FiLife

You’d think that being a billionaire would automatically mean your financial life would be fine. In fact, it would rule.But when Berkshire Hathaway gazillionaire Warren Buffet (seen here enjoying a Dairly Queen sundae) recently pulled his credit score from one of the the credit reporting agencies, his score was 718, Fortune reports (print only).

The Buff’s score is well below the national median of 723 and proves that even if you’re worth is high (even $62 billion dollars), you won’t necessarily have a high credit score. For more information about what actually does impact your credit score, check out this rockin’ pie chart from Fair Isaac.

In Buffet’s case, Fortune reports, the likely culprit is identity theft. Buffet’s report exposed 23 missed payments on a $294 loan at an HSBC branch in Nevada where Buffet says he never has had an account (although the idea of Buffet taking out such a meager loan is kind of cute). Besides, he probably won’t be applying for any auto loans soon, as he recently paid for his Cadillac DTS in cash.

For those of us who don’t mingle with billionaires with trampoline rooms, this serves as a reminder to stay on top of ordering three, free annual credit reports (one from each of the bureaus) and to consider the virtues of a credit report freeze.

-Mary Pilon

Illustration Credit

We’re still pissed we can’t get our credit score for free. And the world of credit scoring and credit reports is still pretty sucktastic. But it turns out that the folks at CreditKarma.com and Credit.com are trying to ease our woes.

CreditKarma provides customers with a credit score, but it isn’t the FICO score that most lenders use to evaluate you. It runs on a different scale (the top is 900) whereas the FICO reaches 850, so don’t get too excited if your score seems off the charts - CreditKarma just uses a different chart.

The site is still in beta and you need this code to get started. You plug in your personal information (they promise that it’s safe) and out turns a pretty little graph with some animation. CreditKarma gives you a list of ads (how they make money to support the site) related to how good or bad your credit score is, graphs showing how you stack up to other people in the country and how a potential lender might view you.

Credit.com, home of FiLife credit scoring guru John Ulzheimer, also offers a Credit Report Card that has a similar scale to the FICO (300-850) and also turns out pretty graphs and information.

And if you’re a Washington Mutual customer, you can get the real FICO score and related tools for free. All of the scores - CreditKarma, Credit.com and WaMu - use your TransUnion report to calculate the score.

In the world of personal finance, it’s exciting when people even know that they can order their credit report for free or if they’re even aware that they check their credit score. CreditKarma and Credit.com’s score exist for the population of FICOphiles out there who pay closer attention to their credit scores than the paparazzi does to Britney Spears.

If credit score monitoring is your new favorite pastime, power to you. But in general, you only need to obsess over your credit score if you’re applying for a loan of some type. And even after you’ve reached a certain threshold (a FICO of 760 or above will get you a sweet interest rate on a 30-year mortgage), you’re in the Promised Land. So sweating jumping from 799-800 might be fun forum discussion fodder, but won’t actually impact your wallet at all.

“I’m not sure artificial scores are ever helpful to consumers,” Ulzheimer says. “Except to provide a directional understanding of their score.”

But when it comes to anything credit-related, we’ll take directional understanding over, say, venereal disease any day.

– Mary Pilon

If you ask these people, today’s twentysomethings are swarming with financial scabies.

KeepItInYourPants.org is handing out a $5,000 scholarship for the student who can produce the best Debt Disease PSA and perpetuate its gimmick of likening credit-card debt to STDs. You can see the Pants People’s intro video (Barry White alert!) here, via US News and World Report.

I admire the general mission of the campaign, but I think most of us would rather take a missed credit-card bill payment over the clap any day. And unlike STDs, credit cards can actually be good for you. Last I checked, there weren’t any rewards program out there for herpes infections.

It’s no secret that banks and credit-card companies seek out college kids like underage frat boys looking for a kegger. And the average undergrad will have $2,327 in credit card debt by graduation.

But what about the irony of handing out a $5,000 scholarship to promote debt awareness and not even breathing a word about ballooning student loan debt? I looked all over the Debt Disease site with its nifty iPod icons and awkward pop-punk design (because kids today LOVE that stuff) and couldn’t find ANY information about how to use credit cards responsibly, establishing credit history or the fundamentals of student loans.

So who are the sexually-charged folks behind this campaign? (more…)

There have been a handful of occasions when I needed to call customer service about my husband’s credit-card account. I’m an authorized user on that account and have a card with my name on it.

But representatives always ask me to hand the phone to my husband, so that he can give them permission to speak with me. Instead of trying to deepen my voice by a couple of octaves — which I’m always tempted to do — I simply put him on the line.

It’s a minor inconvenience, but it made me think: is there a way we can get around this? If he’s traveling, or simply down the block at the gym, I should be able to call up customer service if I have a question about a random fee — and vice versa. (more…)

Although Mr. Freeze was a lame Batman villain, you can now use chilling powers for financial good.

As Ron pointed out a couple of months ago, putting a security freeze on your credit report prevents new creditors from accessing your credit file without your permission. Credit freezes used to only be available in certain states, but now all three credit reporting agencies (Equifax, Experian and TransUnion) will let you freeze your credit report regardless of where you live in the U.S.

Why would you want to put on the big chill? (more…)

In the dimly lit lounge of credit scores, the three-digit number that lenders use to evaluate your risk as a borrower, it turns out that there are a lot of posers — and occasional brass knuckles.

Let’s just make it simple, shall we? The one you want is the studly FICO score, which comes from a formula created by a company called Fair Isaac. Ninety percent of lenders use the FICO in some way shape or form. You can get it here. We’re not paid to say that, it’s just easiest.

The problem - and it’s one that many people fluent in other areas of personal finance don’t even realize - is that there is more than one FICO score. (more…)

Our journey towards homeownership drags on: my husband and I have probably seen at least 25 apartments in brownstone Brooklyn, but we still haven’t found the one.

In the meantime, a broker recently told us that we should get pre-approved for a mortgage – stat – for several reasons: (more…)

Although webinar sounds like some kind of muscle disease, it’s actually short for “web seminar,” a combination web demonstration and conference call. Fair Isaac recently started utilizing webinars to provide information about its FICO credit scores and credit reports in general, and we decided to attend.

I’m a multi-faceted geek, but I’m a noob to this webinar thing. I signed up online, Fair Isaac e-mailed me a link, and at the designated time I clicked on the link, downloaded a program and called a phone number for audio. Before I knew it, the program I downloaded showed me the computer screen of the webinar leader in California, and I could hear the Fair Isaac staff talking. There was a space where I could type in questions, and someone on the phone would read them out and answer them while pointing webinites toward the features on Fair Isaac’s consumer site, myfico.com, that would answer the queries. Overall, the process was pretty simple.

The info they gave was pretty helpful and similar to a lot of topics FiLife will cover. One thing they explained in great detail was the difference between a soft inquiry (where you or a company request your own credit score but peeking doesn’t damage it) and a hard inquiry (requests from other companies that come as a result of you applying for a loan, which can lower your score).

But who has an hour free on a weekday afternoon to partake of these webinars, other than personal-finance reporters and FICO nerds (or those of us who are both)? The discussion itself would have made a great podcast, because after a while, the moderators were just leading me to parts of the FICO website that I’d already seen.

This is a good example of the pickle that providers of financial information are in - the people who need the information the most aren’t necessarily out looking for it. How can companies and news organizations extend their informative tentacles further to help consumers without inducing anxiety?

In any event, woot to Fair Isaac for trying this out, providing it for free and experimenting with the Internets. Now, if only they would give away those Fico scores.

-Mary Pilon

Remember our query about why you can’t see your credit score for free? Turns out that Washington Mutual seems to be the only major credit-card issuer that offers this service. In fact, they’ve been doing this since 2005 as part of an agreement reached with TransUnion, the credit reporting agency that supplies WaMu with its customers’ credit scores every month. Those WaMu customers can see their scores on WaMu’s web site, for free, and WaMu doesn’t have to pay any extra money to provide them.

“It’s such a valuable tool for consumers,” Alan Elias, WaMu’s senior vice president of card services says. “Why not offer it?”

Why not indeed, given that that the banks don’t have to pay to offer this service?

Here are the excuses reasons that some major card issuers — the ones that responded to our queries at least — offered for not offering credit scores up gratis. And if you don’t like their answers, we’ve offered convenient links to their customer service pages.

(more…)

I recently checked my credit score on myFico.com and was delighted to learn that at 776, I’d qualify for the lowest mortgage rate available. The site said that a 30-year fixed rate loan for someone like me runs at 6.11%.

Armed with this, I visited some banking web sites to see how much apartment they think we can afford and what kind of loan they’d be willing to extend to us — especially in light of this whole credit-crunch business.

I started at Washington Mutual. I tinkered with their “How Much House Can I Afford?” mortgage calculator, and it came up with a figure. Turns out we can’t swing the gentrified Brooklyn neighborhood where we rent, which now attracts the likes of Heath Ledger and possibly Moby (my broker told me he was looking).

That wasn’t the surprising part. What irked me was the type of mortgages suggested at the bottom of WaMu’s calculator: two interest-only adjustable rate mortgages (ARMs), and a plain-vanilla ARM, which has a fixed rate for the first year and would adjust thereafter. Isn’t this precisely the type of loan behind the skyrocketing default and foreclosure rates? Where was the 30-year fixed rate I was looking for?

(more…)