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Credit Scores 101: Everything You Need To Know

Have you ever checked your credit score? You’re one of nearly a quarter of Americans who haven’t checked their credit score, according to Javelin Research. It’s no secret that credit scores are confusing and riddled with misinformation. What’s more, credit scores can be lowered by actions you would assume would help them — and the […] Have you ever checked your credit score? You’re one of nearly a quarter of Americans who haven’t checked their credit score, according to Javelin Research. It’s no secret that credit scores are confusing and riddled with misinformation. What’s more, credit scores can be lowered by actions you would assume would help them — and the reverse is true as well. Considering this, maybe it would be better if you ignored your score completely. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. As a measure of your financial health, your credit score is an invaluable tool. With that in mind, if you want to build credit and save some serious dough, here’s everything you need to know about credit scores. What Are Credit Scores? Lenders use a credit score between 300 and 850 to figure out how likely you are to repay debts. Whenever you borrow money, open a utility account or rent an apartment, someone has to trust you. At the same time, lenders and landlords cannot contact all your credit card issuers to determine your trustworthiness. Your credit score will be pulled instead. In short, your credit score is the sum total of your financial life. More specifically, this is a three-digit number that shows your history of borrowing and repaying money. A higher score means creditors think you’re more trustworthy. Even if you laugh at this concept, credit scores are very serious business. The higher your credit score, the better your ability to manage your finances and repay any debt; the lower your score, the riskier you are as a borrower. On the flip side, the lower your score, the higher your interest rate, and the more difficult it will be for you to obtain credit. Every major credit bureau. Each company has its own score, such as Experian, Equifax, and TransUnion. FICO, a data analytics company, creates scores based on information each bureau provides. Here’s where things get confusing. Depending on the type of credit you’re seeking, your score will vary. However, each bureau’s FICO scores are just base scores. So, when you apply for credit or a loan, lenders typically assess your risk based on industry-specific FICO scores. In other words, there’s a difference between defaulting on a credit card and falling behind on your mortgage. As such, you might have to use a different credit score when you apply for a credit card than when you apply for a mortgage. The range of FICO scores for different industries is usually between 250 and 900. A Quick History of Credit Scores In the days before credit scores, loan officers determined whether an applicant was creditworthy. But, this was problematic since decisions were highly subjective. As a result, racial and gender discrimination was widespread. As early as the 1950s, Fair, Isaac and Company (now known as FICO) created the first credit score model to predict a borrower’s risk. However, it wasn’t until the 1970s that credit scores became widely used. The introduction of credit scores made it easier for lenders to make objective lending decisions. As a result of the scoring model, the credit industry has also experienced explosive growth. As early as 1989, FICO introduced a modern scoring model based on the data from three credit bureaus. According to FICO, 90% of lending decisions are based on its scores. Why Credit Scores Matter? Think of credit scores as financial report cards. In its original form, it was developed to predict the chances of a borrower defaulting on a loan. But, over time, it has gained a great deal of relevance since then. Your credit score is checked whenever you apply for credit — whether it’s a loan or credit card. It might cost you more to borrow money if your credit score makes you seem like a risky borrower. Furthermore, a line of credit may not be approved if you have a low credit score. Also, your credit score might be checked before you’re hired. And, usually, landlords check your credit before renting you a place. Overall, there’s a price to pay for having poor credit. For example, to cover a shortfall if you cannot get a loan or credit card, you may need to take out extremely expensive forms of credit, like payday loans. An interest rate that is too high can be a huge financial burden as well. This is especially on large loans and purchases like mortgages and auto loans. Every year, you can spend hundreds or thousands of dollars on interest costs if you carry a credit card balance. In contrast, you can save money, build better credit, and gain opportunities by understanding and improving your credit score What’s a Good Credit Score? Credit scores between 300-850 are generally considered good if they are 700 or higher, explains Experian. An excellent score in the same range is 800 or higher. However, the majority of credit scores fall between 600 and 750. In addition to representing better credit decisions, higher scores can also reassure creditors that you will pay back your debts in the future. Lenders use credit scores to decide whether or not to offer you credit (like a credit card or loan), such as banks offering mortgage loans, credit card companies, and even car dealerships financing auto purchases. In addition, your credit score determines what the terms of the offer, such as the interest rate or down payment, will be. Various types of credit scores exist. Among the most common credit scores are FICO scores and VantageScore scores, but there are also scores specific to industries. Because of this, every creditor defines what’s good or bad credit differently. In spite of that, credit scores are divided into a range based on where you fall on the creditworthiness spectrum. The following are FICO’s credit score ranges: Exceptional: 800 and above Very Good: 740-799 Good: 670-739 Fair: 580-669 Poor: 579 and below There’s also a VantageScore 3.0 that ranges from 300 to 850. Scores are categorized differently, however: Excellent: 750 to 850 Good: 700 to 749 Fair: 650 to 699 Poor: 550 to 649 Very poor: 300 to 549 According to VantageScore, the average U.S. credit score is 695, and based on FICO, it’s 714. In other words, Americans have good credit scores on average. Want to Understand Your Credit Score? Start With Your Credit Report First, let’s take a look at your credit report in order to gain a better understanding of your credit score. Every 12 months, you’re entitled to one free credit report from each bureau. For your free credit report, visit AnnualCreditReport.com. Scores will not be provided on the site. But, the information that goes into your credit report does. You’ll see this on your credit report: Identifying Information These include things like your name, address, Social Security number, and birth date. If you’ve included employment info on a credit application, it may show up there too. Rest assured, you won’t be affected by this information; it’s just for identification. Trade Lines Your credit accounts are listed here. All account information is reported, including the type, when it was opened, the limit or loan amount, and the account balance. Credit Inquiries Every lender who ran a “hard” credit check on you in the last two years can be found in this section. Public Records and Collections Here you can see if your debt has been sent to collections. Here you can also find public records such as bankruptcies, foreclosures, suits, wage garnishments, and liens. There are some apps that allow you to check your credit score for free, such as Credit Sesame. This service usually shows your credit score based on another model, VantageScore 3.0, rather than your FICO score. However, you can also check and monitor your credit scores for free with many banks and credit card issuers. What Impacts Your Credit Score The exact formulas used by FICO to calculate scores are infamously secretive. However, it does tell us that five factors are taken into account: Payment History FICO Scores are based on approximately 35% of this information, which includes: Detailed payment information on a variety of accounts. These include credit cards, retail accounts, finance company accounts, and installment loans. Public record and collection items. Among these are bankruptcies, foreclosures, lawsuits, wage attachments, liens, and judgments. Payment delinquencies and public record items associated with late and missed payments (“delinquencies”). Payments that are current and have not been late. Credit Utilization The credit utilization rate indicates how much of your available credit is being utilized. You have 20% credit utilization if your credit limit is $1,000 and your balance is $200. In general, experts recommend keeping this number below 30%. And, FICO as well as likes this number to be low. Generally, having a $1,000 balance on a $5,000 credit card (20% credit utilization) is better than having a $500 balance on a $1,000 credit card (50% credit utilization). I know, this can get hairy. But, in spite of the higher balance in the first example, the credit utilization is lower. Length of Credit History FICO scores are based on this information to the tune of 15%. Often, the longer your credit history, the higher your FICO® Score. Depending on their payment history and the amount owed, even people who have not used credit for a while can get a good FICO® Score. FICO scores consider the following factors when calculating the length of history: How long you have had credit accounts. The age of your oldest account, latest account, and average account age all go into your FICO score. What is the duration of a specific credit account? When was the last time you used certain accounts? New Credit This information contributes approximately 10% to a FICO score. According to FICO’s research, opening several credit accounts in a short time period presents a greater risk, especially for people with little credit history. A “hard” inquiry will appear on your credit report when you apply for a loan or credit. When you apply for a car loan from three different lenders to find the best deal, FICO might only record one inquiry for the same type of loan. Your credit score is not affected when you check your own credit, which is considered a “soft” inquiry. You will be subjected to the same credit check, whether you are applying for a job or getting preapproved for a loan. Mix of Credit A FICO score consists of approximately 10% of this information. Credit cards, retail accounts, installment loans, mortgage loans, and accounts with finance companies are all considered in FICO scores. A credit account you don’t intend to use is not a good idea, and you do not necessarily need one of each. FICO scores consider factors like the kinds of credit accounts you have and the total number of accounts you have. How to Check and Monitor Your Credit Score Keeping an eye on your credit score is a good idea. Why? It can fluctuate over time. And, thankfully, unlike in the past, it’s never been easier to check and monitor your credit score. The three main credit bureaus provide free credit reports once a year, and there are several ways to check your credit score. Although you can request your credit report directly from credit bureaus, you can also access it via the government-authorized website AnnualCreditReport.com. Before providing any personal information, make sure you are on the correct site. As a periodic check-up between your annual credit report and your bank statement, many banks, and credit card companies will provide you with your credit score for free. Additionally, free credit score monitoring sites like Credit Karma, Experian, and Credit Sesame provide access to free credit scores and reports. Just note, that any credit reporting site you use should be thoroughly researched before you sign up or share any personal information. This is because data sources and terms & conditions vary widely. How to Rebuild a Damaged Credit Score “There are many avenues that lead to damaged credit,” Peter Daisyme writes in a previous Due article. “You might have missed a few payments on an important loan.” It’s also possible that you have opened too many credit cards. There is even a possibility that you defaulted on your mortgage or car loan. In the wake of credit score damage, you may wonder what can be done to restore it. “However you got here, your personal credit score is damaged, and it’s likely affecting your life in several negative ways; you might find yourself turned down for loans, getting worse rates for mortgages, and/or being rejected for apartment applications,” Peter adds. This situation doesn’t have to last forever, fortunately. “With the right techniques and the proper commitment, you can rebuild your credit score from the ground up.” Understand your score and look for errors. To improve your credit score, you need to understand what factors affect it and how they affect your final score. Several types of credit scores exist, but the FICO score is by far the most common. As a refresher, your FICO score is affected by the following factors: payment history, amounts owed, length of credit history, new credit, and credit mix. Annually, check on how you’ve performed in these categories, as well as any errors. Commit to avoiding new credit and debt. What is the best way to rebuild a damaged credit score? Stop the bleeding. Or, in other words, not to worsen your credit score further. That means not closing existing accounts or acquiring any new credit cards or debt. Set up payment reminders. It is important that you pay all your bills on time, and ideally in full, for several months to several years if you wish to see your credit score rise. Setting up automated reminders is the best way to keep track of which payments are upcoming, and when they are due. Start reducing your debts. If you have any current debt, consolidate what you can. You can also introduce new income streams, negotiate better rates, or focus on high-interest debts first. Establish better long-term habits. In order to keep your credit score inching higher and prevent another catastrophe, you should establish better long-term habits after you’ve eliminated or reduced most of your debts. Suggestions include having an emergency fund, paying bills on time, and frequently checking your credit score. FAQs About Credit Scores What is a credit score? In addition to determining your creditworthiness, a credit score is a three-digit number. Credit scores are calculated based on factors like how long you’ve used credit, how well you’ve paid, and what types of credit you’ve used. Generally, if you have a high credit score, you’ll be able to borrow money at a better rate. What is a good credit score? FICO, the most widely known credit scoring model, says a credit score between 670 and 739 is generally considered “good.” That’s on a scale from 300 to 850. FICO scores help lenders predict the risk of a borrower defaulting on a loan. The higher your score, the lower the risk you represent to anyone who lends you money. A higher score also makes it more likely you’ll qualify for the best offers. How are credit scores calculated? Using your length of credit history, type of credit, payment history, and amount of debt, lenders evaluate your creditworthiness. Another variable that FICO incorporates is bank account information. Why are my three credit scores different? You may have different scores with Experian, Equifax, and Transunion. The reason? The credit bureaus have varying information, have not received information, or weigh factors differently. Data errors can also occur between credit bureaus. How soon should I begin building my credit? The benefits of building credit as early as possible cannot be overstated. You can establish credit early by becoming an authorized user on your parent’s credit cards, for example. Some banks and apps like Greenlight permit this. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due. Updated on Aug 5, 2022, 3:46 pm.....»»

Category: blogSource: valuewalkAug 5th, 2022

Student loan freeze boosted credit scores, study finds

Student loan borrowers saw credit scores increase during the COVID pandemic, according to a new study that suggested the loan payment freeze played a factor......»»

Category: topSource: foxnewsAug 9th, 2022

Gov. DeSantis fights leftist corporations’ attempts to use ESG to control how people live

Gov. DeSantis is fighting leftist corporations that are trying to control how people live through ESG. All six major banks have embraced this radical agenda. Florida Gov. Ron DeSantis and Republican state lawmakers recently took a major step toward fighting back against woke corporations parroting Biden’s leftist agenda.  According to a press release by DeSantis’ office, his proposed legislation, will target environmental, social, and governance (ESG) standards. It’s a move that will, if successful, go a long way toward protecting individual liberty and promoting free-market economics. His bill, which will be introduced formally during the 2023 legislative session, would "Prohibit big banks, credit card companies and money transmitters from discriminating against customers for their religious, political, or social beliefs."  It would also "Prohibit State Board of Administration (SBA) fund managers from considering ESG factors when investing the state’s money" and mandate that SBA fund managers "only consider maximizing the return on investment on behalf of Florida’s retirees."  DESANTIS SPIKES FOOTBALL AFTER MAJOR EMPLOYER DITCHES CHICAGO FOR FLORIDA In Florida, the SBA is responsible for managing and investing the assets of the state’s retirement system and other funds.  ESG scores are a kind of social credit scoring system that is now widely being used by woke corporations and Wall Street investors to promote the Biden administration’s far-left agenda, all without having to pass a law through Congress or a state legislature.  ESG scores turn market economics on its head, by rewarding companies based on non-financial, non-business metrics that have absolutely nothing to do with supply and demand. For example, one highly influential ESG system promoted by the World Economic Forum rates companies based on their "Percentage of employees per employee category, by age group, gender and other indicators of diversity (e.g. ethnicity)."  In other words, under many ESG models, a company with the "wrong" ratio of Asian to Hispanic workers would receive a lower ESG social credit score than a business that might sell goods and services that are of a lower quality, but that has a ratio of certain racial groups that’s deemed desirable by corporate elites.  Similarly, ESG metrics punish companies that use too much water or land, aren’t committed to adopting various parts of the Biden administration’s climate change agenda, and don’t engage in community activism.  Many of America’s largest banks, including companies like Bank of America, investment managers like BlackRock, and big-tech companies such as Microsoft have pledged to use ESG scores to help transform society so that it's in line with numerous left-wing goals, especially those related to climate change.  In fact, every one of America’s six largest banks — Bank of America, Goldman Sachs, Citi, Morgan Stanley, JPMorgan Chase, and Wells Fargo — have committed to using ESG and their financial might to force the U.S. economy to produce net-zero carbon dioxide emissions, a decision that is having an absolutely disastrous effect on investment in fossil-fuel development at a time when gas prices are near their all-time highs.  ESG scores have also been used to deny access to capital or payment services for gun manufacturers and other legal businesses hated by left-wing elites.  ESG has been used to discriminate against those who hold social and political views corporate leaders don’t like. For example, the conservative group Moms for Liberty claims payment processor PayPal froze its assets because of the organization’s ideological views.  DeSantis’s proposed legislation, which was rolled out in partnership with Florida’s incoming speaker of the House, Rep. Paul Renner, would put pressure on investment management firms to avoid ESG by preventing many of Florida’s public investments from being used to promote ESG. It would also prohibit banks from using ESG metrics to discriminate against customers on the basis of their religious, political or social beliefs.  GET FOX BUSINESS ON THE GO BY CLICKING HERE The detailed legislative language included in DeSantis’s proposal has yet to be released publicly, and, unfortunately, it appears DeSantis’s legislation would not stop the use of all forms of ESG discrimination. For example, it appears under his proposal, banks could deny access to banking services to customers who refuse to buy electric cars or choose not to put solar panels on the roofs of their home or business.  Despite these flaws, however, the proposal offered by DeSantis and Republicans in Florida’s state legislature are a huge step in the right direction.  CLICK HERE TO READ MORE ON FOX BUSINESS Banks, financial institutions, and investment managers should not be allowed to use their economic power to make an end run around the Constitution and democratic institutions by discriminating against businesses and individuals based on non-financial considerations.  Hopefully, lawmakers in other states will soon take notice of the tremendous progress being made to stop these practices in Florida and make similar, perhaps even stronger efforts to stop the rise of ESG. .....»»

Category: topSource: foxnewsAug 8th, 2022

Credit Scores 101: Everything You Need To Know

Have you ever checked your credit score? You’re one of nearly a quarter of Americans who haven’t checked their credit score, according to Javelin Research. It’s no secret that credit scores are confusing and riddled with misinformation. What’s more, credit scores can be lowered by actions you would assume would help them — and the […] Have you ever checked your credit score? You’re one of nearly a quarter of Americans who haven’t checked their credit score, according to Javelin Research. It’s no secret that credit scores are confusing and riddled with misinformation. What’s more, credit scores can be lowered by actions you would assume would help them — and the reverse is true as well. Considering this, maybe it would be better if you ignored your score completely. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. As a measure of your financial health, your credit score is an invaluable tool. With that in mind, if you want to build credit and save some serious dough, here’s everything you need to know about credit scores. What Are Credit Scores? Lenders use a credit score between 300 and 850 to figure out how likely you are to repay debts. Whenever you borrow money, open a utility account or rent an apartment, someone has to trust you. At the same time, lenders and landlords cannot contact all your credit card issuers to determine your trustworthiness. Your credit score will be pulled instead. In short, your credit score is the sum total of your financial life. More specifically, this is a three-digit number that shows your history of borrowing and repaying money. A higher score means creditors think you’re more trustworthy. Even if you laugh at this concept, credit scores are very serious business. The higher your credit score, the better your ability to manage your finances and repay any debt; the lower your score, the riskier you are as a borrower. On the flip side, the lower your score, the higher your interest rate, and the more difficult it will be for you to obtain credit. Every major credit bureau. Each company has its own score, such as Experian, Equifax, and TransUnion. FICO, a data analytics company, creates scores based on information each bureau provides. Here’s where things get confusing. Depending on the type of credit you’re seeking, your score will vary. However, each bureau’s FICO scores are just base scores. So, when you apply for credit or a loan, lenders typically assess your risk based on industry-specific FICO scores. In other words, there’s a difference between defaulting on a credit card and falling behind on your mortgage. As such, you might have to use a different credit score when you apply for a credit card than when you apply for a mortgage. The range of FICO scores for different industries is usually between 250 and 900. A Quick History of Credit Scores In the days before credit scores, loan officers determined whether an applicant was creditworthy. But, this was problematic since decisions were highly subjective. As a result, racial and gender discrimination was widespread. As early as the 1950s, Fair, Isaac and Company (now known as FICO) created the first credit score model to predict a borrower’s risk. However, it wasn’t until the 1970s that credit scores became widely used. The introduction of credit scores made it easier for lenders to make objective lending decisions. As a result of the scoring model, the credit industry has also experienced explosive growth. As early as 1989, FICO introduced a modern scoring model based on the data from three credit bureaus. According to FICO, 90% of lending decisions are based on its scores. Why Credit Scores Matter? Think of credit scores as financial report cards. In its original form, it was developed to predict the chances of a borrower defaulting on a loan. But, over time, it has gained a great deal of relevance since then. Your credit score is checked whenever you apply for credit — whether it’s a loan or credit card. It might cost you more to borrow money if your credit score makes you seem like a risky borrower. Furthermore, a line of credit may not be approved if you have a low credit score. Also, your credit score might be checked before you’re hired. And, usually, landlords check your credit before renting you a place. Overall, there’s a price to pay for having poor credit. For example, to cover a shortfall if you cannot get a loan or credit card, you may need to take out extremely expensive forms of credit, like payday loans. An interest rate that is too high can be a huge financial burden as well. This is especially on large loans and purchases like mortgages and auto loans. Every year, you can spend hundreds or thousands of dollars on interest costs if you carry a credit card balance. In contrast, you can save money, build better credit, and gain opportunities by understanding and improving your credit score What’s a Good Credit Score? Credit scores between 300-850 are generally considered good if they are 700 or higher, explains Experian. An excellent score in the same range is 800 or higher. However, the majority of credit scores fall between 600 and 750. In addition to representing better credit decisions, higher scores can also reassure creditors that you will pay back your debts in the future. Lenders use credit scores to decide whether or not to offer you credit (like a credit card or loan), such as banks offering mortgage loans, credit card companies, and even car dealerships financing auto purchases. In addition, your credit score determines what the terms of the offer, such as the interest rate or down payment, will be. Various types of credit scores exist. Among the most common credit scores are FICO scores and VantageScore scores, but there are also scores specific to industries. Because of this, every creditor defines what’s good or bad credit differently. In spite of that, credit scores are divided into a range based on where you fall on the creditworthiness spectrum. The following are FICO’s credit score ranges: Exceptional: 800 and above Very Good: 740-799 Good: 670-739 Fair: 580-669 Poor: 579 and below There’s also a VantageScore 3.0 that ranges from 300 to 850. Scores are categorized differently, however: Excellent: 750 to 850 Good: 700 to 749 Fair: 650 to 699 Poor: 550 to 649 Very poor: 300 to 549 According to VantageScore, the average U.S. credit score is 695, and based on FICO, it’s 714. In other words, Americans have good credit scores on average. Want to Understand Your Credit Score? Start With Your Credit Report First, let’s take a look at your credit report in order to gain a better understanding of your credit score. Every 12 months, you’re entitled to one free credit report from each bureau. For your free credit report, visit AnnualCreditReport.com. Scores will not be provided on the site. But, the information that goes into your credit report does. You’ll see this on your credit report: Identifying Information These include things like your name, address, Social Security number, and birth date. If you’ve included employment info on a credit application, it may show up there too. Rest assured, you won’t be affected by this information; it’s just for identification. Trade Lines Your credit accounts are listed here. All account information is reported, including the type, when it was opened, the limit or loan amount, and the account balance. Credit Inquiries Every lender who ran a “hard” credit check on you in the last two years can be found in this section. Public Records and Collections Here you can see if your debt has been sent to collections. Here you can also find public records such as bankruptcies, foreclosures, suits, wage garnishments, and liens. There are some apps that allow you to check your credit score for free, such as Credit Sesame. This service usually shows your credit score based on another model, VantageScore 3.0, rather than your FICO score. However, you can also check and monitor your credit scores for free with many banks and credit card issuers. What Impacts Your Credit Score The exact formulas used by FICO to calculate scores are infamously secretive. However, it does tell us that five factors are taken into account: Payment History FICO Scores are based on approximately 35% of this information, which includes: Detailed payment information on a variety of accounts. These include credit cards, retail accounts, finance company accounts, and installment loans. Public record and collection items. Among these are bankruptcies, foreclosures, lawsuits, wage attachments, liens, and judgments. Payment delinquencies and public record items associated with late and missed payments (“delinquencies”). Payments that are current and have not been late. Credit Utilization The credit utilization rate indicates how much of your available credit is being utilized. You have 20% credit utilization if your credit limit is $1,000 and your balance is $200. In general, experts recommend keeping this number below 30%. And, FICO as well as likes this number to be low. Generally, having a $1,000 balance on a $5,000 credit card (20% credit utilization) is better than having a $500 balance on a $1,000 credit card (50% credit utilization). I know, this can get hairy. But, in spite of the higher balance in the first example, the credit utilization is lower. Length of Credit History FICO scores are based on this information to the tune of 15%. Often, the longer your credit history, the higher your FICO® Score. Depending on their payment history and the amount owed, even people who have not used credit for a while can get a good FICO® Score. FICO scores consider the following factors when calculating the length of history: How long you have had credit accounts. The age of your oldest account, latest account, and average account age all go into your FICO score. What is the duration of a specific credit account? When was the last time you used certain accounts? New Credit This information contributes approximately 10% to a FICO score. According to FICO’s research, opening several credit accounts in a short time period presents a greater risk, especially for people with little credit history. A “hard” inquiry will appear on your credit report when you apply for a loan or credit. When you apply for a car loan from three different lenders to find the best deal, FICO might only record one inquiry for the same type of loan. Your credit score is not affected when you check your own credit, which is considered a “soft” inquiry. You will be subjected to the same credit check, whether you are applying for a job or getting preapproved for a loan. Mix of Credit A FICO score consists of approximately 10% of this information. Credit cards, retail accounts, installment loans, mortgage loans, and accounts with finance companies are all considered in FICO scores. A credit account you don’t intend to use is not a good idea, and you do not necessarily need one of each. FICO scores consider factors like the kinds of credit accounts you have and the total number of accounts you have. How to Check and Monitor Your Credit Score Keeping an eye on your credit score is a good idea. Why? It can fluctuate over time. And, thankfully, unlike in the past, it’s never been easier to check and monitor your credit score. The three main credit bureaus provide free credit reports once a year, and there are several ways to check your credit score. Although you can request your credit report directly from credit bureaus, you can also access it via the government-authorized website AnnualCreditReport.com. Before providing any personal information, make sure you are on the correct site. As a periodic check-up between your annual credit report and your bank statement, many banks, and credit card companies will provide you with your credit score for free. Additionally, free credit score monitoring sites like Credit Karma, Experian, and Credit Sesame provide access to free credit scores and reports. Just note, that any credit reporting site you use should be thoroughly researched before you sign up or share any personal information. This is because data sources and terms & conditions vary widely. How to Rebuild a Damaged Credit Score “There are many avenues that lead to damaged credit,” Peter Daisyme writes in a previous Due article. “You might have missed a few payments on an important loan.” It’s also possible that you have opened too many credit cards. There is even a possibility that you defaulted on your mortgage or car loan. In the wake of credit score damage, you may wonder what can be done to restore it. “However you got here, your personal credit score is damaged, and it’s likely affecting your life in several negative ways; you might find yourself turned down for loans, getting worse rates for mortgages, and/or being rejected for apartment applications,” Peter adds. This situation doesn’t have to last forever, fortunately. “With the right techniques and the proper commitment, you can rebuild your credit score from the ground up.” Understand your score and look for errors. To improve your credit score, you need to understand what factors affect it and how they affect your final score. Several types of credit scores exist, but the FICO score is by far the most common. As a refresher, your FICO score is affected by the following factors: payment history, amounts owed, length of credit history, new credit, and credit mix. Annually, check on how you’ve performed in these categories, as well as any errors. Commit to avoiding new credit and debt. What is the best way to rebuild a damaged credit score? Stop the bleeding. Or, in other words, not to worsen your credit score further. That means not closing existing accounts or acquiring any new credit cards or debt. Set up payment reminders. It is important that you pay all your bills on time, and ideally in full, for several months to several years if you wish to see your credit score rise. Setting up automated reminders is the best way to keep track of which payments are upcoming, and when they are due. Start reducing your debts. If you have any current debt, consolidate what you can. You can also introduce new income streams, negotiate better rates, or focus on high-interest debts first. Establish better long-term habits. In order to keep your credit score inching higher and prevent another catastrophe, you should establish better long-term habits after you’ve eliminated or reduced most of your debts. Suggestions include having an emergency fund, paying bills on time, and frequently checking your credit score. FAQs About Credit Scores What is a credit score? In addition to determining your creditworthiness, a credit score is a three-digit number. Credit scores are calculated based on factors like how long you’ve used credit, how well you’ve paid, and what types of credit you’ve used. Generally, if you have a high credit score, you’ll be able to borrow money at a better rate. What is a good credit score? FICO, the most widely known credit scoring model, says a credit score between 670 and 739 is generally considered “good.” That’s on a scale from 300 to 850. FICO scores help lenders predict the risk of a borrower defaulting on a loan. The higher your score, the lower the risk you represent to anyone who lends you money. A higher score also makes it more likely you’ll qualify for the best offers. How are credit scores calculated? Using your length of credit history, type of credit, payment history, and amount of debt, lenders evaluate your creditworthiness. Another variable that FICO incorporates is bank account information. Why are my three credit scores different? You may have different scores with Experian, Equifax, and Transunion. The reason? The credit bureaus have varying information, have not received information, or weigh factors differently. Data errors can also occur between credit bureaus. How soon should I begin building my credit? The benefits of building credit as early as possible cannot be overstated. You can establish credit early by becoming an authorized user on your parent’s credit cards, for example. Some banks and apps like Greenlight permit this. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due. Updated on Aug 5, 2022, 3:46 pm.....»»

Category: blogSource: valuewalkAug 5th, 2022

How to get a loan with a bad credit score

If you have a low credit score, it’s still possible to qualify for a personal loan. Keep reading to learn more about loans for bad credit. Having a strong credit score can really come in handy if you need to borrow money. When you have bad credit, it can be challenging to get a personal loan — especially one with low interest rates and no fees. But some lenders do cater to borrowers with bad credit scores. Here’s how to get a loan with bad credit and what you need to know about this specific type of credit product. If you need a personal loan, visit Credible to see your prequalified rates from various lenders, all in one place. Before you apply for a bad credit loan, it’s a good idea to check both your credit report and credit history to see where you stand. Knowing your credit score can help you determine which types of loans you can qualify for, what lenders to apply with, and which ones to skip if you’re unlikely to meet their requirements.  Reviewing your credit report gives you the opportunity to spot any potential mistakes or fraud and report them to the credit bureau. If certain items on your credit report are found to be errors, the credit bureau can remove them from your report. This can usually improve your credit score, with little effort on your end. You can also review your report to see which areas you can improve so you can qualify for better lending products in the future.  The reason lenders like to see high credit scores is because a low credit score typically stems from negative marks on your credit report, such as making late payments or having debt in collections. A low credit score indicates to a lender that you’re more likely to miss your debt payments or default on the loan, which can be very costly for the lender. WHAT CREDIT SCORE DO YOU NEED FOR A PERSONAL LOAN? When you apply for a personal loan, you trigger a hard inquiry on your credit report, which temporarily lowers your credit score. This is unavoidable if you want to get a personal loan, but you can avoid having a hard credit inquiry added to your report unnecessarily.  Before officially applying for a personal loan, prequalify with the lender to get an estimated loan offer. When you prequalify, the lender only runs a soft inquiry of your credit report. So if the lender tells you it won’t be likely to approve your loan application, or presents you with terms you know you won’t want to accept, you can skip applying officially with that lender.Credible makes it easy to compare personal loan rates from various lenders, and it won’t affect your credit. Before you prequalify, research which lenders accept your credit score so you don’t waste time and energy on lenders that won’t work with you.  Several lenders offer personal loans for borrowers with lower credit scores. These lenders often take other information into account when considering your application, such as your employment and income. While most lenders tend to require a score of at least 580, some lenders don’t even require a credit check. It’s important to compare prequalification offers from at least three to five different lenders. This way, you can find a loan that works best for your financial situation. You don’t necessarily have to apply for a loan targeted at borrowers with bad credit scores. One way to boost your chances of qualifying for a personal loan — and of getting a lower interest rate — is to apply with a cosigner who has a higher credit score than you. This can be a trusted friend or family member.  The cosigner should be careful, though. They’ll be responsible for making the loan payments if you aren’t able to. If both you and your cosigner fail to make payments, or you make your payments late, both your credit scores can suffer.  HOW TO FIND A COSIGNER FOR YOUR STUDENT LOANS Not sure if taking out a personal loan when you have bad credit is the right move for you? Here are a few factors worth considering:  If you’re ready to apply for a personal loan, head to Credible to quickly and easily compare personal loan rates to find one that best suits your needs......»»

Category: topSource: foxnewsAug 5th, 2022

Personal loan interest rates slip below 11% for 3-year fixed-rate loans

The latest trends in interest rates for personal loans from the Credible marketplace, updated weekly. Borrowers with good credit seeking personal loans during the past seven days prequalified for rates that were lower for 3-year loans and higher for 5-year loans compared to the previous seven days. For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender between July 28 and August 3: Personal loans have become a popular way to consolidate and pay off credit card debt and other loans. They can also be used to cover unexpected expenses like medical bills, take care of a major purchase or fund home improvement projects. Personal loan interest rates edged down for 3-year loans over the last seven days, while rates for 5-year loans rose significantly. Rates for 3-year personal loans fell by 0.28%, while rates for 5-year loans saw an increase of 1.41%. In addition to today's decreases for 3-year personal loans, rates for this repayment term are lower than they were a year ago. Borrowers can take advantage of interest savings with a 3-year personal loan right now. However, both loan terms offer interest rates significantly lower than higher-cost borrowing options like credit cards.  Whether a personal loan is right for you often depends on multiple factors, including what rate you can qualify for. Comparing multiple lenders and their rates could help ensure you get the best possible personal loan for your needs.  It's always a good idea to comparison shop on sites like Credible to understand how much you qualify for and choose the best option for you. Here are the latest trends in personal loan interest rates from the Credible marketplace, updated monthly. The chart above shows average prequalified rates for borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender.  For the month of July 2022: Rates on personal loans vary considerably by credit score and loan term. If you're curious about what kind of personal loan rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates won't affect your credit score. All Credible marketplace lenders offer fixed-rate loans at competitive rates. Because lenders use different methods to evaluate borrowers, it’s a good idea to request personal loan rates from multiple lenders so you can compare your options. In July, the average prequalified rate selected by borrowers was:  Depending on factors such as your credit score, which type of personal loan you’re seeking and the loan repayment term, the interest rate can differ.  As shown in the chart above, a good credit score can mean a lower interest rate, and rates tend to be higher on loans with fixed interest rates and longer repayment terms.  Many factors influence the interest rate a lender might offer you on a personal loan. But you can take some steps to boost your chances of getting a lower interest rate. Here are some tactics to try. Generally, people with higher credit scores qualify for lower interest rates. Steps that can help you improve your credit score over time include: Personal loan repayment terms can vary from one to several years. Generally, shorter terms come with lower interest rates, since the lender’s money is at risk for a shorter period of time. If your financial situation allows, applying for a shorter term could help you score a lower interest rate. Keep in mind the shorter term doesn’t just benefit the lender – by choosing a shorter repayment term, you’ll pay less interest over the life of the loan. You may be familiar with the concept of a cosigner if you have student loans. If your credit isn’t good enough to qualify for the best personal loan interest rates, finding a cosigner with good credit could help you secure a lower interest rate. Just remember, if you default on the loan, your cosigner will be on the hook to repay it. And cosigning for a loan could also affect their credit score. Before applying for a personal loan, it’s a good idea to shop around and compare offers from several different lenders to get the lowest rates. Online lenders typically offer the most competitive rates – and can be quicker to disburse your loan than a brick-and-mortar establishment.  But don’t worry, comparing rates and terms doesn’t have to be a time-consuming process. Credible makes it easy. Just enter how much you want to borrow and you’ll be able to compare multiple lenders to choose the one that makes the most sense for you. Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options – without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,500 positive Trustpilot reviews and a TrustScore of 4.7/5......»»

Category: topSource: foxnewsAug 4th, 2022

Florida woman files class action lawsuit against Equifax over credit score errors

Florida woman Nydia Jenkins filed a class action lawsuit in federal court against Equifax over inaccurate credit scores the company blamed on a coding issue. A series of credit score errors by Equifax that the firm blamed on a coding mistake has now led to a class action lawsuit brought by a Florida woman who claims the company violated the Fair Credit Reporting Act by providing inaccurate credit scores. Nydia Jenkins claims that because of Equifax's error, her credit score was off by 130 points when she applied for a car loan, resulting in her getting denied before having to take a different loan that is costing her $150 more per month. Jenkins' lawyers are looking to add potentially millions of other claimants who may have been affected to the lawsuit, which was filed Wednesday in Atlanta federal court. "Equifax is allowed to perform credit reporting services, involving such sensitive consumer credit information, only if it adheres to the requirements of laws meant to protect the privacy and accuracy of such information, such as the FCRA," the complaint says. "Equifax’s maintenance, use, and furnishing of consumer reports is and was intended to affect Plaintiff and other Class Members, and the harm caused by the inaccuracies on consumer reports resulting from the Glitch was entirely foreseeable to Equifax." The Wall Street Journal reported that Equifax told an auto lender that just 10% of applicants had wrong scores due to the glitch, which impacted applications for a three-week period in March and April. That number is far from small, however, given that lenders requested a total of roughly 2.5 million credit scores during that time, the Journal reported, citing industry officials. EQUIFAX SENT LENDERS INACCURATE CREDIT SCORES ON MILLIONS OF CONSUMERS Equifax said in a statement that "less than 300,000 consumers experienced a score shift of 25 points or more." The company has said that they are working with lenders and providing updated credit scores for those affected, but Jenkins's lawsuit says this is not enough. "The damages that Plaintiff and Class Members bear as a result of the Glitch cannot be rectified by merely updating the affected credit reports," the complaint says. "In addition, while credit reporting agencies offer consumers one free credit report per year, consumers who request more than one credit report per year from the same credit reporting agency (such as Equifax) must pay a fee for the additional report. Such fees constitute out-of-pocket costs to Plaintiff and Class Members." EQUIFAX, EXPERIAN, TRANSUNION TO REMOVE MAJORITY OF MEDICAL DEBTS FROM CONSUMERS' CREDIT REPORTS Jenkins' attorneys, John Morgan and John Yanchunis from the law firm Morgan & Morgan, said in a statement that "millions of American" use credit for "the most important purchases in their lives," such as cars and houses.  "This lawsuit alleges that Equifax failed to live up to its responsibility as one of America’s major credit reporting agencies by providing inaccurate information on millions of Americans," the statement said. "We believe that many of the people impacted – some of whom may still be unaware of what happened – suffered severe financial consequences. We will hold Equifax accountable for these alleged failures and win justice for everyone impacted." GET FOX BUSINESS ON THE GO BY CLICKING HERE Fox Business reached out to Equifax for comment on the lawsuit, but they did not immediately respond. The American Association of Consumer Credit Professionals weighed in on the error, calling it "deeply troubling" for causing problems for so many people "at a time when many Americans were already struggling to purchase homes and automobiles[.]".....»»

Category: topSource: foxnewsAug 4th, 2022

Private student loan rates tick up for both 5- and 10-year loans

The latest private student loan interest rates from the Credible marketplace, updated weekly. During the week of July 25, 2022, average private student loan rates rose for borrowers with credit scores of 720 or higher who used the Credible marketplace to take out both 10-year fixed-rate and 5-year variable-rate loans. Through Credible, you can compare private student loan rates from multiple lenders without affecting your credit score. Rates rose this week for both 10-year fixed-rate and 5-year variable-rate loans. Ten-year loans saw rate increases of more than a quarter point, while rates for 5-year terms went up by nearly a full percentage point. Rates for both loan terms are higher than they were this time last year.  Still, it's worth noting that borrowers with good credit may find a lower rate with a private student loan than with federal loans. For the 2022-2023 academic school year, federal student loan rates will range from 4.99% to 7.54%. Private student loan rates for borrowers with good to excellent credit are lower right now. Because federal loans come with certain benefits like access to income-driven repayment plans, you should always exhaust federal student loan options first before turning to private student loans to cover any funding gaps. Private lenders such as banks, credit unions and online lenders provide private student loans. You can use private loans to pay for education costs and living expenses, which might not be covered by your federal education loans.  Interest rates and terms on private student loans can vary depending on your financial situation, credit history and the lender you choose. Take a look at Credible partner lenders’ rates for borrowers who used the Credible marketplace to select a lender during the week of July 25: Congress sets federal student loan interest rates each year. These fixed interest rates depend on the type of federal loan you take out, your dependency status and your year in school. Private student loan interest rates can be fixed or variable and depend on your credit, repayment term and other factors. As a general rule, the better your credit score, the lower your interest rate is likely to be. You can compare rates from multiple student loan lenders using Credible. An interest rate is a percentage of the loan periodically tacked onto your balance – essentially the cost of borrowing money. Interest is one way lenders can make money from loans. Your monthly payment often pays interest first, with the rest going to the amount you initially borrowed (the principal).  Getting a low interest rate could help you save money over the life of the loan and pay off your debt faster. Here’s the difference between a fixed and variable rate: Comparison shopping for private student loan rates is easy when you use Credible. Using a student loan interest calculator will help you estimate your monthly payments and the total amount you’ll owe over the life of your federal or private student loans. Once you enter your information, you’ll be able to see what your estimated monthly payment will be, the total you’ll pay in interest over the life of the loan and the total amount you’ll pay back.  Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,300 positive Trustpilot reviews and a TrustScore of 4.7/5......»»

Category: topSource: foxnewsAug 3rd, 2022

Equifax Sent Lenders Wrong Info On Millions Of Consumers, Causing Higher Rates, Denials

Equifax Sent Lenders Wrong Info On Millions Of Consumers, Causing Higher Rates, Denials Credit company Equifax provided inaccurate credit scores for millions of US consumers to banks and nonbank lenders during a three-week period between mid-March and early April, the Wall Street Journal reports, citing bank executives and other familiar with the errors. The incorrect scores - off sometimes by 20 points in either direction, affected people applying for auto loans, mortgages and credit cards to banks including JPMorgan Chase, Wells Fargo and Ally Financial. The scores were enough to alter the interest rates consumers were offered, or to cause applications to get rejected . Equifax has blamed a "technology coding issue," which they say they've fixed, and added that the information didn't alter the information in consumers' credit reports. "We have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue," said Equifax president of US Information Solutions, Sid Singh. "For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision." Equifax maintains credit reports on more than 200 million U.S. consumers and sells them to lenders. The information in these files—including whether consumers are applying for debt, the types of accounts they have and whether they have a history of paying on time—determines consumers’ credit scores. Credit scores are among a number of factors lenders consider when making loan decisions. The glitch is another setback for Equifax, which fell victim to a hack in 2017 that exposed the sensitive personal information of nearly 150 million Americans. -WSJ In late May, trade publication National Mortgage Professional reported on the glitch, saying that Equifax had notified lenders of their findings. The next month, Equifax CEO Mark Begor publicly acknowledged the errors, blaming a coding issue that affected "legacy applications that resulted in some scores going out that had incorrect data," and that the company had fixed the problem. "The impact is going to be quite small," said Begor, "not something that’s meaningful to Equifax." That said, the Journal reports that at one big bank, 18% of applicants during the three-week period had incorrect scores, with an average swing of 8 points. The percentage of scores provided to lenders varied. One auto lender was told by Equifax that around 10% of applicants during the affected period had scores that were wrong. Of those, several thousand saw a charge of 25 points or more on their credit score. In a small number of cases, some applicants went from having no score at all to a score in the 700s, or vice versa. Approximately 2.5 million credit scores were sought during the period in question, according to the Journal, citing an industry estimate. Tyler Durden Tue, 08/02/2022 - 20:25.....»»

Category: blogSource: zerohedgeAug 2nd, 2022

: Equifax CEO’s reward amid report of inaccurate credit scores: a ‘special’ $25 million stock award

Equifax Inc. disclosed that it was giving its chief executive $25 million in a "special" stock award Tuesday, just hours after a report detailed inaccurate credit reports the company sent to consumers......»»

Category: topSource: marketwatchAug 2nd, 2022

Equifax sent lenders inaccurate credit scores on millions of consumers

Equifax sent incorrect credit scores to to banks and nonbank lenders that may have been off by as much as 20 points in either direction. Equifax provided inaccurate credit scores on millions of U.S. consumers seeking loans during a three-week period earlier this year, according to bank executives and others familiar with the errors. Equifax sent the erroneous scores on people applying for auto loans, mortgages and credit cards to banks and nonbank lenders big and small—including JPMorgan Chase & Co., Wells Fargo & Co. and Ally Financial Inc., the people said. The scores were sometimes off by 20 points or more in either direction, the people said, enough to alter the interest rates consumers were offered or to result in their applications being rejected altogether. The inaccurate scores were sent from mid March through early April, the people said. The company began disclosing the errors to lenders in May, they said. Equifax said it has since fixed the error, which the company described as a "technology coding issue." The glitch didn’t alter the information in consumers’ credit reports, the company said. EQUIFAX TO PAY UP TO $700M IN BREACH SETTLEMENT "We have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue," Sid Singh, president of Equifax’s U.S. Information Solutions, said in a statement. "For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision." Equifax maintains credit reports on more than 200 million U.S. consumers and sells them to lenders. The information in these files—including whether consumers are applying for debt, the types of accounts they have and whether they have a history of paying on time—determines consumers’ credit scores. Credit scores are among a number of factors lenders consider when making loan decisions. The glitch is another setback for Equifax, which fell victim to a hack in 2017 that exposed the sensitive personal information of nearly 150 million Americans. Trade publication National Mortgage Professional reported on the glitch in late May, saying Equifax had notified lenders of erroneous scores during the period in question. Mark Begor, Equifax’s chief executive, publicly acknowledged the flub at a June investor conference, calling it a coding issue that affected "legacy applications that resulted in some scores going out that had incorrect data." He said the company had fixed the problem and takes issues with its data quality seriously. "The impact is going to be quite small," Mr. Begor said, "not something that’s meaningful to Equifax." The glitch, however, affected many lenders across multiple consumer loan products, not just mortgages, according to people familiar with the matter. The percentage of incorrect scores provided to lenders varied, the people said. At one big bank, for example, 18% of applicants during the three-week period had incorrect scores, with an average swing of 8 points, one of the people said. Equifax told one large auto lender that about 10% of applicants during the three-week period had inaccurate scores, according to a person familiar with the matter. Of those, several thousand saw a change of 25 points or more on their credit score, the person said. In a small number of cases, applicants went from having no credit score at all to a score in the 700s—or vice versa, the person said. The most widely used credit scores range between 300 to 850; the higher the credit score, the more likely an applicant will get approved and at a lower interest rate. Lenders are asking Equifax for more information and are trying to figure out what to do for applicants who were denied credit or offered a higher interest rate than they deserved, the people said. They are considering repricing loans and giving rejected applicants an opportunity to reapply, the people said, a task complicated by recent interest-rate increases. Equifax has been working closely with lenders and providing them with updated scores, Mr. Singh said in the statement. "We do not take this issue lightly," he said. BUY NOW, PAY LATER LOANS TO BE FORMALLY INCLUDED IN EQUIFAX CREDIT REPORTS The glitch could land the Atlanta-based Equifax in more hot water with its regulator, the Consumer Financial Protection Bureau. Under its director, Rohit Chopra, the agency is investigating how the three main credit-reporting companies—Equifax, Experian PLC and TransUnion—handle consumer disputes, The Wall Street Journal previously reported. Mortgage lenders sought about 2.5 million credit scores in the period in question, according to one industry estimate. But because they typically view credit scores from each of the three credit-reporting companies, the glitch’s effects on mortgages may have been blunted, some industry officials said. GET FOX BUSINESS ON THE GO BY CLICKING HERE Fannie Mae and Freddie Mac, which guarantee about half of the U.S. mortgage market, likely purchased only a relatively small number of loans at inaccurate prices due to erroneous credit scores, one of the people said. Mortgage lenders may owe the government-controlled companies additional money if borrowers received higher credit scores than they should have and their loans are deemed riskier than initially thought, according to industry officials. In some cases, Fannie and Freddie could owe lenders refunds if the scores were unduly low. A spokesman said the Federal Housing Finance Agency, which oversees Fannie and Freddie, is still working with the mortgage giants to assess the scope of the loans affected by the glitch......»»

Category: topSource: foxnewsAug 2nd, 2022

What Is The Highest Credit Score?

It’s the Bigfoot of the financial world; a perfect credit score. AKA, the highest score a person can get. This mythical and elusive number for the FICO Score is 850. And, for those unaware, FICO Scores range from 300 to 850. In reality, there are Americans with 850 FICO Scores. As a matter of fact, […] It’s the Bigfoot of the financial world; a perfect credit score. AKA, the highest score a person can get. This mythical and elusive number for the FICO Score is 850. And, for those unaware, FICO Scores range from 300 to 850. In reality, there are Americans with 850 FICO Scores. As a matter of fact, 1.6% of all FICO Scores currently stand at 850. Which, may sound dire considering that 11% of people believe that Bigfoot is real. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   At the same time, obtaining credit with the best terms and lowest interest rates doesn’t require a perfect score. A score above 700 is considered good in most cases. What’s more, the “exceptional” range of 800 to 850 doesn’t usually make a difference to lenders. In fact, a score over 760 usually qualifies you for the best rate. In other words, while achieving a good credit score is a great goal, getting to the top of the scale isn’t necessary. Remember that credit scores keep changing, so even ones that reach 850 don’t always stay there. In light of the fact that the elusive 850 is only achieved by a small fraction of Americans, it can be valuable to examine the features of top scorers if you want to build your credit score. What is a Credit Score (And Why It’s Important)? Generally, a credit score ranges from 300 to 850. This three-digit number represents the risk lenders take on when lending money. Overall, a higher score typically indicates a better chance of approval — even though many factors are considered when calculating the score. In terms of credit scoring, there are two systems, FICO and VantageScore, with a few key differences between them. More specifically, credit scores determine your eligibility for loans and your interest rate. The higher your credit score, the better. People with good credit (670 or higher) usually qualify for the best loan rates and terms. You can save a great deal of money in interest by maintaining a good credit score throughout your life. Additionally, it can prevent you from paying some fees. As an example, if you take out a personal loan, a high credit score could help you avoid personal loan origination fees. On the flip side, those with poor credit scores (below 580) or minimal credit histories may not meet lenders’ minimum credit score requirements. In turn, access to cash may be restricted. And, the most likely option is a bad credit personal loan or a loan with a co-signer or co-borrower. But, that’s not all. Here are some other perks of having a higher credit score: Promotional deals and rewards from credit cards. You’ll most likely qualify for some of the best cash-back credit cards since they require excellent credit scores (700 or higher). Plus, you can qualify for a 21-month interest-free credit card with 0% APR on purchases and balance transfers. Insurance premiums are lower. You may be able to pay a lower monthly premium if your state allows credit-based auto insurance. The security deposit for an apartment is lower. A person with a good credit score will probably pay less of a security deposit when purchasing an apartment. How Do Credit Scores Work? Financial institutions commonly base their lending decisions on your FICO (Fair Isaac Corp.) score. However, there are many different credit scores. In fact, you don’t have a single FICO score. Each of the three credit bureaus, Experian, TransUnion, and Equifax, has one for you. As such, an individual’s FICO score is based exclusively on a credit report from a particular credit bureau. Also, despite the fact that FICO has 50 different scoring models, your main score is based on the median score from the three credit bureaus, which may differ slightly. For instance, if your FICO score is 750 you have scores of 720, 750, and 770. So, it’s important to examine your credit reports closely since these three numbers are significantly different. What is an Excellent Credit Score? Again, there are different credit scoring models (FICO and VantageScore) and credit bureaus (Experian, Equifax, and TransUnion) that pull credit scores. Based on Experian estimates, you can see where your credit score falls. FICO Score Very poor: 300 to 579 Fair: 580 to 669 Good: 670 to 739 Very good: 740 to 799 Excellent: 800 to 850 VantageScore Very poor: 300 to 499 Poor: 500 to 600 Fair: 601 to 660 Good: 661 to 780 Excellent: 781 to 850 How Do You Get a Perfect Credit Score Income, savings, and investments have no bearing on your credit score. It’s simply a measure of your debt management skills. A high credit score can be achieved by showing financial institutions that you are always able to repay your loans on time. Aside from on-time payments and low credit utilization, perfect scores are also distinguished by two other factors, notes the team over at Bungalow. Perfect credit score holders: Have a greater number of credit cards. An average of 6.4 credit cards are owned by people with perfect credit scores, almost twice the national average of 3.8. Credit card debt is less. Perfect credit card scores averaged $3,025 in debt. Nationally, the average salary is $6,445. What Factors Determine Your Credit Score Based on which credit scoring model you use, your credit score will differ. These are the key factors considered by FICO and VantageScore. FICO Score Payment history (35% of your score). An individual with perfect credit is likely to have a perfect payment history. Their credit reports do not contain any collections, late payments, or other negative information. Amounts owed (30%). Utilization rate refers to the percentage of your credit and loans that are used compared to your total credit limit. Ideally, this should be 30%. People with scores of 850, however, rarely use their available credit. The average credit utilization ratio of their credit cards was 4.1%, according to the same FICO report. Length of credit history (15%). How long have you had credit? Perfect credit score holders typically have long credit histories. According to a 2019 FICO report, the average age of their credit accounts was 30 years. New credit (10%). Those with the highest credit scores don’t open new credit accounts, although some do. The application process typically involves a hard credit inquiry that can damage your score by one to five points. Credit mix (10%). You have a variety of credit products, such as credit cards, installment loans, finance company accounts, and/or mortgage loans. Each of these factors contributes to a range of credit scores: 300 to 580: Poor 580 to 670: Fair 670 to 740: Good 740 to 800: Very good 800 to 850: Exceptional VantageScore VantageScore is calculated based on five factors, although each doesn’t have a specific weight. According to VantageScore, available credit, balances, and total credit usage are the most influential factors. In addition to credit mix and experience, payment history is also a significant factor. VantageScore still considers factors like age of credit history and new accounts opened, even though they are less significant. Based on these five factors, there are five credit score ranges: 300 to 499: Very Poor 500 to 600: Poor 601 to 660: Fair 661 to 780: Good 781 to 850: Excellent When it comes to offering credit, each lender takes a different approach — regardless of the score and ranking. Several lenders use an algorithm that reads more than just the score on credit reports. Those with lower credit scores who are improving their credit, but still need to improve it, will benefit from this. Ways to Improve Your Credit Score There’s no need to obsess over reaching 850. Remember, only 1% of consumers will ever get a perfect credit score. And if they do, their FICO score won’t stay high for long, since credit bureaus recalculate it constantly. So, you probably have a better chance of encountering Bigfoot. However, those of you who are serious about hitting this elusive score should follow these steps. Pay your bills on time. Remember, 35% of your credit score is based on your payment history. Once your payment’s 30 days late, one of the three big credit bureaus will report it to Experian, Equifax, or Transunion. Having a late payment on your credit report for up to seven years can harm your credit score. Using a bill management app, or enrolling in autopay, will decrease your chances of missing a payment. Verify that your credit report does not contain any negative marks. It’s possible that your credit reports contain illegitimate negative marks — even if you’ve never missed a payment. Get your free TransUnion and Equifax credit reports from Credit Karma and make sure they are error-free. Dispute any inaccurate marks on your report if you find any. In response to a dispute, credit-reporting companies must investigate and fix errors as soon as possible. Over time, negative marks on your credit reports should have less impact on your scores and eventually disappear. Pay in full. You should always pay at least your minimum payment. But it’s recommended that you pay your bill in full every month. Why? In order to reduce your utilization rate. FYI, your utilization rate can be calculated by dividing your credit card balance by your credit limit. Keep your hard credit inquiries to a minimum. A hard credit inquiry is generated when you apply for credit of any kind. A hard inquiry can temporarily affect your credit score because it can be a sign that you are struggling financially. You should only apply for new credit when necessary if you want to get a really high score. Don’t cancel your cards without a reason. Consumers with longer credit histories and lower credit utilization ratios are favored by both FICO and VantageScore. The problem is that you can’t create 10 years of credit history by magic. The best thing you can do is keep one or two credit cards active and never cancel them. By having more credit cards in your name, you will not only be able to build a longer credit history, but you will also be able to keep your credit utilization rate low. FAQs About the Highest Credit Score What is the highest credit score? The FICO score is the credit score most commonly used by lenders. It has a scale that ranges from 300 on the low end to 850 on the high end. FICO says less than 2% of U.S. consumers have an 850 credit score. But you don’t need to have the highest credit score in order to get the best available rates on loans. Credit scores of 740 to 799 are considered “very good,” while any score of 800 or higher is treated as “exceptional.” What is the average credit score? In 2021, Experian data showed that the average FICO credit score (scores maintained by Equifax, Experian, and TransUnion) for Americans was 716. How does the average credit score differ by generation? The following are the average scores by generation: Generation Z: 674 Millennials: 680 Generation X: 699 Baby Boomers: 736 Silent Generation: 758 What is the average credit score based on income? American Express reports the following average credit scores by income: $30,000 or less per year: 590 $30,001 to $49,999: 643 $50,000 to $74,999: 737 Low average credit scores may be linked to lower income due to factors like higher-income individuals being able to pay back credit card debts (with lower interest rates) more easily and maintaining a lower credit utilization ratio. The credit limit of those with higher incomes may also be higher than that of those with lower incomes. However, income is not the most reliable indicator of a score. A person’s income is only one factor that affects their credit score. It is still possible to have good credit and a low income. No matter your income level, don’t worry. Your credit score is not determined by your income. How many adults never check their scores? TransUnion sponsored a study conducted by Javelin Strategy & Research that revealed that 54 percent of adults do not check their credit scores. To achieve your financial goals and correct any errors in your credit report, you must check your credit score. Use a third-party application or use an established credit reporting company like Experian to monitor your credit score on a regular basis, regardless of whether you use a credit card or pay back student loans. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due. Updated on Aug 1, 2022, 4:13 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkAug 1st, 2022

Gen Z is racking up credit card debt almost three times as fast as everyone else as inflation sinks in

Data from VantageScore shows that people 25 and younger saw their credit card balance increase by 30%, compared to 11% for the rest of the population. Credit card consolidation can be a strategic move to pay off credit card debt and pay less in interest over time.Wera Rodsawang/Getty Gen Z is having a harder time paying off their credit cards as inflation increases. Compared to a year ago, credit card balances for younger people increased by 30%, VantageScore data shows. Low credit score consumers also saw their credit card balance rise by almost 25%. Young people are starting to see the effects of inflation in their credit card bills.Gen Z, or young people 25 and under, saw their credit card balance increase by 30% in the second quarter, compared to a year ago, according to credit score company VantageScore. The rest of the population saw an 11% rise in their credit card balance, per the report. VantageScore's data comes from a random sample of 12.5 million credit files in the US.People with low credit scores under 660 also saw a credit card balance increase by almost 25%, over double the percent for the rest of the population. For millennials, the data found that their credit card balances went up by 22% over the past year.With inflation driving prices up for commodities like gas and food, young and low-income consumers are having a harder time paying off credit card and other bills than they were earlier in the pandemic.During the pandemic, consumers had some cushion from stimulus checks, savings, and a pause on student loan repayments that helped them pay down their debt more, Silvio Tavares, CEO and president of VantageScore, told Insider.VantageScore found that the percentage of credit card loans 30 days past due is still below where it was before the pandemic, but it's increasing, especially for Gen Z and millennials.Reuters reported that consumer credit ratings agency TransUnion estimated the percentage of credit card delinquencies could reach 8.4% in the first quarter next year. "This doesn't mean the sky is falling," Tavares said. "We just need to monitor the trend and see if it continues and spreads to other groups."Tavares told Reuters that some Americans are paying off less credit card debt while spending more on travel and dining.Consumer spending data reflects that, despite high inflation, people are still spending more on travel and transportation compared to other goods and services."There are some signs that inflation has peaked and is coming down," Tavares said. Part of the reason Gen Z and millennials saw an increase in credit card balances, Tavares said, is because their income wasn't increasing as fast as inflation, so they needed a way to supplement their needs."If inflation levels off, we won't see balances rising as quickly," he said. He also added that extending the pause on student loan repayments would help Gen Z and millennials save more money to pay off credit card debts.Overall, Tavares said consumers are healthy, and credit scores are trending up, even for Gen Z and millennials.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 1st, 2022

15 Years On From The Start Of The Financial Crisis Risks Remain As Inflation Runs Rampant

On 9 August 2007 French bank BNP Paribas froze three of its US funds due to US subprime mortgage problems Value of mortgage debt crumbled, and banks stopped lending to each other Bailouts came thick and fast in 2008 as investors lost confidence in the banking system Parallels with today as volatility hits stocks, housing […] On 9 August 2007 French bank BNP Paribas froze three of its US funds due to US subprime mortgage problems Value of mortgage debt crumbled, and banks stopped lending to each other Bailouts came thick and fast in 2008 as investors lost confidence in the banking system Parallels with today as volatility hits stocks, housing markets start to cool, and an energy crunch causes a shock Central banks now lack the tools to alleviate the downturn and instead are focused on bringing down inflation Interest rates were 5.75% in August 2009 with room to fall, today they are at 1.25% and are set to rise further Banks now more resilient and judged to be sufficiently capitalised to cope with a further deterioration in outlook Risks remain on the horizon, including in commodity markets, which threaten to amplify supply crises if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Problems In The US Subprime Mortgage Markets The first drops of rain hinting that a financial storm could be on the way fell when the French bank BNP Paribas froze three of its US funds, citing problems in the US subprime mortgage markets. Those cooling splashes heralded a deluge of destruction which ripped through financial markets. Trillions of dollars of loans made to borrowers with poor credit scores had been sliced up, repackaged and sold on financial markets with a woeful lack of oversight and when the housing bubble burst, it rocked the financial institutions which had bought into the derivatives dream. There were other doom-laden dates to come in the thunder and lightning which followed as banks stopped lending to each other, but 9 August marked the first seizing up of the system. The funds were suspended and investors were prevented from drawing out their cash, after BNP Paribas judged it had become impossible to value the assets, with a highly questionable quality mark attached by ratings agencies. The financial crisis exposed major vulnerabilities not only within banks, which had become household names, but also revealed big flaws in the economic health of Eurozone member states in the years that followed. Bail outs came thick and fast, with investors losing confidence in banks and then countries’ ability to service their huge debts. On the face of it, there are parallels to be drawn with today, given the volatility wracking equities, movements in the bond markets signifying potential recessions and red-hot property prices showing signs of cooling. There are fresh worries that the Eurozone could be facing a severe crisis, this time prompted by an energy shock. The good news is that UK banks are considered to be sufficiently capitalised and strong enough to deal with the risks of a sharper deterioration in economic outlook. In its most recent report into risks to financial stability, the Bank of England says although the outlook for the UK and globally has worsened, UK banks have capacity to support lending to households and businesses. Rules to ensure UK banks’ retail and investment arms are ring fenced came into force in 2019, aimed at preventing contagion in case risk-taking prompted fresh global economic shocks. Consumers might be coping with the biggest hikes in prices in four decades right now but compared to the months before the 2008 financial crisis hit, the Bank of England believes households aren’t as likely to dig themselves deeper into more debt. The Bank expects businesses on the whole to struggle on. It’ll be more challenging for smaller firms to repay borrowing and the expectation is that some businesses will fail, but overall, it’s going to take a much larger shock to see a domino collapse of companies unable to pay their debts. Inflation Is Running Rampant The not-so-good news is that central banks have fewer tools at their disposal to deal with today’s looming economic storm. Back in August 2007, interest rates in the UK were at 5.75% compared to 1.25% today, which provided the Bank of England with plenty of room for manoeuvre. In the years that followed, the rate dropped rapidly to stimulate demand in the economy and a mass bond buying programme was launched to reduce borrowing costs. Today those levers can’t be used as they are creaking under the strain of being pulled to get us through the pandemic. With interest rates lowered to ultra-low levels, the era of cheap money has helped fuel the fires of inflation which central banks are now desperate to put out. So, instead of heading into a downturn, with the expectation there will be another lifeline thrown to pull the economy out of a crisis, the aids currently deployed are being withdrawn rapidly. The governor of the Bank of England, Andrew Bailey, has stressed the over-riding importance of bringing down inflation to the 2% target, saying there will be no ifs and no buts put in the way. It’s far from a comfortable place to be, but an economy losing steam is considered to be the price to pay to stop an inflationary spiral in its tracks. The extra difficulty facing policymakers is that much of the inflation is imported and driven by external shocks rather than by domestic forces, which will make it much harder to push down the spiral of prices. With rates expected to keep marching upwards, the risk of a housing market bubble rapidly deflating are also rising. The ring-fencing rules designed to make banks more robust have been blamed for fuelling the rise in prices. The criticism is that the new regime trapped a big cushion of a money within the UK banking fence and the extra liquidity washing around helped fuel the era of very cheap mortgage deals. However, a Treasury report earlier this year cited ultra-low rates brought in by the Bank of England and pandemic support for the housing market as the bigger drivers of the intense mortgage competition in recent years. There is some concern about the number of UK mortgage holders who are reliant on short-term mortgage deals in comparison with other countries. Homeowners on ultra-cheap, two-year rates are likely to find that their financial resilience will fall as they face the shock of higher monthly payments. In the United States and in many parts of Europe, longer term mortgages have become much more the norm, insulating more households from the short-term shock of steep rate rises.  Longer term rates are becoming more popular in the UK, which could help mitigate risk to the market overall. There are other clear and present dangers on the horizon. Emerging markets are highly sensitive to surges in commodity prices, fresh Covid waves are a continued risk and China’s fragile property market is still seen as a potential threat to stability. Although right now the UK financial system looks ready to keep calm, carry on and cope with the ongoing turbulence, another bolt from the blue still risks shattering confidence and resilience. The Bank of England is uneasy at the expectation that the buck will always stop at Threadneedle Street and that as an institution it will always be able to step in and try and save the day. It’s also highly concerned that the way commodity markets operate risk amplifying supply crises. Going forward, it’s likely to require more market participants and not just the big banks to make sure they have built up enough buffers to adequately insure against severe but conceivable shocks. Economic uncertainty and market volatility can be unnerving for investors, but tough times have been shown not to last forever, and markets eventually recover. With inflation appearing to run rampant and a recession looming there are clearly tougher times ahead for consumers and companies but it’s important for investors to think about their long-term strategy and stay resilient when markets are jittery. We don’t know exactly what is round the corner but keeping calm and carrying on, instead of impulsively selling, might benefit you in the long run when prices eventually recover. Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown About Hargreaves Lansdown Over 1.7 million clients trust us with £132.3 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month. Updated on Aug 1, 2022, 12:53 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkAug 1st, 2022

New Report Shows Homebuyers With Lower Credit Scores Pay an Extra $104,000 in Mortgage Costs

Elevated home prices and rising interest rates are feeding into housing affordability woes for potential buyers, especially those with lower credit scores, according to a new Zillow report that shows that, nationally, buyers with “fair” credit could be paying up to $288 more on their monthly mortgage payment than those with “excellent” credit. The Zillow… The post New Report Shows Homebuyers With Lower Credit Scores Pay an Extra $104,000 in Mortgage Costs appeared first on RISMedia. Elevated home prices and rising interest rates are feeding into housing affordability woes for potential buyers, especially those with lower credit scores, according to a new Zillow report that shows that, nationally, buyers with “fair” credit could be paying up to $288 more on their monthly mortgage payment than those with “excellent” credit. The Zillow report says today’s home shoppers can expect to pay around 62% more per month to buy a typically priced U.S. home than they would have a year ago. Zillow examined credit scores against current mortgage rates and found that such monthly cost increases are exacerbated for millions of Americans with low credit scores or less than perfect credit histories. For example, the report states that a borrower with an “excellent” credit score—between 760 and 850—can qualify for a 30-year fixed-rate mortgage with a 5.099% interest rate. For the same loan, the report shows, a similar borrower with a “fair” credit score—between 620 and 639—qualifies for a 6.688% rate. This equates to a $288 difference in monthly mortgage payments and nearly $103,626 in interest over the life of a 30-year fixed loan, based on the current price of a typical U.S. home ($354,165), Zillow says. “When you are thinking about buying a home, the best first step you can take is to fully understand your financial picture, what you can afford and your outstanding debts or obligations,” said Libby Cooper, Zillow Home Loans vice president. “If you find you have low credit, take realistic steps to improve your credit score by doing things like disputing possible report errors and paying down as much debt as possible. This could increase the amount of home loan you qualify for.” The report included the chart below to illustrate how a buyer’s credit profile plays an important role in how much a home ultimately costs. Buyers who make raising their credit score part of their initial steps in the home-buying process typically have more buying power and lower monthly payments. The cost of buying a typically priced U.S. home based on credit scores FICO® Score Estimated Annual Percentage Rate1 Monthly Payment Total Loan Cost   760–850 5.099 % $1,538 $553,743 700–759 5.321 %   $1,557   $567,739 680–699 5.498 % $1,608 $579,014 660–679 5.712 % $1,647 $592,782 640–659 6.142 % $1,725 $620,882 620–639 6.688 % $1,826 $657,369 The report notes that there is a direct correlation between credit security—having a strong credit history and structural access to credit offerings— nd higher homeownership rates. The homeownership rate is lower in counties that are more “credit insecure,” meaning they are home to high numbers of residents with poor or no credit history. That cuts off millions—particularly Black and Latinx residents—from the wealth-building advantages of homeownership, Zillow noted. Additionally, Black applicants are denied a mortgage at a rate 84% higher than white applicants, and credit history is the most common reason cited for those denials. Limited traditional financial services in Black and other communities of color are a significant factor in the lack of credit history and the inability to build a high credit score, Zillow writes. The report also noted that Fannie Mae and Freddie Mac recently adopted policies that include timely rent payments in their automated underwriting systems. Lenders and brokers can submit bank account data (with borrower permission) to identify 12 months of prompt rent payments to help potential borrowers qualify for a mortgage. “While inclusion of timely rent payments doesn’t change a borrower’s credit score, it can have a positive impact on how lenders view a borrower’s credit worthiness. This move shows how effective policy changes can help consumers build a strong financial foundation that unlocks homeownership,” said Cooper. The post New Report Shows Homebuyers With Lower Credit Scores Pay an Extra $104,000 in Mortgage Costs appeared first on RISMedia......»»

Category: realestateSource: rismediaAug 1st, 2022

Is DAVE Stock the Next Big Short Squeeze?

InvestorPlace - Stock Market News, Stock Advice & Trading Tips The short squeeze in DAVE stock, a fintech that lends quick cash and builds credit scores, may not be here very long. The post Is DAVE Stock the Next Big Short Squeeze? appeared first on InvestorPlace. More From InvestorPlace Buy This $5 Stock BEFORE This Apple Project Goes Live The Best $1 Investment You Can Make Today Early Bitcoin Millionaire Reveals His Next Big Crypto Trade “On Air” Cash Holders Could Get Hit Hard THIS FRIDAY.....»»

Category: topSource: investorplaceJul 27th, 2022

Homebuyers desperate to get a mortgage are lining up for the same risky bet that helped cause the 2008 housing crash

The number of borrowers with risky credit scores getting adjustable rate mortgages is rising — it's what helped caused the foreclosure crisis. Oscar Wong/ Getty Images Adjustable-rate mortgages are making a comeback despite their role in the 2008 housing crash. LendingTree says the number of ARMs offered to borrowers has more than tripled since 2021. The share of ARMs offered to borrowers with lower credit scores is also rising —  it could cause problems down the line.  A growing number of borrowers are turning to a type of mortgage that helped cause the 2008 housing crash as interest rates rise and affordability sinks.  Data from mortgage marketplace LendingTree shows the number of adjustable-rate mortgages offered to its users increased by 230% from the first half of 2021 to the first half of this year. Also known as ARMs, these loans have an interest rate that adjusts over time depending on the fluctuation of market rates. They're less predictable than fixed-mortgages as they tend to change periodically, but are attractive to borrowers as they initially have lower interest rate payments. With more borrowers struggling to afford homeownership, it's no surprise they are making a comeback. However, Jacob Channel, the senior economist at LendingTree, says Americans should be weary about their resurgence."It is very important for both lenders and borrowers to know the risks associated with adjustable-rate mortgages and to not become too cavalier about issuing or seeking out these types of loans," he told Insider. That's because ARMs played a key role in the housing bubble that gave rise to the 2008 housing crash. Leading up to the implosion, many subprime lenders enticed borrowers with interest-only ARMs — an adjustable mortgage that initially only requires interest payments rather than including both principal and interest. However, when rates spiked, many borrowers could no longer afford the payments on their loans. This triggered a foreclosure crisis among homeowners, as well as a credit crisis among the investors who owned bonds backed by these underwater mortgages — it also birthed a global recession. Although lending standards are much tighter in 2022, there has been an increase in the amount of borrowers with risky credit scores being offered ARMs.According to LendingTree, while the share of ARMs offered to borrowers with a credit score of 680 or higher decreased by 21.32 percentage points between the first half of 2021 and the first half of 2022, the share of ARMs offered to borrowers with credit scores of 620 to 679 increased by 19.98 percentage points. For those with a credit score of 619 or below, the share increased by 1.34 percentage points.If more borrowers with fair and even poor credit receive ARMs, Channel says it could result in bigger problems down the line. "While the findings of our study are not necessarily a cause for concern in the immediate future, if the trend of ARMs becoming more common and being offered to borrowers with lower scores continues, then ARMs may once again contribute to a future housing crisis," he said. Indeed, borrowers with lower credit scores are more sensitive to rate hikes. Data from TransUnion shows that as inflation soars, more borrowers with low FICO scores are defaulting on their loans. Although borrowers who recently got an ARMs are unlikely to be impacted by the Feds' recent rate hikes, those who got an adjustable-rate mortgage five or more years ago may see their monthly payment increase by hundreds of dollars."Keep in mind that a rate increase of even two percentage points can increase a person's monthly mortgage payment by hundreds of dollars — depending on factors like their loan amount and starting rate," Channel said, adding that a rate hike may increase some ARM borrowers' risk of defaulting on their loans.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 26th, 2022

Digital Authoritarianism: AI Surveillance Signals The Death Of Privacy

Digital Authoritarianism: AI Surveillance Signals The Death Of Privacy Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute, “There are no private lives. This a most important aspect of modern life. One of the biggest transformations we have seen in our society is the diminution of the sphere of the private. We must reasonably now all regard the fact that there are no secrets and nothing is private. Everything is public.”  - Philip K. Dick Nothing is private. We teeter on the cusp of a cultural, technological and societal revolution the likes of which have never been seen before. While the political Left and Right continue to make abortion the face of the debate over the right to privacy in America, the government and its corporate partners, aided by rapidly advancing technology, are reshaping the world into one in which there is no privacy at all. Nothing that was once private is protected. We have not even begun to register the fallout from the tsunami bearing down upon us in the form of AI (artificial intelligence) surveillance, and yet it is already re-orienting our world into one in which freedom is almost unrecognizable. AI surveillance harnesses the power of artificial intelligence and widespread surveillance technology to do what the police state lacks the manpower and resources to do efficiently or effectively: be everywhere, watch everyone and everything, monitor, identify, catalogue, cross-check, cross-reference, and collude. Everything that was once private is now up for grabs to the right buyer. Governments and corporations alike have heedlessly adopted AI surveillance technologies without any care or concern for their long-term impact on the rights of the citizenry. As a special report by the Carnegie Endowment for International Peace warns, “A growing number of states are deploying advanced AI surveillance tools to monitor, track, and surveil citizens to accomplish a range of policy objectives—some lawful, others that violate human rights, and many of which fall into a murky middle ground.” Indeed, with every new AI surveillance technology that is adopted and deployed without any regard for privacy, Fourth Amendment rights and due process, the rights of the citizenry are being marginalized, undermined and eviscerated. Cue the rise of digital authoritarianism. Digital authoritarianism, as the Center for Strategic and International Studies cautions, involves the use of information technology to surveil, repress, and manipulate the populace, endangering human rights and civil liberties, and co-opting and corrupting the foundational principles of democratic and open societies, “including freedom of movement, the right to speak freely and express political dissent, and the right to personal privacy, online and off.” The seeds of digital authoritarianism were planted in the wake of the 9/11 attacks, with the passage of the USA Patriot Act. A massive 342-page wish list of expanded powers for the FBI and CIA, the Patriot Act justified broader domestic surveillance, the logic being that if government agents knew more about each American, they could distinguish the terrorists from law-abiding citizens. It sounded the death knell for the freedoms enshrined in the Bill of Rights, especially the Fourth Amendment, and normalized the government’s mass surveillance powers. Writing for the New York Times, Jeffrey Rosen observed that “before Sept. 11, the idea that Americans would voluntarily agree to live their lives under the gaze of a network of biometric surveillance cameras, peering at them in government buildings, shopping malls, subways and stadiums, would have seemed unthinkable, a dystopian fantasy of a society that had surrendered privacy and anonymity.” Who could have predicted that 50 years after George Orwell typed the final words to his dystopian novel 1984, “He loved Big Brother,” we would come to love Big Brother. Yet that is exactly what has come to pass. After 9/11, Rosen found that “people were happy to give up privacy without experiencing a corresponding increase in security. More concerned about feeling safe than actually being safe, they demanded the construction of vast technological architectures of surveillance even though the most empirical studies suggested that the proliferation of surveillance cameras had ‘no effect on violent crime’ or terrorism.” In the decades following 9/11, a massive security-industrial complex arose that was fixated on militarization, surveillance, and repression. Surveillance is the key. We’re being watched everywhere we go. Speed cameras. Red light cameras. Police body cameras. Cameras on public transportation. Cameras in stores. Cameras on public utility poles. Cameras in cars. Cameras in hospitals and schools. Cameras in airports. We’re being recorded at least 50 times a day. It’s estimated that there are upwards of 85 million surveillance cameras in the U.S. alone, second only to China. On any given day, the average American going about his daily business is monitored, surveilled, spied on and tracked in more than 20 different ways by both government and corporate eyes and ears. Beware of what you say, what you read, what you write, where you go, and with whom you communicate, because it will all be recorded, stored and used against you eventually, at a time and place of the government’s choosing. Yet it’s not just what we say, where we go and what we buy that is being tracked. We’re being surveilled right down to our genes, thanks to a potent combination of hardware, software and data collection that scans our biometrics—our faces, irises, voices, genetics, microbiomes, scent, gait, heartbeat, breathing, behaviors—runs them through computer programs that can break the data down into unique “identifiers,” and then offers them up to the government and its corporate allies for their respective uses. As one AI surveillance advocate proclaimed, “Surveillance is no longer only a watchful eye, but a predictive one as well.” For instance, Emotion AI, an emerging technology that is gaining in popularity, uses facial recognition technology “to analyze expressions based on a person’s faceprint to detect their internal emotions or feelings, motivations and attitudes.” China claims its AI surveillance can already read facial expressions and brain waves in order to determine the extent to which members of the public are grateful, obedient and willing to comply with the Communist Party. This is the slippery slope that leads to the thought police. The technology is already being used “by border guards to detect threats at border checkpoints, as an aid for detection and diagnosis of patients for mood disorders, to monitor classrooms for boredom or disruption, and to monitor human behavior during video calls.” For all intents and purposes, we now have a fourth branch of government: the surveillance state. This fourth branch came into being without any electoral mandate or constitutional referendum, and yet it possesses superpowers, above and beyond those of any other government agency save the military. It is all-knowing, all-seeing and all-powerful. It operates beyond the reach of the president, Congress and the courts, and it marches in lockstep with the corporate elite who really call the shots in Washington, DC. The government’s “technotyranny” surveillance apparatus has become so entrenched and entangled with its police state apparatus that it’s hard to know anymore where law enforcement ends and surveillance begins. The short answer: they have become one and the same entity. The police state has passed the baton to the surveillance state, which has shifted into high gear with the help of artificial intelligence technologies. The COVID-19 pandemic helped to further centralize digital power in the hands of the government at the expense of the citizenry’s privacy rights. “From cameras that identify the faces of passersby to algorithms that keep tabs on public sentiment online, artificial intelligence (AI)-powered tools are opening new frontiers in state surveillance around the world.” So begins the Carnegie Endowment’s report on AI surveillance note. “Law enforcement, national security, criminal justice, and border management organizations in every region are relying on these technologies—which use statistical pattern recognition, machine learning, and big data analytics—to monitor citizens.” In the hands of tyrants and benevolent dictators alike, AI surveillance is the ultimate means of repression and control, especially through the use of smart city/safe city platforms, facial recognition systems, and predictive policing. These technologies are also being used by violent extremist groups, as well as sex, child, drug, and arms traffickers for their own nefarious purposes. China, the role model for our dystopian future, has been a major force in deploying AI surveillance on its own citizens, especially by way of its social credit systems, which it employs to identify, track and segregate its “good” citizens from the “bad.” Social media credit scores assigned to Chinese individuals and businesses categorize them on whether or not they are worthy of being part of society. A real-name system—which requires people to use government-issued ID cards to buy mobile sims, obtain social media accounts, take a train, board a plane, or even buy groceries—coupled with social media credit scores ensures that those blacklisted as “unworthy” are banned from accessing financial markets, buying real estate or travelling by air or train. Among the activities that can get you labeled unworthy are taking reserved seats on trains or causing trouble in hospitals. In much the same way that Chinese products have infiltrated almost every market worldwide and altered consumer dynamics, China is now exporting its “authoritarian tech” to governments worldwide ostensibly in an effort to spread its brand of totalitarianism worldwide. In fact, both China and the United States have led the way in supplying the rest of the world with AI surveillance, sometimes at a subsidized rate. This is how totalitarianism conquers the world. While countries with authoritarian regimes have been eager to adopt AI surveillance, as the Carnegie Endowment’s research makes clear, liberal democracies are also “aggressively using AI tools to police borders, apprehend potential criminals, monitor citizens for bad behavior, and pull out suspected terrorists from crowds.” Moreover, it’s easy to see how the China model for internet control has been integrated into the American police state’s efforts to flush out so-called anti-government, domestic extremists. According to journalist Adrian Shahbaz’s in-depth report, there are nine elements to the Chinese model of digital authoritarianism when it comes to censoring speech and targeting activists: 1) dissidents suffer from persistent cyber attacks and phishing; 2) social media, websites, and messaging apps are blocked; 3) posts that criticize government officials are removed; 4) mobile and internet access are revoked as punishment for activism; 5) paid commentators drown out government criticism; 6) new laws tighten regulations on online media; 7) citizens’ behavior monitored via AI and surveillance tools; 9) individuals regularly arrested for posts critical of the government; and 9) online activists are made to disappear. You don’t even have to be a critic of the government to get snared in the web of digital censorship and AI surveillance. The danger posed by the surveillance state applies equally to all of us: lawbreaker and law-abider alike. When the government sees all and knows all and has an abundance of laws to render even the most seemingly upstanding citizen a criminal and lawbreaker, then the old adage that you’ve got nothing to worry about if you’ve got nothing to hide no longer applies. As Orwell wrote in 1984, “You had to live—did live, from habit that became instinct—in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinized.” In an age of too many laws, too many prisons, too many government spies, and too many corporations eager to make a fast buck at the expense of the American taxpayer, we are all guilty of some transgression or other. No one is spared. As Elise Thomas writes for Wired: “New surveillance tech means you'll never be anonymous again.” It won’t be long before we find ourselves looking back on the past with longing, back to an age where we could speak to whomever we wanted, buy whatever we wanted, think whatever we wanted, go wherever we wanted, feel whatever we wanted without those thoughts, words and activities being tracked, processed and stored by corporate giants, sold to government agencies, and used against us by militarized police with their army of futuristic technologies. Tread cautiously: as I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, 1984 has become an operation manual for the omnipresent, modern-day AI surveillance state. Without constitutional protections in place to guard against encroachments on our rights when power, AI technology and militaristic governance converge, it won’t be long before Philip K. Dick’s rules for survival become our governing reality: “If, as it seems, we are in the process of becoming a totalitarian society in which the state apparatus is all-powerful, the ethics most important for the survival of the true, free, human individual would be: cheat, lie, evade, fake it, be elsewhere, forge documents, build improved electronic gadgets in your garage that’ll outwit the gadgets used by the authorities.” Tyler Durden Fri, 07/22/2022 - 23:00.....»»

Category: blogSource: zerohedgeJul 23rd, 2022

People Are Refusing to Pay Their Mortgages in China. The Protest Could Spill Into the Wider Economy

Analysts say the homeowner protest is affecting 235 property developments in 24 of China's 31 provinces A mortgage boycott in China is “still multiplying” and threatens to “become much more widespread,” according to analysts who say the homeowner protest is already affecting 235 property developments in 24 of China’s 31 provinces. It is common for homeowners in China to start making mortgage payments on new properties before they are finished, with their payments helping finance the construction. But many projects are facing delays. “The boycotts appear to reflect growing concern among home buyers about the ability of indebted developers to deliver the homes they have sold, as well as some discontent about declines in new home prices, which have left many buyers sitting on paper losses,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note on July 15. [time-brightcove not-tgx=”true”] The development could send ripples beyond the property sector. China’s growing middle classes have piled their savings into property, believing it to be a safe haven for their hard-earned cash. Tianlei Huang, a research fellow at the Peterson Institute for International Economics (PIIE) think tank, cites a 2019 survey by China’s central bank, which showed that nearly 60% of the total assets owned by urban Chinese households were in commercial and residential property. Noel Celis—AFP/Getty Images Police officers look at people gathering at the Evergrande headquarters in Shenzhen, southeastern China on September 16, 2021, as the Chinese property giant said it is facing “unprecedented difficulties” but denied rumors that it is about to go under. He points out that China has the world’s highest home ownership rate, standing at about 96% in 2020. “Given such a significant share of Chinese households’ wealth resides in property, any sharp property price corrections may trigger social instability,” he says. Huang adds that China’s zero-COVID restrictions—which have battered the economy—have impacted both homeowners, who have lost jobs and incomes, and big developers. Property behemoth China Evergrande Group defaulted on its debt in 2021, and at least a dozen other developers have defaulted on offshore bonds. “Many are facing a serious cash flow crisis,” he says. China’s property crisis The scale of the problem is huge. Construction halted on around 13 million apartments during the past year alone, according to Capital Economics, and up to $220 billion in mortgage loans are tied to unfinished residential projects, according to a report by Australian bank ANZ. The growing boycotts threaten to worsen the problem, creating a vicious cycle where already struggling developers become even more strapped for cash. Read More: Why the Fate of Troubled Property Developer Evergrande Group Is Posing a Huge Headache for China In his note, Evans-Pritchard contended that developers “have drawn renewed public attention to the risks involved in purchasing unfinished homes and are likely to dampen appetite for new home purchases.” He also warned that “banks will become more reluctant to extend mortgages for new home purchases from indebted developers.” Michael Pettis, a senior fellow at the think tank Carnegie Endowment for International Peace, and a professor of finance at Peking University, says that over the past decade Chinese people have bought property with the conviction that prices would only ever rise. “That conviction has been shattered,” he says, “and we know from the history of previous property bubbles that once that happens, it is very hard to keep prices from dropping a lot more.” Regulators have already stepped in. The China Banking and Insurance Regulatory Commission has urged banks to extend loans to property developers, so that they can complete unfinished projects, according to Reuters. Bloomberg reports that authorities may allow homeowners to halt payments on stalled projects—but only temporarily. The overarching concern is the implication of a bust in the property sector for the financial system, which is heavily exposed to real estate. On July 18, Fitch Ratings said that a rise in mortgage defaults could be risky for banks and developers. “Authorities are likely to step in to curb mortgage defaults from spreading more widely and to larger cities,” it predicted, “but a failure of policy intervention to restore home buyer confidence could test the banking system’s resilience and heighten liquidity pressure [for] developers.” Sheldon Cooper—SOPA Images/LightRocket/Getty Images A residential construction site pictured in Changzhou, Jiangsu province, China on June 14, 2022 The crisis strikes at the heart of China’s development model. The world’s most populous nation has used construction and property sales to drive economic growth over the last decade, with the property sector accounting for more than a quarter of the economy. The World Bank warned in its China Economic Outlook report last month that China needed to take “decisive action” to “encourage a shift toward consumption” if it wanted to “achieve a more balanced, inclusive, and sustainable growth trajectory.” The obstacles aren’t insurmountable. Huang says the property crisis will impact banking profits, but he doesn’t expect a system-wide calamity. He points out that down payment requirements in China are high—typically 30% for first time buyers—which means that people are unlikely to walk away from mortgages unless property prices see a seriously sharp decline. Meanwhile, Pettis believes that “a combination of threats” may ease the problem in the short term. Authorities “can force banks to lend more to viable but unfinished construction projects,” he says. “They can threaten property developers to complete their projects and they can warn home buyers that a default will affect their social credit scores.” At the same time, he warns that attempts to find new growth engines may be painful for an economy so dependent on booming construction projects. “Once investment has become so excessive that it can no longer be justified economically, any attempt to reduce it causes growth to slow sharply, which in turn undermines the justification of even more investment,” he says. “In that case it is hard not to get caught up in a vicious circle, in which less investment means less growth, and less growth means less investment can be justified.”.....»»

Category: topSource: timeJul 21st, 2022

Seven Major Effects Of COVID-19 On Parents, Students, & Schools

Seven Major Effects Of COVID-19 On Parents, Students, & Schools Authored by Bruno Manno via RealClearEducation.com, COVID-19 disrupted American K-12 education, with calamitous consequences for young people. Here are seven realities that resulted from that calamity. Four describe the tragedy, and three explain what advocates and stakeholders are doing to overcome it.   1. Parents know that there are problems and want new solutions. More than two-thirds (69%) of parents say that they’re worried their child isn’t on track in school, almost twice as many as the 35% who were worried about this pre-pandemic. Nearly six in ten want schools to continue using statewide tests to show what students are learning so that schools will know where to focus assistance. Nearly two-thirds (63%) of parents worry about their child’s mental health. All this leads nearly six in ten (56%) to want schools to rethink how they educate children and create new ways to teach children. 2.  COVID-19 led to much less student learning. Analysts at the National Bureau of Economic Research (NBER) studied mathematics and reading test scores across the country, tracking what students learned using online instruction compared to what they learned in reopened schools. Online instruction was associated with growing achievement gaps, especially for black and Hispanic students attending high-poverty schools. The average student learning remotely lost the equivalent of 13 weeks of in-person instruction, a gap that reached 22 weeks for students in high-poverty schools. The average student in reopened schools lost between 7 and 10 weeks of in-person instruction. Other studies reach similar conclusions, including one that found pandemic learning loss greater than that experienced by New Orleans students after schools closed following Hurricane Katrina. 3. COVID-19 changed young people’s college-going plans. The 2022 high school graduating class lived more than half their school time during the pandemic. Nearly 1 in 3 seniors (28%) have changed their post-high school plans since the pandemic began, up from 18% in a spring 2020 survey. Three out of four (74%) seniors report that they want to go to college, though they’re now facing new challenges. There are significant differences across student groups, with seniors who are Hispanic, black, and male less likely to want to go to college than those who were seniors in 2019. 4. COVID-19 affected young people’s mental health. The Surgeon General issued a public advisory report with troubling information. Mental-health visits for children aged five to 11 increased by 24% compared to 2019, with visits for 12- to 17-year-olds rising almost 31%. The National Center for Education Statistics reports that since the start of the pandemic, 70% of public schools experienced an increase in the number of children seeking school mental-health services, with 76% of school staff voicing concerns about students showing signs of depression, anxiety, and trauma. The General Accounting Office found that during the 2020-21 school year a higher percentage of teachers using online or combining online and in-person learning reported that their students experienced learning difficulties than did teachers in an in-person environment. There are reasons for optimism. Here are three promising pathways to overcoming the COVID-19 learning calamity. 5. Many parents responded to this calamity by voting with their feet. Parents enrolled children in new non-public school education settings, shrinking public school enrollment since 2020 by almost 1.3 million students (though some of this decline owes to decreasing birth rates and immigration). Parents enrolled their children in private and parochial schools, micro-schools, and learning pods, with homeschooling reaching record enrollment levels. In particular, large urban districts experienced a significant student exodus, especially those with lengthy periods of remote-only learning. For example, over the last two years, New York City schools lost around 64,000 students; Los Angeles around 43,000 students; and Chicago around 25,000 students. 6. State and local public school leaders are responding to the calamity. States and school districts have received $190 billion in federal pandemic education funding. Money is being used to implement programs that accelerate student learning, including evidence-based ones like intensive small-group tutoring; competency-based instruction that develops specific student knowledge and skills; summer school; extra instruction in core subjects; lengthening the school year; and offering modest financial incentives and other rewards to students, parents, and teachers.  7. Policymakers are creating new options for parents and young people.   Elected state leaders have expanded school-choice options or created new ones, including open enrollment across school district boundaries, vouchers, tax-credit scholarships, and education savings accounts. This has produced a more pluralistic K-12 system with more educational options for families and students. School closures produced an education and mental-health calamity for young people. The debate about whether school closures were mistaken will continue. The onus is now with K-12 advocates and stakeholders to do whatever it takes to support families and students in their efforts to make up lost ground. *  *  * Bruno V. Manno, a former U.S. Assistant Secretary of Education, is senior advisor to the Walton Family Foundation’s education program. Some of the research described in this piece was supported financially by the Foundation. Tyler Durden Tue, 07/19/2022 - 18:05.....»»

Category: dealsSource: nytJul 19th, 2022

Canary In The Car Mine: Repos From Auto Loans That Originated In 2020 And 2021 Are Skyrocketing

Canary In The Car Mine: Repos From Auto Loans That Originated In 2020 And 2021 Are Skyrocketing If you're looking for proof that we're already in the midst of a meaningful deleveraging, look no further than car repos.  In fact, the industry is a "underappreciated ticking time bomb", according to Barron's. One car dealer said this week that most loans on cars currently being repossessed originated during 2020 and 2021 - a trend that differs from the norm, when origination dates are usually scattered.  "Many of the loans were extended to buyers who had temporary pops in income during the pandemic," the dealer, who has been in the business for 20 years, told Barron's. The monthly incomes of many who took on the loans have fallen "sometimes by half" now that stimulus programs have ended, the report says.  Consumers’ incomes were temporarily high as a result of debt forbearance, pandemic stimulus checks, enhanced unemployment benefits and PPP loans, the report says. The auto dealer says he bought a Bentley, McLaren and two Aston Martins from two buyers, now in default, who used PPP money for down payments.  “Everybody thought the free gravy train would never end,” he said. He told Barron's he has "never seen so many people making $2,500 a month owing $1,000 a month in car payments." “The idea that the economy is strong? Anyone who is actually doing business sees things are not strong. We had a housing bubble in 2008, and now we have an auto bubble,” he continued. He guessed, based on data he has seen from banks, that "subprime repos have nearly doubled since 2020, to around 11% on average".  Normally, about 2% of prime loans wind up being repossessed. That number now stands at about 4%. Continuing data on repos is difficult to find, the industry insider said: “A lot of the banks—they’re smart. They control the market, like diamonds. As repos pour in, they only release them so often.” “The bubble is beginning to show signs of bursting soon,” said Pamela Foohey, law professor at Cardozo School of Law at Yeshiva University, who was one of the first to warn about trouble in the sector back in 2021.  Auto debt is now about 10% of all total consumer debt, rising $87 billion for the year ended March 2022, to a total of $1.47 trillion.  And as Danielle DiMartino Booth, CEO of Quill Intelligence, correctly points out in the article, automobile repos are usually the canary in the coalmine when it comes to economic trouble on the horizon.  Recall, back in May we noted when cracks in the auto market started to appear. At the time, the WSJ reported that millions of Americans with subpar low credit scores were falling behind on paying their credit cards and automobile and personal loans. At the time, we called it "an ominous sign the 'strong consumer' narrative is cracking." Data from credit-reporting firm Equifax Inc in May had already started to show a rise in the share of 60-day delinquencies for subprime credit cards and personal loans. Those delinquencies hit an eight-month high in March, nearing levels not seen since before the virus pandemic.  Equifax's data also showed subprime car loans and leases soared to a record-high in February. The data goes back to 2007.  Tyler Durden Tue, 07/12/2022 - 14:40.....»»

Category: blogSource: zerohedgeJul 12th, 2022