Credit Card Gist

Credit.com’s John Ulzheimer talks about the new credit card laws that protect college students, back-to-school credit tips for parents who want to help their children build credit responsibly.

Never co-sign for a 18-year old’s credit card, is one advice Ulzheimer gives. A better option is to add your child as an authorized user on an existing credit card. If the child mismanages it, you can take him or her off the account.

(Via YouTube.com)

Accept card payments quickly and safely

Accept credit and debit card payments at the lowest processing costs. You will get:

• Free merchant account set-up.
• No fixed monthly fees.
• 24 / 7 customer support.

FICO score components.

FICO, the provider of the most widely used credit score algorithm in the U.S., announced today that “more than 2,500 banks and financial institutions” are now using the FICO 8 Score, the company’s new score model. FICO 8 was first introduced in 2009 and the company claims it improves credit risk prediction by up to 15 percent over earlier models.

The main difference in FICO 8’s algorithm over previous versions is that it does not penalize consumers as harshly for one-time mishaps. However, “if that happens quite often they actually get penalized more than in the prior versions,” cautions Robert Duque-Ribeiro, vice president and general manager of scores at FICO.

FICO 8’s key differences include:

• Leniency toward rare missed payments. Moreover, collection accounts and public record items with an original balance of less than $100 are ignored.
• Higher sensitivity to credit usage. The amount of credit used, as a proportion of the total available credit, known as credit utilization, plays a bigger role in the new algorithm than in previous generations.
• Minimized importance of authorized-user accounts. FICO 8 treats less favorably accounts on which a consumer is only an authorized user, rather than a primary cardholder. The goal is to make sure that consumers “don’t get the benefits of lining up on the back of a consumer’s good credit,” says Duque-Ribeiro.

(Via Bankrate.com)

Learn how to minimize chargebacks and fraud

Learn how to minimize chargebacks and reduce your processing costs. The Chargeback Management kit contains a video and an e-book:

• E-Book – Chargeback Manual (40 pages).
• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).

The recently passed CARD Act made it more difficult for college kids to open up credit card accounts. Under the new rules, everyone under 21 years of age must proof that he or she can repaid the debt, before he or she can get a credit card. Otherwise, they will have to fine an adult to co-sign their application.

But do such accounts help youngsters build credit history? Yes, they do, says MarketWatch’s credit expert Lew Sichelman. Whatever the credit card account’s structure, its activity, both positive and negative, is reflected on all authorized users’ credit files.

That being the case, the co-signer should closely monitor the youngster’s account activity, as any misstep will affect both users’ credit scores. “Any missed payments, high balances or charges that exceed the limit will negatively reflect on [both] their bureau files,” says Sarah Davies, an executive with VantageScore, a predictive scoring model created by the three major national credit repositories.

“The son and the parents should keep careful watch,” she Davies, “to be sure he keeps his balances low. On average, payment history accounts for 32% of a VantageScore, with the utilization rate accounting for 23%.”

(Via MarketWatch.com)

Learn how to lower your card acceptance cost

Learn how to accept credit and debit cards at the lowest processing costs. The Payment Card Acceptance kit contains a video and an e-book:

• Video – Card Acceptance Best Practices for Lowest Processing Costs (18 min).
• E-Book – Payment Card Acceptance Guide (19 pages).

Credit card companies allow cardholders to add authorized users to their accounts, which helps consumers who otherwise would have been unable to get a credit card. Moreover, though using someone else’s cards, authorized users build their own credit history. But what about the principal cardholders, are they risking hurting their credit scores, if they authorize users with worse scores? This is exactly the question a CreditCards.com’s reader asks of Todd Ossenfort, the website’s credit expert.

The answer to this question is no, the authorized user’s credit history does not have an impact on the principal cardholder’s credit history, says Ossenfort. The two user’s credits are solely connected through the joint account and the way the authorized user handles his or her other accounts has no impact on the joint account owner’s credit.

The account owner’s credit can be damaged, however, if the authorized user mismanages the account in some way. For example, if he or she charges a large amount on the credit card and the account owner is not able to make the minimum payment.

Every time you combine your credit with someone else’s, you put yourself at risk, warns Ossenfort. You cannot control other people’s actions and if you are not sure if they would be responsible with a credit card, you shouldn’t allow them to use yours.

(Via CreditCards.com)

Information on credit card debt liability and an advice on how to get your name off your ex’s credit cards.

(Via YouTube.com)