New home prices in Canada climbed 0.1 percent in December from November, as expected, for an average annual increase in 2013 of 1.8 percent, the slowest since 1999, according to Statistics Canada data released on Thursday.
The monthly advance matched the median forecast in a Reuters poll of analysts and reinforces the view that the country’s housing market is stabilizing after a recent boom.
The closely-watched Toronto-Oshawa region was the top contributor to the monthly advance in the new housing price index with a gain of 0.2 percent in December and of 1.4 percent year-on-year.
Vancouver, another hot market for real estate, saw a 0.1 percent monthly decline in prices and a 1.1 percent decline from a year earlier.
Nationwide, prices rose 1.3 percent in the 12 months to December, down from 1.4 percent in November and the fifth straight month of slowing growth.
Overall, prices were unchanged in 11 metropolitan regions, down in five and up in five.
The Canadian government has intervened in the mortgage market several times since 2008 to cool the sector, and most economists expect a gradual softening rather than a U.S.-style crash.
The new housing price index excludes condominiums, which the government says are a particular cause for concern.
Canada Scraps 'Millionaire Visa,' Sends B.C. Property Market Reeling
Real estate agents in Vancouver say property prices could take a hit, after Canada scrapped a program which allowed wealthy immigrants to fast-track the visa process.
The Immigrant Investor Program, launched in 1986, offered visas to business people with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government — for investment across Canada — for a term of five years.
By 2012, the scheme had to be temporarily frozen due to a huge backlog of applications from wealthy mainland Chinese hoping to come to B.C. Now, the government has announced it will end the program for good and scrap all 59,000 applications backlogged worldwide.
The decision came less than a week after the South China Morning Post published a series of exclusive investigative reports into the controversial scheme.
Property prices could take a hit
In West Vancouver, real estate agent Clarence Debelle is still receiving offers from mainland China for luxury property, but she’s concerned the end of the investor program will have an impact on the local economy and the high-end housing market.
“I deal directly with these people who bring a lot of wealth, who are creating lots of jobs for local Canadians — builders, trades, architects, realtors like myself,” said Debelle.
“Most of the buying is coming from Chinese immigrants who are wealthy, so if we make it difficult for them to come into this country, we have killed 80 to 90 per cent of the buying in West Vancouver.”
Immigration lawyer Richard Kurland agrees.
“When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that’s down,” said Kurland.
Market impacted by more than investors
Others aren’t so sure. Even with the investor program frozen, housing prices continued to rise.
Tom Davidoff with UBC’s Sauder School of Business says the market is driven by other things like low interest rates and the local and global economies.
“Given that in the last couple of years, we haven’t seen the market cool off, it’s hard to believe that freezing the investor market is going to kill even the high-end in Vancouver,” said Davidoff.
The government has also announced the end of the Entrepreneur Program, a smaller scheme for business people who plan to own and manage a business in Canada.
However, wealthy investors can still come to Canada through the Start-up Visa Program, which encourages immigrant entrepreneurs to partner with private sector organizations to invest in local start-ups.
The Immigrant Investor Program, launched in 1986, offered visas to business people with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government — for investment across Canada — for a term of five years.
By 2012, the scheme had to be temporarily frozen due to a huge backlog of applications from wealthy mainland Chinese hoping to come to B.C. Now, the government has announced it will end the program for good and scrap all 59,000 applications backlogged worldwide.
The decision came less than a week after the South China Morning Post published a series of exclusive investigative reports into the controversial scheme.
Property prices could take a hit
In West Vancouver, real estate agent Clarence Debelle is still receiving offers from mainland China for luxury property, but she’s concerned the end of the investor program will have an impact on the local economy and the high-end housing market.
“I deal directly with these people who bring a lot of wealth, who are creating lots of jobs for local Canadians — builders, trades, architects, realtors like myself,” said Debelle.
“Most of the buying is coming from Chinese immigrants who are wealthy, so if we make it difficult for them to come into this country, we have killed 80 to 90 per cent of the buying in West Vancouver.”
Immigration lawyer Richard Kurland agrees.
“When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that’s down,” said Kurland.
Market impacted by more than investors
Others aren’t so sure. Even with the investor program frozen, housing prices continued to rise.
Tom Davidoff with UBC’s Sauder School of Business says the market is driven by other things like low interest rates and the local and global economies.
“Given that in the last couple of years, we haven’t seen the market cool off, it’s hard to believe that freezing the investor market is going to kill even the high-end in Vancouver,” said Davidoff.
The government has also announced the end of the Entrepreneur Program, a smaller scheme for business people who plan to own and manage a business in Canada.
However, wealthy investors can still come to Canada through the Start-up Visa Program, which encourages immigrant entrepreneurs to partner with private sector organizations to invest in local start-ups.
Foreign Worker Program Works Fine, If Properly Done, Unions Say
EDMONTON - While the federal government’s temporary foreign worker program has been criticized for allowing some firms to undercut Canadian wages and lay off staff, two unions support the program in principle.
“Some trades cannot supply the manpower needed during peak periods, and for us that is spring and fall when energy firms do their turnarounds and close for several weeks,” said Joseph Maloney, an international vice-president of the Boilermakers union.
His union trains boilermakers and works closely with “quality contractors” to ensure properly trained staff are available. And when they are short, they use the TFW program.
“We bring in about 400 journeymen in the spring and fall from our pools in the U.S. and Ireland, where they are trained to the same standards as Alberta boilermakers and welders. When they come they are paid the same as Canadians and are treated the same,” he said.
“When properly used, this program is able to assist contractors and unions to get these jobs completed on time and on budget, and safely.”
The Ironworkers union, which saw 65 of its members laid off last week and replaced by Croatian TFWs, still supports the program, says Harry Tostawaryk, business manager of Local 720.
“We assist contractors, we go to trade fairs, and we work with them to ensure workers meet the criteria,” he said.
But the problem with the Pacer-Promec Joint Venture (PPJV) at Imperial’s Kearl oilsands project goes back several months when Tostawaryk said his union “told (PPJV) that the Croatians did not meet the standards, but they brought them anyways.”
The federal government has promised to investigate this incident and Tostawaryk said that will impact other companies.
“The other contractors who are doing the program correctly, the PCLs, KBRs and Horton CBIs, will have a harder time bringing people in here because the government is going to scrutinize more.”
Tostawaryk said none of the ironworkers who were laid off last week have been called back, and the Croatian workers are still on the site.
“Some of the guys want to go back to the (PPJV) project, but others have taken other jobs. I told them that if (PPJV) called we would work with them and get them back, but other contractors have also put in extra calls to pick up these (laid off) ironworkers.”
Meanwhile, Alberta Federation of Labour president Gil McGowan said Monday that the actions of PPJV are “a perfect example of how this (TFW) program is being used to drive down wages. And this situation is not unique. This is happening at work sites all over the country because this is how the TFW program is designed to operate,” he said in a statement.
“Some trades cannot supply the manpower needed during peak periods, and for us that is spring and fall when energy firms do their turnarounds and close for several weeks,” said Joseph Maloney, an international vice-president of the Boilermakers union.
His union trains boilermakers and works closely with “quality contractors” to ensure properly trained staff are available. And when they are short, they use the TFW program.
“We bring in about 400 journeymen in the spring and fall from our pools in the U.S. and Ireland, where they are trained to the same standards as Alberta boilermakers and welders. When they come they are paid the same as Canadians and are treated the same,” he said.
“When properly used, this program is able to assist contractors and unions to get these jobs completed on time and on budget, and safely.”
The Ironworkers union, which saw 65 of its members laid off last week and replaced by Croatian TFWs, still supports the program, says Harry Tostawaryk, business manager of Local 720.
“We assist contractors, we go to trade fairs, and we work with them to ensure workers meet the criteria,” he said.
But the problem with the Pacer-Promec Joint Venture (PPJV) at Imperial’s Kearl oilsands project goes back several months when Tostawaryk said his union “told (PPJV) that the Croatians did not meet the standards, but they brought them anyways.”
The federal government has promised to investigate this incident and Tostawaryk said that will impact other companies.
“The other contractors who are doing the program correctly, the PCLs, KBRs and Horton CBIs, will have a harder time bringing people in here because the government is going to scrutinize more.”
Tostawaryk said none of the ironworkers who were laid off last week have been called back, and the Croatian workers are still on the site.
“Some of the guys want to go back to the (PPJV) project, but others have taken other jobs. I told them that if (PPJV) called we would work with them and get them back, but other contractors have also put in extra calls to pick up these (laid off) ironworkers.”
Meanwhile, Alberta Federation of Labour president Gil McGowan said Monday that the actions of PPJV are “a perfect example of how this (TFW) program is being used to drive down wages. And this situation is not unique. This is happening at work sites all over the country because this is how the TFW program is designed to operate,” he said in a statement.
CANADA FX DEBT-C$ firms to 1-week high, helped by producer prices
The Canadian dollar strengthened to its highest level in a week against the greenback on Monday, helped by a bigger than expected rise in Canadian producer prices and as investors consolidated positions after the currency’s recent declines.
The loonie was also given a boost by U.S. data that showed a sharp drop in manufacturing in January, hinting at a slowing economy. That sparked investor speculation that the U.S. Federal Reserve may have to refrain from a further reduction of its stimulus program.
The Canadian dollar has come under pressure in recent months, with selling intensifying in January, as investorsturned increasingly bearish toward it. The U.S. dollar appreciated nearly 5 percent against the loonie in January.
“This is probably a move that had run very quickly and is looking just a bit fatigued as we take a step back and assess the landscape and try to figure out why exactly we moved so far so fast,” said David Tulk, chief Canada macro strategist at TD Securities in Toronto.
The possibility of a fast Fed wind-down of its stimulative asset purchases has typically boosted the greenback against the Canadian dollar and other currencies. But Monday’s weak U.S. manufacturing data made that possibility look more remote and the U.S. dollar took a hit,falling 0.4 percent against a basket of currencies.
“To see the Canadian dollar catch a bit of a break in that environment does make a bit of sense,” Tulk said.
Data at home showed the recent weakness in the Canadian dollar helped producer prices rise by 0.7 percent in December, with higher energy prices also contributing to the gain.Economists had forecast an increase of 0.3 percent. Rawmaterials prices also rose.
The figures were the first release in a busy data calendar this week, which will culminate with the closely watched unemployment report on Friday. Hiring in Canada is expected to have picked up in January after the economy unexpectedly shed jobs the month before.
The Canadian dollar ended the North American session at C$1.1097 to the greenback, or 90.11 U.S. cents, stronger than Friday’s close of C$1.1138, or 89.78 U.S. cents.
Data on Friday showed investors had pared back their shortpositions on the Canadian dollar.
“A lot of people have booked a lot of profits on the Canadian dollar weakness story, something that was quite compelling as a narrative to start the year, but just appreciating how far we’ve come, maybe some of the momentum has scaled back a little bit,” Tulk said.
The Canadian dollar briefly fell through the psychologically important C$1.12 area on Friday before bouncing higher. That the currency was not able to sustain the move past C$1.12 helped the loonie gain some strength on Monday, said Scott Smith, seniormarket analyst at Cambridge Mercantile Group in Calgary.
“The trade has been a little crowded for a while, we needed a little washout and reset,” Smith said. “So it’s along the lines that we expect a little bit of a consolidation here until we see the catalyst for the next move higher” for the U.S. dollar-Canadian dollar pairing.
Canadian government bond prices were higher across the maturity curve, with the two-year up 3.7 Canadian cents to yield 0.931 percent and the benchmark 10-year up 35 Canadian cents to yield 2.297 percent.
The loonie was also given a boost by U.S. data that showed a sharp drop in manufacturing in January, hinting at a slowing economy. That sparked investor speculation that the U.S. Federal Reserve may have to refrain from a further reduction of its stimulus program.
The Canadian dollar has come under pressure in recent months, with selling intensifying in January, as investorsturned increasingly bearish toward it. The U.S. dollar appreciated nearly 5 percent against the loonie in January.
“This is probably a move that had run very quickly and is looking just a bit fatigued as we take a step back and assess the landscape and try to figure out why exactly we moved so far so fast,” said David Tulk, chief Canada macro strategist at TD Securities in Toronto.
The possibility of a fast Fed wind-down of its stimulative asset purchases has typically boosted the greenback against the Canadian dollar and other currencies. But Monday’s weak U.S. manufacturing data made that possibility look more remote and the U.S. dollar took a hit,falling 0.4 percent against a basket of currencies.
“To see the Canadian dollar catch a bit of a break in that environment does make a bit of sense,” Tulk said.
Data at home showed the recent weakness in the Canadian dollar helped producer prices rise by 0.7 percent in December, with higher energy prices also contributing to the gain.Economists had forecast an increase of 0.3 percent. Rawmaterials prices also rose.
The figures were the first release in a busy data calendar this week, which will culminate with the closely watched unemployment report on Friday. Hiring in Canada is expected to have picked up in January after the economy unexpectedly shed jobs the month before.
The Canadian dollar ended the North American session at C$1.1097 to the greenback, or 90.11 U.S. cents, stronger than Friday’s close of C$1.1138, or 89.78 U.S. cents.
Data on Friday showed investors had pared back their shortpositions on the Canadian dollar.
“A lot of people have booked a lot of profits on the Canadian dollar weakness story, something that was quite compelling as a narrative to start the year, but just appreciating how far we’ve come, maybe some of the momentum has scaled back a little bit,” Tulk said.
The Canadian dollar briefly fell through the psychologically important C$1.12 area on Friday before bouncing higher. That the currency was not able to sustain the move past C$1.12 helped the loonie gain some strength on Monday, said Scott Smith, seniormarket analyst at Cambridge Mercantile Group in Calgary.
“The trade has been a little crowded for a while, we needed a little washout and reset,” Smith said. “So it’s along the lines that we expect a little bit of a consolidation here until we see the catalyst for the next move higher” for the U.S. dollar-Canadian dollar pairing.
Canadian government bond prices were higher across the maturity curve, with the two-year up 3.7 Canadian cents to yield 0.931 percent and the benchmark 10-year up 35 Canadian cents to yield 2.297 percent.
9 Mistakes That Kill Your Credit
Credit can be a tricky thing — some behaviors are obviously harmful to your credit, like paying late (or not at all), or maxing out your cards. But some mistakes aren’t all that obvious, and in fact some actions that might seem beneficial can actually have a terrible impact on your credit. we’ve compiled the biggest mistakes to help you determine what might be killing your credit.
1. Closing Credit Cards Accounts
Some of you may wonder why closing credit cards is number one on this list — even above missing payments. In fact, closing credit cards is almost as bad of an idea to boost your credit scores as missing your payments, but it is also a clear number one on the list of credit myths. It is perhaps the most common piece of misguided advice that consumers are given when they ask, “How can I increase my credit score?” But here’s the reality: Closing credit card accounts will not increase your credit score, even if you don’t use the cards anymore. Here’s why:
A closed account will fall off your credit report sooner than an open one -Lenders and credit reporting agencies have to follow certain rules determining how long information can remain on the credit report. In most cases negative credit information will remain on your credit files for seven years from the date the debt first became delinquent. Positive credit information can remain indefinitely, however, closed accounts in good standing are usually removed from the credit report within ten years after closing. And while credit scores continues to benefit from the positive history associated with an account for as long as it remains on the credit report – open or closed – once that account is removed from the credit report all of that good history is gone.
Why is this a bad thing? Because a credit score favors a long credit history, as the length of your credit history counts for about 15% of a FICO score. Consumers with a younger credit history tend to be seen as more risky borrowers than consumers who have had credit for many years. So hang onto those old accounts if you can by leaving them open.
You will hurt your “utilization” measurements - In the short run this is significantly more important than your closed accounts eventually falling off your credit reports. “Revolving utilization” is the amount of your revolving credit card limits that you are currently using. For example, if you have an open credit card with a $2,000 credit limit and a $1,000 balance then you are 50% “utilized” on that account because you’re using half of the credit limit. This measurement makes up almost 30% of your score, and is almost as important to your credit scores as making your payments on time. As this percentage increases, your credit score decreases.
2. Missing Payments
Missing payments is number two on the list because it doesn’t take a credit expert to tell you that missing payments is a bad thing. It’s common sense, unlike closing a credit card account. The explanation why missing payments is a huge mistake is also fairly obvious. Credit scores look at your credit history to see how you have managed your current and past credit obligations in an effort to predict how likely you are to miss payments in the future. The most powerful “predictor” of future late payments is having missed payments in the past. There are three ways that missing payments can hurt your credit scores. They are:
“Settling” is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $10,000 but you can’t pay them the full amount, then they will likely make you a deal for less than that full amount. They have “settled” for less than the full amount, which is likely much less than you contractually owe them. This may seem like a good idea because you are happy that you didn’t have to pay the full amount. However, the lender will report that remaining amount to the credit bureaus as a negative item. This remaining amount is called the “deficiency balance.” A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. If you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action. If they will not agree to this, then work to find a way to pay them in full or your credit will suffer for 7 years.
4. Over-Utilization of Your Available Credit Card Limits
Having high balances on your credit cards are likely to cause your credit scores to go down (as we talked about in Mistake #1). In this situation, your best bet would be to use your cards sparingly and pay them down as much as possible each month. If paying your cards off every month is unrealistic, try your best to reduce that percentage as much as possible, and your score should slowly work its way back up. There is no magic target to shoot at, but it’s safe to say that the lower the percentage the better.
5. Excessively Shopping for Credit
Every time you fill out a credit application, you are giving the lender permission to access your credit reports. When they access your credit reports they automatically post what is called an “inquiry.” The inquiry is a record of who pulled your credit report and on what date. Federal law requires that the inquiry remain on the report for 24 months, however, credit scores only look at inquiries less than one year old.
Inquiries are used by credit scoring models to determine whether or not someone is shopping for credit. It is a statistical fact that consumers who have more inquiries tend to be higher credit risks than consumers with fewer inquiries. Thus, the more inquiries you have the more points you may lose on your credit scores.
6. Thinking That All Credit Scores Are the Same
Credit scoring is already a confusing enough topic to understand. Add to the mix that there are as many different types of credit scores as there are soft drinks, and it gets really confusing. The most commonly used credit score is a credit bureau risk score. A credit bureau risk score is designed to assist lenders in predicting whether or not a consumer will pay their bills on time in the future.
There are many different places where consumers can purchase their credit reports and credit scores, however, not all of the scores being sold are the same. On the surface this might not seem like a big deal, but it certainly can be. For example, if you are in the market for a new car and you purchase an “educational” (sold to consumers, but not used by lenders) or other type of credit score ahead of time for your own information, the score you get might be different from the score the lender is looking at. Every lender has different lending standards, so the same score may earn you a good deal with one lender but not with another.
7. Thinking That All Credit Scores Predict the Same Thing
Adding to the confusion in number six above is the fact that there are models that predict other things than general credit risk. Scoring models can be built to predict almost anything including:
This act, commonly referred to as the “FCRA,” is a list of credit reporting rules and regulations that govern lenders and the credit reporting agencies. You should become familiar with your rights — including the “permissible purposes” under which your credit reports can be accessed, your rights to dispute errors on your credit reports, and your right to a free copy of your credit reports from each of the three credit reporting agencies via www.annualcreditreport.com. See the Federal Trade Commission site for more info.
9. Not Knowing That You Have 3 Credit Reports & Corresponding Credit Scores
Most consumers understand that they have a credit report. However, many do not know that they have three credit reports compiled and maintained by three separate and competing companies called “credit reporting agencies.” These companies are essentially repositories that store your credit history and sell it to lenders and consumers. The three largest of these companies are: Equifax, Experian and TransUnion.
Each agency maintains credit files on more than 250,000,000 consumers. They do not share credit information with each other, so you are likely to have a unique credit report at each of these agencies. In turn, each of these credit reports can be used to calculate many different credit scores. Do not assume that your credit reports and scores are all the same
1. Closing Credit Cards Accounts
Some of you may wonder why closing credit cards is number one on this list — even above missing payments. In fact, closing credit cards is almost as bad of an idea to boost your credit scores as missing your payments, but it is also a clear number one on the list of credit myths. It is perhaps the most common piece of misguided advice that consumers are given when they ask, “How can I increase my credit score?” But here’s the reality: Closing credit card accounts will not increase your credit score, even if you don’t use the cards anymore. Here’s why:
A closed account will fall off your credit report sooner than an open one -Lenders and credit reporting agencies have to follow certain rules determining how long information can remain on the credit report. In most cases negative credit information will remain on your credit files for seven years from the date the debt first became delinquent. Positive credit information can remain indefinitely, however, closed accounts in good standing are usually removed from the credit report within ten years after closing. And while credit scores continues to benefit from the positive history associated with an account for as long as it remains on the credit report – open or closed – once that account is removed from the credit report all of that good history is gone.
Why is this a bad thing? Because a credit score favors a long credit history, as the length of your credit history counts for about 15% of a FICO score. Consumers with a younger credit history tend to be seen as more risky borrowers than consumers who have had credit for many years. So hang onto those old accounts if you can by leaving them open.
You will hurt your “utilization” measurements - In the short run this is significantly more important than your closed accounts eventually falling off your credit reports. “Revolving utilization” is the amount of your revolving credit card limits that you are currently using. For example, if you have an open credit card with a $2,000 credit limit and a $1,000 balance then you are 50% “utilized” on that account because you’re using half of the credit limit. This measurement makes up almost 30% of your score, and is almost as important to your credit scores as making your payments on time. As this percentage increases, your credit score decreases.
2. Missing Payments
Missing payments is number two on the list because it doesn’t take a credit expert to tell you that missing payments is a bad thing. It’s common sense, unlike closing a credit card account. The explanation why missing payments is a huge mistake is also fairly obvious. Credit scores look at your credit history to see how you have managed your current and past credit obligations in an effort to predict how likely you are to miss payments in the future. The most powerful “predictor” of future late payments is having missed payments in the past. There are three ways that missing payments can hurt your credit scores. They are:
- How Frequent Are Your Late Payments? – If you miss payments frequently then you may be penalized more severely than someone who misses payments infrequently.
- How Recent Are Your Late Payments? – Since scoring models are designed to predict how you are going to pay your bills in the future, the more recent the late payment, the worse it is for your score. For example, if your late payments occurred in the most recent two years, then statistically you are more likely to miss payments in the next two years than someone without any recent late payments.
- How Severe Are Your Late Payments? – The severity of your late payment also plays a big part in your credit scores. Consumers who have missed payments by only a few weeks and then bring their payments up to date are likely to score better than consumers who have payments that are 90 days past due or worse. If you have late payments, it is in your best interest to do all that you can to bring them up to date as soon as possible.
“Settling” is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $10,000 but you can’t pay them the full amount, then they will likely make you a deal for less than that full amount. They have “settled” for less than the full amount, which is likely much less than you contractually owe them. This may seem like a good idea because you are happy that you didn’t have to pay the full amount. However, the lender will report that remaining amount to the credit bureaus as a negative item. This remaining amount is called the “deficiency balance.” A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. If you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action. If they will not agree to this, then work to find a way to pay them in full or your credit will suffer for 7 years.
4. Over-Utilization of Your Available Credit Card Limits
Having high balances on your credit cards are likely to cause your credit scores to go down (as we talked about in Mistake #1). In this situation, your best bet would be to use your cards sparingly and pay them down as much as possible each month. If paying your cards off every month is unrealistic, try your best to reduce that percentage as much as possible, and your score should slowly work its way back up. There is no magic target to shoot at, but it’s safe to say that the lower the percentage the better.
5. Excessively Shopping for Credit
Every time you fill out a credit application, you are giving the lender permission to access your credit reports. When they access your credit reports they automatically post what is called an “inquiry.” The inquiry is a record of who pulled your credit report and on what date. Federal law requires that the inquiry remain on the report for 24 months, however, credit scores only look at inquiries less than one year old.
Inquiries are used by credit scoring models to determine whether or not someone is shopping for credit. It is a statistical fact that consumers who have more inquiries tend to be higher credit risks than consumers with fewer inquiries. Thus, the more inquiries you have the more points you may lose on your credit scores.
6. Thinking That All Credit Scores Are the Same
Credit scoring is already a confusing enough topic to understand. Add to the mix that there are as many different types of credit scores as there are soft drinks, and it gets really confusing. The most commonly used credit score is a credit bureau risk score. A credit bureau risk score is designed to assist lenders in predicting whether or not a consumer will pay their bills on time in the future.
There are many different places where consumers can purchase their credit reports and credit scores, however, not all of the scores being sold are the same. On the surface this might not seem like a big deal, but it certainly can be. For example, if you are in the market for a new car and you purchase an “educational” (sold to consumers, but not used by lenders) or other type of credit score ahead of time for your own information, the score you get might be different from the score the lender is looking at. Every lender has different lending standards, so the same score may earn you a good deal with one lender but not with another.
7. Thinking That All Credit Scores Predict the Same Thing
Adding to the confusion in number six above is the fact that there are models that predict other things than general credit risk. Scoring models can be built to predict almost anything including:
- Insurance Risk – That’s right. Some insurance companies use credit scoring models to predict whether or not you are likely to file an auto or homeowner’s insurance claim. A poor insurance score may mean that you will pay higher premiums.
- Response Rates – If you receive pre-approved offers of credit in the mail everyday, it’s not random. You have been selected from hundreds of millions of other consumers to receive that offer because you have a “Response Score” that indicates you are more likely to respond to that offer than someone else.
- Revenue Potential – Credit card companies also use revenue scoring models to predict whether or not you will use their credit card and, hopefully, generate revenue for them.
- Collectability – For those of you who have collections on your credit reports, collection agencies assigned to collect those past due debts may be scoring you to determine whether or not you are likely to repay your collection debt sooner than someone else.
- Bankruptcy Potential – Bankruptcy scores predict the likelihood that you will file for personal bankruptcy. A poor bankruptcy score could cause your credit applications to be declined.
- Fraud Potential – Amazingly sophisticated, these models actually can predict whether or not a purchase you are trying to make with a credit card is likely to be fraudulent or not. What’s even more amazing is that it takes about 2 minutes to complete your check-out at a store, and in this short amount of time you may have been scored to see whether or not the retailer should accept your credit card.
This act, commonly referred to as the “FCRA,” is a list of credit reporting rules and regulations that govern lenders and the credit reporting agencies. You should become familiar with your rights — including the “permissible purposes” under which your credit reports can be accessed, your rights to dispute errors on your credit reports, and your right to a free copy of your credit reports from each of the three credit reporting agencies via www.annualcreditreport.com. See the Federal Trade Commission site for more info.
9. Not Knowing That You Have 3 Credit Reports & Corresponding Credit Scores
Most consumers understand that they have a credit report. However, many do not know that they have three credit reports compiled and maintained by three separate and competing companies called “credit reporting agencies.” These companies are essentially repositories that store your credit history and sell it to lenders and consumers. The three largest of these companies are: Equifax, Experian and TransUnion.
Each agency maintains credit files on more than 250,000,000 consumers. They do not share credit information with each other, so you are likely to have a unique credit report at each of these agencies. In turn, each of these credit reports can be used to calculate many different credit scores. Do not assume that your credit reports and scores are all the same
Getting Debt Help: Five Steps Toward Debt Consolidation
Debt stress can negatively impact every aspect of your life. The only way to cure debt stress is to get rid of it by consolidating and managing debt with a goal of eliminating it. Here are five tips for starting a debt consolidation plan:
- Understand How Credit Card Debt Consolidation Works: Debt consolidation involves rolling several debt accounts into one. You can accomplish this by borrowing enough to pay off all of your credit card accounts, but tightening credit restrictions are making this increasingly difficult. You may qualify for enough to pay off your debts by putting up your car or home as collateral, keeping in mind that debt consolidation lenders can repossess your car or foreclose on your home if you don’t repay them. A safer way to consolidate debts is getting debt help from a professional credit counseling service. Before seeking debt help, you’ll need to gather some information.
- Know What You Owe (and to Whom, and What It’s Costing): This step may temporarily increase debt stress, but it’s worth for achieving credit card debt consolidation. You’ll need to review all of your credit card accounts and list how much you owe, who you owe, and the annual percentage rates (APRs) and minimum payments for each account. The APR for each account appears on each billing statement.
- Choosing a Credit Card Debt Consolidation Option: You’ll need to decide if you can develop and commit to your own debt consolidation plan, or if you need help. Seeking professional debt help can help you stay on track, and provides an interface between you and your creditors.
- Cooperation and Cutting Up Cards: If you seek help from a professional debt consolidation program, your counselor will review your income and debts and negotiate a repayment plan with creditors. You make payments to your debt consolidation agency, and they disburse funds to creditors. The downside is that your plan can be voided if you fail to meet written terms, and you may be required to close your credit card accounts.
- DIY Credit Card Debt Consolidation Methods: If you’re making your own debt consolidation plan, you can approach it in a way that works best for you. Sometimes it’s easiest (and psychologically satisfying) to pay off any small debts first for reducing the number of bills you have and streamlining debt management. Financial advisers often recommend paying your bills in the order of highest APR to lowest. You would pay more toward the highest APR debt until it’s paid off. Then you would pay that amount plus your minimum payment on the next highest APR debt and so on. This method is sometimes called the avalanche method, as it gains momentum as debts are paid off and more is paid toward each remaining debt.
How Our Financial Calculators Can Help You in Creating a Budget
The main purpose of a budget is to determine where your money is coming from and where you want it to go. For a budget to show the picture clearly, you need to gather financial statements, record your income sources, list your monthly expenses, categorize your expenditures and make necessary calculations to suit your goal. Creating a budget can be boring and tedious if you don’t enjoy collecting data and crunching numbers. Since the process requires a lot of calculations, you can make the task easier, faster and more accurate by using our financial calculators.
We have five different financial calculators to help you perform all your finance related calculations fast, easy and accurate. Each of these calculators is designed for a specific purpose. However, you can use all of them to assist you in creating a budget. Here is how each can help you create a budget.
Student Budget Calculator:
This calculator is designed to assist students to create their budget when attending a college or university. It allows you to input your income and expenses in categories such as school expenses, professional fees, food and groceries and living expenses. The budget automatically assumes the school year to be of eight months starting from September and ending in April.
How much do you owe?
When creating a budget, it is very important to take into account every penny you owe the bank or any other lender. This calculator lets you enter all your credit cards, loans, other existing installment loans (such as car loan), interest rates and payments. It helps you get a clear picture how much you owe and how long it will take to be free of debts.
Mortgage Loan Calculator:
If you have an existing mortgage or planning to take out one, then this calculator will come in very handy. Once you enter the mortgage amount, interest rate, amortization period and other relevant data, it generates an amortization schedule for your mortgage. It lets you see at a glance your principal balance and how much interest you will have to pay. If you are planning to make any prepayment, it even shows you its impact on your mortgage, including the total saving you will be able to make on the interest. It helps you state your mortgage loan clearly in your budget.
Savings Goal Calculator:
One of the main purposes of creating a budget is to save money by prioritizing the important expenses. This calculator helps you do just that. Once you enter the number of years to save, your savings goal, the amount you have in current savings, savings per period, expected rate of return and the expected rate of inflation, it shows you graphically the current status of your saving and how far from your goal you are.
Line of Credit and Loan Payments Calculator:
Loans and repayments play a big part in every budget. This calculator lets you enter the loan amount, annual interest rate, term in months and other relevant data and gives you a clear picture of your loan or line of credit payment.
We have five different financial calculators to help you perform all your finance related calculations fast, easy and accurate. Each of these calculators is designed for a specific purpose. However, you can use all of them to assist you in creating a budget. Here is how each can help you create a budget.
Student Budget Calculator:
This calculator is designed to assist students to create their budget when attending a college or university. It allows you to input your income and expenses in categories such as school expenses, professional fees, food and groceries and living expenses. The budget automatically assumes the school year to be of eight months starting from September and ending in April.
How much do you owe?
When creating a budget, it is very important to take into account every penny you owe the bank or any other lender. This calculator lets you enter all your credit cards, loans, other existing installment loans (such as car loan), interest rates and payments. It helps you get a clear picture how much you owe and how long it will take to be free of debts.
Mortgage Loan Calculator:
If you have an existing mortgage or planning to take out one, then this calculator will come in very handy. Once you enter the mortgage amount, interest rate, amortization period and other relevant data, it generates an amortization schedule for your mortgage. It lets you see at a glance your principal balance and how much interest you will have to pay. If you are planning to make any prepayment, it even shows you its impact on your mortgage, including the total saving you will be able to make on the interest. It helps you state your mortgage loan clearly in your budget.
Savings Goal Calculator:
One of the main purposes of creating a budget is to save money by prioritizing the important expenses. This calculator helps you do just that. Once you enter the number of years to save, your savings goal, the amount you have in current savings, savings per period, expected rate of return and the expected rate of inflation, it shows you graphically the current status of your saving and how far from your goal you are.
Line of Credit and Loan Payments Calculator:
Loans and repayments play a big part in every budget. This calculator lets you enter the loan amount, annual interest rate, term in months and other relevant data and gives you a clear picture of your loan or line of credit payment.
Subscribe to:
Posts (Atom)