Credit Questions? Just Ask Nicole

NY Times Article: "Credit Card Buyer Beware"

The New York Times published an editorial today that I thought was dead-on. It's called "Credit Card Buyer Beware."

It starts off by accusing the federal government of failing to stop the predatory and unfair practices of credit card companies against consumers which have now become industry standards, and says that Congress, "which sat on its hands while the problem got worse and worse," needs to do something about it.

You're doggone right!

This article totally supports my conspiracy theory: that the credit card companies are in bed with the government.

Yup, they are definitely doing each other!

There's just no other explanation for how they can get away with the crap that they do, and for so long. Stuff like:

• charging interest rates as high as 30%
• using methods that maximize them collecting on heavy-duty penalties and fees
• flooding consumers with low introductory teaser rates while they reserve the right to raise the interest rate whenever they choose
• hiding important details in 1,000-page thesis-type disclosures that even lawyers have a hard time understanding
• retroactively applying penalties to purchases that were made even before a penalty was incurred
• retroactively applying penalties to debts that were even paid off before a penalty was incurred
• using that handy-dandy "universal default" clause which allows them to jack up your interest rate if you've been delinquent on another account even if you've been in good standing with them
• using "double-cycle billing" which allows them to charge you interest on the total amount of your purchase instead of just charging interest only on the unpaid portion of your purchase

The stuff they do is not consumer-friendly. Though they'll try to be your friend and suck you into the hype with pretty, glossy brochures, trinket-filled rewards programs, and offers you think you just can't pass up.

When it comes to using credit cards, you have to stay on top of the game. You have to protect yourself because as of right now, there's no one else to look out for your best interest.

The government doesn't care. Even though they may pretend to. They're the very ones allowing some of the underhanded tactics that credit card companies use to continue.

Michigan Democratic Senator Carl Levin introduced a bill that would help stop some of the blatant credit card rip-offs by eliminating such things as retroactive penalties and double-cycle billing, and limiting penalty interest rates and over-the-limit fees.

And who knows if it'll even pass. Let's hope it does because it'll be a step in the right direction - the direction of helping protect consumers against predatory credit card practices.

So, in the meantime, "get smart about your credit."

Learn about the sneaky little methods credit card companies use to keep you behind the eight ball. Learn how to spot their schemes from a mile away. Learn how to effectively use credit cards, pay down credit card debt, and evaluate credit card offers. Learn how to master the credit card game, and then play to win.

Foreclosures Rise in First Half of 2007

According to RealtyTrac, there were 925,986 foreclosure filings in the US during the first six months of 2007, but only 573,397 individual properties were subject to some stage of foreclosure.

These numbers represent the fact that there may have been more than one foreclosure filing on a single property. Could be the result of multiple mortgages on the same property going into default, foreclosure due to defaulted property taxes, or a property going back into foreclosure after getting out.

These stats are up 30% over the previous six month period, and up more than 55% over the first six months of 2006.

That's a helluva hike in just six months and one year's time. And we haven't even seen the worst of it.

The top 10 states with the highest foreclosure rates (not filings) are:

1. Nevada (1 for every 40 households)
2. Colorado (1 for every 60 households)
3. California (1 for every 69 households)
4. Michigan (1 for every 80 households)
5. Florida (1 for every 81 households)
6. Ohio (1 for every 82 households)
7. Georgia (1 for every 84 households)
8. Arizona (1 for every 92 households)
9. Connecticut (1 for every 108 households)
10. Indiana (1 for every 112 households)

Michigan Utility Costs to go Down over Next Couple of Years

Michigan Attorney General Mike Cox announced today that consumers in Michigan should see over $100 million worth of rate reductions in their gas and electric bills over the next two to four years.

Consumers Energy, MichCon, SEMCO, Michigan Gas Utilities Company, and Detroit Edison have all been overstating their costs for removing old equipment, and then passing those costs on to consumers in their utility bills as a "depreciation expense."

Bastards!

WSJ Article: "Small Firms Use Credit Cards for Capital"

The Wall Street Journal ran an article yesterday called "Small Firms Use Credit Cards for Capital," citing how the use of credit cards among small business owners is growing.

Yeah, but what else is new?

Small business owners are just like everyone else - using and maxing out credit cards like there's no tomorrow.

The article also talked about how entrepreneurs find it faster and easier to use credit cards to start or run their businesses than applying for a loan with a bank.

This philosophy definitely seems to hold true among the small business owners I've helped establish and build business credit. They find using credit cards to be less of a hassle, less intimidating, and much more familiar territory.

Traditional credit cards may be oh-so-handy, but some entrepreneurs don't use them by choice.

Some are actually pigeon-holed into using them - if they can even get them - because they don't otherwise qualify for a bank loan, they've depleted their savings, or they don't have anyone (like a friend or family member) they can borrow from.

Now that's a tight spot to be in as a busy entrepreneur that's working hard to get a business off the ground or keep one running. But that's not a spot they have to stay in.

By tossing out some "old school" methods and by not just relying on Master Card or Visa to meet expenses, an entrepreneur can make all the difference between success and failure withtheir business.

The trick is in knowing what's now and what's relevant, and knowing how to use business capital to your best advantage without damaging your business's financial reputation.

Using traditional credit cards as a source of funding capital for your business is not a bad idea, but you really have to be mindful and smart about what you're doing.

For example, are you personally guaranteeing your "business" credit cards? If so, have you fully considered the impact that could have on your business and personal finances?

Are you using the credit cards responsibly and keeping all of your personal stuff off of them?

Do you know the credit card usage triggers that could cause your business to be red flagged?

There's a lot to consider when finding and using money to start, run, or grow a small business. Traditional credit cards (like Master Card and Visa) and bank loans may be the most popular sources, but they're not the only games in town.

Wells Fargo Says Good-bye to ARM's

Wells Fargo Bank has just decided to do away with the ever-so-popular 2/28 adjustable rate mortgages they previously offered.

They're just outta there, gone, adios, buh-bye!

Reason is due to "regulatory and market pressures."

Ya think???

Boy, oh boy, these mortgage lenders are having a tough time figuring out what to do with themselves after the sub-prime mortgage market fallout.

They're doing whatever they can to keep their doors open for business, but with so many bad loans on their books, it's not an easy task.

Maybe if they hadn't been so greedy trying to give mortgage loans to everyone and their mother's twice-removed fourth cousin, they wouldn't be in this mess.

And neither would the record number of home owners that are in foreclosure.

Adjustable rate mortgages have been a really popular mortgage product for sub-prime borrowers.

If your credit wasn't up to par, you didn't have any money in the bank, and you didn't make enough money to really afford the house - so what?!

You could still get a mortgage!

But now that the sub-prime mortgage market is vanishing into thin air, less-than-perfect credit borrowers are going to be S-O-L.

A new day is dawning where you will really have to be credit worthy to get approved for a mortgage.

So NOW is the time, more than ever, to get smart about your credit, raise your credit scores, and put yourself in the best possible financial position if you want to buy or refinance a home, or do anything else where your credit will be used as a determining factor.

Don't put it off. Get on it right away!

Detroit Property Tax Breaks Approved by City Council

Today the Detroit City Council approved property tax breaks for 24 more Detroit neighborhoods as part of Mayor Kwame Kilpatrick's "Neighborhood Enterprise Zones" initiative.

Thank goodness! Because Detroit property taxes are high!

The first phase of this initiative was rolled out last summer and included 25 neighborhoods.

These property tax breaks could mean anywhere from an 18 - 35% reduction in city and county property tax rates for Detroit homeowners.

The tax break goes into effect in Summer 2008, and will most likely help the "Motor City" retain and attract new families because they'll make home ownership in the City of Detroit more affordable.

For most people, the expenses of home ownership are often the biggest source of debt and cash outlay. There's the mortgage, property taxes, insurance, utilities, and the cost of maintenance.

So, any relief home owners in the City of Detroit can get with their property taxes will certainly benefit them financially.

The break is good for up to 15 years for homeowners who purchased their homes after December 31, 1996.

To see maps of the Detroit neighborhoods affected, click here.

What's the Deal with ForeclosureBusTours.com?

Today I had the opportunity to serve as the Credit Expert for ForeclosureBusTours.com, which is a real estate venture here in Michigan run by of a couple of really great guys - Ralph Claxton and Rodney Townsend. I initially met each of them through our mutual real estate investing mentor, Mark Ijlal.

Ralph and Rodney are both active real estate investors that are making a killing in the current Michigan real estate foreclosure market. Maybe you remember seeing them on WDIV Channel 4 news a little while ago?

Well anyway, they specialize in buying and selling residential foreclosure homes in the Detroit metro area.

They buy some homes directly from distressed homeowners that are facing foreclosure through a process called a "short sale," and other homes they buy directly from banks after the foreclosure process is completed, which are more commonly known as "REO's" (real estate owned by the bank).

Once they buy the homes, they rehab them - quickly and nicely, and then sell them to homeowners or to other real estate investors.

Now I dabble a little bit in real estate myself, but I only put a drop in the bucket compared to what these guys are doing!

To keep pace with the demands of their business and all the people wanting to know how they do what they do, they formulated ForeclosureBusTours.com. And just as the name implies, they literally take groups of people on a bus tour of Detroit metro area foreclosures.

Lots of valuable real estate information was given on the tour today. They talked about how to buy and sell foreclosures, issues related to rehabbing a home, how to make offers and crunch the numbers, and some of the closely guarded techniques they use in their own businesses.

They even had one of the best and most thorough property inspectors I've ever come across, John McAuliffe of Quality Home Inspection, give some crucial inspection pointers while walking through one of the foreclosures featured on the tour.

And then, of course they had "yours truly," do a little spill about personal credit and business credit.

And I was absolutely delighted to do it!

I really enjoyed mingling with the group of about 20+ and answering their questions about personal credit, business credit, and how both impacts their real estate investing business.

I might have been there today in a professional capacity to share a little of my knowledge about credit with their group, but I had a really good time.

And for those of you who were on the tour today that may be reading this... again, it was a pleasure meeting you.

And remember, if you need help with improving your personal credit, building business credit to fuel your real estate investing, or improving the credit of potential home buyers for your properties, I'd be more than happy to help.

To get a glimpse of what went on today, check out the video below. Ralph is the one you see talking and Rodney is the narrating camera-man extraordinare!