Knowing Your Credit Score Can Save You

This is a day and age where your credit means everything. It means the difference between getting or not getting the house you’ve always wanted to own, the car you need to get around, and the extra things in life that make it pleasant and enjoyable. Your credit score is vital to your financial future, and not knowing what’s on there is dangerous because if you don’t know something is creating a blemish on your record that might be the difference between getting an important loan and not getting it, how are you going to be able to take care of it?

I have the perfect example actually. Before I got my free credit report for the first time, I had no idea that there was an outstanding bill that was out there for a Dr. appointment I had about seven years ago. I had moved after the bill came to my old address you see, and I had no idea that this bill was still outstanding because the bill was never forwarded to my new address, even thought I had filled out the forwarding paperwork at the post office.

Naturally, when I saw that, I called and had it paid and taken care of right away, but before I had learned that you could get free credit scores, I didn’t have any way of knowing that creditors were looking at this blemish as a negative aspect of my competency to pay them back in the event they were to extend credit to me. I had purchased a car prior to this, and perhaps I could have gotten a better interest rate if I had known about what was showing on my credit report, good and bad, before I settled the loan.

You see, not only does your credit history determine whether lenders will even consider loaning sums of money to you for purchases big and small, but it also almost always plays a huge determining role in what kind of terms you get on your loan. This means what kind of annual percentage rate they are going to give you as a “fee” for them lending you money, also known as your interest rate. Do you know how many thousands of dollars you can potentially save in interest on a mortgage loan or even any other standard installment loan by simply having stellar credit and a clean history?

It’s mind boggling actually, and it only hammers home the important of keeping up with what your credit history is and if there are any items on there that could be seriously hampering your chances at getting great APR’s from lenders. Not only that, but of getting a loan at all to be honest. Many creditors in this day and age are (understandably) getting more and more stringent about their terms of acceptance, and the bar is being raised on the important of a good credit score.

I guess you live and you learn though, I was younger then and have since been schooled in the financial importance of your credit history. You could have all the cash in the world, and your credit would still be important. You can’t open a business, buy a high ticket item, or sometimes even get a credit card with a high limit and low interest rate without having at least good credit, and if you don’t have the tools to attain that by getting your free credit score, then you understandably will not take care of the items that are creating a bleak outlook for your credit worthiness to lenders in a timely fashion so you can repair your record and get on the road to extreme creditworthiness.

Consumer Spending Casts Doubts on Recovery

It seemed for a while that everything was smelling like roses when it came to the economic recovery that has been so hotly anticipated. Not all good news of course, but we had people like Ben Bernanke saying that there were signs of life showing, which to me was a breath of fresh air after all the other negative nellie news. However, there’s a huge difference between glimmers of life and the recovery that we really need right now.

My first thought when I hear pseudo positive news like this is “gee, we pumped billions of dollars in to these financial institutions with a huge recovery package, shouldn’t we be showing a little more than glimmers of hope from that?” Call me a total cynic, but I feel a little like sunshine is being blown up our collective you know whats. And I fear I may be right and a recover is much further down the road than once thought.

First of all, the company I work for, which is a Fortune 500 company which shall remain nameless, just had a RIF, or Reduction in Force again, and I keep hearing about more and more job losses, which take a long while to recover from in and of themselves, and second, the news just came out that consumer spending is not improving, which is another propeller to a healthy economy that quite frankly just isn’t happening right now.

Consumer spending is one of the key elements to get this economy moving again, and people are keeping their money in their pockets, which will do them good individually but of course will keep our economy stalled as well as our jobs in the minus zone. This means that consumer confidence is still no the brink, and that we need to get that back in order to get people spending. People are having their credit card limits reduced, having a hard time getting credit in the first place, and there is still a relative credit freeze going on, which means people can’t buy on credit, the former American way. Even credit cards for bad credit are getting harder and harder to come by.

That’s a little tough when we can’t even seem to turn on the news every day without hearing of massive layoffs, how hard it is for people to get jobs now, and we experience the same fear and doom at our jobs individually. I know at my job right now there is a large fear that you may “be next” to reduce costs for a company, and the more you make the more at risk you may be. Once we can get over that fear is when our economy will really look up, until then I’m convinced we are still in trouble.

Americans Scaling Back on Vacations to Save Money This Summer

I’ve already talked to a lot of people who have said they’re only taking “staycations” (gee, that’s a buzzword from this century if I ever heard one) and going places that are cheap and close to home rather than taking off far and wide to foreign countries of places that are hundreds of miles away this year, in an effort mostly to save money for a year.

This years scary unemployment numbers have no doubt gotten people scared of losing their jobs, but also it’s a psychological biproduct of a recession this deep to go into save and buckle down mode. Sadly the same mode that helps people save money when they need it is the same one that keeps the economy down since consumer spending drives the economy and drives job creation and stability.

Polls recently taken of Americans show that at least 1/3 of them have already canceled one planned trip or are not planning on taking a normally planned summer trip. If you think about it, both older Americans and younger working Americans are saving their pennies. Older retirees have lost a lot of money in the stock market and financial markets, and younger Americans are losing jobs, getting pay reductions, and having to rely on making it on less income.

Most Americans who are not taking a summer trip this year, which is the most popular time to vacation, cited financial concerns as the reason for their staying at home. For this reason, the bargains for travel abound online right now. I couldnt’ believe when I looked up some of the travel deals for places that are normally considered luxury, and charged accordingly, such as Maui, and saw the prices were cut by nearly 50% in some cases. If you’re a last minute louie, you’re in even more luck because there are some last minute deals that are available that are dirt cheap, some of them even including food and drinks!

Parallels to the Great Depression?

Some people like to draw parallels to the current economic situation and the Great Depression which started with a stock market crash on October 29,1929, or many like to think it started then. However, if you look at the numbers concerning unemployment, then you will see that we are nowhere near those numbers now, although ours right now are admittedly not something that should make you feel all warm and fuzzy inside. Right now, at the peak of unemployment most likely, unless jobs continue to be lost at an alarming rate, we are at almost a 9% unemployment rate.

The Great Depression saw unemployment rates as high as 30%, which is catastrophic. People saw their net worths and income drop by anywhere from one half to two thirds, which devastated personal worth and also led to a vicious cycle of spend cutting by consumers. Right now, yes, we are looking at some huge losses to people’s investment portfolios as well as their income, but the stock market has already slightly rebounded, although not to anywhere near the pre-recession levels it was at before this all hit.

You have to remember also, that during the Great Depression, the government was not as proactive as it is today in preventing this sort of catastrophe. I guess you could say that we learned a great deal from the Depression, and that has taught the top economists how to avoid that same thing from happening again. Even back during the Depression, great visionaries and financial gurus saw that this time would pass and that financial prosperity would return to the people of America and to the society itself.

And they were right, just as people today know that although we are near a bottom now and things seem pretty bad, they will indeed get better, and who knows, they may even emerge stronger than they were before. I think that the Obama administration has done what they can, but the government can only do so much, and then it is left up to the private sector and businesses to make things right again. Let’s just hope that the right safeguards are put into place and the same risky lending practices that led to this fall will be monitored from now on.

Job Losses for April the Last Bad News?

There are some good economic monitors that are speculating – let me say that again – speculating – that the latest bad news which was a jobs loss report for the month of April 2009, may be some of the last bad news we receive about our further ailing economy, based on other numbers that they have been running and other economic indicators that are on the horizon.

While it certainly does not mean that the job losses are over (Americans have lost an estimated 5 to six million jobs during the duration of this recession thus far, but don’t forget this recession began back in 2007, which means it’s been going on for well over one year now), it does mean perhaps that the April report may be the most severe we see for the next few months, and that after that, since other indicators are on the rise, we may begin to see employers hiring people again. Wow, won’t that be nice!?

It’s interesting, the dynamic that is going on right now. I was just talking to a friend about how you keep hearing that new college graduates as well as people who are high up on the food chain when it comes to jobs, since there are few of those high paying jobs out there (companies are targeting not just middle management, but those with seniority as well as the higher paid employees, to cut costs significantly), are having a very hard time finding work right now.

With the April jobs reporting that over 500,000 additional jobs were lost in April, that means that’s all that much more competition out there for people looking for work. Heck, I’m not even immune in my small department at a major company, and I thought I was. We’re having efficiency experts come in next week, and for all I know, I may be in a position where I have to defend my job. But I guess that means I can just write more blogs for you then, huh?

But I digress, the point I’m making is that right now jobs are one of the worst signs we have. Because the economic bottom has been a process sort of like a domino effect, the worst of the job losses may be over sooner than we think, and those same companies that laid people off left and right just a few months ago may be looking to hire people back or hire new people, just to get them in the door and trained for when the economy really starts to look up and consumers and businesses alike loosen the strings on their purses and are ready to become buyers again.

Are Jobs on the Recovery Path?

Well, it seems like there is a lot of mixed message media going on lately as far as the economic recovery goes. However, I’d like to think that this one very important indicator of the overall economy, and the precursor to higher consumer spending and confidence – the job market improvement – is true. Economists are speculating that although the April numbers were still pretty devastating, and may well last the next few months as well as companies shed jobs at record paces due to shallow profits, may be on their way back up soon.

They are saying that because consumer confidence and spending appears to be up as of late, this may well indicate that more companies will soon need more employees to meet consumer demand. This means that some companies may even end up rehiring those that they laid off, to prevent having to hired totally unskilled workers, which is of course much more expensive in the long run. There are also other indicators that point toward a possible hiring increase, but the months ahead will show what the true story is.

Ben Bernanke gave his disposition on the economy lately on Capitol Hill, and he speculated that we will begin the glimpses of a recovery in late 2009, but that we still have quite a road ahead of us now. As far as the time I’m writing this, which is the beginning of May, I can tell you that the stock market is already rebounding, with many of the last month’s losses already being covered and then some, so that is another good sign. However, it’s important to note that the stock market is not a leading indicator of the actual state of the economy, but rather, usually leads economic boom times by several months.

So if that stands true this time, we still have quite a lot of time on our hands before the real, serious recovery begins and we can start sighing a breath of relief since jobs will likely be going way up and we will be enjoying our way of life again. It’ll be nice when every headline doesn’t read with words like “foreclosure”, “unemployment”, “stocks tank for fifth month in a row”, and the like, won’t it? Some day, and some day soon, these headlines will be a thing of the past.

One Bank That Seems Stable

When I was searching for bank stocks to buy, and take advantage of the currently extreme negativity about banks in general given the current mortgage crisis which spawned the greatest financial meltdown most of us will see in our lifetimes, one came to the forefront as a promising business model with a promising outlook, and minimally impacted bottom lines from what many other banks too part in.

When I say what many other banks took part in, I mean risky lending practices that involved lending to people who were in high risk categories in order to get more money quicker, and to get more of an interest rate out of them . When these subprime loans dropped the ball, and people couldn’t pay them any more, that’s when the whole mortgage and subsequent financial crisis took off, leading to a downfall of the stock market, and straight up consumer panic. You can see why banks aren’t the most popular stocks right now.

That news, combined with the news that the government was providing the largest, seemingly most stable stalwarts of the banking industry with TARP money meant to help keep them from going under after a series of bad business decisions, is the reason you can get bank stocks on the cheap now. But you have to be extremely careful – there’s a reason why they’re cheap, because they stand a good chance of still having substantial liquidity and profitability problems in the intermediate time frame as well as the distant future.

The one bank that stood out to me as one that has weathered this crisis pretty well, and seems to have a pretty conservative business model (the reason they stayed out of the subprime fiasco a lot more than other banks – one word, greed), is Hudson City Bancorp. This smaller bank has just posted record profits, perhaps because they have gained a reputation as being pretty solid in these uncertain times, but also because they have been voted the best managed bank.

It first came to my attention when I was reading an article in a newsletter from an investing service I subscribe to. It was one that looked like it warranted further research for me to invest in, so I started to research it and found that because of their more conservative approach to making loans to people for homes, they have made good profits and stayed in business, making mortgage loans and other loans, but not ones with substantial downside risks.

It doesn’t mean they will weather this storm without any scrapes, no banks will, but in comparison I really like the way they’ve done business and maintained profitability, unlike their larger competitors. Look where all that greed and risky lending got them – on the TARP program and itching to get out of it as soon as possible!

Home Shoppers Taking Their Time

Prospective home buyers have been taking their sweet time looking for potential homes, townhouses, condos and the like to be their next dwelling of choice. And who can blame them?

Aside from the occasional story of the house that everyone wants that sells within a matter of days (yes there are still cases like that, some homes are just that desirable, so they go very quickly, especially to people with children if they’re in a good school district), there are more stories about buyers who have been shopping for their new home on and off for months now, just waiting for that perfect dream house to be found at the right price.

Likewise, there are a lot of homes and apartments and condos that would have been snatched up very quickly due to desirable amenities, space, and property, that are sitting on the market for months, even a year sometimes, and they’re not even priced badly, it’s just that there are a lot more homes on the market now than there are serious potential buyers. It’s what you call a buyer’s market.

I watch the show “My House is Worth What” all the time on HGTV. It’s one of my favorite shows, I have to admit, so I record it all the time and will watch it with my lunch or dinner on the weekends. I like to watch it just to see the homes and get great decorating ideas, not so much to figure out what I need to do to my house to get it to go up in value, but the added bonus is that I’ve learned a lot about the housing market, and what you should vs. what you shouldn’t do to your home in order for it to sell for maximum value and with the greatest ease whenever you do put it up for sale again.

Not that I plan on selling any time soon. When we bought this house, it was a long term investment, a home that we wanted to stay in and fix up regardless of resale value, so with that in mind I don’t pay much attention to all the tips about resale value because I’m content to stay here a while. However, I notice that within the past six months, the hosts of the show and the real estate experts that come in to appraise the home’s value and estimated listing price are very cautious to tell the sellers about how bad the market is, so they won’t be totally disappointed in the price.

There are also a lot more disappointed home owners I notice now that are being told their homes will list for a significant percentage less than what they had hoped for, and this is a show that used to tell people their properties were worth a whole lot more, so it’s a sign of the times when you start to see a lot more disappointed faces. They are also cautioned that it takes a lot more wow factor these days to move a home quickly.

Unemployment Rates Allover the Map

I saw an interesting map of the unemployment rates allover the US right now, and with a few exceptions (very few unfortunately), unemployment has pretty much unanimously risen across the board, especially in states like Florida and California, where the downturn is really affecting people of all walks of life, there are some huge hefty mortgages to be paid and a high standard of living, and jobs pay a lot of money because the cost of living and standards are so high for the people that live out that way in most areas.

In my home state of Ohio, I took a quick look at the mouse over map, which listed unemployment rates by county, and saw that most of the counties that surround me and the country I live in, have double digit unemployment numbers, and this number rose considerably just recently, which tells me that the recession and economy may be in the middle of getting to be it’s worst, so it’s still going to be years before we’re out of the woods.

Not one financial or economic guru seems to be comfortable with calling the “bottom” of this economy, or of predicting when the leading indicator that things are going to get better – the jobs market – is going to see serious signs of improvement. I mean, the company I work for has been downsizing some departments now for months, and in my department we have been lucky enough not to get hit by this because of the work we do as well as the fact that for a large corporation, we are such a small by numbers group, which doesn’t make us a larger target for cutbacks.

Believe me, I feel seriously lucky that this is my situation, as I know that there are a lot of others out there that are not so fortunate and would give their right arm for my job, or for any job for that matter, in this day and age. There are some lucky areas that have not been hit by the recession as hard, but most areas have been , and it’s been like a slow domino effect.

Credit Card Holder Bill of Rights?

That’s right, for all of us who feel that we have been treated unfairly or misled by those ever so tempting credit cards of all types, there may be some sort of a bill set forth by congress that spells out what a credit card holder’s rights should be in the credit card and spender contract (you have a contract with your creditors pretty much when you agree to sign on for one, that you will pay your monthly bills pretty much no matter what, or else they can send collector man after you).

The cardholder’s bill of rights would cut down on the most abusive practices of credit card companies. These unfair practices are things like increased monthly payments for no reason, large increases in interest rates at the whim of the company, retroactive force payments, unfair late fees and excessive fees for overage costs that go over the monthly spend limit and also for being late on payments, and what they call misleading advertising of interest rates that you think are one thing and then end up jacked way up when you’ve had the thing for a year or so. And so on and so forth. You get the picture.

Democrats are pushing for this bill to happen because they say that the American consumer is being duped into paying large fees, interest rates and more at the expense of wasted income. The bill will actually ban the practices, so the card lenders will be forced to have certain practices. I’m not sure if this is good for overall business, I just hope that it doesn’t cut down so much on credit card company’s profits that they hesitate to extend credit to consumers, which will only add another wrench into the dismal consumer spending that has lended to the recession we find ourselves in.

I agree that something needs to be done though. I just don’t know what the answer is. As far as legislation, yes I do agree that something needs to be done, I just hope that creditors are flexible enough to be able to still be profitable and extend enough credit even when they feel it may not be the most profitable situation always.