Your credit score hurts more than your credit

At a party this week, I was chatting with a friend. She relayed to me a story regarding her credit which serves as a good cautionary tale to all, the gist of which is this: your credit score can affect more than just your the rate on your cards.

You see, companies have figured out that FICO scores are good predictors of who will pay their bills on time. Insurance companies have started giving discounts to customers with higher scores on the notion that they will pay on time and are generally more responsible. Actuarial data tend to support this. Of course, we could easily look at it the other way: that insurance companies penalize those with lower scores by raising their premium.

Max out your friends, not your credit card

A guy I worked with years ago (circa 1991, a time when a young Victoria Jackson was teaching America to laugh and Sergeant Slaughter finally defeated Ultimate Warrior for the WWF championship belt) told me about how when his father was a young salesman he was part of a "suit financing ring". Each ring would have, say, 10 friends or coworkers. Basically each person put in $5 a month. At the end of each month, one person would get a new business suit (10 people putting in $5 a month would give the fund $50 a month and I guess back then a good business suit would run you about $50). After 10 months, everyone had a new business suit and the cycle would continue.

Is buying bird seed for the birds?

Last week NPR's Planet Money podcast had an interesting piece about how credit card companies judge your ability to pay (whether or not you're a credit risk) based on what you're actually buying. The show noted that a Canadian retailer called Canadian Tire released several examples.

Credit Reports

Sing it with me, you know the words:

"F-R-E-E that spells free, credit report dot com, baby..."

The commercials are catchy, quirky and make a good point- check your credit reports or you won't discover things that may negatively impact your score. So is freecreditreport.com the place to do this?

What does it take to get a credit card in America?

When I was living in Seattle (well, technically a suburb called Kirkland) I used to get a lot of pre-approved credit card offers. I don't mind junk mail as long as it is easy to visually sort. I had a wood-burning fireplace and junk mail provided a few extra BTUs of free heat in winter. Most credit card offers came in gaudy envelopes. Whoosh right in the fireplace. Discover Card, however, put their offers in plain white envelopes without anything on the outside of the envelope to identify the mail was coming from Discover Card. The only thing printed on the envelope (besides my address and a nondescript, generic return address) was a small warning that time sensitive information was in the envelope and it should be opened right away. It appeared, for all intents and purposes, like an important notice from the government. Being a foreigner in America post-9/11 and with a green card application in process that appeared to have been shelved following 9/11, I was rather sensitive to making sure I didn't miss anything coming from the government about staying in compliance with my H1B visa or things I might have to do for my green card.