With the extra money I received in December, I did several things: I put a substantial amount onto my house loan, I put some into a college savings account for my grandson, I bought some camera equipment to replace what was stolen last June, I paid off all my credit cards, I set aside enough money in savings to pay off my car.
I also transferred a smallish amount to prosper (see link on right) so I could do more lending and earn decent interest. Prosper now offers "portfolio plans". A member can create up to four portfolio plans, choosing to make loans to persons with credit records that range from conservative to somewhat risky. I put different amounts of money into each risk portfolio and chose $50 as the loan amount for each.
The way it works is that whenever I have sufficient funds in my account bids are placed automatically, according to the maximums in each portfolio, until the portfolio is full. As loans are paid off and more money accumulates in my account the portfolios automatically refill themselves. At least that's the way I like to put it.
By doing this I am able to keep bidding on loans even when I am not anywhere near a computer. And my portfolio has a mix of risks in it. Obviously, the higher-risk loans bring higher interest, so I have put a fair amount of my money in the top two levels. I figure if one defaults, that is $50 at most that I am out - and probably less, because a collection agency steps in and part of the loan may have already been repaid. It isn't likely many will default - even though the default history of high-risk borrowers is higher than that of lower-risk borrowers it is still rather low as a percentage of loans.
Thursday, January 10, 2008
Tuesday, December 11, 2007
Credit score: How to bite it in one stroke
My credit score was rising steadily. It inched into the 700s and was looking good. Then I got a call. I had not paid a credit card for over 90 days. It was a card that I thought was paid off and for which I did not receive paper bills. Apparently I had signed up for online bills only but I forgot that and did not even know I had registered that account. It did not show up when I went to that bank site and logged on.
The reason it did not show up is that it is a business account and my other account was personal and the two automatically are on different pages. But I did not know that.
The upshot is that I was not paying this card, which had a low balance, because I didn't know I owed anything. As soon as I learned that I was behind I got caught up. Nothing overdue. But the damage was done. My credit score plunged about 300 points!
There was one other contributor: my high debt level. But that wasn't particularly new. The overdue bill was the biggie. So now my credit grade is "HR" - high risk!
Here's what's irritating about that: If you look at my credit history you will see nothing but green for miles. Bills paid on time, usually ahead, and more than the minimum, for many many months. Then this one bill is overdue. One out of fifteen cards. Anyone looking at that might ask me what happened and I have a reasonable explanation. But what happens is that the lenders look only at the score and they have no idea why it is so low. They think I must be a high risk. But I am not.
It's a dirty business, to be sure. Ugly. Fortunately, I don't need any more credit right now.
The reason it did not show up is that it is a business account and my other account was personal and the two automatically are on different pages. But I did not know that.
The upshot is that I was not paying this card, which had a low balance, because I didn't know I owed anything. As soon as I learned that I was behind I got caught up. Nothing overdue. But the damage was done. My credit score plunged about 300 points!
There was one other contributor: my high debt level. But that wasn't particularly new. The overdue bill was the biggie. So now my credit grade is "HR" - high risk!
Here's what's irritating about that: If you look at my credit history you will see nothing but green for miles. Bills paid on time, usually ahead, and more than the minimum, for many many months. Then this one bill is overdue. One out of fifteen cards. Anyone looking at that might ask me what happened and I have a reasonable explanation. But what happens is that the lenders look only at the score and they have no idea why it is so low. They think I must be a high risk. But I am not.
It's a dirty business, to be sure. Ugly. Fortunately, I don't need any more credit right now.
Getting into Prosper
I am in a Prosper "webinar" right now. These seminars are conducted through gotomeeting.com, and I just discovered that you have to call in to get the audio. I hate that so I'm not calling, just watching the stuff I can see. And what I see is basic. These seminars appear to be for beginners. Yes, I am a beginner, but I have figured most of this out already. It is helpful, though, to see the choices available to me on Prosper, as a lender. It's also possible to ask questions using a separate chat-type box, so I did that. Then I answered my own question.
Tuesday, November 13, 2007
Big money
I will be receiving an unexpected windfall in December. A nice sum of money. Ever since I learned of it I have been trying to work out how to make good use of it, how to stretch it yet have fun with it. My main goal is to reduce the payments I make every month, and I will be able to pay off all of my credit cards and set aside the money for my car loan (the interest rate on the car loan is so low it actually makes sense to put that money into a savings account and pay the loan off from there rather than pay the car loan off immediately), which will cut my expenses by about $800 per month.
I am relieved, of course, to have this piece of luck on my side. I didn't do anything to earn it. At the same time I fear myself. My daughter suggested that I set aside a specific amount to blow on fun stuff, and I love that idea. I can put that amount in a separate account and keep track that way and then I am less likely to go through the money without realizing it.
In addition to the fun money, I will take out some for putting down a chunk on my house loan, giving a bunch to various charities, and finding some ways to keep the rest earning money. I will also purchase items I want: energy-efficient, more effective appliances and some camera lenses and other equipment. Items that will make my life more pleasant and that will save some energy, too.
What has been funny is that knowing about this money has not made me deliriously happy. It has given me headaches.
I am relieved, of course, to have this piece of luck on my side. I didn't do anything to earn it. At the same time I fear myself. My daughter suggested that I set aside a specific amount to blow on fun stuff, and I love that idea. I can put that amount in a separate account and keep track that way and then I am less likely to go through the money without realizing it.
In addition to the fun money, I will take out some for putting down a chunk on my house loan, giving a bunch to various charities, and finding some ways to keep the rest earning money. I will also purchase items I want: energy-efficient, more effective appliances and some camera lenses and other equipment. Items that will make my life more pleasant and that will save some energy, too.
What has been funny is that knowing about this money has not made me deliriously happy. It has given me headaches.
Saturday, October 27, 2007
Calling the credit card companies
It's no secret that the way to get the interest on a credit card reduced is to ask. The companies won't do it out of their sense of good will or from any sense of right and wrong. Would they be in the business of charging over 30% per year if they were?
So I finally got up the stuff to start making calls.
First I called the Bank of America. This card, incidentally, started out as a Wachovia card and had excellent interest rates. Then it was sold to another bank, and then to Bank of America. Now the interest is somewhere around 27%. My payments are always on time and always more than the minimum. I did nothing to "deserve" this ridiculous interest rate.
I tried one customer service line and got voice mail options that did not include any for changing interest rate and did not include ever speaking to a real person. I tried several of the options and just went endlessly into voice mail options, none useful for my purposes. So I hung up. I found another number for them and called that. Got exactly the same thing. So I went online and sent them a message through their message form. The information on the website said they would respond within 12 hours. That was two days ago. And of course I have gotten no response. So I am nowhere with that card, yet.
Then I called citiCards. I spoke to a real person. He talked fast and with an accent I did not recognize (not Indian). He reduced my rate by ten percent, from 23.74 to 13.74%. That's a victory. At the same time I somehow signed up for credit protection that I do not want. I can't cancel it until I actually see it on a bill, and you can be sure I will cancel it then. I wish that I had a tape of that phone call because I had so much trouble understanding what was happening that I kept asking him to repeat and repeat. Ultimately I couldn't take it any more so I did not try to cancel that credit protection thing on the phone. A victory, nonetheless. A reduced rate.
I called Chase. I have two cards, one personal, one business, with Chase - both Amazon cards. For some reason I have not been getting my business statements and I had charged something a while back on it and thought that I had paid it off. Just a few days ago I learned, from a phone call, that in fact I still owed something and that it had not been paid in over 90 days. Well, that sucks. I made a payment then but of course that 90 days is bad. I also made one late payment on the personal card, a few days late, this month. My head was just not on straight and I got it done late. Because of the 90 day thing I understood that the interest rate on that card could not be reduced. But I was really irritated to learn that the personal one could not be changed either because of one payment a few days late. After years of paying on time and more than the minimum. The guy said I could try again in a couple of months. I said "sure" in a sarcastic tone and hung up. So no victory there.
I will call about my paypal card today. I forget what bank has it now - like the others, it has changed several times. I have a couple of cards that I have not used at all - Ikea and Dillards - and maybe I can get those rates reduced, but I suspect not. They probably like to see some activity first.
So far, then, one for three. I have an idea about Bank of America. These systems all seem to work the same, and most of them say you can talk to a real person by pressing zero. Even though the BofA operator does not say this I suspect it's true. So I am going to try that.
EDIT: October 28, 2007
I called the BofA number again. This time I pressed 0, even though this was not an option offered to me. And it worked. I got a real person. I told him what I wanted to do, to lower the interest rate. He said that the people to call for that are not working today, and he gave me the number to call tomorrow. In the meantime he tried to talk me into opening a line of credit at a lower interest rate so I could move all of my credit card debt there. I wasn't going to apply for that without thinking about it, so I said no thank you.
EDIT: October 30, 2007
I called the new number for BofA. I spoke to a person who was actually personable, like a real person. For those of your with B of A cards who want to try this, call 1-800-718-6135.
She reduced my percentage rate to just under 25% from just under 29%. Not much of a drop. She also suggested that I apply for a "Gold Option Line of Credit", which I did (she transferred me to someone else). The line of credit was denied. It sounds like a better option than a credit card for those who qualify: unsecured, up to $50,000, no annual fees, no prepayment penalty. It is for a set term, like a mortgage.
So I finally got up the stuff to start making calls.
First I called the Bank of America. This card, incidentally, started out as a Wachovia card and had excellent interest rates. Then it was sold to another bank, and then to Bank of America. Now the interest is somewhere around 27%. My payments are always on time and always more than the minimum. I did nothing to "deserve" this ridiculous interest rate.
I tried one customer service line and got voice mail options that did not include any for changing interest rate and did not include ever speaking to a real person. I tried several of the options and just went endlessly into voice mail options, none useful for my purposes. So I hung up. I found another number for them and called that. Got exactly the same thing. So I went online and sent them a message through their message form. The information on the website said they would respond within 12 hours. That was two days ago. And of course I have gotten no response. So I am nowhere with that card, yet.
Then I called citiCards. I spoke to a real person. He talked fast and with an accent I did not recognize (not Indian). He reduced my rate by ten percent, from 23.74 to 13.74%. That's a victory. At the same time I somehow signed up for credit protection that I do not want. I can't cancel it until I actually see it on a bill, and you can be sure I will cancel it then. I wish that I had a tape of that phone call because I had so much trouble understanding what was happening that I kept asking him to repeat and repeat. Ultimately I couldn't take it any more so I did not try to cancel that credit protection thing on the phone. A victory, nonetheless. A reduced rate.
I called Chase. I have two cards, one personal, one business, with Chase - both Amazon cards. For some reason I have not been getting my business statements and I had charged something a while back on it and thought that I had paid it off. Just a few days ago I learned, from a phone call, that in fact I still owed something and that it had not been paid in over 90 days. Well, that sucks. I made a payment then but of course that 90 days is bad. I also made one late payment on the personal card, a few days late, this month. My head was just not on straight and I got it done late. Because of the 90 day thing I understood that the interest rate on that card could not be reduced. But I was really irritated to learn that the personal one could not be changed either because of one payment a few days late. After years of paying on time and more than the minimum. The guy said I could try again in a couple of months. I said "sure" in a sarcastic tone and hung up. So no victory there.
I will call about my paypal card today. I forget what bank has it now - like the others, it has changed several times. I have a couple of cards that I have not used at all - Ikea and Dillards - and maybe I can get those rates reduced, but I suspect not. They probably like to see some activity first.
So far, then, one for three. I have an idea about Bank of America. These systems all seem to work the same, and most of them say you can talk to a real person by pressing zero. Even though the BofA operator does not say this I suspect it's true. So I am going to try that.
EDIT: October 28, 2007
I called the BofA number again. This time I pressed 0, even though this was not an option offered to me. And it worked. I got a real person. I told him what I wanted to do, to lower the interest rate. He said that the people to call for that are not working today, and he gave me the number to call tomorrow. In the meantime he tried to talk me into opening a line of credit at a lower interest rate so I could move all of my credit card debt there. I wasn't going to apply for that without thinking about it, so I said no thank you.
EDIT: October 30, 2007
I called the new number for BofA. I spoke to a person who was actually personable, like a real person. For those of your with B of A cards who want to try this, call 1-800-718-6135.
She reduced my percentage rate to just under 25% from just under 29%. Not much of a drop. She also suggested that I apply for a "Gold Option Line of Credit", which I did (she transferred me to someone else). The line of credit was denied. It sounds like a better option than a credit card for those who qualify: unsecured, up to $50,000, no annual fees, no prepayment penalty. It is for a set term, like a mortgage.
Wednesday, October 24, 2007
Prosper Days
I will be going to the Prosper Days with a press pass. So I will be recording my experiences and what I learn from it here.
That will be February 25 and 26, 2008. You can read about it here.
That will be February 25 and 26, 2008. You can read about it here.
A prosperous trip?
I just read of "Prosper Days" on the prosper website. Prosper is the place where real people, like me, can loan money to real people, like you. Or get a loan. I have made three small loans so far and am happy with the regular little payments coming in. A lender can do much better here than with a savings account, if she manages loans to minimize risk. The basic rule there is to look at the credit rating and make small loans. I am guessing that at Prosper Days there is a lot more information that can help me make the most of what I can lend.
For the buyer there is certainly a plus, too. You can ask for a loan at a much lower rate of interest than you are already paying on credit cards and other loans. And it's nice knowing that average joes like me are getting the money instead of money-grubbing institutions.
So I am considering attending this conference. It's in San Francisco and is just a day and a half. That would mean two nights' lodging there, not so bad, and registration.
For the buyer there is certainly a plus, too. You can ask for a loan at a much lower rate of interest than you are already paying on credit cards and other loans. And it's nice knowing that average joes like me are getting the money instead of money-grubbing institutions.
So I am considering attending this conference. It's in San Francisco and is just a day and a half. That would mean two nights' lodging there, not so bad, and registration.
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