• CASINO: Don’t Gamble with Credit

“The longer they play, the more they lose, and in the end, we get it all.”

‘Credit Card Companies are out to make Dough.’ Just like in casinos, the House always Wins. So, Don’t gamble with your credit score and play by the rules. Aaron Patzer, Vice President of Personal Finance at Intuit, offers the three tips below to ‘stay alert for anyone who might try to blow up your credit score:’

• Hire Informants to Watch Your Back:
  • “Set up bill reminders with lenders to prevent late payments, which have the biggest impact (up to 35%) on your credit score.”
  • Steal Your Credit Report:
    • It’s free, so there is no crime! Carefully check report for any errors –“they can be like brass knuckles to your score.”
    • Diversify Your Operations:
      • “A good mob boss diversifies. About 15% of your score depends on your credit mix – credit cards, auto loans, and mortgages.”

Whatever your financial situation is, make sure to, “Keep a close eye on what’s yours and never underestimate the other guy’s greed.”

Tags: CREDIT, Credit card, credit cards, Credit Score

GOODFELLAS: You’re on Your Own

“Everyone had their hands out. Everything was for the taking. And now it’s all over.”

Everything was for the taking in Goodfellas, and “Until recently, money was easy to come by,” says Vice President for the National Foundation for Credit Counseling, Gail Cunningham. She further advises, “Now interest rates have gone up, credit lines have been lowered, annual fees have been added on, and accounts have been closed.”

Cunningham then compares credit scoring to the paranoia from Goodfellas. The main character, Henry Hill, says in the movie that those who desire to murder you, “always seem to come at a time that you’re at your weakest and most in need of their help.” Cunningham says of Henry Hill’s quote that, “The credit scoring model is similar – pay on time or you’ll suffer immense pain!” – But it will be financial, not physical pain, as ‘it will be a lower credit score – not the muscle – that comes knocking.’

The feeling of desperation and paranoia that Henry Hill feels in Goodfellas is not un-relatable. The article advises that, “When you’re strapped, you might be tempted to utilize payday loans and non-traditional forms of credit that are willing to do business with you…for a price. Instead create a budget, track spending, and try to save.”

Cunningham adds that, “Lack of savings often delivers the financial knock-out punch, causing people to make decisions that aren’t in their best interest.” Just like the paranoia felt by Henry Hill caused him to make decisions that weren’t in his best interest.

Tags: CREDIT, Credit card, credit cards, Credit Score

• THE DEPARTED: If It Looks Like a Rat, It Probably Is

“If you had any idea of what we do, we would not be good at what we do, now would we?”

“’This quote sounds like the guys who created credit score algorithms,’ says Huettner, who acknowledges that the ways to improve your score are often opposite of what you might think.” Below are some examples:

• DO Open a New Account:
  • “If you don’t have much credit, add some. You need breadth and depth – at least three cards open for at least two years. Boost your score further – get approved for a limit that’s double or triple what you plan to charge on the card.”
• DO Close Accounts:
  • “You don’t need a charge card for every store at the mall. Open accounts will show you can manage credit, but too many cards (more than 10 or 15) are suspect.”
• DO Use a Credit Card:
  • “Make a charge to one or two cards twice a year. Pay them immediately. Demonstrate that you can manage your credit.”
• DON’T  use a Credit Card
  • “Having unused cards helps your utilization rate, showing you can have access to credit and not use it.”

Further, Algazi says, “It’s never the amount of money you owe that takes your credit score. It’s always your debt utilization ratio—the amount of your overall available credit you’ve used up. The higher your ratio, the lower your score. The ratio gives a general idea of the leverage of the individual along with the potential risks the individual faces in terms of debt load.” The article further clarifies the idea of the debt utilization ratio with the following example:

• “A $10,000 combined credit limit on three cards and $7,000 in credit card debt means your utilization ratio is a high 70 percent”

While Credit Card companies won’t break your legs, but if you misuse your credit cards, they will run right to the credit bureaus and ruin your financial reputation.

Tags: CREDIT, Credit card, credit cards, Credit Score

• THE GODFATHER: Be Wary of Favors

“I’ll make him and offer he can’t refuse.”

A common idea is that if something is too good to be true, it probably is. If the Godfather made you an offer you couldn’t refuse, it may not have been the best deal. “Unless you have a gun to your head, think twice before signing up for a rewards credit card.” The offer may seem too good to be true, and often is. “Real Estate lender Todd Huettner, president of Huettner Capital, says, ‘Card promotions can lower credit score more than other cards.’” Further, Solomon Algazi of Credit Servicez says that, “Every new card requires a credit inquiry and disturbs the average age of your file, both of which ding your score.”

So, be wary of all the enticing rewards and rates that credit cards can offer. Huettner says that, “Most interest-free periods are costly, with rates of over 20% if the balance isn’t paid in full by the end of the promotion. They offer these discounts to make money on finance charges.”

Huettner further advises to, “Only use the promotional card that saves you money if you have money to pay of the purchase immediately.” However, if you miss the payoff date, it may cost you an arm and a leg, hopefully not literally.

Tags: CREDIT, Credit card, credit cards, Credit Score

Taken from Mint.com, Five financial experts show how the words and ideas from Five Gangster Movies can be used to show helpful lessons about one’s credit. Below are the five movie examples from the website. I will showcase one movie a day for five days, each with a theme and a pertinent, yet famous, quote from the movie that characterizes the lessons learned from both the Gangster Lifestyle and the idea of one’s credit.

• SCARFACE: The World Is Yours…..If You Don’t Get Cocky

“Say hello to my little friend”

And, that little friend is a massive machine gun of Tony Montana, Scarface himself. But just as any gun or weapon is powerful, so are credit cards. The power brought on by credit cards can open up doors you never thought possible, but they can also hurt you in ways you never imagined.

“Denise Winston, money expert for Money Start Here, says, ‘Just because you own a gun doesn’t mean you know how to use it.’ The same principle applies to credit cards. ‘Respect it, practice using it, clean it, and keep it in a safe place….maybe even under lock and key.’”

And with a reverence like that, one can successfully use a credit card. But always be wary. “Having credit cards can lure you into a false sense of security.” But to avoid that, the best protection is a good credit score. Winston advises that, “Managing and protecting your credit score can make deals happen and command respect.” And we all want to command respect. Scarface certainly did.



Tags: CREDIT, Credit card, credit cards, Credit Score