Monday, December 21, 2009

Credit Secrets Revealed: Loan Modifications

I've been on a credit kick lately and I think its time I start looking at a loan modification. I've been thinking about it for a while since all of this hoopla about homeowners losing their homes and others saving their homes.

My home is worth less than what I currently owe and the minimum payments on my credit cards are going up due to the CARD ACT, so if the bank is willing to work with me it's worth a shot. I did some research and you don't have to be behind in payments or in financial trouble at the moment.

Let's start with a definition of what a loan mod is then we'll get into the details.

Simply put a Loan Modification or Loan Mod is a change to the mortgage terms which are agreed to by the lender and the homeowner. The lender modifies the existing loans in order to work with the homeowner because of hardship. The changes are usually in the form of a rate reduction, where the interest rate is fixed for a certain duration of time or a term extension, where the length of the loan is increased by several years.

When the bank makes these changes it makes the loan more affordable for the homeowner, it keeps a foreclosure off of the banks books, it allows the homeowner to keep the house and it keeps the property values from plummeting.

Wednesday, December 9, 2009

Credit, credit, credit: Get it together!

OK since we've been visiting and focusing on credit lately, I decided to get my affairs in order.

Credit Report
First of all I need to get my credit reports.
According to the Federal Trade Commission there is only 1 place to go to to get your free annual credit report.

It takes a few minutes but when you are done you will have all the information that 3 of the major credit bureaus have about you. Once you get it, review it and make corrections by writing the bureaus or following the instructions on their websites.

If you need more information about credit reports, the credit bureaus and pricing:

Credit Score
You also want to get your credit score. My favorite site is
They charge money for the information but they deliver it to you in an easy to read format and also provide all sorts of calculators and other information.

If you want to wait until you clean up your credit to start paying for those types of services there are free alternatives.

One is Credit Karma. They provide you a credit score from TransUnion and they also provide a credit "report card".

Credit Report Cards

Another free tool is's Credit Report Card. A nifty tool that also attempts to rate your credit based on the information pulled from the credit bureaus. It also provides you with an "estimated" credit score.

Which One?
At first glance, there isn't a huge difference besides offering a free score from transunion. According to this article Credit Report Cards: vs Credit Karma, tends to be more accurate in terms of pure data. Check out both websites and see which ones appeal to you. I've been using Credit Karma for about a year and don't have any issues. I don't see a need to switch, but that's just me.
Since we are getting our affairs in order, you might as well sign up for A real easy way to track your finances, it includes some calculators and budget tools to help you see where you need improvement. needs its own article and I will provide one in the future.

Investigating the massive consumer loan industry and what's ahead for customers and banks -- a FRONTLINE-New York Times co-production.

Since I've been posting so much about credit lately. I came across this Frontline investigation also available on DVD.

As credit card companies face rising public anger, new regulation from Washington and staggering new rates of default and bankruptcy, FRONTLINE correspondent Lowell Bergman investigates the future of the massive consumer loan industry and its impact on a fragile national economy.

Watch the whole program on PBS Frontline.

Tuesday, December 8, 2009

Crunch or Be Credit Crunched Pt 2: An actual letter from "CityBanc"

In Part 1 of "Crunch or be Crunched" we discussed the CARD ACT, what it is and some of the changes we have to look forward to. If you missed it go here.

I wanted to address the letters that the card companies have been sending out. I got this one from "City" and it basically states:

Dear Quest,
We are making changes to your account terms.
To continue to provide our customers with access to credit, we had to adjust our pricing. The terms of your account will be changing.

Changes include:
- increase in the variable APR to 19.99% (currently at 5%) for purchases.
- increase in the variable APR to 29.75 if you default.
- increase in the variable APR to 25.24% for cash advances.
- increase in the transaction fee for balance transfers to 5% of the amount of the balance transfer.
- increase in the transaction fee for cash advances to 5% of the amount of the cash advance.
- changes take effect December 29, 2009
- if you do nothing, you accept the changes

To accept the terms do nothing and earn interest back every month if:
1. Your payments are on time every month.
2. You charge $500 or more in purchases every month.

Earning interest back = a credit on your billing statement equal to 10% of your total interest charges on your PURCHASE balance.

You have the right to Opt Out.
If you do opt out
you can pay down your balance under your current terms. If you opt out, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later.

How to opt out:
Call or write "Citybank" by December 28, 2009.

Opting out:
- your account will be closed
- you will not have access to credit
- you must repay the balance under the current terms
- you will not be able to earn rewards
- you will lose any rewards you have accumulated

So what does it all mean? Join us in part 3 as we break it down for you.

Monday, December 7, 2009

Crunch or Be Crunched: Your Card company is raising its rates and what you can do about it.

Did you know that most of the credit card companies are raising their interest rates by the end of 2009? If you don't read those letters and notices that you get from your credit card companies ASAP, you will not have an opportunity to stop those deadly rates from rising.

Most credit card companies have been trying to find new ways to make make money because of potential hits they may take due legislation passed in May 2009. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 also known as the CARD Act or CARD took effect on August 20th, 2009 and will be implemented in multiple steps with the bulk of the changes coming in February 2010. This multi-phased approach allows the credit card companies as well as consumers to prepare for the coming changes.

Some of the changes include:
- new restrictions on credit card lending
- elimination of over-the-limit fees
- 45 day notice of rate change (not required if you have a variable rate or an introductory rate)
- delivery of periodic statements 21 days before your bill is due
- elimination of due date traps (due dates on weekends or holidays, due dates that change without warning)
- no increasing interest rates for cardholders in good standing if reasons are unrelated to the cardholder's behavior with respect to that card.
- payments at local branches be credited on the same-day

According to an article in
Lita Epstein, author of 25 books on personal finance, said lawmakers made a grave mistake by giving the card companies so much lead time between passage of the law and its implementation. To have the best effect, she said, legislators should have frozen card agreements at the time the bill was signed into law.

“By giving them an idea what restrictions were coming, they gave banks free rein to work around those restrictions -- so by the time the law is in place, the restrictions will have very little meaning,” she said.

Stay tuned as our series will explore what your options are and how you can protect yourself.
It is 24 days, 3 hours, 36 minutes and 35 seconds until Friday, January 1, 2010. What are you doing to start preparing for next year? It's not too early.

Friday, December 4, 2009

So I've been thinking ....

One of my goals is to come up with a new business idea every day. Good or bad I have to come up with some thing that people need or want. The rules are:

1. There are no limits except my imagination.
2. It must be something that I can sell or a service that I can sell.
3. I need to keep track of this list.

Blog title...

Out of all your goals for 2009 are there any that you can still accomplish? There are 27 days, 9 hours, 09 minutes and 09 seconds until Friday, January 1, 2010. Not too late to get them done. I will remind you daily Facebook. I still have 6 pounds to go!

Wednesday, December 2, 2009

29 days until the New Year not to late to accomplish those unfinished goals!