WWL>Topics>>3-6-14 3:10pm Angela: on credit scores

3-6-14 3:10pm Angela: on credit scores

Mar 6, 2014|

Angela talks credit scores with Adam Levin, founder of Identity Theft 911 and Credit.com.

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Automatically Generated Transcript (may not be 100% accurate)

Well before we start our next program I just want to know that WWL has short tickets to Memphis. But Tony award winning best musical at the singer Tuesday march 11. You'll experience -- underground dance clubs of Memphis in the fifties and the birth of rock and roll. How do you win tickets will just listen to our show Wednesday through Friday between one and 4 PM. And when you hear the song underground. From the musical Memphis. I'll give you the number to call. Caller number eight wins a pair of tickets valued at 233 dollars. It's that easy to win tickets to see the Broadway hit Memphis from the station that loves theater and the singer. WW. Well now we began can't wait to listen to this man. It's so easy to flip out that credit card to pay for everything from soft drink to a car. But according to one of the nation's top consumer advocates there are five things that should never be put on a credit card. Adam Levin chairman and founder of credit dot com and identity theft 911. Will be with -- the whole hour to talk about the do's and don'ts with credit cards. How to -- your credit score. And the subject we all need to hear about eliminating that four letter word debt. Plus we're gonna talk about identity theft so it's going to be a great hour and I thank you -- so much for being our guest. Let's go ahead and start with what are the five things you never put on credit card. Well that's ultimately drive and talk about. Your situation. That is taxes. And the -- -- -- medical bills and this -- duplication. So now as -- the -- I was dilution. You know you don't match that you credit card by paying tuition. You compare the situation you'd go low cost low. Scholarship grant you'll also get a part time job. And I don't have a problem we keep using your credit card to -- -- situation as long as senior credit and debit card. Please say -- -- a -- and make the payment that the points. Christmas -- using were reports. And then -- -- -- as I possibly can because. We did a lot of the interest rates that people are facing -- -- And our situation is not cheap and you -- not cheap and not blow it can be very unpleasant experience. Which you bring to the very good point about point because I've known people who have put. They're for private school tuition on a credit card but they they could they want the points and want to airline points. But they do try to pay it off very quickly she sang. No it's very important you know what happens is sometimes people approach with the best of intentions. -- I'm gonna -- it as something happens and they'll. And it's and it happens and they deal. And the problem is not only -- facing payments that might be extremely comfortable for you. But also if your credit card is maxed out -- close to limit penalties negatively impact your credit score. But you're also taking away your ability to cope with that emergency if one pops out and you have nothing independently. Let's talk about those taxes because it's right around the corner. That's for sure in the islands basically paper tax credit card but this is not a good idea. Because first the processors will collective city and secondly. It's it's again not a small number. You're facing potentially higher interest rates and it's certainly overburdened pay tax combine that with a high interest rates that could come suffocating. But oh the -- they will step repayment plan for you Bret. Even beyond that you should make sure that your adjust withholding actually about -- paying taxes the problem is if you -- He not only pay interest which. For the IRS is not a big deal it's like 3% but that you pay penalties penalties can be area. You mentioned about the in other words if you want to put it on credit card. They charge of an extra seeing. The process or will charge you an accuracy. Like a couple of percent. Somewhere between you know one point 88 may be two -- change. So that have a very notion saying you know 2% or more war. And again that's just adding to the bird. Well -- putting a wedding together that would be tough not to put something from. A credit. -- -- This is a group work and earn points. Vacation points for future vacations. Which can do is put the wedding on the credit card and then not have a conscious effort to pay off. As quickly as possible. Because you know this is a wonderful days you water remember pleasantly. And if you're dealing with debt. That you can't get -- -- a rate that you almost can't deal. That takes sort of blew off the rose. So it's it's very important just planet right. Now a lot of people they have away and their guests give them cash and this may be away users poke him use a credit card company registered about cash using cash to immediately after credit card. So it's just you have to balance things to make sure that you just -- getting yourself you know. Now what about the medical bills is probably that is used more than anything. There are the movers and it can become a problem and made a lot of people right and it into trouble with medical bills. What -- and dealing with the credit card you have to credit card on top of it again if you have a low interest credit card. It may be less of an issue but if it's not an inexpensive medical bill. And you charger -- your credit card and then you find that you don't have a great deal of available credit laughed. You are negatively impacting your credit score and you're putting yourself. Almost in it -- trouble seeing with satellite well. But probably the easiest of all is the vacate. I know oil and it's an irresistible thing in most cases you know it's been important to be -- walk up to -- -- week. The person that the reservation -- And the -- credit card now that it's going to be tried it again. Not a bad idea to use a credit card as long as -- your head it's a debit card. So that you're gonna pay it off as quickly as possible protection can't don't want and that the situation -- he's had a very pleasant. And now you know what sort of damocles hanging over your head. And added that is what happens it just it I called reality all of a sudden. GI love that but now paying fort for ever. -- -- -- I -- to conscious greatest thing ever you get somebody this plastic thing in need to get money. I'm -- thirty days later realities and it's and it's an ugly reality. The issue as we've all gone through the horrors of you know this depression that we went through an 0809. And people really. Started thinking about all of this. Are you seeing people use credit cards less. And cash more. I was. But people are once again Manning the credit barricades they're getting a fair there appear -- expanding their utilization credit. I'm not as much as they were before. But they are. And -- it was a it was a brutal realization. We went through appeared time had irresponsible lowering spending and lending this is what we're we were all on the same ship and it started to sink. And thank god we didn't -- But it was a jarring time and it left a lasting impression a lot of people might. By -- it was a child of the depression never really understood. You know unless you -- -- he didn't understand it nine today after 2006. And he started again real humble appreciation. How what they went through of course my mother's favorite line as well money is round. He loses his best -- make it is you know that sort of thing to live buys it you know when times are good. Enjoy remember. There will be arraigned that will float over at some point in just make sure you've got a number -- Absolutely well we're going to take a break but won't come back. We're gonna talk about credit scores because I've actually heard now where younger people anyway when they start dating they wanna know somebody's credit score. So what matters stay with this -- -- Honda VW well. So happy to have Adam Levin with those who is on the founder of credit dot com and identity theft 911. And certainly you have any questions for on Adam Levin about anything to do with credit cards or. Your credit scores give us a call at 2601872601870. Talking about credit scores out of my. I'm sure credit scores have been around forever but I think they have become so prominent in people's minds. Because now we understand the influence they have in our lives and I literally did hear recently where some young sort of young working people as they start today that is something they wanna know from someone they look at is of a future partner. -- your credit score kind of blew me away. Well you have to I've heard some people say that it's just he is the new ten. So. You know there are people actually are concerned about that because if you get into -- relationship with -- but he they're having credit issues. And -- if you aren't fully aware of them time to terms. You can have a situation I know people get married and all of a sudden. One of the state houses and a Padilla response was going to declare bankruptcy comes on to Asia. So it's important you know also if it's one. Spouse or partner. -- stronger credit in the other and they talk about it they have the ability to actually help each other. There are ways you can you can help somebody you care about different aircraft. It is very positive way but you can't if you don't know so that's supplies along with the big conversation people. Credit or financial attitude has to be part of that. I think arms. So anyway the start first thing is. We need to paradigm shift in the way that people think about credit you know lot of people think back -- something happens to -- And it would be healthier people look at creditors as it may. As opposed to a certificate. And -- there's a lot you can do about it but you have to look at credits. As an asset as a wealth builder as a security -- And as something that you have control over. But just that you would hope that a professional manager would manager money you have to -- the professional manager of your credit. And your identity which shall so -- -- credit. A procedure not. And then things will happen to you that would be tragic. It would going back to the the couple's two Marion on one hand stronger than the other or one has good credit him -- his bad when they marrying. Does it take away from the good credit of the one. Now I'm a little nervous of misconceptions that the minute you get America over certain all things are merged clues including your -- your credit it. That's not true you individual credit accounts. And then you have joint credit if you want. So the problem is that if you jointly applied for something. Lenders tend to look at the weakest of the true followers. And then -- lawyer instruments according. That can be a problem. So if you have a situation so as much for our credit to the other person was strong credit should apply as step number one. And that would they can do is for instance and -- -- spouse -- partner on to their credit card is an additional cargo. They can -- A loan program. They can also. Helps them get a secured credit card which which actually just cost some money. And then you'll be given credit that is equal to the money deposited into account. You could also as the partner who's got stronger credit but let's say you've saved some money CD. Which you do this year your partner borrow. Camps that CD. And then -- and bargain you know. Anything you can do to show that you're building -- history. Responsible payment. It's something that actually -- benefit of the person trying to establish credit or make their credit stronger. What is what ruins a credit score the quickest. Two things one you don't pay on time. And secondly. That you're using. A larger percentage of your available credit. That you should be. Now I realize is going to be hard to swallow this one -- If you using more than 10% of your available credit available credit is usually credit cards and credit lines not. You know about auto loans -- mortgages. But if you use more than 10% he -- to -- area and Portugal over 40% students start negatively impacting your credit score. That is a very interesting I wonder how many people realize that. Every detail and -- of the Google hopes to have one credit card -- culture you have to demand action. That's not a good that's not a good blueprint. Which you need to do is have a few different credit cards in use for a few different things total use of which I do use one of the little details they use and other. You know show that there are some velocity slow. But keep in mind that that magic 10% number. That it doesn't mean in -- in one month you mean like by a big screen TV church developers. But that just means that you have to have a plan to pay that debt crisis could come back auction. You know you bring up about having a couple of cards. What about people who have you know five or six or seven cards and want to start eliminating them does that affect your score. The test as a what you should do is if you have credit cards you -- not using. Pessimistic deposit box or -- if you feel the need to tread on those credit cards to your available credit. So more of available credit you have. But then whatever portion of that you're using seems last that if your available metrics one of the problems that people had during the great -- He is banks credit card companies were closing accounts grew lowering credit. At what that did percent of vicious cycle kind of -- downward spiral. Where you're available credit which can. He's -- a credit that you actually using would look like he was greater than you have been using. That would freak out more institutions that would then your credit limit -- -- count. -- -- have to think of everything. Now what about. You know a lot of people I know do change credit cards because they're looking for the lower interest. Change credit cards is not a big deal I mean it looked -- you he'll take a teeny little bit on -- Credit score because every time you know there's a poll and your credit nordic determines. Your credit worthiness for granting new card. That will be we'll have a minor impact but if you replacing one credit card. With another that has roughly the same or a larger available credit. It's really not a big deal the only thing you will lose. If you lose some of the age of your credit history but not immediately. Because credit cards or -- credit. As it's on your credit report for ten years. Where is negative credit information. That goes away after seven years of -- to bankruptcy related to stick around for. We're gonna pick it up right there but I want everyone to stay with this and again if you'd like to talk to Adam Levin. Of fund credit dot com get this call 2601870. But now let's go to the newsroom and day of college. Adam Levin is our special guest he is the founder of credit dot com. And identity theft 911. And we're talking about credit card used were talking about. Keeping up your credit scores and other things we have a caller Harry from river ridge. -- -- Neither of part of a credit. Back and -- Are actually have a or Carter or. I'd rather rip as you pay it and -- just open it as an orphanage which went -- usually make a few. -- just you know a few months. There -- reported just short. -- has an -- because some financial institutions made a report. Alone like this year after hasn't been. If I borrow against -- CDs and revenues CD is hurting a little something not like it was legal case. Just a few months to -- them just it just establishing the patterns that they can they concede game has used it works Cuba that. Okay thank you for calling Harry what are some other things that one can do to build up that score. Portland -- -- first thing. That store credits or. The first is European industry there's no substitute. For -- things on time and so. And and ruptured right there let me mention because people have asked me if they are late. On one payment to a department store or one mortgage payment does that mess it up. It and depending on how you'll. I mean if you're -- obviously aware of that and you'll probably difficult institution I've seen cases where. The freezer credit card account to receive the payment especially. You know after the great melt down. But they don't. Report view two credit reporting agencies -- thirty days. And of course one of the big changes that occurred is under the credit card reform -- There are not allowed. To release you -- it's on the existing balances. Until you course sixty -- -- But they can. -- shoot thirty densely. Notify you with 45 days notice that they -- injury on future purchases. So always keeping your mind. Table for the -- one of the things also the credit card reform act changed is used in fourteen days out pretty much 21 days. From that that times saves in the bills that the other thing is that. -- he'd used to be that they would. Could change the the and the money -- do. We've had we've seen cases where they -- it was a Sunday. And obviously -- process Sunday. And some institutions that the position look at look at the payment -- by Friday your outlook until Monday and once you get Monday purely. And we charge it leads me. So now that's changed the due process than the -- Tuesday. Is is when -- do the due date falls weekend or holiday. Well that's interesting though so we have a little bit of grace period but the bottom line is again and then there had the time and don't. Don't mess -- that we have another caller -- from narco. -- match. Yeah I would I -- -- would Shumlin signed the exact formula used by the credit reporting agencies determine battle. Actually do their credit now. Well you can. The first. If you go to my Psycho. Which is six sites that will break it out of the credit reporting agencies pretty much tell you. The five elements are to a credit score. -- abilities what is payment history second is -- out of debt you carry relatives of the amount of credit that's available. That is what is the each of your credit history along and you have a credit. That forces mixed with your accounts in the in the perfect world they'd like to see your mortgage. I'm -- revolving debt which credit card debt some installment debt which sort of -- And then the final piece is inquiries. We choose you know how many times you go out looking for credit and you put you know you actually applied for credit. So it's point 5% pre payment history. 30% for the year debt ratio. 50% for the -- of your credit history 10% for the Mexican credit accounts and 10% for inquiries. Now that being said. What you see your credit score a lot of people think you one credit score but the truth is that any one time we have eighty different -- likely. Because different lenders use different criteria. To tweak the scoring models plus they put people at different buckets depending upon. You know where they fit we -- certain elements. So like the movie pirates of the Caribbean you have a look at the pirate's code more as incentive. Guidelines that the code you have to look at the credit score that you would get when you go to you know get a consumer credit score. -- you have to look at that more like a pipeline. And actually. Who would. Not question it because it just a balance on her credit card for a you know hundred dollars 300 dollars to your credit score. I mean by formula. That three major credit reporting what do you determine what their court -- error reporting. Question is it much credit. Score. In our lives by it I -- Ten dollars or two. Dollar on the Democratic Party people. In a significant difference in my credit should go our option is there any published. Formulas that they use that they got especially being. A world tactic -- credit score he's staying. Yeah you'll never actually see no one's really good about their formula because that's part of you know the secrets wizardry to credit. However. Again where the F ten dollars a credit card or 4000 dollars in credit card. May not be a problem depending upon how much available credit -- you have. -- And how they're there. At the current. Reporting agencies. To keep even back in the world -- -- -- -- It is news is making more information available but yes it's true this has been a conundrum people who have been there. There -- certain guidelines that you know you can read about them in different places credit dot com we have. We called the credit report card it's absolutely free and grades you -- it tells you what you do right. What you do wrong what you need to do better updates scores every thirty days it's free. So you know you get an education there's credit education -- we have to look forward. But a technically. They. Actually. Privacy law allowed try to credit reporting agency staff and that really really because you know other matters that are here. Principles changed the buckets that they put people in change I mean. One of the new changes to the world which it just came during Dodd-Frank. Saturday at Colorado had to put -- commitment it's called fair access to credit scores. And now if you rejected for a loan or you get an unfavorable rate relative to somebody. With good credit. That they have to notify -- that's why -- happened to we're fighting actually get an expanded so that every time to live alone. You should do he should -- scored the argument. That a lot of scoring companies and the reporting agencies use secure. So many different scores that people have. That -- -- what score may not necessarily be completely council. I really appreciate the calls and I'm so sorry we're gonna have to move on. I want everyone to standby who still holding we have to take a break and I'm just gonna say if you want to win. That pair of tickets to Memphis at the singer on March 11 call 260. Wins or 260946. Salmon now. And if you're the -- collar you win with WM congratulations to Carly Mattingly. You just won a pair of tickets to see Memphis at the singer on March left -- listen for your chance to win each day this week good -- from the station but loves the singer and good luck and congratulations to you. Again -- having Adam Levin on who was the founder of credit dot com and I was so glad to hear you say to our last caller about. Your website I actually went on last night signed in. And I'm doing it your website is fabulous the the free thing we just sign up. You can look at your credit score and it will show you -- will grade -- in those various areas it's a great site. No thank you and the newest feature refused to edit. Pristine world two over users. Is the fact that if you if you look at your credit score and say okay it's six DD 700 whenever. How to lie -- get -- up to 760 which gives me excellent credit. It actually if you plan. Just by moving a few of the sliding scales. It does that's what's so exciting. Now -- that's and that's a wonderful service. Let's talk a little bit about because I just loved it to a great article called the four letter word debt. And often times we live beyond our means we we just have to have that flat screen TV -- we have to have that or sometimes we have emergencies like medical emergencies. But we get into debt and so just some of your thoughts on how we can help -- that. Well you just have to say here's is that something I could afford and stay in the people get caught up -- acquisition and Ecstasy the purchase it. Just even something as simple people collect Christmas shopping in May have in their minds is that I'm now. They wanna stand and they walk into the story they become overwhelmed and an economic question would be the perfect gift for somebody and then before you know it. They've blown through their budget and there are only a third of the way -- accurately estimate of panic actually sort of -- with it. And the problem is there are consequences. Of what you have to do you gotta sit them. -- gently -- -- beginning of the year it right now -- -- -- between. That the holiday period and and now the Internal Revenue Service which isn't comfortable position to be again. And you have to sit down and say what can afford what's my planned and you have to consciously -- but the plan if you can't. Then you should seek out professional assistance some very fine. Credit counseling firms out there. And you should you know never hesitate. To contact a professional. And helped them helped you come up with a plan it dole don't feel like you lost its C. Without without -- for a. You know I I think we've become such a consumer society that almost wonder what would happen if everybody took your advice and cut back on things would we. How would it impact our economy. It wouldn't that mean there obviously it folks are trying to get everyone as -- as possible on stand. And spending just fine as long as you ain't no words coming from. And BP. Have a plan set in your mind. Who have budgets -- that you contain them. Because if you let it out and don't pay it down. You have no room for error when it comes to emergencies. And it will impact negatively your credit score and it it has a suffocating the fact. You know you mentioned something early earlier about bankruptcy -- and I'm just curious is there are people who will say you know something I'm never going to be a homeowner. So if I'm fine blow it and I have. Have to file bankruptcy. You know to heck with my credit score how belts can it impact your life. Well today in this -- to forget from credit score and think about just credited jail. Credit impact you in the in the -- if you wanna get a whole -- car he would get a loan for education. You want to rent a vehicle you can get a credit card he's got deposits if you wanna get -- -- well you need to deposit. -- insurance premiums are impacted now like credit scores. Even scarier even -- credit scores are part of formulation. More and more warriors. Are actually looking -- credit reports. -- in the military can impact your ability to secure church. -- It matters I want everyone to stay with us one more time another last break we'll be right back. Well I have loved this day listening to Adam Levin. On credit and credit scorers what a genius he is also our discussion on common -- and on the tragedy of childhood obesity. I hope you'll join us tomorrow thanks for listening.