise troubled borrowers to make sure they are dealing with a reputable organization by calling your loan servicer and HUD-certified housing counselor.
For more information on this new initiative, please visit http://inr.mediaseed.tv/FreddieMac_36557/. You may also find additional media assets at http://mediaseed.tv/Story.aspx?story=36557.
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