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Credit Issuers Flip the Script as Credit Gets Tight all Over

Not only is it getting tough these days to get a mortgage with lenders implementing tighter underwriting guidelines for mortgages products, including home equity loans and lines of credit, it's also getting tougher and harder for consumers to get ANY type of consumer credit:

• Some lenders are raising the credit score requirements for their auto loans, personal loans, and credit cards.

• Some lenders are increasing their fees and raising the interest rates on their credit cards.

• Some lenders are scaling back on credit line limit increases and slashing current credit limits by as much as half.

• Some lenders are raising the interest rates even more than before for the less-than-perfect credit borrowers they will still lend to.

According to several recent reports, some of the lenders making these sweeping changes include Bank of America, Capital One, Citigroup, JP Morgan Chase, HSBC, American Express, and Discover. And rest assured, many others will soon follow suit, if they haven't already.

Credit terms are-a-changing, and changing fast!

Are you prepared?

Lenders are paying real close attention to your credit risk level and credit activity and are making moves to cut you off at the pass much quicker if they believe you to be a bad credit risk.

They may change your low, fixed interest rate to a higher variable rate, they may charge you higher fees, they may slash your credit limit, and they may even close your account all together!

And the kicker is that you don't even have to be late on payments for them to take such actions!

If they sense any signs of what they consider to be "stress," like you spending too close to your credit limit, they'll whack you without hesitation with some sort of penalty and/or change.

Be sure to pay close attention to your credit statements and the little inserts that come in the envelopes with them.

Because credit card issuers can change your rates and terms at any time, stay on the lookout for any changes they may make in your credit terms and conditions.

If they try to impose a sudden change on you that you don't agree with, check to see if they will allow you to opt out of the changes and pay off your existing balance under your existing terms. And if they agree, just be prepared that they will more than likely close your account.

While we navigate through these ever-changing and uncertain credit times, be extremely mindful of how you use your credit.

You never know what "stress" signals may set a credit issuer off and cause them to flip the script on you!

"Can't you make room for just one more?"

Thanks goes out to "Mr. Incognito" from Canton, MI for asking this question:

"I wanted to take your Business Credit Smart 101 class on Aug. 25 but waited too late to register and now it's full. I remember you mentioning that you keep the class size small. I don't know how many people you take at a time, but can't you make room for just one more? :-)"

Ha! Ha! I've been asked this question in a variety of ways over the past few days, and the answer is:

Of course I could make room for one more, but the truth of the matter is... I won't.

Sorry! :-(

The Business Credit Smart 101 class size is limited to a certain number of people so I can make sure that everyone gets their questions answered and gets the proper attention they need while we go through the large amount of information that's discussed.

Trust me, when you take the class, you'll appreciate being in a smaller group setting as opposed to a large, auditorium sized group.

Also, when the class is over, everyone who attends receives business credit coaching, so there's only a limited number of entrepreneurs and small business owners I can reasonably work with at a time.

But don't be alarmed Mr. Incognito!

There will be another Business Credit Smart 101 class coming up in September. The date hasn't been released yet, but when it is, I urge you to enroll right away to guarantee your space. And because you are already on the wait-list, you will receive priority notification.

So stay tuned for the next class date, and I look forward to seeing you there!

NOW is the Time to buy a Home in Michigan!

Last night I attended my monthly real estate mastermind meeting with Mark Ijlal, my real estate investing mentor. The meeting was very good, per usual.

A few of the Mark Ijlal Inner Circle group members sat in the "hot seat" and allowed themselves to be grilled about their Michigan real estate foreclosure business by Mark himself, and the rest of the group.

Not to get into the particulars about all of the stuff that was said or the great ideas that were generated during the meeting because it's of little relevance here, but what it all boils down to is that it's an excellent time for consumers to buy residential real estate in Michigan.

There are goo-gobs of houses on the market, lots are excellently priced, and some sellers are willing to negotiate some unheard-of deals.

As a buyer in today's real estate market, you have the ultimate advantage.

If you want to own a home in Michigan, the time to buy is NOW!

But wait, not so fast!

You know I'm all about saving money, getting great deals, and making smart moves. But before you go visiting open houses all willy-nilly and getting excited about how you'll furnish and decorate your new home once you find the perfect one, you need to get your ducks in a row. Your financial ducks, that is.

You need to put yourself in the best possible financial position before you take the leap into home ownership.

Owning a home is no joke. There's a lot involved. Especially money.

You don't want to buy a home and then run the risk of losing it to foreclosure because of something that's avoidable - such as you not planning properly, or budgeting your money well, or understanding how your mortgage works, or getting in over your head.

So that's why last night while at the meeting, I immediately decided to put together a workshop specifically for people who want to buy a home in Michigan and take advantage of the current real estate market (which by the way, won't last forever).

I think the workshop will be called something like "Home Smart 101." Not really sure yet.

I'm going to put something together that will teach potential Michigan home owners about how to improve their credit to buy a home, what to expect when buying a home, the process of buying a home, how to negotiate a great deal on a home, how to estimate how much home you can afford, how to get financed for a mortgage when lenders are now being more strict, how to avoid foreclosure, etc., etc.

And don't worry, this is not going to be like one of those run-of-the-mill, full-of-fluff, free home ownership seminars. This workshop is going to be the real deal and provide you with some good, solid information that will help you become a "smart" Michigan home owner, step-by-step.

So many people want to buy homes but they are no where near ready to do so, and they have no idea what they're getting into. So this workshop is going to fix that.

If you have any interest in attending, the best thing to do is to sign up to receive priority notification and join the wait-list by clicking here.

Subprime Mortgage Foreclosures Cause "Economic Tsunami?"

Interesting story aired on CBS News.

They report that analysts say we should get ready for an "economic tsunami" because a "massive foreclosure wave looms."

About 2 million subprime mortgages, which were obtained between 2004 and 2006, are scheduled to re-set to sky-high interest rates over the next 18 months, with the bulk of them re-setting around this October.

Analysts predict that when it's all said and done, about 2.4 million people will have lost their homes to foreclosure.

Massachusetts, New York and Ohio have already begun multi-million dollar foreclosure bailout plans, and California and a few other states on the east coast are considering rolling out foreclosure bailout plans of their own.

Now, how is it that so many home owners will be subject to foreclosure?

Well, it pretty much boils down to lenders going through a period where their loan standards were so lax that they were dang-near handing out mortgages like flyers to a club on a Saturday night.

I mean, they were using some ridiculous loan standards to approve mortgages.

I've said it before that those hard-to-believe-they-even-existed, sub-500 FICO, 100%, no income verification, no asset verification loans were just no good.

When you start lending tens of thousands, and hundreds of thousands of dollars to people who don't really have a decent credit history or the income to support the mortgage, you're going to be in trouble.

Now of course there are those real life occurrences that contribute to the foreclosure rate as well, such as illness, death, loss of job, etc., but those issues have always been there.

I'm more focused on the large number of people who wouldn't have even been approved for a mortgage in the first place if lenders weren't being so greedy.

They were lending to loads of people who really weren't ready for the big financial commitment and responsibility that comes with owning a home and carrying a mortgage, and who probably didn't really understand the ramifications of having an adjustable rate mortgage.

One of the ways to avoid a potential foreclosure situation is to refinance into a better mortgage loan before the ARM adjusts. But so many people are not able to. Know why? Because they can't get approved for a new mortgage now as easily as they did before.

The game has changed.

Mortgage lending standards have tightened up big time. Lenders now want you to be a strong, low-risk borrower.

So if your financial position is not stable or strong, and your FICO credit scores suck, you're going to have a tough time getting a mortgage.

Period.

Best bet is to "get smart about your credit," and work on improving it and raising your credit scores.

Once you do that, you won't have to worry any longer about being locked out of financial opportunities, the best interest rates, and loan programs usually reserved exclusively for good credit consumers.

In case you missed the CBS News story, you can watch it online by clicking here.

Don't Use These Prepaid Debit Cards!

The Federal Trade Commission (FTC) recently filed charges against several related companies for deceptively debiting $159.95 from the bank accounts of consumers who purchased the prepaid debit cards they marketed and sold under different names and on different web sites.

They solicited consumers though emails and pop-up ads that directed the consumers to various web sites for the cards. Once there, consumers would have to provide their personal information to apply for the card, including their bank account information.

Well they used the consumers' bank account information to debit their accounts, without authorization, for a $159.95 "application and processing" fee that wasn't even clearly and prominently disclosed in the first place.

Consumers usually found out about these unauthorized debit charges when their banks informed them of penalty fees or overdraft charges due to insufficient funds, or when they reviewed their bank statements.

The bank-issued, Visa and MasterCard branded, prepaid stored-value cards are:

• Acclaim Visa
• Impact Visa
• Sterling Visa
• VIP Advantage Visa
• Vue Visa
• Elite Plus MasterCard
• Impact MasterCard
• Secure Deposit MasterCard
• VIP MasterCard
• Vue MasterCard

The companies and people behind this scheme (all based in sunny California) who were issued a temporary restraining order and had their assets frozen are:

• EdebitPay, LLC
• EDP Reporting, LLC
• EDP Technologies Corporation
• Secure Deposit Card Inc.
• Dale Paul Cleveland
• William Richard Wilson

My best advice to you is to avoid the prepaid debit cards listed above like the plague! Don't do business with companies that rip you off!

[As a side note, they also market short-term loans on www.SuperAutoSource.com, www.SuperCashSource.com, and www.FastCashUSA.com. So buyer beware! You never know what kind of tricks they might pull out the bag on those sites!]

Consumer Debt Still HIGH, HIGH, HIGH

Yesterday the Federal Reserve released the preliminary consumer credit statistics for June, 2007:

• revolving credit rose at an annual rate of 8.4%
• non-revolving credit rose at an annual rate of 5.3%
• overall, consumer credit rose at an annual rate of 6.50%

The total amount outstanding on revolving credit is now estimated at $903.9 billion.

The total amount outstanding on non-revolving credit is now estimated at $1,556 billion.

The preliminary figures released last month for May, 2007 were underestimated - the revised figures came out higher. We'll have to wait until next month to see how close these preliminary June, 2007 stats compare to the final numbers.

So how much are you contributing to these numbers?
Do you have your spending under control?
Do you have a good handle on your debt?

If not, don't waste any time... get smart about your credit TODAY!