Financial Cliff Notes
FICO Launches Changes to Credit Score
Fuel Consumption Facts
Prepare Before You Shop to Get the Best Car Deal
 
Tips to becoming the cash conscious college student

This year Fair Isaac, the originator of the FICO score, is revising the formula it uses to generate its credit scores. The new formula will allow for several changes, including one which could affect young people who are seeking to establish a credit history.

The formula will remove the benefit to being an authorized user on another person’s credit card account. Historically, being an authorized user on an account was a means of establishing credit. Many parents added children as authorized users on credit card accounts in order to help them build their own credit score. With the new formula, being an authorized user will no longer help a credit score, and may actually hurt it.

This change is in response to the practice of “piggybacking” in which some Web sites allow consumers with low credit scores to benefit from someone else’s good credit record. These companies promise to boost credit scores by adding a client as an authorized user on the credit cards of strangers with excellent credit, for a fee.

Other major changes deal with late payments. Previously, one late payment on a credit report would wreck havoc on a score. With the revised formula, an occasional late payment will not do much damage to a score; however, a pattern of late payments will destroy it. In addition, applying for instant store credit will no longer cause as much damage to a score under the new system.

Transunion and Experian will be using the new formula, called FICO 08. Equifax will not adopt the new formula due to an unrelated lawsuit filed against them by FICO.
  Fuel Consumption Facts

With record-breaking summer gas prices, you may be looking for ways to save. Here are some problems that can make your vehicle use more gas:

  • Misaligned front wheels can increase fuel consumption by 2%.
  • Under-inflated tires can increase fuel consumption by 5%.
  • A malfunctioning thermostat in the cooling system can increase fuel consumption by 7%.
  • Worn spark plugs and other ignition components, as well as clogged air filters, can increase fuel consumption by 11%.

Altogether, these problems could increase your fuel costs by a whopping 25%! The point is, a well-tuned and well-maintained car uses less fuel.
  Prepare Before You Shop to Get the Best Car Deal

Now could be the perfect time to purchase a new car. According to consumer advocate Clark Howard, declining auto sales could mean that dealers are ready to offer great deals. Sales figures for March show that GM and Chrysler are down 20% and Ford is down 14%. Even Toyota is reporting a 10% decline.

If you want to take advantage of the deals, prepare before you shop. First, determine how big a car you need, how important fuel economy is to you and what safety features you want. Also, decide beforehand what features you need. This will keep you for spending more on extra features. For help in determining the best car for you, investigate resources such as Edmunds’ buyers’ guides (Edmunds.com), Consumer Reports (consumerreports.org), the Kelley Blue Book (kbb.com), and J.D, Power and Associates (jdpower.com). These resources will include vehicle descriptions, ratings, reviews, comparisons and other useful information.

Next, determine what monthly payment you can afford. Once you have determined that amount, stick to it. Don’t be talked into going beyond what you can comfortably afford. If you have a trade in, research what the vehicle is worth before you accept a trade-in offer.

As you shop, visit several dealerships. The more information you have as you search for the vehicle you want, the better deal you will get.

 
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