Almost 1 Million Home Owners now in Foreclosure

RealtyTrac has officially confirmed: You're not imagining it, you are seeing more foreclosure signs these days.  (Though likely few so inadvertently appropriate to the news as the one we show here.) 

One in 171 households fell into foreclosure during the second quarter of this year, 739,714 homes in all––that's up 121% from the same period last year.  Though the worst of the worst is happening in a handful of states––Nevada, California, Ohio, to name a few––the latest numbers show that 48 states saw a growing number of people who are losing their homes.

Yesterday, the President threw a legislative flotation device to Fannie Mae and Freddie Mac and to hundreds of thousands of homeowners on the verge of foreclosure.  Though help may be on its way to some consumers, the best move yet is to get educated.  RealtyTrac offers Foreclosure Laws and Procedure by State and tips on dealing with foreclosure. 

Bottom line: don't ignore the inevitable.  If you know your options, you might be able to save your home or at least improve a worst-case scenario.

photo credit: joelogon

Your Checkbook Cheatin' Ways

Think you know your spouse?  More specifically: think you know how your spouse handles finances?  A survey reveals (via CNN.com) that you might not. Harris Interactive polled to find that 26% of men and 33% of women in committed relationships admitted to hiding their spending habits from their spouses.

Just like the immortal words of Hank Williams, Sr., "Your cheatin' heart will tell on you"––financial statements keep no secrets. If you think that your significant other won’t eventually notice that you’ve wagered your retirement fund at the races, or that your shoe collection has grown in inverse proportion to your nest egg, it might be time for a reality check. 

No matter what lengths you go to conceal your spending habits from your spouse, the details of your covert spending will eventually emerge.  So here's bit of advice: the sooner you come clean, the better.  Easier said than done to be sure, especially if you've racked up a fair amount of debt, but this is a "pay now, or pay later" situation.  (In case you're wondering, "pay later" is the uglier option in which you'll have less control.  Go with "pay now." Trust us on this one.)

The CNN article notes that some "cheaters" may not even be aware that they're spending in a less than forthcoming manner.  So this is where everyone should ask themselves, whether or not they're indulging in clandestine sprees: Am I routinely blowing our monthly budget with my spending habits?  Am I eroding our long-term goals? 

Note to the spouses who discover their beloveds' fiscal infidelities: Diplomacy, diplomacy, diplomacy is key. An emotional reaction may not solve your financial problems, but a good financial plan can.

Giving Credit Where Credit's Due: Three Cheers for Wells Fargo

"Wells Fargo goes on the offensive with 'at risk' credit card holders," reports Mark Calvey in yesterday’s San Francisco Business Times. Wells Fargo is writing to customers “it believes may be in the danger zone,” he writes, “offering to set up automatic payments, design a repayment plan or connect them to a consumer counseling service.”

Calvey goes on to quote from the bank’s “warm and friendly approach”:

"We recognize that in a changing economy some of our customers may experience a period of financial challenges and we would like to help. … There are caring Wells Fargo representatives waiting to speak with you. … Wells Fargo strives to meet the financial needs of our customers, and intends to work with customers through both prosperous and challenging times."

“Fantastic!” I thought – but frankly, it sounded too good to be true. So I sent out a couple of emails – one asking Wells Fargo for more info. Lisa Westermann, Assistant Vice President at the bank, responded, saying that Wells Fargo first conducted a test mailing, where “the response has been mostly positive.” 

She also pointed out some of the other services Wells Fargo offers its customers, including a variety of online banking tools, payment options, and account alerts – about cash advances, when customers are approaching their credit limits, payment due dates, etc. And to help last-minute payers, Wells Fargo accepts payments up until midnight PST on the due date as on-time payments.

I was curious to know which credit counseling agency the bank was partnering with for its customers. It’s Money Management International (MMI) consumer credit counseling service, which Lisa describes as “an accredited non-profit organization that provides confidential financial guidance, free credit counseling services, debt management assistance and comprehensive housing counseling certified by the U.S. Department of Housing and Urban Development.”

What Does Our Expert Say?
Gerri Detweiler, Credit Advisor for Credit.com, gives MMI and Wells Fargo high marks. “This is a much better approach than the one many card issuers have been using -- yanking credit lines and raising interest rates,” Gerri explains. “Most of the consumers I talk with say they want to pay their bills but their lenders won't work with them. Wells Fargo is taking the right approach by being proactive.”

Isn't it great to hear about a bank doing right by its customers? Has Wells Fargo reached out to you? Please let us know what you think of the help you’ve received.

Nancy Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent the last 23 years teaching people how to get out of debt, save money, and live better on less. She writes on all these subjects for CreditBloggers.com.

Freedom from Credit Card Tricks and Traps

Today, Wednesday July 30, Members of Congress in the House Financial Service Committee will be voting on the Credit Cardholders Bills of Rights. Among other things HR 5244 will:

• Ban credit card companies from raising interest rates on existing balances - unless you paid 30 days late
• Apply your payment proportionally between high and low rate balances - saving you money
• Give you a chance to set a fixed credit limit and avoid over limit fees

Make your voice heard on this important issue! Let your Representative know what you think about protecting credit card holders. Take two minutes to make a quick phone call that could help save you -- and millions of cardholders - a lot of money in the long run.

Update- Great news!  Linda Sherry from Consumer Action just emailed me with this news:

The Credit Cardholders Bill of Rights passed the House Financial Services Committee! I hope you can help us get this bill passed by the entire House, and to continue your Senators to pass credit card reform as well.

Consumer Action could not have had as much impact without your participation. Pat yourself on the back right now!!

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com. Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts

Stuck in a Gas Guzzling Lease? There May Be a Way Out!

Despite the price of gas still near $4 per gallon, millions of SUV drivers are hesitant to escape their vehicle simply because they think the cost of exit will outweigh the benefits. (It doesn't help that a lot of owners are upside down on their vehicle loans.) It can take years to realize the gas cost savings when you calculate what it takes to get rid of your SUV and then shop for a more fuel-efficient vehicle.

If you lease your SUV, though, you may be in a better situation. Even if you still have several months remaining on your SUV lease, nationwide programs are available that let you transfer ownership of your lease to someone else, essentially letting you walk away from your contract. Often, the price to walk away can be less than half of one car payment.

For some, the cost of breaking an SUV lease can be as high as $10,000. "When you break your lease, you're essentially paying out the balance of the remaining payments," said Sergio Stiberman, CEO and founder of LeaseTrader.com. SUV drivers can list their vehicle on the site for $79, find someone else to take over the remaining portion of the lease and transfer ownership for $149.

I've reported before on this blog that I used a lease assumption service to get a sweet deal on a Mustang convertible. It worked out really well for us, and I would recommend this option to others who not ready to make a long-term commitment to a particular car - or car payment. (The other major player in this market is Swapalease.)

My only question is whether there are many people willing to take on the lease payment for a large vehicle. My guess is there are many more drivers wanting to unload them than those looking. I spotted a Hummer listed on LeaseTrader for $285 a month...it appears the owner is going to continue making the rest of the $425/month payment if he can get a taker.   

The car I drive now is paid for. But if I were in the market for a vehicle right now, I would definitely see what's available on these sites.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com. Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts

American Express and Costco: A Card for the Times

Last week, I appeared on Fox Business News to talk about American Express and their recent earning problems. It's significant that this super-prime credit card company - known for playing by the rules, having strict underwriting and being solidly built - would be feeling the same pinch as issuers that deal with more subprime customers.

I hypothesized that it might be due to their large share of the small business owner business card market. Small business owners including real estate agents, contractors and mortgage brokers, who may be at a higher risk for credit card default with the housing slump.

In the meantime, there is a one place where American Express is well placed for the current economy: Costco! The company has had a long term partnership with the discount giant and is the only credit card accepted at Costco stores. Credit.com recently added the True Earnings Card from Costco and American Express to our suite of offers. Here's the rundown:

True Earnings Card from Costco and American Express

APR - 14.99%, a little higher than standard Amex rates.
Annual Fee - $135, but that includes your Costco membership too.
Rewards - 3% cash back on gasoline (including discounted Costco gas) and restaurants. 2% on travel and 1% back elsewhere. These rewards aren't that stellar, but the 3% back on discounted gas could translate into some major savings for a super commuter. Most rewards cards ban discounted gas stations from their rewards programs.
Balance Transfer - A lower than standard 2%.
Minimum Finance Charge - A downright retro $0.50. Many cards are as high as $2 or $3 these days.
Foreign Purchase Fee - None, one of the best perks of an Amex card for travelers.

I think this card will do well as consumers start looking for money saving deals. What do you think?

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Belle of the Ball

The big social deals when I was in high school were the Proms, like the Junior Prom and Senior Prom. We guys rented tuxedos and the gals got fancy dresses in what is now known as the Crinoline era.  Some of my classmates had already "paired up" but for the rest of us, it was a time of great uncertainty and anxiety. 

You didn't know exactly whom to ask and you feared rejection if the girl you asked were to say, "No." If you got, "I already accepted an invitation from someone else," at least it let you down gracefully.  I think that it was worse for the gals because we guys at least had the ball in our court. I suppose they look at the possibility that no one would ask them. I honestly don't remember if we had a procedure for classmates without a date.

From the gals' standpoint, there was always the fear that they might accept an invitation from someone who was not their first choice and then a "preferred" guy would ask them later and they would have to decline.  That was a timing thing everyone worried about.

What does this have to do with the mortgage business?

It's about loyalty. It is hard for some borrowers to make up their minds whom to do business with.  That's OK up to a point. Everyone ought to have the right to check out the market and see what's out there. But there comes a point where the borrower has to decide about the combination of assistance with problems, other aspects of service, and the rate, which usually isn't even known ahead of time.  Once that choice is made, the borrower owes his lender his loyalty.

What is a NO-NO is to tell one lender you are going to use them and then keep the door open to other lenders.  To me it's like a gal accepting an invitation from one guy and then calling him up a week later saying, "Sorry, I'm not going to the Prom with you. I got a better offer." That was uncouth in high school and it's no better in business. 

The lender who was initially chosen has a lot of work to do on behalf of his client.  Every day there is more.  Indeed, there may have been a lot of energy expended in counseling even before the transaction. That help was free in anticipation that the borrower would be loyal to them. You don't get advice from one place and then buy at another. A friend with a camera store fears spending an hour with a buyer who leaves the store without buying and then uses the knowledge he received to buy the camera on the Internet, saving $10.

Competing lenders don't have to do any work. It isn't even their deal.  But they know that once the deal is underway, there is no promise of "better service" that will make the slightest impression on the borrower. They may not even know if they can approve the deal. They know that they only thing that will "get to" the borrower is an offer of a lower price, whether the offer is true or not.

They also know if they quote real market rates, it won't be appealing because the borrower can get that from his chosen lender. So they lie about the rates, dangling a bright, shiny lure to entice him away.  A loyal borrower won't listen to that offer because his decision has already been made.

So do your research carefully and when you choose your lender, stick with it. You'll get a better deal in the end dealing with a truth-teller and you'll sleep better with a clear conscience.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles. Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

Funny Money Friday: Summer Vacation Ideas

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Summer is here and, with the economic downturn, many of us are facing challenges in planning our vacations. Rising airline costs make air travel unappealing. Gas prices make a road trip in the ol' SUV a nightmare. The low dollar makes Europe almost impossible. It's time to get creative!

For funny money Friday, we're brainstorming three affordable summer vacation ideas for your family:

Bike Vacation - You'll save up to $1,000 on gas by biking from coast to coast instead of driving! And there are even tandem bikes that seat up to four riders.  Think of how much your kids will love seeing the American landscape with the wind blowing through their hair and the bugs in their teeth!

Walk Vacation - Save even more by not buying a bike at all and setting out on foot. You can lose weight along the way and even land yourself a documentary movie deal!

Staycation - Everyone's least favorite new word for 2008! Stay at home and enjoy your own backyard with the kids. Who needs a fancy hotel with a swimming pool when you can buy a"Summer Escapes"  inflatable pool online for only $29!

Sim Vacation - Take a virtual vacation with your family via a video game! Sims Castaway lands you on a deserted tropical island where you can lounge on the beach and soak up the digital rays. Mix up a pina colada and grab a controller. Think of how much you'll save over a trip to Hawaii!

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

CreditBloggers.com is Testing Twitter

We're so web 2.0! The experts at CreditBloggers.com are testing Twitter this week.  You can find us posting regularly at twitter.com/creditexperts.

All this begs the question, where are you getting your personal finance information these days?

Online Surveys & Market Research

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Your Credit Card's Interest Rate May Go Up for Reasons Beyond Your Control

Four of the top ten credit card issuers say that factors beyond a cardholder's control might cause an interest rate increase – for example, "market conditions," "the economy," and "business strategies." This worrisome news is from Consumer Action's 2008 Credit Card Survey, which was just released.

This is the first time lenders have given reasons like "market conditions" to explain why they hike interest rates, according to Consumer Action (CA), which points out that this "loophole" has already led to rate hikes for many cardholders at Bank of America and Capital One. American Express and Citi joined Bank of America and Capital One in citing "market conditions," "the economy," and "business strategies" as factors that might cause an interest rate to increase.

"What this means to even the best customers is that a perfect payment history is not a safeguard," says Linda Sherry, CA's Director of National Priorities. "If a car dealer was having a lousy year, he wouldn't be able to use that as an excuse to raise interest rates on car loans, but that same standard doesn't apply to card issuers." OMG!!

Over the years, CA's annual surveys have detailed the many reasons card issuers give for why your interest rate might be raised. For example, in this year's survey, over three-quarters of the issuers say they can increase APRs or change terms "any time for any reason" (CA reports that this includes all top ten issuers – even Citibank, which pledges not to change the terms before a card's expiration date.)

Here are some of the other factors that CA found issuers are using to raise:

• Worsening credit scores
• Paying another company late
• Too many credit cards
• Too much debt

Pay Off as Much as You Can, ASAP
It'll cost you a lot more if the rate goes up … and up … and up. I should say when the rate goes up, given the shape the economy's in, especially with lenders now saying they use this reason to make us pay more. If you need yet more motivation to get out from under, add in the fact that the Fed will soon raise rates to tamp down inflation.

Has your interest rate recently gone up because of "market conditions" or any other reason beyond your control? Please let us know about it. And if you want to support Consumer Action's advocacy program in support of legislation that will require fairer credit card rules and regulations, click here.

Nancy Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent the last 23 years teaching people how to get out of debt, save money, and live better on less. She writes on all these subjects for CreditBloggers.com.

Who is Looking Out for the People in Trouble?

I have been seeing a troubling situation developing.  It is no secret that something like 2,000,000 homeowners are in or headed to foreclosure. Ever since last fall, the Federal Government has been encouraging lenders to "work" with these borrowers to make their situation more palatable and to keep them in their homes. I think that this is important but the statistics you read indicate that they are helping 10,000 people whereas 100,000 need their help.

I get a lot of feedback from people who are in homes with toxic loans who are getting zero help from their lenders. In the cases I hear about, the people could actually afford a normal loan at normal rates, but they have a subprime type loan that has adjusted into something that makes the loan untenable.

There is some kind of underlying assumption to the Government's rescue plan that says, "If they have good credit, they can refinance into an A-paper FannieMae type loan." That is just not true. Those entities have dramatically tightened up their criteria and some fairly good borrowers just cannot get loans through them.  Perhaps their income falls short or they don't have much if any equity. No help for them.

The people I talk with have great credit, scores in the high 700's.  That would qualify them for an A-paper loan but maybe they are single and have an ability to live on a very modest budget. Our industry’s rules do not account for that.  These people are not willing to destroy their credit standing by missing payments but they don't want to lose their homes either.

I have heard from other folks who have missed payments and been told, "We will help you next month," but the next month it's "next month" again and again and again. Finally, there is no help.

At the other end of the spectrum I see lenders whose clients are potential refinance candidates not wanting to lose the "servicing" of a loan that is on the books. The servicing business is exceedingly profitable.  The right to collect payments and send to the ultimate investor is worth about 1% of the loan amount. Servicing of a $500,000 loan is worth $5,000.

These lenders see a likely refi candidate like someone coming off of a 5/1 ARM. The look at the file, see good credit, and low LTV and they know the borrowers will be approved anywhere they go. They do not want to lose the servicing on that loan, so they make the borrower a great offer. In cases I see, they offer no cost refinances at much lower than market rates, something that no other lender can duplicate. It is profitable for them to do a break-even deal if they keep the servicing.

Now, I respect their right to do anything they want, including making a sweetheart deal to a good borrower. What I question, however, is that they are spending a lot of time an resources on good borrowers that can get a loan anywhere and not taking care of ones that they treated shabbily in the past few  years. Seems to me that they have a responsibility to redress some of the damage they caused when they got those people into toxic loans in the first place. Then they can go help people who do not need help.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles. Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

Credit.com on CBS Evening News: Did you See Us?

Credit.com's credit score expert and a contributor to CreditBloggers.com, John Ulzheimer appeared on Friday's CBS Evening News with Katie Couric. John talked about rising credit card default rates. Click below to see the clip!

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Funny Money Friday: Budweiser Credit Cards

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Perfect for your new economic hardship drinking habit and subsequent switch to cheap beer: Budweiser has released three credit cards with US Bank.  You can choose a Budweiser, Bud Light or Clydesdale design and start charging!

The card lets you earn 3 reward points for every $1 spent at Budshop.com and any other Anheuser-Busch park or retailer. 1 point for every $1 spent elsewhere {Ed: why would you ever need to spend elsewhere?}.

Once you hit 25,000 points you get a $25 gift card to buy more beer merch from Budshop.com. That's halfway to getting the free King Cobra Performance Mock Turtleneck you've always dreamed about. Why would anyone choose cash back or a gas rebate over this sweet deal?

But wait, it gets worse.  The card's introductory APR could be as high as 20.24% and there's a $2.00 minimum finance charge (most cards set this at $0.50).

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

Big Day for the Banks

After having been clobbered for the last few months, it was time for the financial stocks to shine.  Apparently the market thinks that most of the risk is out of those stocks. Eight of the ten most active stocks on the NYSE were financial stocks. Here ar the numbers:

Company  Price  Percent Change

Wells Fargo    $27.23  (+32.76%)
BofA              $22.67  (+22.41%)
Citicorp         $16.47  (+13.12%)
FreddieMac    $6.83    (+29.85%)
WaMu           $4.53     (+25.48%)
Wachovia      $10.54   (+16.08%)
FannieMae     $9.25    (+30.83%)
Lehman Bros  $16.65  (+25.95%)

Note that all of these companies are THE major players in the mortgage market. In my area, the banks here account for over 50% of the loans funded and that is probably the case nationally too and obviously Fannie and Freddie own or guarantee over half of the outstanding mortgage debt in the country.

Now, I do not know if the risk is out of this segment of the market or not, but if you believe that there is always a message in the markets, this may be the best evidence that the paroxysms of pain in the financial and credit markets may well near an end.

It doesn't mean that there may not be another IndyMac Bank type failure. It doesn't mean that there won't be more write-offs somewhere, but if you were looking for light at the end of the tunnel, this may be it.

Comment: it may take a long time to come out of that tunnel even if we see the light. Some areas may come out in 2010 or even later, but at least this is a nice peg to hang your hat on if you were looking for some good news. 

Final comment: I think that for people who are looking at buying a home for their own use or for an investment income property, I think that your time has come. Seriously, this is the time to get off your hands and call your real estate agent and start looking for properties. IT'S A GREAT TIME TO BUY.

You CAN Stop Debt Collectors and Regain Control of Your Finances

I just finished reading a review copy of a terrific book –- Stop Debt Collectors –- by Gerri Detweiler, Mary Reed, and John Ventura, which is published by Credit.com. If you’re behind on your bills, you need this book, which will be available pretty soon.

In the spirit of full disclosure, before I say anything else, I need you to know that Gerri Detweiler and I go way back, as friends, colleagues, and co-authors. She’s one of my favorite people on the planet. Also, for the last few years, I’ve been happily writing for Credit.com, as well as for its blog, that is, this site, CreditBloggers.com. 

I’d like to think that I’d be able to separate out these various factors under every circumstance, but who knows? In this case, it’s not even close, which is fortunate for you … especially if the bill collectors are already calling you at home and work.

Stop Debt Collectors Is a Gem
It’s non-judgmental and empowering, clearly spelling out your alternatives, while offering sound advice on what you should and shouldn’t do or say – and then making it easy for you to follow that advice. For example, as the authors put it, “One of the most important pieces of advice we can give you when you’re dealing with debt collectors is to maintain detailed written records about your interactions with them.” They give you a form to make it easy for you to keep track of who said what, when.

Similarly, they say “if a collector contacts you about a debt that is several years old, do not acknowledge that you owe it or agree to pay it until you find out whether or not the debt is outside the statute of limitations.” The book tells you what the statute of limitations are in every state and the District of Columbia and how that information can help you prioritize your debts.

Stop Debt Collectors includes many concrete tips, for example, about how to avoid foreclosure on your home and how to avoid the “repo man,” if you’re even just a little behind on car payments. It also spells out what debt collectors can and can’t do under the law -– and what you can do if they violate the law.

But what I like best about the book is that it can help you take charge of your debts from where you are now: “If you’re like a lot of people,” they explain, when the phone calls start, “your first reaction may be that you need to immediately come up with the money the debt collector is asking for. However, paying it may be a bad decision depending on the importance of the debt relative to your other debts, whether or not you believe that you really owe the debt, whether or not you believe that the amount of the debt is accurate, and whether you can afford to pay the debt, among other things.”

It’s not an ideal world, and sometimes, there are difficult choices to be made. Gerri Detweiler, Mary Reed, and John Ventura go through the pros and cons of each option you may face. I like that they are equally clear when they feel you have no alternative. For example, if you’ve “fallen behind on a secured debt (your car or home loan, for example) and you do not have the money to get caught up on it, contact a consumer law attorney immediately!” (The authors recommend you surf over to the National Association of Consumer Advocates to find a lawyer who specializes in this area.)

I hope you don’t and won’t need Stop Debt Collectors, but if you might –- be honest with yourself -- how about at least bookmarking this blog? The sooner you face your debts, the sooner you can take control and create a brighter future!

Nancy Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent the last 23 years teaching people how to get out of debt, save money, and live better on less. She writes on all these subjects for CreditBloggers.com.

The Best Way to Raise your Credit Score

Susan wrote in earlier this week with a common question:

What is the best way to raise my credit score?  Is it paying off old debts or is it paying on time that raises it?  I have old debts and my credit report and I have old items on it.  I was told if I cleaned it up it would help me.  How do I do this?

There are so many myths out there about what will and will not help your credit score. Here's a list of things that will and will not help your credit:

Good for your credit score:

• Using credit cards responsibly
• Paying off your debts
• Paying your bills on time
• Having a mortgage and/or car loan
• Keeping positive accounts open for a long time
• Having high credit limits

Bad for your credit score:

• Carrying high balances on your credit cards
• Paying late
• Closing old accounts
• Reducing your credit limits
• Collection accounts, judgments and bankruptcy filings
• Applying for credit too often

There are also other changes that could be good or bad depending on your own credit history. The best way to see which changes will improve your credit the most, is to use a credit score estimating tool. Start by entering your current credit data to accurately estimate your score. Then, adjust the factors to see how your score would go up or down.

Emily Davidson – Credit.com's Financial Expert and former TransUnion credit insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

FannieMae and FreddieMac

Let's understand the mortgage market today: the only reason this industry hasn't imploded completely is that FannieMae and FreddieMac are still market-makers for traditional loans. Many lenders have said that is the only kind of loan that they will do because it is the only kind of loan that they can sell.

Both of these companies have seen a precipitous drop in the price of their stocks, once in the $60 range and both have seen an increase in the number of loans that are in trouble even though they did, to a great extent, only loans to qualified borrowers.  Bottom line, mostly they were doing good loans and the figures show that the default rate on the good loans was still about ½%.

But they also did subprime loans and Alt-A loans, somewhere between subprime and A-paper quality, and it is here that the problem arises. The default rate on those loans is significantly higher and resulted in their having to repurchase loans and do significant write-downs. They also had to value these loans on the likely value that might arise. That number on recent repurchase seems to be about 60% of the face value of the notes. That means losses!

What set in this week was, however, seems to have been pure panic selling, just a desire to get out of anything that sounded anything like the word "mortgage."  Indeed, FannieMae continued to get battered and today it closed at $10.25, down 22% on the day but significantly higher than the $7.16 opening price. Shares of FreddieMac opened at $4.26 per share and ended up the day at $7.75, about where they closed yesterday. 

Here's the deal as I see it. There are three issues here. The first is stock price which is horrible right now. There is no question that when you have to raise money by selling additional shares of common stock, you have to sell many more shares at a low price to raise a given amount of capital. If they raise money by selling preferred stock, as seems to be the case, depending on its convertibility into common, it is likely to be less dilutive.

The second, and larger issue, is that capital requirements that are required by their government regulators, the Office of Federal Housing Enterprise Oversight. Both have successfully raised capital to make sure that they are well capitalized, exceeding their regulators' requirements. So unless there are more losses, they are OK on that front.

The third, and most important issue, is how THEIR lenders view them in the future. Already the spread between what they have to pay for money is about 8/10 of a percent higher than what the government has to pay, a significant increase from the traditional value of less than ½%. That has to translate into higher costs for mortgages, so be prepared. 

Finally, I do not want to talk about the worst case scenario which is if their lenders just don't even want to buy securities on A-paper loans, but if I were thinking about buying a home or refinancing a mortgage, I would do it sooner rather than later as the volatility ahead is likely to be worse for consumers.   

Funny Money Friday: Cash Trivia

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Let's celebrate this Friday with some fun money trivia from around the world. How many of these facts did you know?

The highest currency currently in circulation is the Zimbabwe $50 billion note. Inflation in Zimbabwe is 9 million percent and the current exchange rate is $102 billion to $1 US dollar.

The highest currency in circulation in the US is $100 bill.

The lowest paper currency ever issued in the US was the 3 cent note used during the Civil War. The highest was the $100,000 gold certificate used for federal transfers only.

When the US first issued paper currency in 1861, each bill was hand signed by by representatives of the Treasury. This practice was replaced by printed signatures a year later.

The largest paper currency ever issued was issued by the Philippines in 1998. The 100,000 Piso note was about the size of a legal sheet of paper.

The US dollar earned it's "buck" nickname from Old West buckskin traders.

Have a great weekend!

Emily Davidson – Credit.com's Communication Director and former TransUnion credit expert. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.

BofA and Countrywide

Bank of America has completed this transaction that makes them the largest mortgage lender in the country with a market share estimated at between 20% and 25%. That makes them a force to be reckoned with, the proverbial 800 pound gorilla.  What does this portend for the future of the mortgage business?

When I got into the mortgage business in 1980 the market was dominated by local Savings & Loan Associations.  The rise in interest rates resulted in most of them being absorbed by others or being taken over by the RTC, the Resolution Trust Corporation. The result of that was that the taxpayers lost $500 billion loss in 1990 dollars, much more in today's money. There was a significant contraction of the industry and the pundits all said, "In a few years there will just be a few lenders."

Just the opposite happened as FannieMae and FreddieMac became the dominant players in the market. There was a huge expansion of the industry fueled first by the re-fi boom as people rolled out of ARMs they had gotten in the '80's into fixed rate loans which were reasonably priced for the first time in a decade.

All during the '90's there were a lot of mergers and acquisitions and the call went out again, "In a few years there will just be a few lenders." But at the same time new mortgage companies were being created.  It got even more heated when we got into the post-dot com era and the Fed lowered rates dramatically.

The mortgage business expanded dramatically with record volume. The mortgage industry added more jobs than the rest of the economy in this period. Among the new lenders were those that were doing subprime loans. Of course, they are all gone now. 266 lenders have failed according to the Implode-O-Meter.

Existing big lenders have absorbed many of those lenders including, most obviously, the subject of this article. Again, the call is, "In a few years there will just be a few lenders."

This time, they may be right. I looked at loan statistics for my market and found that just seven lenders accounted for 50% of the market. I strongly suspect that many of the companies in the other 50% of the market won't be here next year. Indeed, the number eight lender on the list, IndyMac Bank, looks like the next casualty. Well, maybe after 25 years the pundits will finally be right.

With this background in place, in the weeks ahead I will talk about what this means to consumers.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles. Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

Protesting the 'Toxic' Spread of Higher Fees and Rate Hikes

SEIU, the Service Employees International Union, is organizing demonstrations in six cities today to call attention to the abusive credit practices of our country's largest lenders, including Washington Mutual (WaMu). Protestors in Ft. Worth, Houston, Los Angeles, Miami, New York City, and San Francisco will be wearing HazMat suits and carrying signs that detail the spread of the "greed virus" -- skyrocketing credit card interest rates and "obscene" overdraft and late fees.

Another purpose of SEIU's protest is to deliver a warning about what it sees as the 'toxic' combination of giant private equity firms with banks. In June, WaMu joined forces with the Texas Pacific Group (TPG), a private equity firm "known for squeezing returns as high as 20-30 percent or higher over relatively short periods," according to SEIU.

The union, which represents health care, property services, and public service employees, believes that such a partnership can worsen the banking crisis. "Private equity firms may squeeze their returns from troubled banks through higher fees, and increasing interest rates as well as unfair lending practices."

So don't be surprised if you notice people in HazMat suits near a WaMu branch when you're out and about at lunch time. I hope you'll stop by and thank them for publicizing these issues. As a child of the 60's, I love the notion of protests like this one, which calls attention to a serious problem in an ingenious way. What do you think?

Nancy Castleman – Co-author of "Invest in Yourself: Six Secrets to a Rich Life" and founder of Good Advice Press. Nancy has spent the last 23 years teaching people how to get out of debt, save money, and live better on less. She writes on all these subjects for CreditBloggers.com.

Are We Really Driving Less?

Last week on CNN's Issue #1 there were several pieces about how people are driving less (locally or longer trips) to save fuel.

I don't know where these people are -- but maybe I don't see them because they are not on the road.

Instead I see fuel foolishness every day. After running a few errands this week, for example, I pulled up to Chick Fila to pick up lunch for my daughter and her friend. We were short on time and they were still in their jammies (no summer camp that day!) and so I planned to run through the drive through.

But it was 12:15 and I counted 17 cars idling in line for the drive through. So instead I let the girls wait in the vehicle (ignition off) while I ran in to grab their food.

I expected the inside of the restaurant to be jammed too, but instead I was able to go right up to the counter, place my order, and walk out about 5 minutes later.

In the meantime, the long line of cars continued to snake through the drive through one by one. All of them were idling, and wasting gas because their drivers refused to just get out and walk a few feet to get their lunches. (Most cars had only one adult in the them.)

Last week I was astonished when twice I went to the gas station and saw drivers leave their trucks running while they went in to make purchases in the station's convenience store. People still let their trucks or cars run while they are not in them??

Now I have wasted plenty of money in my life (more than I care to count) but I just cannot see wasting money on fuel. Especially not now, when we are fighting wars over oil, talking about drilling in our pristine wilderness areas, and when people in our country are being forced to choose between fuel and food.

Come on folks. Let's turn off our engines and use our legs a little more!

Gerri Detweiler – Personal finance author, radio host and credit expert. Gerri contributes budgeting, debt recovery and savings information online.

Funny Money Friday: The Amazing Shrinking Groceries

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

If the rising cost of gas isn't enough to get your goat, here's another reason for your blood pressure to creep up: Grocery manufacturers have been quietly shrinking the size of their products and keeping the prices the same.

That's right, your weekly bag of groceries is getting lighter. To combat rising expenses and inflation, many manufacturers have started dropping a couple ounces from their packages without notice.

The Consumerist has been keeping a running tab of products hit by the "grocery shrink ray" including diapers, yogurt, cereal, chips, beer, cat food, garbage bags, juice, ice cream and more. Some products are shrinking by as much as 25%. You're left with paying the same price, but getting less.

For Funny Money Friday, we've thought of some other ways this "shrink gun" idea could be leveraged for solutions to America's problems:

• We won't have to pay $5 a gallon if a gallon shrinks down to only 3 liters. It's a minor .78 litters difference and would lower the cost to $3.70. Think of how happy the lower price could make you!
• What job losses? American companies have just been shrinking down to "fun size" for the past six months.
• Chop off the extra bedroom from your suburban home and that 30% drop in your equity won't seem so bad after all.

On the plus side, between the rising cost of gas forcing people to walk or bike more and shrinking food sizes we may just be winning the war on obesity!

Emily Davidson – Credit.com's financial expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.