October 27th, 2011 
Vijaianand 
In today’s newsletter from inmannews.com, I came across an article about “How real estate distress can scar credit scores?”. We all know that Shortsales, foreclosures, Bankruptcies really make a big dent on the credit scores. But when those situations happens, people really don’t have time to think about their credit score instead they were thinking about running their daily lives. That’s important point which we miss out on these infographics from credit bureaus.
Experian released, the Annual State of Credit Map for this year. The credit bureau and financial data company ranked more than 100 metropolitan areas in all 50 states in the order of their average resident’s credit scores.
Here is my city Houston’s State of Credit,
Houston did fare decent compared to many metropolitian cities and being the 4th larges city in nation. It averages 724 score which corelates with unemployement percentage of 9% and foreclosure around 1250 homes.
If you go over the list from top and bottom of 10 cities, one pattern instantly emerges: Eight of the 10 American cities(Red circle) with the highest credit scores are in the Midwest (the outliers were San Francisco and Sioux Falls, S.D.). A parallel pattern emerges on the other end of the credit score rankings: Eight of the 10 cities(Yellow) with the lowest credit scores are located in the South (rounding out the list: Bakersfield, Calif., and Las Vegas).
Experian points out on its graphic of the list that there seem to be strong correlations between a metro area’s average debt (that nine of the 10 cities on the high-credit-score list have unemployment scores below the national average. This makes sense, as it would seem difficult to pay your bills on time every month with no job and no income.
The report also found some regional patterns in debt levels consistent with the credit score rankings; six of the 10 American cities with the lowest levels of debt were in the Midwest, and eight of the 10 with the highest debt levels were in the South.
It was most intriguing to see the real estate and mortgage insights layered within the study. If you go to the interactive map, you’ll see that it allows you to mouse over individual metro areas and see a set of data points for each locale, including its average credit score, average number of open credit card accounts, average debt, population, unemployment rate, and the area’s foreclosure activity over a one-month time frame.
The conclusion is almost inescapable that cities like Bakersfield and Las Vegas, the two non-Southern cities on the lowest credit score list, made it onto the list as a result of the unfortunate one-two punch: sky-high unemployment and chart-topping foreclosure rates.
At the top of the credit score list, the reverse also seems to be true — Midwestern cities have been notoriously resistant to the real estate recession compared to the rest of the country, as have San Francisco and Sioux Falls, the only two non-Midwestern areas on the list. And this is backed up by the low foreclosure rates reflected in the data on the infographic for these areas.
From this map, it is clear that real estate turmoil will cause the credit score to go south. At the same time, even people who are trying to avoid those turmoil faces same issue with credit by charging off the credit card to pay mortgage, stop making mortgage payment while trying to do modification and so forth. Even though many analyst say don’t go beyond your limits, try avoiding charge offs and pay mortgage on time, these advices won’t work if a bread winner loses his/her job for months and trying to sort out things. It is a tough ordeal unless you have big Emergency fund to fall back on.
Source: Inmannews.com
Experian’s Annual State of Credit Map – Things to think about…
Onlinefraud – Business Bank Accounts are not covered…
Recently I read an article in Business week about hackers targeting small business bank accounts and stealing thousands of dollars from their online accounts. As per stats, Cybercriminals steal $1 billion a year from commercial accounts at banks, which often hold companies responsible for losses. It has become big concern for both banks and businesses.
Hacking has been real trouble since the starting of internet era. Virus, Spamwares, Spywares and all sorts of malwares floated around internet to either destroy somebody’s work or steal someone’s private information so they can make money out by selling it until past few years. Now hackers have gone for bigger bucks by hacking into personal and business online bank accounts and sucking the money in thousands.
What is the FDIC and Fraud Insurance?
Many people confuse with FDIC Insurance and assume FDIC will cover for all bank loses. That’s totally not true. FDIC insurance will only cover loses when the bank you have an account with goes belly up. It doesn’t cover a single penny when it comes to online fraud except personal bank accounts which are covered by Banks fraud insurance.
Is my business account covered?
No, Business accounts are not covered under fraud insurance. But banks promise to work with you and try to get the money back. If you are lucky, you will either get whole many back or part of it. If you only get part of it, banks either will wash their hands and say that’s all we can get and rest is gone or sometimes compensate the part depending upon banks policy.
That’s what happened few customers when their accounts were hacked and going to court doesn’t really help. As per Business week story, one business was Patco Construction. A 22-employee builder in Sanford, ME., lost $354,444 in 2009 after cyberthieves hacked its accounts. When the bank, now named People’s United Bank (PBCT), rebuffed his attempts to reach a settlement, he sued. He argued the bank should have better monitored his account. Federal judges have twice agreed with the People’s United contention that its protections were “commercially reasonable.” Patterson plans a further appeal.
Last year Senator Charles E. Schumer (D-N.Y.) introduced a bill to make banks extend cyberfraud protection, already required for individual depositors, to small business clients. I don’t think that gone anywhere.
The American Bankers Assn. says businesses might get lax about security if they knew fraud losses would be covered. “The goal is to … have a partnership between a business and a bank and recognize that every one of those partners has a responsibility to secure the environment,” says Doug Johnson, senior policy analyst for the ABA. “If you put in a provision that takes away any responsibility, it gives the commercial customer no motivation to be active partners with the bank.”
What can businesses do?
If you are small business owner, try to protect your computer with up-todate security softwares and keep up with them. Make sure only give access to onlines to certain people who will be careful about protecting them properly. Many online Banks like INGDIRECT provides security softwares to protect your computer so you can avoid becoming a victim of cyberfraud. Talk to you bank and see whether they want you to implement any special softwares to comply to their rules so they can cover you if anything goes wrong.
You can only do so much when it comes to online hacking, after that you can only pray and hope, these hackers won’t get to your computer.
Betterment.com – Free $100 Bonus offer
I have posted about Betterment.com online investing service in the past. It is like mutual fund service for anyone who wants to make their life easy in investing for long term without worrying about the logistics and strategies.
If you want to earn 1% for 10000 which is $100 immediately, you can deposit the amount by Oct 23rd and Betterment.com will deposit the amount for you. If you don’t have any account, you can signup new with their $25 bonus and then initiate $10000 deposit to earn another $100. It easy and simple to get free bucks which is like getting 1% return for you investment upfront.