Tom Dziubek and Flexo speak with Mark Frauenfelder, the creator of Boing Boing and the editor-in-chief of the MAKE magazine. Frauenfelder also writes for Credit.com, and within this interview he shares details about some of this website’s new services including the Credit Report Card (reviewed here).
Frauenfelder is a proponent of the do-it-yourself (DIY) lifestyle, and he explains the source of his interest in this lifestyle as well as details about a forthcoming book on the subject.
To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.
[00:00] Introduction from Flexo
[00:32] Interview with Mark Frauenfelder
– [00:55] Boing Boing
– [01:50] Mark’s move to the Cook Islands
– [03:59] MAKE magazine
– [05:15] Mark’s involvement with Credit.com
– [08:12] Services offered by Credit.com
– [09:05] Credit.com vs. credit reporting bureaus
– [10:12] Personal information on Credit.com
– [11:21] Improving your credit with the Credit Report Card
– [13:57] Building cigar box guitars
– [15:45] Beekeeping
– [19:21] Upcoming book on do-it-yourself (DIY) experiences
[23:42] End
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For a few years, Credit Karma has been offering a product that lets consumers see what lenders and employers see when they look at the consumers’ credit reports. After securely and privately providing your personal information, Credit Karma retrieves your credit report from one of the credit reporting bureaus, either Experian, Equifax, or TransUnion.
Credit Karma then analyzes your details and assigns a grade, A through F. The various categories receiving grades relate to the items that determine your credit score. Lenders review these items when deciding whether to extend credit to you, how much credit to extend, and at what cost.
This is a free service, supported by advertising.
Yesterday, Credit.com announced they will also be offering a similar free service, providing a credit report card to help you evaluate and improve your credit report.
So which service is better? I took both services for test drives.
Credit report cards
Here are some of the most obvious differences. Credit.com assigns grades to the following categories: Payment history, debt usage, credit age, account mix, and inquiries. Credit Karma’s categories are similar: Open credit card utilization, percent of on-time payments, average age of open credit lines, total accounts, hard credit inquiries, total debt, and debt-to-income ratio. More categories, and therefore more information, is more helpful.
To look further into the health of my credit, Credit Karma offers charts in each category, placing my result within the spectrum of results from the Credit Karma Community, all users of the website. So I can see, for example, that the grade of “C” Credit Karma gave me for “Total Accounts,” which includes how those accounts are divided among revolving credit accounts and loans, puts me in a group of users who received an average score of 683, significantly lower than my score.
This tells me I’m doing well enough in the other categories to make up for this deficit but improving my mix of accounts will improve my score further.
I also received a grade of “C” from Credit.com for the “Credit Mix” category. Credit.com doesn’t offer a chart, but it does include details about my types of credit (23 revolving credit accounts, 0 mortgage loans, 1 auto loan, 6 student loans) and excellent suggestions for specific actions I can take to improve in this category.
Here are some screen shots. Click on the thumbnails to see the full-size images. [click to continue…]
If you’re an AAA member in California, Hawaii, New Mexico or Texas, you’re suddenly eligible for a free credit monitoring service, provided by Experian.
While I was looking through the fine print (a free service for you provided by ConsumerismCommentary.com), I found this, which gave me pause:
You are receiving a complimentary credit monitoring membership. Your membership is effective for the period disclosed to you when you received your activation code. Should you choose to discontinue your membership for any reason before expiration of the then applicable membership term for which you are entitled, you may cancel your membership by calling the toll-free number listed on this Web Site or the toll-free number listed in the welcome materials sent to you. Please be aware that if, at the end of your promotional membership, you decide to continue your membership for a monthly/annual fee, you will have an opportunity to re-enroll at a separate website with different Terms and Conditions.
But the e-mail I got from AAA stated:
This benefit is complimentary to AAA members—there are no hidden fees or charges. You won’t be asked to provide any payment information when you sign up.
There was an offer along the way to see my credit score for $5, but I’m happily using the free CreditKarma service for that.
When it was all done, there was a big button labeled “View Credit Report”, which isn’t the same as “identity theft monitoring”, but for all of our sakes, I clicked it. Thankfully, there was a menu option (all the way at the top, very small font) for “Credit Monitoring”. Here’s what you actually get:
- Daily Monitoring of your Experian Credit Report
- Email Alerts of key changes to your Experian Credit Report
- Dedicated Representatives for Identity Theft Victims
- Experian Credit Report
I love e-mail alerts, so I’ll be keeping this on for a while, and I’ll report back on its usefulness.
If you’re a frequent reader of this (or any other personal finance blog) you’re familiar with credit scores and credit reports, and the advice to check them often.
These resources detail your financial history and provide a measure of your supposed financial risk. They’re also useful tools to determine the safety of your identity. However, when was the last time you checked your ID Score?
MyIDScore.com is a new company that offers what they call, “a new way to quickly assess your risk of identity theft.”
Your ID Score is:
A statistical score that’s based on technology currently used by leading communications, financial services, retail companies, healthcare providers, government agencies, and consumers to assess your risk of identity theft. These companies use ID Analytics’ scoring technology to ensure that fraudsters do not apply for goods and services in an innocent consumer’s name.
Basically, your ID Score will give you an overall picture of the security of your identity, just as your credit score gives you an overall picture of the state of your finances. Monitoring every single part of your identity that gets tossed around is a big job, and MyIDScore.com wants to help.
The interesting thing is, even though you’ve probably never heard of ID Analytics, you’ve almost certainly had your data analyzed by them, notes an MSNBC.com article:
ID Analytics is not exactly a household name. That’s because most of us never deal with the company directly. But if you’ve purchased a wireless phone, have a credit card or applied for a retail charge card, there’s a good chance the company analyzed the information on your application.
How does it work?
After providing your personal information, ID Score utilizes information provided by retailers, governmental bodies, financial service providers, healthcare companies, communication providers and other companies to determine how you can protect your identity.
What about privacy?
Obviously, if you’re providing all of your personal information, MyIDScore.com will have access to quite a bit of what goes on in your life. By doing this, it’ll be easier to monitor what goes on in your life, but you won’t be the only one doing it. The site does take privacy very seriously, and you can choose how your information is used.
Is it worth it?
Monitoring your identity is becoming more and more of priority, especially since the ways in which someone can access your personal information are increasing exponentially. IDScore may be the right fit for some people, and it seems to be an extremely useful and powerful tool.
Am I going to use it? Probably not right now (knock on wood). I’m comfortable with the “old school” methods I’m using to protect my identity for the time being. I can see myself considering IDScore.com in the future, however.
It’s good to know that there are tools out there that can help you keep your identity safe. Many people would benefit from a product like this, and I’d recommend it to anyone who is even moderately worried about their identity.
Every so often I address questions and comments I receive via email. If you have a question, please contact me using the form on this page. I try to respond to everyone, but it might take a while before I read every email I receive.
From Mary Lynn:
I really liked your article that explained how freecreditreport.com isn’t free at all. I was wondering if you knew of any credit report site that doesn’t ask for a fee! I don’t have any credit cards since I just turned 18 and graduated from high school but I need a credit report for this job I’m taking. Please, if you know of any, let me know.
First, to answer Mary Lynn’s question, the one and only website for retrieving the government-mandated three free credit reports each year, one from each credit reporting bureau, is AnnualCreditReport.com. Even there, since the site works with the for-profit reporting agencies, they will try to sell you something. Steer clear of the offers and get your free credit report once every four months.
I find it odd that your employer requires you to get your own credit report and present it. Employers, if they must to a credit check on prospective employees, should do it without requiring you to do anything other than provide your Social Security Number.
From Jake T.:
You seem to open a lot of bank accounts. How many different banks do you have accounts at, and which one is your favorite?
I do have a diversified set of savings accounts. I wrote about reducing your number of banks as a way to simplify your finances, but I like the idea of keeping money spread around. Without Quicken, this would be an organization nightmare. I have accounts with Wachovia (my main brick-and-mortar bank for both business and personal savings and checking), TD Bank (formerly Commerce Bank, open on Sundays, my secondary brick-and-mortar bank), Ally Bank, FNBO Direct, HSBC Direct, ING Direct, E*TRADE Bank, and Emigrant Direct. I’m also in the process of opening an account at EverBank. Of these, ING Direct and FNBO Direct stand out as favorites.
If you have questions, let us know. You can email your questions directly to me (or to Smithee, Jeff, or Tom) or leave your questions in the comments area.
Your money is important, and so I want to make sure I’m telling you the truth in every instance. A few months ago I wrote an article called What You Need to Know About the FICO Update, which contained some news about the process of “piggybacking”:
Not too long ago companies started offering to add someone with poor credit as an authorized user on an account belonging to someone with better credit. After a while, the credit rating for the less fortunate person would improve. Under the new formula, this sort of—let’s be frank—trickery will not be rewarded. Spouses and children, however, will not be penalized in the same way.
Throughout that day, a commenter named Bill tried to tell me I was wrong, and since the e-mail address he used was linked to a company that provides such a service (he didn’t make the address public, so I won’t, either), I still had my doubts.
And I’ve had doubts ever since, in both directions. I thought it’d be worthwhile to wait a few months and see if any news outlets made retractions or corrections to the initial flood of reports that FICO 08 will no longer reward piggybacking. So far they haven’t. Here’s one from May 13th that says the same thing again.
So, I thought, “Well, why not just see what Fair Isaac (the FICO people) say?” And after searching for “fico 08″ on their Web site, exactly one useful page shows up: Fair Isaac Innovation Will Restore Authorized User Accounts to Calculation of FICO 08 Scores.
What that article says is this:
[FICO's] scientists have discovered a way to restore authorized user credit accounts to the calculation of FICO® 08 credit scores while materially reducing any potential impact to the score from tampering. Fair Isaac is now adding the patent-pending technology advance to its FICO® 08 formula. The company estimates that more than 50 million U.S. consumers are legitimate authorized users on another person’s credit card.
It’s that last phrase that I think is the most important: authorized users on another person’s credit card. So, if you have the authority to charge something to a credit card that also has someone else’s name on it, that’s not piggybacking. That’s being an authorized user, and your credit score will benefit from being associated with that person.
In the descriptions I’ve read of services that provide piggybacking, you don’t get access to the credit line or the authority to charge anything on a stranger’s card. Of course you don’t; that would be absurd. I think this is the gap where FICO’s scientists are able to distinguish between authorized users and piggybackers, and why my original conclusion still stands.
Here’s a good article from Bankrate (that updated a previous article) which explains FICO’s:
- original decision to ignore all authorized users
- the protests (from people like Bill)
- and the subsequent tweaking that FICO made to keep authorized users, but still ignore piggybackers
Here are a couple of key phrases:
Legitimate authorized users, such as spouses, parents and children, have relationships with the primary accountholders and reasons to share access to the accounts.
Fair Isaac said lenders complained that using FICO 08 would inhibit compliance with Federal Reserve Regulation B, which requires lenders assessing a married person’s credit risk to consider the credit history of accounts shared by the spouses.
Fair Isaac is keeping the specifics of the new analytic approach secret but says it has found a way to restore authorized-user accounts to the formula but also reduce the impact of piggybacking.
To conclude: authorized users = spouses, children, people with a relationship to the cardholder. Piggybackers = unauthorized.
I don’t want to riddle your screen with links to each news outlet’s report, so I’ll just direct you to Google News for more. Check out a comprehensive list of articles from 2009 that all agree. (Well, they all agree, except for the ones that are reproductions of press releases from companies that offer piggybacking services.)
Fair Isaac, the company that is responsible for the formula behind your FICO score, has been planning an update for a long time, and it’s now being put into practice, but not without a few wrinkles.
Called “FICO 08″, the new re-tooling should provide a more accurate risk assessment for anybody with a credit history. The most alarming thing right now is that while Fair Isaac is ready to roll out the new formula, according to the Chicago Tribune only one of the three credit reporting agencies, TransUnion, is making use of the new rules. Equifax is going ahead with plans to use FICO 08, but Experian may take quite a bit of time due to pending litigation with Fair Isaac. Suffice it to say that this won’t have an overnight impact on your ability to borrow.
Eventually, though, here’s what it means:
No more piggybacking
Not too long ago companies started offering to add someone with poor credit as an authorized user on an account belonging to someone with better credit. After a while, the credit rating for the less fortunate person would improve. Under the new formula, this sort of—let’s be frank—trickery will not be rewarded. Spouses and children, however, will not be penalized in the same way.
Bad accounts under $100 are no problem
Even if it goes to a collection agency, if you foul up on an account with a balance of less than $100, it won’t heavily affect your score.
A single serious flaw won’t ruin everything
With the older system, one big problem, such as a vehicle repossession, could torpedo your entire credit score. Now, if all other accounts are in good shape, one serious issue will not matter as much. – NewsChannel5
Available credit means more
This may be a case of unfortunate timing, with Americans’ credit lines shrinking as a result of fearful banks, but your future FICO score will depend more heavily on how much available credit you have. In short: keep your accounts open, even if you’re not using them.
You’ll want multiple types of credit in your name
In order to have a high score in the future, it won’t be enough to have a department store card or three, you’ll be rewarded more for having a loan or two in the mix, as well.
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