Lose debt first, protect credit later

I enrolled in a debt-management plan in August 2003 and have finally finished paying off all my credit cards. I would like to find out if having used the agency will hurt my credit score.

As a single mom, I have worked hard to clear my debts and put myself in a better financial situation, but I need to bolster my assets (buying a home, increasing retirement savings, building a college fund for my little one) to increase my net worth.

I don't have any other outstanding debts or loans, but will that work against me now? Given my situation, is there a best way to begin? -- Colleen

Dear Colleen,

Congratulations on successfully paying off your credit-card debt! From your letter, it sounds like you have set some great financial goals for yourself. That is a good motivator to keep you out of problem debt again.

Some of my readers may be wondering why you didn't consider the potential damage to your credit before going on the debt-management plan, known as a DMP. My answer is that it really didn't matter because the essential goal was to pay off the debts that were plaguing you and your family.

Your credit rightly took second or even third place in importance. Had you avoided the debt-management plan simply to protect your credit, it would have been like telling the doctor you can't lose weight because you are afraid your clothes won't fit anymore. Or, that you can't stop smoking because you might gain weight.

Trust me, you were right: Lose the debt first, take care of the credit second.

I am often asked about how a DMP will affect a credit score. The answer is threefold. First, the fact that your accounts were part of a debt-management plan is not included when calculating your credit score.

Second, any negative information that occurred on those accounts before or while you were on the program is included in factoring your score. So if you were 60 to 90 days late on your accounts when you began the debt-management plan, it will negatively affect your score. Also, missing any payments while on the program will also lower your score.

Third, how an account is reported depends on the policies and systems capability for each individual creditor. For example, a given creditor may accept a reduced payment with lower interest and no fees under a DMP, but may report the original payment amount as due to the credit bureau. This will cause a negative to appear on your credit report.

This inconsistency can be caused by inflexible internal management policies or systems that cannot easily be reprogrammed to accept lower rates and payments.

The only way to know for sure to see where you stand is to get a copy of your three credit reports. I recommend you go to AnnualCreditReport.com and request your free annual credit report from all three major credit bureaus. I would also pay to receive your credit score. It's cheaper to get your score with the free report and it will help you understand how all the information on the report adds up.

Each bureau also has some good credit tips on its own Web site, as do the FICO people at myFICO. Review your credit reports carefully and make sure everything is correct. If not, dispute any inaccurate information with the bureau that reported it.

You are correct in believing that having no outstanding debts or loans will not help with your goal of purchasing a home. Without any open accounts, it will be difficult to improve your score.

My suggestion is to begin opening credit accounts during this year, before you purchase a home. Your goal should be to have different types of accounts -- an installment loan (such as a furniture loan), a passbook loan and some revolving accounts, such as a credit card.

Pay on time and as agreed and you will build a positive credit history that will move you toward your goal of homeownership.

news source : http://www.scrippsnews.com/node/31745

What does your credit score say?

PARKERSBURG — A credit score can tell a potential lender if a borrower is a good risk for a loan.

A score is calculated based on credit history and how well they are handling their credit, said Pam Dowler, executive director of Consumer Credit Counseling of the Mid-Ohio Valley.

‘‘The higher the score, the better interest rates and premiums on insurance rates people can get,’’ Dowler said.

A credit score is a three-digit number based on a borrower’s bill-paying history, debt profile and statistical information about other borrowers that lenders use to determine the likelihood of certain credit behaviors, including whether someone will pay on time, according to ConsumersUnion.org, a non-profit publisher of consumer reports.

Dowler said a credit score runs between 300 and 850.

A credit report, which includes the score, has a person’s name, address, social security number and possibly their workplace as well as any public record the person might have had generated, including whether they have ever declared bankruptcy, being sued or so on, she said.

Criminal records are not included on a credit report and bad checks are not included unless they had been turned over to a collection agency.

A credit report can detail any credit a person has had over the last 10 years. Dowler said if someone has spent the last 10 years paying off credit card debt and finished paying it off today, that information would be available for the next 10 years. A credit score is calculated by using mathematical models that analyze credit worthiness, according to ConsumersUniom.org.

‘‘The models consider the amount and types of debt one owes and then analyze and compare someone’s repayment history with thousands of other consumers to arrive at a credit score,’’ they said.

People with high credit scores have traditionally have an excellent payment record, no court judgments against them, not many inquiries on them and the length of time they have held many of their accounts, Dowler said.

A low score can include someone who has trouble making their payments, have had collection agencies try to collect back and late payments, have had court judgments against them where they had to pay a specified amount to someone and have had a large number of inquiries from lenders checking their credit score, she said adding someone doing a check of their own credit report is not counted as an inquiry.

Dowler said a credit report can also show how much credit someone has available. Even if someone has little or no debt, but has three credit cards with a $5,000 limit for each, someone could determine that person has a potential for $15,000 of debt and that can affect their credit score.

‘‘We advise people to only have one credit card,’’ she said. ‘‘The more debt someone has, credit card companies can up their interest rate and lower their credit amount.’’

Dowler said the highest credit score she has seen for someone is 813.

They advise people check their credit score annually due to the potential of identity theft and to make sure mistakes have not been made.

‘‘People need to know where they stand,’’ Dowler said.

Credit reports are available through a number of different sources at a variety of fees and costs.

Reports can be gotten through the Consumer Credit Counseling Office for a fee and Dowler said they have counselors who can go over it people.

The three major consumer credit reporting agencies are Equifax, Experian and TransUnion. People can also go through AnnualCreditReport.com which allows someone to request a free credit report once every 12 months from each of the three nationwide consumer credit reporting companies.

Lenders can pull a credit report after customers sign the proper releases as well as credit card companies. A potential employer or an insurance company can pull a credit report.

‘‘It can be used for a variety of different things,’’ Dowler said.

Increasingly, credit scores are being used for purposes other than determining whether someone will default on a loan or make late payments, according to ConsumersUnion.org.

‘‘For example, some insurers are using low credit scores as indicators to identify individuals they believe are more likely to make claims against their insurance policies,’’ they said. ‘‘These insurance companies maintain that there is a correlation between poor credit and filing multiple insurance claims.
news source : http://www.newsandsentinel.com/page/content.detail/id/503680.html

ID theft protection starts in wallet

EDGEWATER -- Two out of the 17 people who attended an identity theft seminar had their identities stolen, but more potential crime targets were in the room.

A quick survey on Tuesday by victim advocate Theresa Ronnebaum revealed five vulnerable people with a Social Security card in their wallet. Another susceptible person didn't own a shredder.

With Florida ranking fifth in the nation for identity theft crime, Ronnebaum stopped by Edgewater's Community Center to hold a free, two-hour seminar about simple ways to protect yourself.

Educating the public would not only prevent further crime, but it also might help her deal with the flood of requests for help at her Orlando post with the Office of Statewide Prosecution.

"If I'm educating you today, these are less victim calls I have to deal with (later)," said Ronnebaum, the state's only identity theft victim advocate.

Still reeling from Social Security number and credit card theft, one participant who wished to remain anonymous, said even young people should be required to learn how to safeguard themselves from ID theft.

"As you get older, you realize its inevitable," said the 50-year-old ID theft victim with two master's degrees.

GET INFORMED

To learn whether you've been a target, start off by checking your credit report every year to learn if there is any suspicious activity under your name.

Ronnebaum warns, however, there is only one legitimate, free, credit reporting source that is federally funded for the public to use. Visit www.annualcreditreport.com.

"There is a statute of limitations in regards to prosecuting the case, that's why it's important for you all to pull your credit report every year," she said. "If you don't pull your credit, sometimes you don't even know you're a victim."

Victims should place fraud alerts on all accounts with the three main credit reporting agencies, she said. They should also file a complaint with the Federal Trade Commission.

Crime victims are encouraged to file reports with their local law enforcement agency. The police, by state law, should record a report, she said, and may choose to investigate the case. It will be up to the state attorney's office to decide to prosecute.

PREVENTION

Be careful about the contents of your wallet and purse.

Keep track of what's in your wallet by making photocopies of credit cards, Ronnebaum said.

"Copy not only the fronts, but the backs of your credit cards because that will give you your 1-800 numbers (for cancellations)," Ronnebaum said.

Resident Norma Perkins made copies of her cards a few years ago, but said she would update her list to refer to phone numbers in case her wallet gets stolen.

"I have a great amount of awareness of being cautious," she said.

One of the easiest ways to prevent identity theft is to leave your checkbook and Social Security cards at home, Ronnebaum said. She suggests writing letters encouraging companies that print your Social Security number on cards, such as health insurance agencies, to use a different identification number.

With thieves digging into personal trash and even at businesses, all documents should be destroyed with a shredder. Ronnebaum recommends a cross shredder because some thieves, who may be high on drugs, have nothing else better to do than piece your information together.

"When you don't use a cross shredder, they're just lines. It's like a puzzle," she said.

It's important to safeguard everything, even mailboxes. It's easy to become a target as soon as the mailbox's red flag is raised to indicate mail needs to be picked up.

"You're basically telling the bad guys, 'Hey, here's the mail. It's got my account number, my checking account number, my routing number and a bill,' " she said.

news source : http://www.news-journalonline.com/NewsJournalOnline/News/Neighbors/DailyJournal/evlDJ02031508.htm

SLT’s 2007 Annual Report - Letter

I would like to offer a few comments on the SLT Annual Report which struck me as unique and refreshing:

1.The 3-page quick read is an innovative and practical departure from conventional reporting of corporates. It encapsulates the salient features of the Report for the busy yet discerning reader.

2.The messages of the Chairman and CEO are exceptional. They succinctly review performance, plans and prospects. A very well coordinated effort without any overlap between the two. The chairman’s message is focused on putting the last decade since privatization into context. In addition the Chairman’s message puts the entire Annual Report into context. The CEO’s message spells out the strategy of SLT in a very clear and easily understandable manner without the use of jargon. These two statements are a must read and should be regarded as a model for modern Annual Reports.

3.The preamble to the Management Report gives in 4-pages and in a tabular format at that, an excellent summary of SLT’s current position; what most readers would be unable to or at best take forever to comprehend and deduce from most annual reports.

4.I am afraid the operations review however is far too esoteric for the greater majority of the targeted readers and too lengthy at 18-pages especially compared to the Financial Review of only 6-pages the average stakeholder would I am sure be uninterested in the abstruse details of technology and infrastructures involved. Much of this Review is an exercise in futility, I am afraid.

5.The Financial Review lucidly expounds the operational results which is music in stakeholder’s ears and carries a wealth and useful information in particular on Risk Management - the name of the game is today’s volatile economic environment locally and internationally.

6.Investor Relations Review is a commendable new feature in Corporate Reporting, which comprehensively deals with an aspect hitherto treated perfunctorily in Annual Reports.

7.The Sustainability Report vividly captures the corporate ethos or culture of SLT.

8.Although Corporate Governance is still a relatively new concept in Sri Lanka, its practice at SLT is well documented in the Report.

9.The look and feel of the Report is classy and has a sense of understated elegance. There is no attempt to force a modern, hip type of image as one would expect. Instead modernity comes out almost in a paradoxical manner through the clever avoidance of clichéd imagery and the use of a sophisticated style of illustrations.

I was particularly motivated to write this critique in the context of an unsavoury trend of sheer volume and bulk in Annual Reports that I have seen emerging. This may be due to companies slavishly following conventions or flavours of the day largely motivated by awards. It would have been preferable if the majority of potential readers of most Annual Reports of blue-chip corporates were spared the tedium of wading through a plethora of technical and financial information much of which is unlikely to be of interest or comprehensible to them. SLT must be commended for bucking the trend.

news source : http://www.sundaytimes.lk/080309/FinancialTimes/ft334.html

ADR Report-ADRs fall, led lower by banks on credit concerns

NEW YORK, March 6 (Reuters) - U.S.-listed shares of overseas companies fell on Thursday as credit market concerns and a U.S. report showing mortgage foreclosures reached a record high hit financial sector shares.

The Bank of New York's index of leading American Depositary Receipts (ADRs) fell 1.3 percent while the 30-share Dow Jones industrial average .DJI declined 0.9 percent.

The Mortgage Bankers Association said the rate of failing loans swelled, led by a growing wave of subprime borrowers unable to make payments. A record 0.83 percent of U.S. loans entered the foreclosure process in the final three months of 2007. For details, see [ID:nN06468141].

India's HDFC Bank Ltd (HDB.N: Quote, Profile, Research) fell 5.6 percent to $99.78. Brazil's Banco Bradesco (BBD.N: Quote, Profile, Research) dropped 3.6 percent to $31.57, a day after Spanish bank BBVA (BBVA.MC: Quote, Profile, Research) sold its 5.01 percent stake in the company.

Also, British bank Barclays Plc (BCS.N: Quote, Profile, Research) fell 3.2 percent to $34.36, while Swiss bank UBS AG (UBS.N: Quote, Profile, Research) -- the world's largest wealth manager -- sank 4.2 percent to $29.55 on write-down fears. [ID:nL06593044]

In Latin America, the major benchmarks were also rattled by news that U.S. "jumbo" mortgage lender Thornburg Mortgage Inc (TMA.N: Quote, Profile, Research) said it received a letter from JPMorgan Chase notifying it of a default after it failed to meet a margin call. [ID:nN06395667].

Receipts with the Bank of New York's index of leading Latin American ADRs .BKLA dropped 2 percent. Mexico's IPC index .MXX was down 0.8 percent.

news source : http://www.reuters.com/article/

Asian Stocks Drop on Growth, Credit Loss Concerns; Toyota Falls

March 3 (Bloomberg) -- Asian stocks dropped the most in almost two weeks, almost erasing last month's gains, on deepening concerns credit losses at financial companies will increase and the U.S. economy is headed for a recession.

Commonwealth Bank of Australia retreated to the lowest in more than two years in Sydney, while Mitsubishi UFJ Financial Group Inc. fell in Tokyo after UBS AG said industry losses in credit markets may reach $600 billion. Toyota Motor Corp., the world's second-largest automaker, dropped after a gauge of U.S. business activity fell to the lowest level since 2001 and the yen strengthened against the dollar.

``The U.S. economy is contracting, there's no doubt about it,'' said Tom Murphy, who helps manage the equivalent of about $1 billion at Deutsche Bank AG in Sydney. ``Weakness in stocks is and will continue to extend beyond the financials over the next few months.''

The MSCI Asia Pacific Index lost 2.7 percent to 143.64 as of 1 p.m. in Tokyo, set for its biggest decline since Feb. 20. Financial stocks were the biggest drag. The benchmark almost erased February's 2.8 percent gain, which came amid speculation a bailout of U.S. bond insurers will limit credit losses.

Japan's Nikkei 225 Stock Average slipped 3.8 percent to 13,080.82, the largest slump since Feb. 6. The gauge has tumbled 15 percent this year. Australia's S&P/ASX 200 Index fell 2.9 percent today, led by BHP Billiton Ltd., after metal prices retreated.

Bank Stocks Drop

U.S. stocks plunged on Feb. 29, capping the market's fourth monthly drop, after the National Association of Purchasing Management-Chicago said its business barometer contracted as production and employment weakened. The Standard & Poor's 500 Index declined 2.7 percent, the most since Feb. 5.

Commonwealth Bank, Australia's biggest mortgage provider, dropped 5.1 percent to A$39.99, poised for its lowest close since Nov. 7, 2005. Mitsubishi UFJ, Japan's largest publicly traded bank, declined 3.8 percent to 910 yen. HSBC Holdings Plc, Europe's No. 1 bank by market value, slipped 1.7 percent to HK$118.70 in Hong Kong.

A measure of financial shares on MSCI's Asian index has dropped 13 percent so far this year, the largest decline among the regional benchmark's 10 industry groups, amid signs of increased writedowns to cover losses on investments tied to the U.S. mortgage industry. The broader index has fallen 9.2 percent this year.

``We have to recognize the risk that the economy will suffer more damage than what consensus suggests,'' Geraud Charpin, head of European credit strategy at UBS in London, wrote in a Feb. 29 report. Financial institutions have so far disclosed more than $181 billion of writedowns and credit losses.

Yen Strength

Takefuji Corp., Japan's No. 3 consumer lender by market value, slumped 5.1 percent to 2,530 yen after saying it may cut its full-year earnings forecast because of losses on derivatives transactions arranged by Merrill Lynch & Co.

Toyota declined 4 percent to 5,520 yen, leading declines among Asian exporters. Nintendo Co., the maker of the Wii game console, slumped 4.5 percent to 51,000 won. Samsung Electronics Co., Asia's biggest maker of chips, mobile phones and flat panels, retreated 1.1 percent to 556,000 won.

U.S. reports this week may show the unemployment rate probably rose in February as hiring slowed in the largest market for Asian goods and manufacturing may have contracted, according to economist estimates.

Japanese exporters also fell on concern the dollar's decline to a three-year low against the yen will erode the value of U.S. revenue. The dollar fell to 102.93 yen, the lowest since Jan. 28, 2005. It was recently at 103.08 yen.

`Anxious'

A one yen increase in the value of the Japanese currency against the dollar cuts Toyota's annual operating profit by 35 billion yen ($340 million).

``Investors are anxious about the U.S. economic contraction and that's feeding into the weaker dollar and stronger yen, which is pulling the market down here,'' said Junichi Misawa, who oversees $655 million at STB Asset Management Co. in Tokyo. ``There's a lot of economic data coming out this week and if it is as bad as economists are predicting we're likely to see markets correct further.''

BHP, the world's largest mining company, fell 2.7 percent to A$38.52. Rio Tinto Group, the world's No. 3, dropped 3.7 percent to A$132, set for its biggest decline since Jan. 29. A measure of six metals on the London Metal Exchange, including copper and nickel, dropped 0.9 percent on Feb. 29, halting a three-day, 6.4 percent advance.

Also in Australia, Zinifex Ltd. surged 8.5 percent to A$12.07, the biggest advance on MSCI's Asian index. The company agreed to merge with Oxiana Ltd., the fourth-largest Australian metals producer by market value, to form a A$12 billion ($11.2 billion) company.

Oxiana slipped 2.8 percent to A$3.86.

news source : http://www.bloomberg.com/