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Mary Mastroeni

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Report Examines Differences between Credit Scores Consumers and Lenders Receive

July 20, 2011 7:59 pm

The Consumer Financial Protection Bureau (CFPB) released a report recently examining the differences between credit scores sold to consumers and scores used by lenders to make credit decisions.

“The consumer bureau’s mission is to bring transparency to the consumer financial markets so families can compare products and choose the ones that are right for them,” says Elizabeth Warren, Special Advisor to the Secretary of the Treasury on the CFPB. “One way consumers have tried to empower themselves is by knowing their credit scores. We are assessing whether purchasing a credit score provides a consumer with the information he or she needs. ”

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) required the CFPB to study the differences between credit scores consumers purchase and those creditors use to make credit decisions. The CFPB’s report covers the process of developing credit scoring models, why different scoring models may produce different scores for the same consumer, how different scoring models are used by creditors in the marketplace, what credit scores are available to consumers for purchase, and ways that differences between the scores provided to creditors and those provided to consumers may disadvantage consumers.

Consumer reporting agencies (CRAs) compile and maintain files on consumers that are used to produce credit reports. Credit scores are numerical summaries of the comparative credit risks of default; they are calculated based on information contained in credit files and credit reports. These scores are important because they are used to make credit-granting decisions, to identify prospects for credit offers and solicitations, to make decisions about raising or lowering credit limits on credit cards, and to set terms for mortgages or other loans, among other uses.

While most credit scores are purchased by lenders and other users to assess consumers’ credit risk, consumers can also purchase credit scores when they obtain their free annual credit reports, when they request copies of their credit reports directly from CRAs, or when they enroll in “credit monitoring” services that offer credit reports and scores for a monthly subscription fee. The credit scores available for purchase by consumers may vary from the score used by a lender for a variety of reasons, including: 

• Use of different scoring models;
• Lenders and consumers may not use the same CRA;
• Data in the consumer’s credit reports change between the time the consumer purchases a score and the time the lender obtains the score;
• A consumer and a lender could possibly access different reports from the CRA, if they were to use different identifying information about the consumer; 

The report discusses the general lack of information about credit scoring. One survey shows that many consumers do not know that a credit score represents the risk of not repaying a loan. Furthermore, many consumers do not know that credit scores they buy may not use the same credit scoring models that are most widely used by lenders.

Consumers who are unaware of the variety of credit scores available in the marketplace may purchase a score believing it to be their “true” score. The most significant adverse impact on a consumer from score differences would likely occur if the credit scores the consumer buys give a substantially different impression of his or her credit risk than credit scores that a lender would use. 

As a follow-up to the report, the CFPB is obtaining data from each of the three nationwide CRAs, and credit scores from the CRAs and Fair Isaac Corporation widely used by lenders and consumers to compare the variations between the credit scores sold to lenders and those sold to consumers. To help educate consumers, the CFPB also plans to post advice on its website about how to obtain and maintain a good credit score.

For more information, please visit www.consumerfinance.gov.

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82 Percent of U.S. Adults 50 and Older Are Happier with Their Life Now Than When They Were Younger

July 20, 2011 7:59 pm

Our culture may be obsessed with youth, but research indicates that Americans are actually happier after 50. Commissioned by OurTime.com, the largest online dating community catering to singles over 50, a survey released recently indicates that 82 percent of people age 50 and older say they are happier with their lives now than they were when they were younger. 72 percent are more optimistic about their future happiness. Conducted online by Harris Interactive on behalf on OurTime.com in June 2011, the nationwide survey of 1,064 U.S. adults aged 50 and older also revealed that 85 percent of these adults consider companionship more important than it used to be when they were younger.

To look deeper into factors driving this group's brighter outlook, in a separate study, OurTime.com surveyed a segment of the one million singles that comprise its membership and found that 93 percent agree that having a romantic relationship is an important component of their overall happiness.

"The main reason people 50-plus are happier now is that they are more confident in themselves and about what they want from life," says Dr. Gail Saltz, OurTime.com's Relationship Expert. "Priorities shift in this stage of life and relationships become more and more important to one's happiness."

Today, there is someone turning 50 every seven seconds. In fact, the 50-plus demographic is the fastest growing demographic in the country. The 78 million Baby Boomers now represent 28 percent of the U.S. population. According to 2010 U.S. Census data, almost 30 percent of Boomers are single.

This large group of singles is actively seeking companionship online. Over the last year, the number of dating-site users 50 years of age or older has grown twice as rapidly as any other age group. The OurTime.com community has experienced astonishing membership growth of more than 400 percent in just two years.

"As these surveys illustrate, most people in this stage of life are no longer so stressed about getting ahead in their careers, and their kids are already out of the house," says Dr. Saltz. "This allows them to focus on companionship and sharing this fulfilling time with someone they love."

The survey of those 50 and older also found that, compared to when they were younger, these adults have changed their views in the following ways:
• 85 percent agree that companionship is more important now.
• 79 percent are more confident in what they want out of life.
• 87 percent are more confident in their intelligence.
• 82 percent are more confident when meeting new people.
• 91 percent are more confident as a judge of character.
• 52 percent are less focused on "getting ahead" in their career; another 29 percent said the career question was not applicable to them.

OurTime.com members also weighed in as follows:
• 89 percent are at a point in their lives where they feel fulfilled and are looking for someone to share their lives with.
• 95 percent are more focused on compatibility, and finding someone who makes them happy, than they were when they were younger.
• 89 percent say they have a better idea of the type of person who will make them happy.
• 80 percent have children over the age of 25; 81 percent do not have children who live at home.

For more information, visit http://www.ourtime.com.

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Question of the Day

July 19, 2011 4:59 pm

Q: Which is better, a 15-year or 30-year loan? 

A:
The 15-year mortgage offers you a chance to save thousands of dollars over the life of the loan. This is because the interest rate is typically lower and amortization is half that of the 30-year loan, which means that the total interest paid on the 15-year note, as compared to a 30-year note, is significantly less because of the shorter borrowing period. 

Put another way, a 15-year loan accrues principal much more quickly than a 30-year loan, so you get to own your house in half the time. 

However, because you are building equity faster and paying down the loan sooner, a 15-year mortgage requires higher monthly payments. 

Get a lender to help you calculate the overall savings of the 15-year loan versus the 30-year mortgage. In the end, though, base your decision on your circumstances and overall financial plan, such as whether you are nearing retirement age and also will have to shell out college expenses for children, in which case a 15-year loan may not be for you. Remember that your spending habits, budget, and financial goals should all be considered before making a final decision.

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Word of the Day

July 19, 2011 4:59 pm

Condominium. Type of housing where buyers own their units outright, plus an undivided share, or joint ownership, in the common elements of the building or community.

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FDA Approves Vaccines for the 2011-2012 Influenza Season

July 19, 2011 4:59 pm

The U.S. Food and Drug Administration announced recently that it has approved the influenza vaccine formulation for the 2011-2012 vaccine that will be used by the six manufacturers licensed to produce and distribute influenza vaccine for the United States.

Vaccination remains the cornerstone of preventing influenza, a contagious respiratory disease caused by influenza virus strains. The vaccine formulation protects against the three virus strains that surveillance indicates will be most common during the upcoming season and includes the same virus strains used for the 2010-2011 influenza season.

Between 5 percent and 20 percent of the U.S. population develops influenza each year, leading to more than 200,000 hospitalizations from related complications, according to the U.S. Centers for Disease Control and Prevention (CDC). Influenza-related deaths vary yearly, ranging from a low of about 3,000 to a high of 49,000 people.

"Vaccines to prevent seasonal influenza have a long and successful track record of safety and effectiveness in the United States," says Karen Midthun, M.D., director of FDA's Center for Biologics Evaluation and Research. "It is important to get vaccinated every year, even if the strains in the vaccine do not change, because the protection received the previous year will diminish over time and may be too low to provide protection into the next year."

In addition to the important role that health care providers play in recommending influenza vaccination for their patients, influenza vaccination of health care personnel is also important to protect themselves, their patients, their family, and the community from influenza. The FDA urges health care organizations to encourage their members to follow CDC's Advisory Committee on Immunization Practices (ACIP) recommendations to get vaccinated.

For more information please visit www.flu.gov.

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Keep Your Cool in Hot Weather Driving

July 19, 2011 4:59 pm

It's tough to keep your cool when the inside of your car is full of hot air from a malfunctioning air conditioning (A/C) system. According to the Car Care Council, an annual checkup of your vehicle's A/C system will help prevent it from breaking down when you need it most, especially as sky-high temperatures are hitting many parts of the country.

"Getting stuck in traffic is hard enough but getting stuck in traffic during the heat of summer without properly functioning A/C is the pits," says Rich White, executive director, Car Care Council. "It is important to always have the A/C system properly maintained to keep it in tip-top shape and avoid costly repairs down the road."

A vehicle's heating, ventilating and air conditioning system (HVAC) keeps the interior cabin comfortable in any season by providing the right temperature and humidity level. Typical A/C service consists of the following steps:
• A service technician checks pressures to test operation, refrigerant charge and outlet temperatures.
• If the system is found to be low on refrigerant, a leak test is performed to find the source of the leak. Keep in mind that if your vehicle is leaking refrigerant, it is damaging the ozone layer.
• Refrigerant may be added if necessary to "top off" the system, although some states do not allow "topping off."
• A technician may also check for evidence of refrigerant cross-contamination, which is the mixing of refrigerants.
• A/C service should also include a check of the compressor's drive belt and tension.

"Checking the A/C once a year is key to making sure your cooling system is running efficiently all year long," White says. "A properly running HVAC system will help improve your gas mileage, is more environmentally friendly and will keep you from losing your cool on the road."

The Car Care Council is the source of information for the "Be Car Care Aware" consumer education campaign promoting the benefits of regular vehicle care, maintenance and repair to consumers. For a copy of the council's Car Care Guide or for more information, visit www.carcare.org.

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Living on a Budget - Home Remedies Better, Cheaper

July 19, 2011 4:59 pm

At a time when it seems that prices are soaring everywhere we look, it is no wonder that cost conscious homemakers are now saying, "Ouch!" at the cost of some popular household cleaning products.
But there are proven home remedies that will do many of the same cleaning jobs-and often for pennies on the dollar. Here are some of the top picks: 

Keep chrome fixtures clean and shiny by wiping them down with new or used fabric softener sheets. For stubborn water spots, try rubbing alcohol on a paper towel. 

To remove tough stains from the inside of a vase, fill the vase with warm water and drop in two Alka Seltzer tablets. 

For a fog-free mirror after you shower, wipe it down a couple of times a week with a few drops of aftershave on a paper towel. 

Fill in unsightly nail holes with plain white toothpaste; smooth with a damp sponge. 

Make an effective all-purpose cleaner for countertops and appliances by filling a spray bottle with one third pine cleaner, one third ammonia and one third water. 

Prolong the life of fresh flowers by filling the vase with a quart of warm water, two tablespoons vinegar and three tablespoons sugar.
Sharpen scissors by cutting 10 times through three layers of foil or by cutting a piece of fine sandpaper into small pieces. 

Try polishing the silver with toothpaste; just rub on and wipe off.
Remove small scratches on polished wood furniture by rubbing them with a shelled walnut. 

Smelly shoes? Put a few tea leaves into nylon stockings and stuff one stocking into each shoe. Leave it there for a couple of days until the smell vanishes. 

To keep lint and dust off glass tabletops longer, clean them with a solution of one tablespoon of fabric softener and a quart of warm water. (Also works well for computer screens and TV screens.)


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Preparing a Vacation Property

July 19, 2011 4:59 pm

Whether you are an owner or a renter, if you are planning to occupy a summer rental or vacation home, you want it to look and smell fresh and clean the first time you open the door. So here are some ideas from the folks at HousingInfo.com on how to prepare your vacation property for yourself, or any seasonal renters or other family members.

When tackling the cleaning project make a cleaning checklist by area: bedrooms, living room, kitchen, etc. Then record the specific duties you’ll want to complete in each room every time a renter vacates your vacation rental. Here’s an example:

For the living area:
Sweep or vacuum floors, then mop or scrub them
Dust window sills and ledges
Dust all furniture, window dressings, picture frames, ceiling fans, and lamps.
Vacuum furniture, including under seat cushions
Check sofa bed and remove any used linens
Provide clean linens for the sofa bed
Wash all windows and glass doors
Empty and clean wastebaskets

For the bedrooms:
Change sheets and pillowcases after checking for wear and tear or stains
Vacuum floor and under beds
Check for personal belongings left in drawers and closets
Wash blankets and comforters after every 10 rentals
Dust furniture and clean mirrors
Check windows for fingerprints
Check for dead light bulbs

Bathroom cleaning tips:
Clean and sanitize toilets
Clean, scrub and sanitize all surfaces, including showers, bathtubs, vanity, and sinks
Polish chrome
Wash floors and tile walls
Stock clean linens
Empty wastebasket
Replenish liquid hand soap

Kitchen cleaning tips:
Wash floor and clean, scrub, and sanitize sinks, countertops, and backsplashes
Clean appliances, counters, cabinets, table, and chairs
Clean range top and wipe out inside of oven
Clean inside and outside of refrigerator and microwave oven
Empty dishwasher, and quickly organize cupboards
Refill dishwashing detergent, liquid dish soap, coffee filters, and trash bags
Put out clean dishtowels, and a new sponge

Cleaning tips for miscellaneous areas like a kitchen nook, library, laundry room, garage, outdoor areas, and any balcony spaces. Make sure you do the following in these spaces:
Check all light bulbs and change those that have burnt out
Change your furnace filter once a month
Ensure washer and dryer are empty and clean out dryer lint trap
Wipe off patio set, clean barbeque grill

Using this guide will ensure your rental or vacation property is welcoming and clean—whether it is you or a rental client who will be occupying the space this summer or fall.

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Question of the Day

July 18, 2011 4:59 pm

Q: How long do bankruptcies and foreclosure stay on a credit report?
A:
They can remain on your credit record for seven to 10 years.
However, a borrower who has worked hard to reestablish good credit may be shown some leniency by the lender. And the circumstances surrounding the bankruptcy may also influence a lender's decision. For example, if you went bankrupt because you were laid off from your job, the lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, it is unlikely the lender will readily give you a break.


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Word of the Day

July 18, 2011 4:59 pm

Competitive market analysis. A method of determining home value that looks at recent home sales, homes presently on the market, and homes that were listed but did not sell.

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