Credit 101

April 14th, 2008

I had the opportunity to sit down and talk with Kimberlie Hooker from Andorra Credit Repair (www.andorracreditrepair.com). We discussed the basics of credit including topics such as identity protection, credit scores, myths of credit and many other topics regarding credit.

One thing she made very clear was how important it is to know what impacts your credit score. Things like late payments can impact your credit score 50-100 points. She stresses the importance for college students to know what impacts your score and knowing how to build good credit. She also talks about the importance of protecting your identity. Websites such as www.optoutprescreen.com can stop the pre-approved offers from coming to your mailbox. Another important protection is the option to enact a security freeze on your credit report. The security freeze prevents anyone from pulling your credit score without a pin number that you are provided with once you use a security freeze.

Hooker suggests that a revolving credit card is a good way to build credit. But she stresses the importance of not maxing out your cards, only using up to 30% of the available credit and making your payments on time. Other forms of credit such as a car loan help to build credit as well. If someone has issues with their credit, they could also try a secured credit card.

It’s important to remember that credit impacts a lot of things in your life such as buying a home, getting a car, even getting a job.

Pay attention for the next credit installment, FICO Scores and Everything About Them with Kimberlie Hooker, which will be available next week.

Post a comment if you have any other questions about credit or suggestions for other shows.

- Kelsey Balcaitis, Talking Cents Team Member

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What’s Happening with the Economy?

March 12th, 2008

Today I had the opportunity to sit down with Steve Rick, a senior economist with Credit Union National Association in Madison and an Econ 102 professor at the University of Wisconsin Madison. We had a great discussion about the current state of the economy and how the economic crisis will affect students.

Steve mentioned the problems with the credit crunch. The credit crunch is when lenders are more hesitant to lend money to consumers. This means that consumers cannot get the money needed to help stimulate the economy. He described how from 2001 until 2003 the economy was in need of economic stimulus, so the government lowered the rate at which banks can borrow money (called federal funds rate). This lower rate allowed a large amount of money to become available for lenders to give out to people, which eventually led to a lot of the problems we are experiencing today such as the housing boom and bust, the credit crunch, and the potential for a recession.

Steve believes, along with a lot of other economists, that the United States economy is in a recession, but states that you can never know if you are in one usually until after it is over. However, he does believe that this recession will be longer and more severe than past ones. He says that the Fed might continue to lower rates below 2% and that the economic stimulus package from the government in the form of increased tax rebates may not have the intended affect the government would wish for. He believes that the money to fund these rebates will most likely come from borrowing from other countries, such as China or Japan. The government would like this money to be spent on goods from the United States to help stimulate our economy, but Steve says that many economists believe that this money could go back to China or Japan as US consumers spend the money on foreign goods.

The credit crunch will also affect college students. With the hesitance of lenders to loan money to consumers, college students might see increased rates in student loans or have more difficulty in getting money to pay for college. Credit card companies are also starting to lower limits, increase rates and increase fees and penalties. All of the issues affecting the economy will have the potential to affect college students in some way or another.

Click below to hear the whole interview. -Kelsey Balcaitis

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