27 January 2008
Pay it Down
Pay it Down by Jean Chatzky
Cost of a $20,000 Loan
| Score | Interest Rate | Monthly Payment | Total Interest Paid over 30 Y. |
| 720-850 | 4.931% | $460 | $2078 |
| 700-719 | 5.659% | $467 | $2396 |
| 675-699 | 7.894% | $487 | #3389 |
| 620-674 | 10.808% | $515 | $4722 |
| 560-619 | 15.126% | $558 | $6779 |
| 500-559 | 18.530% | $593 | $8467 |
How your Credite Score is Computed
35% of your score is based upon how well you pay your bills (on time)
30% is a measure of how much credit you have available to you and how much of that credite you're using. Why? Think of the percentage of credit you're using now--your credit utilization--as a fraction. See below.
-cancelling cards will have a negative impact on your score. E.G.:
Credit you're using
---------------------- = Credit Utilization
Credite avail. to you
--You have 10 cards and each of those has a $1,000 limit. You have $10,000 in revolving credit available to you. Now suppose you're only using five of your cards and that those five cards are all maxed out. You're using half of the credit available to you, which puts your credit utilization at 50%:
$5,000
---------- = 50%
$10,000
--If you decide you dont' need all of those cards, you dramatically reduce the credit you have available to you. Now your'e using all of the credit you have available, which puts your credit utilization at 100%
$5,000
---------- = 100%
$5,000
--This level of utilization could send your score down by 100 points.
10% is based on your search for new credit--how recently you have opened (or inquired about opening) new accounts.
10% is the financial composition of your file: what percentage is back-card debt and what percentage is installment debt?
15% is a measure of the length of your credit relationships: how long have you had the cards in your wallet? (longer=better)
How Long Negative Info Stays on your Record
-Late Payments :: 7 years
-Debt management plan (through credit counselor) :: 7 years
-Chapter 13 Bankruptcy :: 7 years
-Chapter 7 Bankruptcy :: 10 years
-Where to find good balance transfer offers: bankrate.com & cardweb.com
-Check the Schumer Box to compare credit card offers and compare the following:
-the APR after the teaser period
-the formula for computing a variable APR
-the length of the grace period (look for 25+ days)
-the annual fee
-the minimum finance charge
-the transaction fees (for cash advances, balance transfers, etc.)
-late/over fees
-the moethod used for computing your balance (from best to should-be-avoided: adjusted balance; average daily balance; two-cycle balance)
Debt Collectors are NOT Allowed to:
-call you before 8am and after 8pm
-use deceptive, unfair or abusive practices when trying to collect their debts
-threaten litigation if they don't have the right to sue you (creditors have the right to sue, collectors don't)
-lie to you if they're trying to collect a debt by telling you they're going to throw you in jail or contact your boss
-call you on the job if they know (b/c you're a teacher, for example) that it's not possible for you to take these calls at work
-call you on the job if they know your employer has prohibited it
-threaten to garnish your wages (they can't do that unless they have a judgment)
Address, Phone No. & Web Sites of the Three Major Credit Bureaus
Equifax in the South and Southeast; TransUnion in the North and Northeast and Experian in the West.
TransUnion
P.O. Box 390
Springfield, PA 10964-0390
800-916-8800
www.tuc.com
Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
www.equifax.com
Experian
P.O. Box 949
Allen, TX 75013
www.experian.com
recorded at 00:59
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