Car Financing

Securing financing before you go to the lots allows you to have the bargaining power of pre-approved finance when searching for your vehicle. Remember that the longer you borrow the money, the more it will cost you. Try not to borrow too much and make sure you don’t borrow an unreasonable amount that you can’t pay back. Try to pay as much as you can up front – in cash or as a trade-in – and pay less interest. Several ways to get financing is via the internet (see resources), your local bank or credit union.

* How low is the interest rate?

* What are the annual fees?

* Can you make extra repayments without being penalized.

* Are you covered with the payments if you get sick or injured?

* Do you have a good credit rating?

Thoroughly investigate your loan and always make sure you look at the total cost of the loan as a higher interest rate can sometimes be better than a loan with a low rate but with a lot of hidden fees!

Leasing

Leasing enables you to lease a more expensive car than you could afford to purchase. The lessor (usually a bank or leasing company) buys the vehicle from the dealer or manufacturer and then leases it to you. You, in turn, pay the lessor for the right to drive the vehicle during the term of your lease. When you buy a car you pay for the entire price of the car. When you lease, you pay for the depreciation, acquisition fees, negative equity on a trade-in and after-market products (such as extended warranties) over the lease term.

A vehicle with a 20,000 price tag can be leased for three years with nothing down and a monthly payment of $385.00 or bought over the same period for $2,500 down and a monthly payment of $595. Sounds like a good deal but we got to remember the buyer owns the car and can claim the equity in it.

Car Insurance

There are several ways to get insurance: by phone, the internet or you can go to a insurance agent. Every policy is different and each insurer uses a different set of criteria in determining insurance premiums. Criteria for how much your premium will be is determined by where you live, age or sex and sometimes even your credit rating. Remember, the higher the risk, the higher the premium.

* Some other things they look at:

* Make, model and age of your car.

* Whether your car is driven for business or privately.

* The age of the drivers.

* Your driving record.

* Whether or not the car is financed.

* If there are any theft deterrents on the car.

* The number of miles that you drive per year.

Bodily Injury Liability:

Covers other people’s bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. Bodily injury liability covers injury to people, not your vehicle, not you or other people on your policy. Remember to review the terms and conditions contained in the policy. It is mandatory in most states.

Property Damage Liability:

Covers you if your car damages someone else’s property. Usually it is their car, but it could be a other property damaged in an accident such as a house or a fence. It also provides you with legal defense if another party files a lawsuit against you.

Comprehensive Coverage:

Covers your vehicle from incidents other than collision such as if it was stolen, fire, flood, or animals. A higher deductible can substantially lower the cost of insurance premiums but it means you pay more out of pocket if an incident happens. This is not required by most states, but if you have a loan or a lease they will require it.

Collision Coverage:

Covers damage to your car when your car hits, or is hit by, another vehicle or object other than a car. This coverage pays to fix your vehicle after you pay the deductible. This is not typically required by a state, but if you have a loan or a lease they will require it. .

Uninsured and Underinsured Motorist Coverage:

Covers when property damage is sustained by an driver with no insurance or is insured, but the limits of liability carried by the driver are not sufficient to cover the damages.

GAP Insurance:

This is insurance that pays the difference after you car has been totaled. For example your car is worth $3000.00 but you still owe $3500.00 to a lender. The Gap insurance pays for the difference.

Equifax Inc. is one of the top three consumer credit reporting agencies, including Experian and TransUnion. Founded in 1899 as Retail Credit Company, by 1920 it had offices in the United States and Canada, and by the 1960’s protected millions of credit histories. It changed it’s name from Retail Credit Company to Equifax in 1975 and is traded on the New York Stock Exchange as EFX. It is a Standard and Poors (S&P) 500 company. The company corporate headquarters is in Atlanta, Georgia but it has over 4000 employees in 13 countries and reports $1.4 billion in revenue.

Equifax has had its share of criticism and has been fined by the Federal Trade Commission twice for violations of the Fair Credit Reporting Act. In the years prior to the Fair Credit Reporting Act, the criticism involved the extensive and invasive nature of the information that Equifax was gathering about consumers. At this point it was still called Retail Credit Company, and it gathered and sold information, whether true or rumor regarding private information such as marital status, employment history, sex life and political affiliation. Additional criticism occurred because of allegations that they were not only encouraging their employees to obtain this information by any means necessary, but they were also willing to sell it to anyone willing to pay.

This complaints and the advent of computerized records led to a hearing by the U.S. Congress on the subject of consumer information: what can be obtained and who it can be provided to. As a result the Fair US Credit Reporting Act was enacted in an effort to protect consumers from unlawful gathering of private and inappropriate information, as well as providing rules for the release of this information.

Equifax has been fined twice by the Federal Trade Commission for violations of the Fair Credit Reporting Act. The first instance involved all three major credit reporting companies (Equifax,Experian, and Transunion) for an amount of $2.5 million dollars for charges that they were not providing customer service during phone call inquiries for information and copies of a consumer’s credit report. Apparently they did not learn their lesson as Equifax was again fined the sum of $250,000 for identical infractions of the Fair Credit Reporting Act.

Recently Equifax introduced a 3-1 Monitoring System. For $12.95 a month, consumers will receive monitoring of their credit report for all three major credit agencies of Equifax, Experian and TransUnion; automated and customized alert notification of changes to any of these three credit agency reports; unlimited access to their Equifax Credit Report; $20,000 Identity Theft Insurance policy with no deductible although certain limitations and exclusions apply and a customer service center 24 hours a day, 7 days a week.

Several different additional services, like Score Power, are also available and vary in type and cost from $8.95-$39.95. ScorePower is one such service which provides access to your FICO or “credit” score (not all reports provide your score, just a listing of creditors and financial information); and explanation of that your score means, how credit lenders see your credit information; a comparison of your score and the ability to use the Equifax online dispute feature free to dispute errors on your credit report. An “Interactive Score Simulator” is also available allowing you to virtually determine how your future financial decisions (buy a house, car or add a credit card) may affect your credit score.

Some consumers may feel that the price of $12.95 a month ($155.40/year)
is not a good value for the money and services offered. Consumers should take into consideration that one free three agency credit report is available to them each year, however additional reports may cost approximately $10.00 each. The Equifax service does offer some advantages such as customization, wireless alerts, identity theft insurance and convenience.

Most people know they have a consumer credit score, but few realize there is a similar ranking used by auto and property insurance companies to rate a customer’s potential liability and it is key to getting affordable auto insurance.

Fittingly, this is called an insurance score, but it takes into account more than just how promptly you pay your bills. It also incorporates data such as how many claims you’ve made on past policies, how frequently and how costly they’ve been to previous insurers.

This score has a dramatic impact on the cost of your auto and property insurance premiums. According to Robert Hartwig, president and founder of the Insurance Information Institute (www.iii.org), a nonprofit agency designed to help consumers with insurance questions, “These scores are basically credit information that an insurance company uses from your credit profile, but they then take that and relate it to actual information regarding your claims history or your legal history.”

In other words, do you have a habit of suing people? Fair or not, those things factor into your insurance score. There’s almost nothing you can do about it, other than keep your credit in tip-top shape and try to avoid making multiple claims.

“People with poorer credit tend to be associated with relatively higher losses to insurance companies,” Hartwig says. “That group . . . can incur more claims or more costly claims, or both.”

Hartwig says this is different than a credit score because of the manner in which information is used. “Insurance companies don’t need all the information that’s in a credit score. The insurer only takes information that correlates with what it needs to determine. They’re looking to maximize the correlations between credit information and loss information. If [people] tend to be financially responsible, they tend to not be reckless behind a wheel, they tend to maintain their homes, things like that.”

Perhaps the most interesting thing about insurance scores (and the most disconcerting) is that you can’t change themat least, not in the short-termbecause your ranking factors in cumulative information over a period of years. Moreover, you can’t find out what your score is because each company considers the method by which it ranked you to be proprietary.

“You can’t find out because each company makes their own insurance score,” explains Jeanne Salvatore, senior vice president of public affairs at www.iii.org. “Each insurance score also uses credit differentlysome might just use it in applications and some give it greater weight than others. Underwriting (how a company determines who to insure and for what price) is very proprietary. That is how insurance companies competeby being able to price the product better than the next guy. If they gave that away (how they rank individuals) they’d be giving away some part of their trade secrets.”

So, what exactly can a person do with this new fact of insurance scores? Is your collision coverage too high because of it? Why do you need high risk car insurance?

“As a consumer, what you should be doing is shopping around, shopping for a good rate, because that ultimately is what you want to do anyway,” Salvatore says.

And it’s the best way to ensure you get the most affordable auto insurance possible.

That and drive safely!

Dun & Bradstreet operates the largest business database in the world, with information on over a hundred million businesses worldwide.* This includes thirty-eight million in the US. Dun & Bradstreet is far and away the number one provider of business information concerning marketing, credit and purchasing decision-making. Currently, over a hundred and fifty thousand businesses of many sizes depend on D&B for the insight needed to build and maintain profitable business relationships.

The information found in the D&B database is compiled by gathering millions of bank and trade transactions, business owner info, public utilities, federal bankruptcy listings, and all the offices of the US Secretaries of State. They also go over hundreds of magazine, newspaper, trade publication, and electronic news to gather data. In addition, they conduct millions of interviews, with managers and businesspeople. They can attain up to as many as fifteen hundred data elements compiled on a particular company.

Overall, over two hundred million financial transactions are added to D&B’s database annually. They update the information on a continual basis; one and a half million times each business day, to be sure the information is the most current available.

It’s a good idea to manage your business’ credit as this credit rating can either save or cost your business money.

Have you ever been denied a loan? Have you been required to pay a high insurance premium? Have you been required to pay cash on delivery to receive supplies?

If you’re not exactly sure of what is in your credit profile, you can’t really be sure if your company is being presented in a favorable way. A bad or absent credit profile can affect your bottom line directly. Having good credit is a lifeline to your business. This will let you find the funds to expand, make capital expenditures, create research and development, and hire staff. Your future growth is dependent on this rating, along with access to the cash needed to survive. Maintaining a good business credit rating also let you keep cash on hand to cover your costs, and this kind of liquidity will allow you quick response to situations that are time sensitive – without the need to wait or pause operations.

Business credit has become the main method of setting the terms of business loans, lease payments, and insurance rates. Maintaining excellent credit can help your business earn lower rates and improve cash flow. Your credit record is the main method which companies will determine if they want to do business with your company or not – and, on what terms. These companies will depend upon your creditworthiness in order to make important decisions. These decisions include whether or not to sell to your business, lend money, accept you as a partner, increase a line of credit, lease equipment, extend favorable rates of financing, and determine if you compare well against competitors in your field.

A number of business data points are included in business credit: date began, experience of executive leadership, annual sales figures, and the total number of employees. This info is listed with the credit profile, as well as ratings and scores which have been determined though the past behaviors of your business. For example, past willingness to pay bills is factored into determining the likelihood that you will pay bills in the future. The overall credit worthiness of a business is determined by the four Cs of credit: character, capital, capacity and conditions.

Character includes the total number of years operating in business, workforce size, willingness to share information, judgements or law suits, coverage in the media, stock market valuations, and comments from relevant references.

Capital determines if a business has the resources necessary to repay creditors. Generally, this part of the credit report is most important in the review of an analyst. Top importance is attributed to items including net worth, working capital amounts, and cash flow.

Capacity refers to a company’s ability to satisfy its accounts payable. This also covers the debt of the company and how it is structured, including unused credit and defaults.

Conditions are the outside factors which surround the company. These include industry growth, market changes, political or legal factors, and currency valuations.

Loan officers and credit managers answer these sorts of questions by reviewing information supplied by customers, banking information, trading information, and requests for credit check information. The process is quite like that of gaining personal credit. If you’ve ever opened a banking account, financed an auto, or used a credit card, you have a personal credit file. This info intends to help you locate the funds to operate your household. Still, not all businesses have a credit profile; this is why some creditors check the personal credit of small business owners. If you want to reduce your personal liability and operate a business, it is preferable to establish credit for your business and use this to run it. Using personal credit to obtain funds to operate your business could pose some problems.

The bottom line is that other businesses need to take note of your credit profile regardless of the size of your company. You too, need to understand your own business credit profile, to understand how creditworthy you appear there. All transactions affect your profile. On-time payments help keep the cost of borrowing low. The information about new and old companies are equally available, obtained from numerous sources and added into your compiled profile. Make sure this information is true, accurate and updated. A strong credit score can help you maintain favorable rates, and affect your overall cash flow, the lifeblood of a business.

*The information provided in this article is strictly for informational purposes only. Please consult with your financial advisors regarding any aspects of your credit profile.

A credit rating is simply someone’s assessment of how well you would be able to pay back money lent to you. Usually, that “someone” is a credit reporting agency; however, creditors themselves will also make their own assessment, which is usually based on the score you receive from the credit reporting agencies and is determined by requirements that vary a great deal from one creditor to the next.

Credit can be established in a number of ways. Perhaps the most common is the opening of a credit card account. In some cases, a secured card (a card that requires you to pay money into an account the creditor controls before you receive a card) may be the way to establish credit initially. You can also use low balance store cards or gas cards that let you prove that you can pay your monthly payments back, before qualifying for a larger balance credit card.

Again, credit is just one person’s or one entity’s estimation of your ability to repay what you borrow. Once you’ve established one or more trade lines on your credit, your score will be more directly related to the percentage of credit you carry as compared to the total amount you could carry and your payment history on the trade lines you have. A trade line is any credit account where you have borrowed money and are paying it back such as a credit card, home loan, or signature loan. All your open trade lines and some of your closed ones will show up on your credit report.

As mentioned above, the amount of debt you are currently carrying when compared to your max debt is one factor that figures into your credit rating. If your max debt, or credit limit, is $10,000 and you are carrying $8,620, you’re currently carrying over 80% of your max debt, which is more than the credit reporting agencies like to see.

Payment history is another factor the agencies use to determine your score. Your payment history is the trend you set when it comes to paying off your debt, either an on-time minimum payment every month or a less-than-minimum payment, late payment, or other problem even one time. If your payment history isn’t spotless, it can cost you points on your credit score, and may cost you money the next time you try to get a loan.

The length of time your trade lines have been open will also affect how your score is established. Closing old trade lines in favor of new ones won’t help your score, since your payment history on the new trade lines won’t be as long as it was on the old, giving the credit reporting agencies less on which to base your credit score.

Credit and your credit score have everything to do with your usage, management, and payment habits pertaining to the trade lines on your credit report. Be wise in the handling of these trade lines and your score will rise. Make poor decisions and your credit will suffer. Your credit rating is important when it comes to financing cars and homes, shopping for insurance – even when interviewing for some jobs. You’ll want to present the most responsible picture, and that means having excellent, well-established credit that speaks for itself.

For more articles on credit rating and how is it established, visit http://www.bills.com/establish-credit-rating-article/

Everyone knows that it can be extremely difficult to work with an insurance company after an accident. Sometimes, it feels as if you and the insurance provider are speaking two different languages. Often times, insurance companies will use certain “tricks of the trade” to avoid paying your claim. The tricks seem simple enough, but can end up costing you a large amount of money.

One such trick insurance companies use is confusing their customers. Insurance policies are written in incredibly difficult and dense language. Unless you are familiar with difficult legal and insurance jargon, these policies are nearly impossible to interpret. The South Carolina State Supreme Court said it best: “Insurers generally are attempting o convince the customer when selling the policy that everything is covered and convince the court when a claim is made that nothing is covered.”

In an effort to aid consumers, lawmakers have passed “plain English” laws that require contracts to be written more simplistically. However, many Americans are still not fully aware of the intricacies of their insurance policies and contracts. Insurance companies still use obscure language in their contracts to confuse their clients.

Another trick in the insurance companies’ arsenal is using your credit score against you. Your credit history can have a harsh effect on your premium costs. Sometimes, your score can even prevent you from qualifying for any insurance at all. This can hurt many people, even those who are fiscally responsible. For example, many people pay all their bills on time but do not have extensive credit records. Those who have not borrowed much money over the years may have lower credit scores by no fault of their own. Yet insurance companies may use this as an excuse to demand higher premiums.

Using credit scores as a measuring tool can be detrimental to many. Some people find themselves in financial straits from time to time. Insurance companies use these rocky times in a person’s financial history to justify increased premiums, assuming a poor credit score equates to a poor or irresponsible driver.

Another problem with this method is that credit scores can sometimes be unreliable. A recent study found that 79% of credit scores contain errors. The same study reported 25% of those errors were very serious. Also, relying on credit scores to determine premiums is disadvantageous to the poor and to minorities, many of whom do not have enough of a credit history to create a credit score.

These tactics insurance industries use can be harmful to the average consumer. Make sure you are not caught unaware by your insurance provider.

Mail Call: Bills, a letter from your Aunt Mary, a circular from a local department store, your monthly bank statement, and an offer for a new credit card that says you’ve been “prescreened” or “prequalified.”

A “prescreened” offer of credit? What’s that?
Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer. Prescreened offers sometimes called “preapproved” offers are based on information in your credit report that indicates you meet criteria set by the offeror. Usually, prescreened solicitations come via mail, but you also may get them in a phone call or in an email.

How does prescreening work?
Prescreening works in one of two ways:

a creditor or insurer establishes criteria, like a minimum credit score, and asks a consumer reporting company for a list of people in the company’s database who meet the criteria; or

a creditor or insurer provides a list of potential customers to a consumer reporting company and asks the company to identify people on the list who meet certain criteria.

Can prescreening hurt my credit report or credit score?
No. There will be “inquiries” on your credit report showing which companies obtained your information for prescreening, but those inquiries will not have a negative effect on your credit report or credit score.

Can I reduce the number of unsolicited credit and insurance offers I get?
If you decide that you don’t want to receive prescreened offers of credit and insurance, you have two choices: You can opt out of receiving them for five years or opt out of receiving them permanently. Call toll-free 1-888-5-OPTOUT (1-888-567-8688)for details. The telephone number is operated by the major consumer reporting companies. When you call you’ll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.

Remember that if you have joint credit relationships, like a mortgage or a car loan with a spouse, partner, or other adult, you may continue to receive some prescreened solicitations until both of you exercise your opt-out right.

Why would someone opt out or not?
Some people prefer not to receive these kinds of offers in the mail, especially if they are not in the market for a new credit card or insurance policy. They may prefer to opt out to limit access to their credit report information for credit and insurance solicitations, or to reduce some mailbox “clutter.” However, some companies send offers that are not based on prescreening, and your federal opt-out right will not stop those kinds of solicitations.

As you consider opting out, you should know that prescreened offers can provide many benefits, especially if you are in the market for a credit card or insurance. Prescreened offers can help you learn about what’s available, compare costs, and find the best product for your needs. Because you are pre-selected to receive the offer, you can be turned down only under limited circumstances. The terms of prescreened offers also may be more favorable than those that are available to the general public. In fact, some credit card or insurance products may be available only through prescreened offers.

Does opting out hurt my credit score?
Removing your name from prescreened lists has no effect on your ability to apply for or obtain credit or insurance.

If I decide to opt out, how long will it be before I stop getting prescreened offers?
Requests to opt out are processed within five days, but it may take up to 60 days before you stop receiving prescreened offers.

What if I opt out and then change my mind?
You can use the same toll-free telephone number or website to opt back in.

Will calling 1-888-5-OPTOUT stop all unsolicited offers of credit and insurance?
Calling the opt-out line will stop the prescreened solicitations that are based on lists from the major consumer reporting companies. You may continue to get solicitations for credit and insurance based on lists from other sources. For example, opting out won’t end solicitations from local merchants, religious and charitable associations, professional and alumni associations, and companies with which you already conduct business. To stop mail from groups like these as well as mail addressed to “occupant” or “resident” you must contact each source directly.

What other opt-out programs should I know about?
The federal government has created the National Do Not Call Registry a free, easy way to reduce the telemarketing calls you get at home. To register your phone number or to get information about the registry, call 1-888-382-1222 from the phone number you want to register. You will get fewer telemarketing calls within 31 days of registering your number. Your number will stay on the registry for five years, until it is disconnected, or until you take it off the registry. After five years, you will be able to renew your registration.

The Direct Marketing Association (DMA), a trade association for businesses in direct, database, and interactive global marketing, maintains a Mail Preference Service that lets you opt out of receiving direct mail marketing from many national companies for five years. When you register with this service, your name will be put on a “delete” file and made available to direct-mail marketers. However, your registration will not stop mailings from any organizations that are not registered with the DMA’s Mail Preference Service. To register with DMA, send a letter to:

Direct Marketing Association
Mail Preference Service
PO Box 643
Carmel, NY 10512

FCRA or The Fair Credit Reporting Act is designed by the Federal Trade Commission to promote accuracy and ensure privacy of the information used in consumer reports. This is designed to protect the citizen and several commonly asked questions are answered at http://www.pueblo.gsa.gov/cic_text/money/fair-credit/fair-crd.pdf and in several other websites.

The FCRA Act was passes by the US Congress in 1971. The act and its details can be found at the Federal Trade Commission website on the World Wide Web and at local libraries. Read the act at http://www.ftc.gov/os/statutes/031224fcra.pdf.

The act covers various aspects and according to the act:

• Consumers have a right to know what is in a CRA report. And the CRA must furnish a list of all those who have requested for a person’s report.

• An employer can obtain a CRA report only with the approval of the person.

• Creditors and insurers too can only get copies of the CRA report with the approval of the person.

• The CRA by law can report negative information for at least seven years. The exceptions are:

o Criminal convictions may be reported without limitations.

o Bankruptcy information can be reported for 10 years.

o Information reported in response to a job with salary exceeding USD 75000 has no time limit.

o Information reported in response to applications for USD 150000 worth of credit or life insurance has no time limit.

• Credit bureaus must investigate a consumer dispute if they want to challenge credit information on the credit report.

• Only persons with legitimate business can get a copy of the CRA report. For example a person or company can request for a report if a person has applied to rent a property, has applied for an insurance, credit, or employment.

• Individuals can request the CRA to keep their names of lists given to banks, and insurers. This ensures that marketing calls are not received.

• Credit bureaus must complete investigations within a 30 day period and any inaccurate information or unverifiable entries must be deleted from the records.

Consumers have the right to check the reports and point out or dispute any inaccuracies.

Only specific agencies can collate information and create credit reports.

The FTC can be contacted at 1-877-FTC-HELP or people can visit the website www.ftc.gov.

We set the record straight so that won’t happen. Text How many of us have looked at anything offered to us for “free”? Not me? Of course I have. In this day in age when gas prices are listed as “Arm” and “Leg”, providing health insurance for your family costs more than some mortgage payments and the cost of raising kids looks like a hockey stick pasted onto a graph, you bet I look at offers to save money.

Therein lie’s the problem. It seems like the vast majority of American consumers are desperate to cut costs, any costs, and will jump too soon at offers promising to do just that. Sometimes when you combine a cost cutting mentality with the importance of credit, not only to purchase the big ticket items important to us, but more and more to simply survive in this economy, desperation happens. Unfortunately, the marketers know this too. So, without a little education anyone can get confused and the likelihood of being taken advantage of increases significantly. The good news is that just a little education will save you plenty.

Take for example, the term “Free Credit Report”. It now ranks right up there with the ubiquitous, “new” and “improved”. “Free Credit Report” has become part of that lexicon of advertising buzz words that are absolutely meaningless to me. But for many, there is much confusion over this term. Why? I think mainly because it has been announced that federal law dictates we are all entitled to a free credit report on the front page of all the newspapers.

We know everyone wants a free credit report, which is why we started our site. People naturally want something that is mandated by law to be at no cost, is front page news and is so incredibly important to each of us if we want to purchase just about anything. We know people want their free credit report and because most all of us work so hard for our money, we think people deserve hearing the truth about the subject. That is why we even put a section on our page entitled, “The Truth About Free Credit Reports”.

So, is it not true? Yes, it is true, it’s just that the devil is in the details and the resulting confusion has been a bonanza for those seeking to cash in on the confusion. In fact, each of us in the good ole U. S. of A. is entitled to a free credit report. But, how do you get it? Where do you get it? Who is giving it to you? Why is it being offered for free? And most importantly, who cannot offer you one for free?

Who cannot offer a free credit report? Let’s start with the last one first because it shines a lot of light on the rest of the questions. Any company, web site or service that is in business for a profit and is not named Experian, Trans Union or Equifax is not able to provide anyone at any time with anything remotely resembling a credit report free of cost. Period. End of story. Got that? Further, there is one place set up on the web to get free copies of credit reports at no cost and it is: www.annualcreditreport.com . We’ll talk more about this site a little later but, other wise, caveat emptor, let the buyer beware.

How then are these offers being made? Look closely, the “Free” report is usually offered initially upon signing up for a service that charges your credit card each month for monitoring your credit. If you cancel the service just in the nick of time, before the charge is made to your card, you will get it at no cost. What a hassle! And the bet is you will wake up at least one, if not a couple or more months later with several charges to your card. You think these guys make foolish bets?!

Then what caused a free credit report to be offered on the front page of newspapers, who is providing them and how and where do I get one? Due to the importance of consumer credit history, identity theft and complaints from consumer rights groups about having to purchase a credit report in order to gain knowledge about the contents shown on individual consumer reports, even if it was reported inaccurately, a change was mandated.

The Fair and Accurate Consumer Trade Act (FACTA), a revision of the Fair Credit Reporting Act, provided for one credit report free of charge from the reporting agencies (Experian, Trans Union and Equifax) every twelve months, if and only if, you haven’t received a credit report in the previous twelve months. The consumer, by either mailing a written request to the three major credit reporting agencies or going to www.annualcreditreport.com one can obtain the free report if they meet the criteria. This program was and is being phased in to sections of the U.S. by the credit reporting agencies starting in the western states, with the northeastern states at the time of this writing still to come.

However, Pamela Yip of The Dallas Morning News writes that even this has not been without its problems.

“The Federal Trade Commission said Experian Information Solutions Inc., one of the three major credit bureaus, settled complaints that it “deceptively marketed ‘free credit reports’ by not adequately disclosing that consumers automatically would be signed up for a credit report monitoring service and charged $79.95 if they didn’t cancel within 30 days… . With the help of the Federal Trade Commission, the bureaus established www.annualcreditreport.com as the only authorized online source for consumers to get a free report under federal law.

While many consumers haven’t had any problem getting their reports, others say they’ve been hit with sales pitches for products and services from the credit bureaus or were diverted to imposter sites. The FTC said the company led consumers to its www.freecredit report.com and www.consumer info.com Web sites. Radio, TV, e-mail and Web ads promised free reports and “a bonus – free trials of a credit-monitoring service.”

The FTC said consumers “were assured that: ‘Your card will not be charged during the free trial period. However, valid credit card information is required to establish your account.’ ”

What the Web sites didn’t adequately disclose is that consumers would be charged the $79.95 annual fee if they didn’t cancel within 30 days, the FTC said.

“ConsumerInfo billed the credit cards that it had told consumers were ‘required only to establish your account,’ and, in some cases, automatically renewed memberships by rebilling consumers without notice,” the agency said.

As part of the settlement, the FTC required ConsumerInfo.com, an Experian company, to “give up $950,000 in ill-gotten gains.”

Experian also has agreed to provide refunds to consumers who purchased credit-monitoring products and ordered a free credit report between Nov. 1, 2000, and Sept. 15, 2003.

“It’s unfair and deceptive to promise consumers something for free and then trick them into paying for products they didn’t want in the first place,” said Lydia Parnes, director of the FTC’s Bureau of Consumer Protection.

“It wasn’t an attempt to mislead at all,” said Peg Smith, an Experian executive vice president. “We absolutely deny any wrongdoing.” She does acknowledge that consumers may have been confused.

“To the effect that our product offering has caused that confusion, we certainly regret that,” Ms. Smith said. “We encourage consumers to read the language in any disclosure on any Web site, including our own.”

The FTC also requires ConsumerInfo.com to state clearly that its free credit report offer isn’t related to the federal program.” http://nl.newsbank.com/nl-search/we/Archives?p_action=list&p_topdoc=21

The reality is that no one credit report or combination of three credit reports by and of themselves is sufficient to educate oneself about where you stand as a consumer in the eyes of a lender. Imagine a high speed race boat zooming across a lake at top speed without a steering wheel. Where it is going is a complete mystery but one thing is for sure, it will crash and crash quickly unless you get control. That’s right, you. Because without your credit scores and the knowledge about what they mean, how they were calculated or how a lender views them, you are headed for a crash.

No bank, credit card issuer, mortgage company, retail store or any other credit provider will grant you any item, service or product without looking almost exclusively at your credit scores and the average person has no idea what their scores are and even if they did, many if not most, wouldn’t know what they mean.

For example, most people don’t even know that repeated “pulling” of your credit reports by potential credit grantors lowers your scores by as much as four points per “pull”. You start “shopping” around for the best rate on a credit card by allowing each credit issuer to run a credit report on you and your score will take a dive. The difference between a 699 score and a 700 represents thousands and thousands of dollars in interest.

Often, credit issuers don’t make it perfectly clear that your credit history is being accessed when you respond to their offer for a new card over the phone. The call center sales representative also doesn’t explain and state clearly to you, that your credit history will show an “official inquiry” which counts against your scores whether you are accepted or rejected.

Most people don’t know that a maxed out credit card lowers their scores even if they pay on time every month. Many don’t know until it is too late that one late payment on one credit card will cause the interest rate charged to skyrocket not only on that card but any other cards that have a balance! Most also don’t know that a credit card balance showing less than thirty per cent of the available balance improves the score. Most don’t know that in calculating credit scores, your payment history counts as 35% of the score, amounts owed count 30% of the score, length of your credit history counts 15% of the score, new credit is 10% of the score and types of credit in use is 10%.

What is the truth about free credit reports? The truth, is that consumers need to read the fine print very, very carefully and get educated. The truth about credit reports in general is that only part of the story is being told by one. The truth, is that knowledge is power and without it your money is being taken from you, your buying power and therefore your future is being dictated to you rather than by you and that the cost of everything including insurance is based on your scores.

If asked for my advice to the average consumer? Worry less about getting a “free” report and more about the real cost of being ignorant regarding credit. Worry more about the immediate and long term costs of not taking control of what is reported on your credit report both the correct and incorrect. Gain some credit knowledge. It is easy to do and will literally save you a fortune. One thing is absolutely for sure, your money and future and your children’s future will be severely impacted by your credit. How, is up to you.

I wanted to make a few comments today on the comparisons between different stock market strategies. First, let me say I am yet to come across a strategy that doesn’t work, given the right circumstances. They can all make money, some just require more skill, more time, or more luck than others. Everyone has their preferences, and I thought we’d compare a couple today.

I’m constantly intrigued by people who decide on an investment strategy without the faintest idea of ‘why’ they use that particular strategy, or without having a look at an alternative strategy, with other possible advantages, that achieves the same (or similar) thing.

Of course everyone invests to ‘make money’. The question of ‘why’ goes to the specific intention of a particular strategy – “why do you use one form of investing over another?”

The only way to answer that question is to first ask yourself another – “What am I trying to achieve?”

Are you hoping to get the maximum benefit out of the movement in the share price – to get the most profit from a stock rising (or falling) quickly? Are you willing to try and capture these profits on the big winners, knowing that most of the time you may pick losers, but keeping your losses small and your winners big (hopefully)? If so, are you happy to continue trading when you know you may only get 30, 40 or (if you are one of the brilliant few) 50% correct?

Or, are you trying to make money ‘regardless’ of the share price movement? Are you happy with steady and very high (if not spectacular) returns on a regular basis.

The question I will address in this article is simple: Would you prefer to be in a position where the share price MUST go up to make money, or would you prefer it if the share price doesn’t need to go up (it can stay the same, or even go down a little), yet you still make 100% of your profits?

I’d like to take this opportunity to explain the ‘rationale’ behind one particular investment strategy – the Credit Put Spread strategy (sometimes called “Selling Insurance”).

This article is an attempt to explain exactly WHY you may trade the Selling Insurance strategy, rather than any of the dozens (hundreds?) of other option strategies available.

This article does not attempt to explain the intricacies of any particular strategy, nor the various options available to the trader throughout the trade (rolling out/down, closing early etc), rather to explain in simple terms the ‘principles’ behind why you may choose this particular strategy over a multitude of other strategies.

Please be aware I have either traded or investigated just about every strategy using options that I know of, and the Selling Insurance strategy certainly has its place in a diversified portfolio, with many advantages over other strategies. More importantly, it satisfies several criteria that we look for in our trading.

Let’s look at why. As mentioned, we first need to understand the reasons why we would use a particular strategy, and determine what it is we are trying to achieve. Without that goal, finding the correct strategy for YOU is impossible.

When we first started out, we detailed 5 specific criteria that needed to be met with any investment strategy we use. All of these conditions had to be met, otherwise that type of investing was not appropriate for us.

Now, your criteria may be completely different to ours, and that’s fine. Only YOU can choose what is right for you. You may have a completely different set of criteria, but the point is the same: Before choosing any investment strategy, make sure you lay out what you want, then choose the strategy that suits your criteria.

Here’s the criteria we settled on, and how the Selling Insurance strategy fits the bill…

1) Trading doesn’t take up too much TIME.

Any investment must NOT consume too much of our time. The entire purpose in making money is not for money itself, but to create a lifestyle. Therefore as little time as possible must be spent on any strategy.

The time it takes you to read this article will be greater than the time we have spent in the last 2 months implementing this strategy, and was still able to earn some considerable profit.

Most other type of trading, especially any form of ‘directional’ trading, requires a considerably more active mindset, with positions being monitored consistently, stop-losses enforced etc. For the most part, they are not ’set and forget’ investments, and require considerably more time to apply, monitor and manage.

The Selling Insurance strategy enables us to live the lifestyle we want, without the need to be watching the market every second.

2) It must have a High Probability of Success.

There must be a high chance that our investment will return as expected, most of the time.

With the Stock Market, the way we view it is there are essentially 5 things that can happen in respect to the price of the stock…

1) The price can go up a lot
2) The price can go up a little
3) The price can stay the same
4) The price can go down a little
5) The price can go down a lot

With our Selling Insurance strategy, we format our investments so we make 100% of our expected profit if 1) to 4) above occur.

So that’s an 80% chance of success – without applying any skill at all!

It is only if 5) occurs that we need to take any action, and we then have several choices to either retain our profits or slightly reduce them. We can only lose a maximum set amount if we choose to close our position entirely.

With most other types of trading, you are essentially making a ‘bet’ as to which way the stock will go – commonly known as ‘directional trading’. Therefore, a profit is only realised when the share price goes up a lot if you are long (no 1), or down a lot (no 5) if you are short, giving a substantially less likelihood of a profit on any and every trade.

The flipside to this is that while there is much less chance of making a profit with directional trading, the profit achieved can be considerably higher if the price does go your way, as opposed to the Selling Insurance strategy where profits are capped.

That’s fine with us – we’re not trying to make millions with one trade – that is not our goal. We’re trying to earn a steady, consistent and recurring income on a monthly basis.

This is a point I can’t stress strongly enough, and is the reason for this entire strategy! We do NOT require the stock to move in a specific direction to make money. That means we make money more often than any other strategy I know of.

3) We are always PROTECTED on the downside.

With our Selling Insurance strategy, our losses are capped, and if a ‘worse case’ scenario happens, I am not wiped out. We know exactly what our possible losses are BEFORE entering the trade, and these are managed to be minimised as much as possible.

With good money management this can be comfortably achieved with most strategies, so while I can’t stress enough the importance of ‘loss prevention’ and ‘risk management’, because it can be achieved with most investment strategies it’s not really a deciding factor on choosing one strategy over another.

4) We make a ‘regular’ INCOME so we don’t have to work.

We need to be able to live our lives the way we want – day in and day out. That means we need income. I’ve got bills to pay. I’ve got a wife with a penchant for Italian shoes. Hell, I’ve got a penchant for Italian shoes!.

The whole point of being wealthy is to live a certain lifestyle, and that lifestyle costs money. So we need an ‘income’ to fund that lifestyle.

Investing just for ‘capital gains’ or ‘long term growth’ is all well and good, but in the meantime any investment strategy must supply enough income to live on, and live well!

The Selling Insurance strategy has only one goal – to provide income on a regular basis (generally monthly). That’s it. It’s important to understand this strategy is NOT for long term capital growth – although it can be achieved if you re-invest the profits – but was designed purely to replace income. Not too many other strategies can do that as effectively.

5) LOCATION is not important.

We need to be able to manage my investment from anywhere in the world.

Again, most strategies can be done with a laptop and an internet connection or a phone from anywhere in the world, but this point goes hand in hand with the ‘time’ factor.

The Selling Insurance has the advantage of being less time consuming, therefore if I’m travelling the world or relaxing somewhere, I don’t need to spend hours in front of my computer managing my trades. A few minutes a day is all I need, so this is a big advantage over most types of directional trading.

So, all in all, the main criteria that indicate a better investment strategy for us would be Selling Insurance over most other ‘active’ types of investment is 1) Time, 2) Income and 3) Probability of Success and 4) the fact it can be done easily no matter where I am or what I’m doing.

What I consider to be the biggest advantage, and the most important reason I use this particular strategy, is the high probability of success. That’s the clincher for me, and the deciding factor that means the Selling Insurance strategy is one strategy I put my money into time and time again.

In Part 2 of this article, we’ll examine this part of it in more detail, and compare the results of different strategies to highlight why this point is so important. Understanding that may help to ensure you make money from the markets over the long term. Until then…