Smart Borrower Blog

Archive for August, 2009

Credit Card Education Not Regulation

Some parts of the newly enacted Credit Card Act of 2009 will go into effect this week, meaning big indirect changes for many credit card users. As of today credit card companies must mail out customers’ bills at least 21 days before the due date, a longer period than the previous requirement of 14 days. Before they make any changes to customers’ rates, companies’ must now give them 45 days’ notice instead of 15 days. More provisions of the law will start in February 2010 with more disclosure regulation becoming effective in July 2010. One of the unfortunate by-products of... more »

FICO Score Changes More Forgiving

Good news for those hoping to improve their credit. Changes to the FICO model that credit agencies use to determine your credit score is more forgiving for small credit blemishes, according to a recent article in the Wall Street Journal. The new formula, FICO 08, has been made available to lenders by the big three credit agencies; Experian, TransUnion and Equifax, since last month. Unlike previous versions, FICO 08 will not ding your credit score for bills in collections originally under $100. It is also less likely to lower your scores for occasional missed payments, although those with a pattern... more »

The Need for Student Loan Consumer Protections

The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with Congressionally-sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation’s history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting set up also promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately,... more »

Where’s the Small Business Help?

What is the real driving force behind our economy? Is it the big Fortune 500 companies or is it the entrepreneurs - the small business owners? If the President Obama’s philosophy is true that the economy grows from bottom up, then why has the government been focusing on bailing out Wall Street and not giving breaks to the backbone of America’s ingenuity and innovation? In a recent poll from Intuit Payroll reported in a CNN article, 75 percent of small business owners say they are not getting enough government support and that the opposite is actually true - the Feds... more »

New MDIA Law Spells Danger for Home Buyers

If you read an article in your local newspaper that said the new Mortgage Disclosure Improvement Act (MDIA) helps protect home buyers, you’ve been misled. This new law that went into affect July 30, 2009 is a wolf in sheep’s clothing. I’ll explain. What Sounds Good: Lenders must provide you with the Truth in Lending (TIL) form at least seven business days before closing. This form shows the Annual Percentage Rate for your loan. Receiving this information in advance sounds great. But wait. There is a big catch. The Potential Deception: The Annual Percentage Rate is not the interest rate... more »

Most Students Are Not ‘Drowning in Debt’

Contrary to some flashy news stories, most U.S. college students are not graduating from college with excessive student loans, according to a story from U.S. News & World Report. A new study from the College Board, admittedly designed to “take down a notch the sensationalist stories about students drowning in debt,” according to study author Patricia Steele, found that a full third of June 2008 graduates completed their degrees with no outstanding government or private student loans. And only 10 percent of all graduates of four-year colleges had more than $40,000 in such loans at the end of their college... more »

Cash For Clunkers Extended (Updated)

Updated: On August 6th, the Senate passed a bill to add $2 billion dollars to the popular CARS program. According to a New York Times article today, the U.S. House of Representatives passed an extension bill providing more money for the Obama Administration’s “Cash for Clunkers” program. The Senate is likely to pass the same bill by Friday (although there have been several proposed amendments from various senators). The current auto trade-in program has been wildly popular, with $1 billion in government funds already used up. The extension bill promises to pump an additional $2 billion into giving new car... more »