In the past couple of years we’ve heard announcements from several companies who have had their databases hacked and private customer information compromised. When this happens the data breached isn’t always financial data, but nonetheless you still probably don’t want your personal information floating around out there where it can be used by a malicious hacker.

Just last week Zappos.com, an online shoe retailer announced that they had been the victim of a cyber attack, and although credit card information hadn’t been accessed, there was still plenty of private information compromised. As such they announced to customers that all passwords would be reset, and all users would have to choose a new password. They also suggested changing password information on other sites where similar passwords were used.

Not only is it a headache for the company when something like this happens, but the potential for identity theft and credit card fraud could be a huge liability for us as consumers.

So what can we do to protect ourselves from finding ourselves in a situation like this?

How To Protect Yourself When Shopping Online

There are a variety of ways that you can protect yourself from hackers, criminals and identity thieves when shopping online.

• Limit your exposure:  The best way to avoid having your information compromised is to limit where you have it stored.  The less places you save your information, the less databases you’ll be in and the less risk you’ll be exposed to.
• If the site looks fishy, stay away:  If you’ve gone to a site and it looks a little risky to be shopping there, trust your instincts.
• Make sure you’re checking out on a secure page:   When you’re checking out on an e-commerce site, make sure to look for the https:// in the url bar, instead of just http:// on the checkout pages.  If the page isn’t secure, avoid entering any personal or financial information.
• Avoid public Wi-Fi or hotspots when shopping or accessing financial data:  When shopping online, try to avoid entering passwords, credit card numbers or other personal information when on a public Wi-Fi access point or hotspot.  Yes, it’s convenient, but it can also leave your data accessible to hackers in some cases.  Also avoid financial sites like bank accounts, mint.com, adaptu.com or other aggregators. If someone gets your password for those accounts you could lose a lot of money, and you may have no recourse.
• Never give your Social Security number online:  If you’re shopping on a site and they ask for your social security number, it’s probably a scam. They shouldn’t have a need to use your social. The exception may be sites like TurboTax and other tax preparation software where you need to enter your number to file taxes.
• Check your credit reports and scores:  Most people these days will do some shopping online.  To make sure your data isn’t being used in a negative way, make sure to check your credit reports regularly.  You can get one free credit report from each of the credit agencies once a year through http://www.annualcreditreport.com.   You can also check your free credit scores from free websites like Credit Karma  or Credit Sesame on a regular basis.   A drop in score could mean something is up.
• Use anti-virus and anti-malware software: Make sure to have a regularly updated anti-virus software installed on your computer, and make sure it is set to update on a regular basis.  Also make sure that it’s actually set to scan at regular intervals.  My in-laws had the anti-virus software, but never updated it or scanned – leaving them vulnerable.   When I did update their system we found they had a newer virus that it took me several hours to remove.
• Use a credit or debit card with protection:  When shopping online make sure to use a credit or debit card with identity theft protection of some kind – just in case. Some credit cards also offer one time use credit card numbers. Use them!
• Be careful what you click on:  When you’re online use some common sense and don’t click on links when you don’t know the source of the email, social media message or e-card.  All are ways that viruses are spread, so only open links from known sources.
• Use a third party payment system:  Consider using a third party payment system like Paypal when buying things online to add an extra layer of protection – where your credit card information isn’t stored with the retailer.
• Use strong passwords:  Make sure to use strong passwords that include random numbers, capitalized letters and symbols.  Avoid using family member names, pet names or the word “password”. >

When it really comes down to it you just need to use a bit of common sense, follow the guidelines mentioned above and be wary of where you’re putting your personal information.

Note: If the worst case happens despite your best efforts, be prepared to follow through and know who to call in case your identity is stolen. Here’s a identity theft checklist to walk you through what steps to take next.

Have you ever had your personal information stolen or compromised? What would you have done different? What steps do you take to avoid having your information stolen?

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This was a year of several big ticket purchases for the Extra Money Blog household and throughout the year, my advocacy of using credit cards responsibly was further reinforced and validated by each big ticket purchase experience.

Note that I mentioned using credit cards responsibly. Those without discipline shouldn’t be carrying plastic to begin with. It is because of the undisciplined that many personal finance writers often trash credit card usage, and rightfully so. However, there are circumstances where using a credit card over cash or checks is really the most prudent approach.

Using Credit When Giving A Down Payment

One of those circumstances is putting down a down payment or deposit on a deliverable (whether a good or a service) that is to be expected sometime in the future. Why is this a qualified circumstance? Consider a local home remodeling store in your city goes out of business. What happens if you ordered carpet and prepaid a portion of it at the store while awaiting delivery and installation on a future date?

Most businesses are volatile just because they are a business and their success is predicated on several variables that they cannot control. For example, a local home remodeling store in your city relies on the city’s residents to have discretionary income to spend on home improvement and remodeling projects. It also relies on home ownership and the establishment of new homes. But what happens when the housing market slows down?

File A Dispute To Avoid Losing Money

Something similar happened to us this summer. My wife and I were shopping around for basically an entire bedroom. We wanted to furnish it with a twelve inch thick memory foam mattress and box spring bed, a maple bed stand with headboard and two night stands on each side. In addition, we had lamps, dresser cabinets and drawers picked out to match the bed stand.

Just a week after our visit to the store, the store closed its doors. Fortunately for us, we had paid for the items using our credit card and were awaiting delivery. By rule, if a transaction exchange is not honored by the time it is promised, you can file a dispute with your credit card company to get a refund on your payment.

Whether a credit card can collect from the business that shut down is irrelevant to you as the customer. The credit card company is obligated to reimburse you for your loss. It is part of the risk that a credit card company takes when it agrees to process payment charges. They key point to remember is to file the dispute within 60 days or you lose the right to a refund.

Use Credit To Minimize Risk

This risk management strategy can be applied to other transactions as well. Let’s say you are planning a family vacation to a small town and plan on staying at the local bed and breakfast. When making reservations, pay with your credit card instead of sending them a check or “PayPaling” over the funds. Yes, I’ve actually paid for a bread and breakfast stay through PayPal (oooh technology).

When you make the reservation, ensure that it is no more than sixty days outside your planned stay. By doing this, you are assured some safety in the event the bread and breakfast shuts its doors for whatever reason.

Credit cards are not always evil if used responsibly and appropriately. Hope you found this tip helpful.

Can you think of other strategic uses of your credit card that can benefit your pocket?

Sunil owns over a dozen profitable niche websites and is the author of “How to Go from $0 to $1,000 a month in Passive and Residual Income in Under 180 Days All in Your Spare Time”, a FREE report you can download instantly from his blog, where he discusses expedited wealth building through solid personal finance, entrepreneurship and internet marketing. In 2007, he sold his ecommerce website for $250,000 to a top Ebay Power Seller and since then has sold several niche sites for five figures each. You can read more about him on his Extra Money blog.

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Wow. It’s been two years since we had our credit cards, and we’re still alive. We made it two years without borrowing! But was that the best financial decision?

My Credit History

I remember my very first credit card. It was a Chase card. Oh, how I thought I was special when I received it in the mail. I was ready to enter into the realm of fiscal responsibility, become an adult, and pay off my credit card in full every month.

And I did. I always paid my credit card on time, every time.

In preparation for marriage, my soon-to-be wife and I sat down with a Wells Fargo representative and was sold on the idea of getting another credit card. This time, it was for “overdraft protection” so that anything we overspent in our checking account would be transferred to our credit card. This was intended to save us overdraft fees, of course. Or was it?

That’s about the time I read Dave Ramsey’s 7 Baby Steps.

A New Beginning – Without Credit Cards

Everything changed. All of the sudden I saw money in a whole new light, and started understanding the dangers of credit.

Although I had never gone into any credit card debt (besides what I owed each month), I identified two ways having credit cards was holding me back:

• I didn’t have an emergency fund. I thought that if we got into a bind, we would always have our credit cards to rely on. This might have plunged us into a sea of credit card debt.
• I didn’t strive for a better job. Because of the false sense of financial security my credit cards gave me, I didn’t see the value in getting a higher paying job.

So in a Dave Ramsey style ceremony, I cut up the credit cards with the largest pair of scissors I could find – with my wife’s approval, by the way.

That day was a turning point. We set our course on something we felt was better. But was it the best decision?

20-20 Hindsight Tells All

Looking back, we find that we don’t regret our decision to destroy our credit cards! It pushed us to follow a financial plan that kept our household financially secure.

The pressure of not having a safety net pushed me to find a different job: one that nearly quadrupled my income. We paid off our student loan debt, and built a fully funded emergency fund! We also were able to save some money toward an account designated for my wife’s continuing college education.

Sure, we might have achieved some of these goals without sacrificing the cards, but I’m pretty sure not all of them – and not as quickly as we have.

What About Credit Card Rewards?

We certainly missed out on some sweet credit card rewards. But later we learned about a financial institution that had a cash back debit card. We signed up, and are enjoying over $550 in perks every year.

What About Building Our Credit?

Our goal is to have a zero FICO score. Weird, isn’t it? Let me ask you this: if you don’t plan on borrowing in the future, why would you want a good credit score?

Although we may pay a little more for on our insurance premiums, it’s well worth not having the risk of going into debt.

We do plan on getting another home in the future, but plan on a mortgage with a company that can look at other factors besides credit score.

Are You Ready To Cut Up Your Cards?

You might not be ready to cut up your credit cards like we were. But let me tell you, two years of being credit card free has been nothing short of wonderful.

Meet me in the comments and let me know your thoughts! It’s okay to disagree!

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Many credit card companies urge their consumers to consider buying credit card payment protection.  This type of insurance can put your payments and interest accrual on hold should you become unemployed (for up to 24 months in some cases).  In the event of your death, payment protection can pay off the remainder of your credit card balance.  The question to ask is if it is a wise use of your money.  Consider my parents’ own example.

An Example Of Utilization Of Payment Protection

At the end of 1985, my mom and dad were 36 and 37, respectively.  They had just gotten on their feet again financially because my dad had finally been able to obtain a job after two years of unemployment.  They had $10,000 in credit card debt (mainly because they used credit to help float them through the long stretch of unemployment).  In today’s dollars, that is $20,000 in credit card debt.

They had not taken out individual, private life insurance policies because they thought they couldn’t afford them.  What they did have were two small life insurance policies, one from my dad’s employer that covered him automatically, and one from the credit union that they paid a small amount for monthly.  His total life insurance protection was less than 2 times his annual income, and he was the primary breadwinner.  They also had credit card payment protection on their cards.

Six months later, my dad passed away; he was diagnosed with colon cancer in late January and passed away by early May.  My mom was very grateful for the credit card payment protection as the balances were paid in full upon my father’s death, and she used the little bit of life insurance to pay off their house.

Why Credit Card Payment Protection Is Not A Wise Investment

Based on this experience, one might expect me to endorse credit card payment protection plans, but I do not.   Most plans require that the user pay an amount per hundred dollars owed on the card, usually .89 to .95 per $100.  In today’s dollars, getting payment protection on my parents’ credit card debt of $20,000 would cost them an average of $178 a month in payment protection alone.  To make matters worse, many cards offer a maximum payout amount, ranging from as low as $5,000 up to $25,000.

Most term life insurance policies cost far less than the amount someone $20,000 in credit card debt would pay on payment protection coverage. For example, my husband and I each took out 20 year term life insurance equal to 10x our income when we were 31 and 33 respectively.  My husband’s policy costs us $32 a month, which is far cheaper than the $178 a month required for payment protection to cover $20,000 of credit card debt.  I would love to go back in time and tell my parents to forgo the credit card payment protection and to instead buy term life insurance policies for each of them.

While the credit card debt was wiped out upon my father’s death and the house was paid off, because they were underinsured, my mom only had a small amount of money to live off for the first year after my dad’s death.  She had been a homemaker and an in-home child care provider for the 15 years they were married; she had no college education, and yet she found herself having to enter the workforce.  The term life insurance policy, had they purchased one, would have provided her with enough money to pay off the credit cards and her home and still have money to invest and live off, giving her time to pursue her education so she could have found  a career she enjoyed.

Even if life insurance policies were more costly 25 years ago, it still would have made more sense to buy a term life insurance policy instead of payment protection as it provides much greater security.  Instead of paying for credit card payment protection, calculate how much it would cost you monthly and use that money to invest in a term life insurance policy.  Use the remainder, if you have a remainder, to pay down your debt so you don’t need to worry about payment protection.

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Do We Really Need That?

A while back my wife and I were talking about how we needed to get a new TV in our bedroom. It was 2009, and with the digital switchover happening that year, we had two options to consider. First we could buy a digital to analog converter box for about $10 after using our $40 government coupon. Second, we could buy a new digital TV for $400-500. After considering it we both decided we wanted that new TV, after all, we’ve earned it right?

We considered the expense over the next few weeks. We asked ourselves, “Do we really NEED to buy a new TV for our bedroom? Or do we just want to buy it out of a sense of entitlement?”.

We ended up not buying the new TV, and instead bought the $10 converter box. The TV works like new, and we saved ourselves a ton of money.

Entitlement Blurs The Line Between Wants And Needs

The whole experience got me thinking about the sense of entitlement people have in this country today. They want to be able to have everything their parents had, but at a younger age. They want the house, but without saving for a big down payment. They want the fancy car, and they sign up for a 5 year loan at 9% interest. They want the new TV, so they put it on the credit card.

In an article on bankrate.com psychotherapist Olivia Mellan talks about how people confuse needs with wants:

A lot of us in wealthy, overspending America are either born or raised with a tremendous sense of entitlement. We say to ourselves,”I work hard or, I work at a job I hate — at least I should be able to have a Starbucks coffee every day or eat out for lunch.” But of course, those are not needs, they’re wants. They’re pleasures.

Wants and pleasures turn into needs because we feel like we deserve it – even if sometimes we don’t deserve it or can’t afford it.

Having a standard of living beyond our income is almost expected these days. Spending has gone beyond the actual needs of food, water, shelter and clothing, and have expanded to include things like a cell phone, cable tv, bottled water, eating out every day and new furniture. The things people enjoy having become needs in their mind, and without them they don’t feel like they’re living to the fullest.

The better off we become financially, the more we realize that true happiness can never come from the things we own. Instead they come from faith, family, friends and through helping others. All other sources of happiness are fleeting at best, and corrupting at worst.

Are you aware of your wants and needs – and how the line has become blurred in your own life? My challenge to you is to keep close track of what you’re spending this month, and see just how much of your spending is on things you want, but don’t NEED.

Avoiding Impulse Spending On Things We Want

So how do you avoid impulse spending when you’re trying to save or pay down debt? Here are some ideas that I came up with, along with a few from MSN Smart Spending:

• Implement a “touching and talking rule”: Either touch the item 3 times, or talk about it 3 times with a spouse or loved one before actually purchasing it. If you still can justify the expense after that, consider purchasing it if it will fit in your budget.
• Wait it out: Wait a while before making a big purchase. Give yourself some time to mull over the decision before dishing out the big bucks. At our house we try to wait at least a month before buying something, and if we still consider it a good purchase, we’ll go ahead with it.
• Don’t Buy it, Try it: Try borrowing the same or a similar item from a friend. Try it out and see if it is all you thought it would be. Chances are you may realize that you don’t need that Ipod as much as you thought you did.
• Save up and pay cash: Save for the item you want and pay cash for it. By the time you have enough money you may realize you don’t want it anymore.
• Ask yourself if you really need it: Ask yourself, “Do I really need this? If I get it, will my life be significantly improved? If I don’t get it, will my life be substantially diminished?”

When you think consciously about your purchasing decisions, and actually ask yourself if you NEED the things you buy, you’ll be well on your way towards living a less cluttered and more fulfilling life. You might even be able to save some money in the process!

Have you found yourself rationalizing your purchases by telling yourself that you “need” it? Tell us about it in the comments.

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Today I was checking my free credit scores and reports (Here’s how to check your credit for free) to make sure all was OK with my credit situation, when I decided to look a little deeper at my credit report. I wanted to take a jog down memory lane and see just how much debt I have incurred over the years, what those debts were for, and how long they took me to pay off.

What loans have I taken out, and what lines of credit and credit cards have I used?

If nothing else i thought that this exercise may remind me of just how much spending I’ve done over they years, much of it unnecessary.

What Debts Have You Had?

When I opened my credit report from Experian (the credit agency I’ll be using for this post), I see a total of  15 different real estate or car loans, credit cards and other credit accounts.  So what accounts were they?  I’m thinking that’s probably less than the average family.

Real Estate Related Accounts

I have 3 real estate related accounts on my credit report.  Two are associated with my current home – once when we bought the home and once when we refinanced.  The other was a home loan for our townhouse that we bought when we were first married.

• Bank of America: Current mortgage and our only debt.
• Mortgage 2: Paid and closed  upon refinance.
• Mortgage 1: Paid and closed upon sale of our first home.

 Credit Cards And Other Revolving Accounts

I’ve had a total of 7 credit cards or other revolving credit accounts. Of those 2 are currently open and 5 are closed.

An Experian marketing insight  study shows that  overall, consumers had an average of 5.4 open credit cards.  So we’re below the average with our 2 open cards.  To be completely honest, one of the open credit accounts is a JCPenney card we opened a couple of years back when buying a bunch of furniture to save 15%.  I used that card once, paid it off and cut it up.  I forgot to close the account and keep forgetting to purge it every time I check my credit.  Here are the accounts I’ve had.

• Chase Cash Rewards Mastercard: My only open credit card.   We don’t use it very often except for some trip reservations, renting a car and a few other high ticket items because of the extra protection and insurance the card gives. Zero balance.
• JCPenney Store Credit Card: Opened to buy some furniture and never canceled or used again.  I’ve still got to cancel this card.   Zero balance.
• American Express Blue:  Amex card that I got while I was in college and only canceled a year or two ago while taking the Dave Ramsey FPU class.
• PayPal Credit Card:  I honestly don’t remember having this credit account, but it is closed now and wasn’t ever really used.  It must have come with my PayPal account or something?
• Sears Store Credit Card:  I believe I got this card while I was in college and buying a TV in order to save 10%.   Used once and then canceled.
• Chase Visa Card: Another credit card opened during college for a free t-shirt. I had the card (and used it!) for several years before wising up and canceling.
• US Bank Line Of Credit: Line of credit at our old bank.

Installment Accounts Including Car, Boat, Student Loans

I’ve had another 5 loan accounts over the years for things like cars, student loans and a wedding ring.  I think this number might be quite a bit lower than a lot of families as well as I’ve only purchased a couple of cars using a loan, and had one student loan.

• Topline Credit Union: 3 year car loan that was paid off early.  This was my last ever car loan.
• Chase Automotive Finance: 3 year car loan paid off in 2 months.  I got the loan, and then paid it off fast after getting a loan with a better rate (see above).
• US Bank Auto Loans: 5 year car loan paid off in 3 years.
• Jewelry Store Financing:  Buying my wife’s wedding ring.   0% interest over 1 year, paid off in 1 year.
• US Department of Education: 10 year student loan, paid off in 6 years.

So there it  is, that’s the extent of my credit and borrowing since I turned I turned 18, so many moons ago.  If you add up the total amount of credit used or loans taken out across all 15 accounts, the total comes out to well over $600,000.  Of course the actual total is much lower than that since we never had to fully pay off 3 mortgages.   Still, that’s a lot of loans and credit, and interest paid.

What Could You Have Done With Money You Paid In Interest?

While we feel pretty good with where we’re at today in our financial lives, looking back over the amount of credit and debt we’ve used over the years is really eye opening.

What could we have done with all that money we spent on interest and credit over the years?  Would the amount we  paid on credit total up to a nice nest egg for your retirement?  How much could that money have turned into had we invested it at 25 instead of getting used car loans and using credit cards and paying a ton of interest?

How about you?  How many credit cards, real estate and other credit accounts do you have on your credit report?  Does looking at your credit report make you realize just how much money you’ve spent over the years on principal and interest?

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Over the years I’ve never really been someone who spends large amounts of money, but if I’m completely honest I haven’t exactly been frugal all the time either.  When I was younger I never really denied myself the things I wanted, even when I didn’t necessarily have the cash on hand to buy it.  If I could put it on the credit card and pay it off within a month or two I’d do it.  I had fallen prey to the idea that using credit is normal and acceptable, and that saving up and paying cash was for suckers.   Over time, however, smaller purchases have a way of adding up.

When I was at college I can remember walking through the student union on campus, seeing the multiple tables set up by credit card companies to sign up unsuspecting students to their first credit card.  Some of those tables actually had lines of people waiting to sign up and get their free t-shirt, school blanket or cheap school frisbee – in exchange for taking on a credit card, and starting their financial lives on the wrong foot.   Most people probably didn’t have those free t-shirts or frisbees for more than a year or two, but in the end those credit cards followed  many of us around for years to come.

While at school I also amassed what felt like a fortune in school loan debt.  In the end I had about $23,000 or so in school loans. Today that doesn’t seem like much, but at the time for me it seemed like a lot.

While I was busy building up my debts in school through school loans, credit card debt and irresponsible spending – I always had an uneasy feeling in the back of my brain that told me I was doing things I was going to regret later.  Many in society tell us that debt is necessary, and that debt is the only way to get ahead, but it just isn’t true.   Living a cash only lifestyle is possible, and will allow you to get ahead that much faster.  Living on debt will leave you broke and borrowing to live.

A Financed Lifestyle Is Fun For A Season.. But You Have To Pay Eventually

My thoughts on debt and money didn’t really start changing until after I married my wife Maria.  She was a bit more fortunate than I in that she came to our marriage with no debt of any kind, except for the mortgage on her townhouse which her parents had helped her to buy.   Even the townhouse wasn’t purchased the traditional way for young folks – with no down payment and unaffordable payments.  They had helped her to put 30% down and keep the payments affordable.

“Debt is the slavery of the free” – Publilius Syrus, Roman author, 1st century B.C.

When I looked at her finances and then at my own, I quickly realized that it was my own debts and obligations that were the proverbial anchor holding us back as a couple.  It was my credit card debt, my car payment and my student loans that were our only debts.  I knew then that if we wanted to get ahead I had to make some changes and starting living a cash only lifestyle. No more financed fun!

The last big debts we signed up for before we started getting things under control were our two wedding rings and our honeymoon to Hawaii.  All of them except my own ring were purchased on credit.   So now we had to find a way to get out from under over $32,000 in credit and student loan debt.

That early in our marriage I wasn’t following any specific plan to get out of debt, I was just following a haphazard plan of making extra payments on our highest interest debt (the credit cards) when I could. While i was working towards paying off the debts, I really didn’t have a solid financial plan or a budget.  I also didn’t have any sources of extra income.

Despite these facts we were fortunate in the fact that we were able to pay off  over $32,000 in debt in about 4 years.  While I’m glad we were finally able to rid ourselves of all debt except our mortgage, if I could do things over I probably would have done a better job of making a financial plan and a budget, and of trying to find some temporary extra sources of income to help pay off our debts faster.

Steps For Getting Rid Of Debt

If I had it all to do over again, here are some steps I would have taken right away to get out of debt.

• Save up for a rainy day: One thing we never did at the beginning was to save up a small emergency fund of some kind.   Because of that, whenever something would go wrong – a car repair, or some home maintenance bill – we’d end up putting it on the credit card and incurring new debt.  Instead of allowing the debt cycle to continue indefinitely, save up an emergency fund of $1000-2000 so you don’t have to worry about small unexpected expenses – and worry about losing ground on your debt reduction plan.
• Make sure you track your money: Get together as a family and do a zero based budget where you allocate every dollar of income to either a spending, saving or giving category. Actually tracking your money can be a seriously eye opening experience.  We were shocked to discover just how much we were spending on eating out every month!  We currently use a great zero based budgeting software called You Need A Budget.  Check out my YNAB review here.
• Make extra income: Sometimes when trying to pay off debt the only way you’ll get ahead is to create extra income of some kind that you can put towards your debts. While your part time work doesn’t have to be a permanent thing, if you can swing it, it can be a great way to reduce your debt that much faster.
• Have a plan to pay off debts: Put together a plan of some sort to pay off your debt.  At our house we used Dave Ramsey’s debt snowball to pay off our remaining debts because it has been proven to work, and it made sense to us.  If you don’t like the debt snowball, find another debt reduction plan to use, but find something!
• Save up a larger emergency fund:   After we paid off our debts, the next step we took was to save up a larger emergency fund for bigger contingencies like a job loss or major medical event. That meant saving up about 10 months of expenses in a saving account.  Now that we’ve reached that amount of savings, we’re also planning ahead for other expected life events like new cars, kids education and other things. We’re saving up cash for those things because we would prefer to live with cash now!

Getting out of debt isn’t easy, and there is no magic bullet.  Like anything worth it in life it just takes hard work, perseverance and a bit of self control. If you make the choice to ditch the financed lifestyle and switch to a lifestyle where expenses are budgeted and planned for, in the end you’ll be happier -and wealthier.

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After the Fair Credit Reporting Act legislation was passed consumers were given the chance to check their credit files every year to check for errors or discrepancies, without having to incur any costs to themselves. The three credit agencies, TransUnion, Equifax and Experian, now will allow you to get one free credit report every year through the government site at AnnualCreditReport.com.  Personally I like to stagger my reports and get one of them every 4 months to stay on top of things.

While you get your credit report for free at the government site, getting your actual credit score used by companies in determining your creditworthiness will cost you an extra fee.    A couple of weeks ago we talked about how you could get your TransUnion credit score for free.  This week I thought I’d look at how you can get your Experian credit score for free.

Free Credit Score AND Report From Quizzle.com

When I was setting up to do this review, I realized that I had been using Quizzle for quite a while longer than I had realized.  I actually signed up for the service way back in March 2008, and have used it to some degree ever since.  Back  in 2008 the site wasn’t as comprehensive, and didn’t have as many options to play around with as it does today, but it did still offer the free credit score at that time.

Before we get started, let’s ask this – how is Quizzle supported, and how can they offer all of this great information for free?

The site was actually started by Quicken Loans, a home mortgage provider.  Essentially they’re giving you all of this great information on their site for free, in hopes that you’ll end up using them as your home loan servicer. While it sounds like they’re going to be spinning off the Quizzle brand at some point, Quicken Loans is still worth a look.   (Read my Quicken Loans review here)

When you sign up you will just need to provide name, address, date of birth, and email address and some other personal information.   You won’t need to provide a driver’s license number and social security number as some other sites ask for, but they will ask you to confirm some information from your credit file.  All in all, a seamless easy process to sign up.

So what information will you find on Quizzle?

Free Experian Credit Score And Report

As mentioned above, you can get your free credit report from the government site mentioned above, but to get your credit score you’ll have to either pay, sign up for a free trial with a credit card,  or use Quizzle.  Quizzle isn’t the only way to get your credit score for free, but it’s definitely one the easiest as far as I’m concerned.  Here are some other sites that will give you a free credit score or report:

• Credit Karma
• Credit Sesame
• AnnualCreditReport.com

When you get your credit score and report from Quizzle, what you’ll be getting is your report and score from the Experian credit agency.  Here’s a look at my credit score trending report.

My Numbers

When you first login to Quizzle you’ll be presented with a homepage of sorts called “My Numbers” where you’ll be shown your credit score, as well as recommendations for Mortgages through Quicken Loans.  You’ll also be shown a quick picture of your finances via debt to income ratio (if you’ve entered some other financial information), as well as a quick look at your Experian report.  It also has a tab showing any savings goals you’ve setup on the site.  In essence it’s supposed to give you an overview of your finances.

My Home Section

The My Home Section takes a look at several different things surrounding homes and mortgages including looking at your mortgage and whether you can save, a section looking at your home’s value (if you have one), looking at details of homes sold in your area (in case you’re thinking about selling), and a section looking at the home buying process for new buyers.

My Money

The my money section looks at your family’s money, and helps you to set up a budget and savings goals.  It  also has a debt planner that can help you to get out of debt. It will ask for income and expenses, and show you where you can improve. In several of the sections Quizzle partners will be promoted.

My Credit

The credit center has all the details about your credit report and score, and talks about how you can improve your situation. It will also show you graphs showing your credit and how it trended over the months and years.  You can also sign up for a  regular credit report and score via one of Quizzle’s partners, more often than the two a year they give you.

Reasons I Use Quizzle

There are a lot of reasons to like Quizzle.

• Can’t beat the cost. ( Free! ) While you can get your credit score elsewhere, this is the only place I know of that you can get it for free without giving up your social security number or credit card.
• Check your credit report and score twice a year: With Quizzle you can check your credit score and report twice a year.  So you’ll be able to add that to the one report you’ll get free from AnnualCreditReport.com, although here you’ll also get your credit score.
• Figure out how to improve your credit:  Check your credit report and Experian score in Quizzle and it will give you ideas on how to improve your score.

Sign Up For Your Free No Obligation Quizzle Account

So with all that said, have any of you used Quizzle?  If so, what do you think of the site, and how do you use it? Do you find it useful?

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The federal government passed the Fair Credit Reporting Act legislation a while back that aimed to give consumers the ability to find out more about their own credit without having to pay one of the credit bureaus for the information. They put together the government website at AnnualCreditReport.com where you can go and get a copy of your credit report from each of the three agencie, TransUnion, Equifax and Experian, once a year.  I like to stagger my reports out during the year, and get a report once ever 4 months from one of the agencies, giving myself a little bit more protection in case something were to show up on my report.

You can get your credit report for free through the government site, but you can’t get your credit score for free.  Your credit score is what is used by companies in deciding if you’re a worthy credit risk, and they’ll charge you a fee to see that.

There are now several ways that you can get your credit score for free that I’ve discussed here in the past including Credit Karma, or using one of the premium credit score sites on a free trial.  Now you can also get your credit score via Credit Sesame.

Get A Free Monthly Credit Score Via Credit Sesame

I just signed up for Credit Sesame this past week after hearing about them from someone on twitter. I had just mentioned getting a free credit score from Credit Karma and someone replied that you could do the same with Credit Sesame.  The site is free, with no obligation of any kind.  Credit Sesame is paid for via partnerships with banks and mortgage companies who pay Credit Sesame if you sign up for a loan or other financial product through the site.  It’s a similar revenue model to Credit Karma and Mint.com, which also make money via referrals.  Of course you’re under no obligation to ever sign up for anything if you don’t want to.

Signing Up

Signing up was very easy. The site will ask you for your basic personal information, home address and whether you own or rent.  Then it will ask for your social security number so that it can pull your credit file from it’s credit agency partner Experian.  It will ask you to verify some information from your credit file before you proceed.

Optimizing Your Financial Situation

Once you’re signed up Credit Sesame, it will then do the work of trying to help you optimize your financial situation. How do they do that?  They’ll analyze your current situation – your loans, mortgages, credit and credit card debt – and then they’ll give you ideas of how you can improve.

First, however, they’ll give you your free credit score from Experian (They use Experian’s “National Equivalency Score”, which is different from your actual FICO score).   My score came up as a 789, which is comparable to the 780 that I got with Credit Karma/TransUnion.

If you own a home, they’ll also give you your estimated home value (from data provided by eppraisal.com) , debt to income ratio and give you ideas about how you can optimize your loans that you currently have.  If they think that you can find a better deal on a mortgage, they’ll tell you that.  In fact they’ll actually run your current financial situation – income, debts and so forth – and give you only options that you will most likely qualify for.   Their technology is now actually integrated with Mint.com as that website’s “home loan finder”.

When I ran Credit Sesame against my situation there wasn’t much they could offer me since our only debt is a home mortgage. They did find us a lower rate on a mortgage, but after closing costs and mortgage insurance it wasn’t much better than our current mortgage – especially given that we may not be living here for more than a few years.  Granted, it was a better deal, so it may be a good option for many folks looking to refinance.

Looking for a home mortgage or refinance? Get a quote here.

What If?

The site also has a “What If” credit modeling simulator that allows you to see how much you could save if your credit score were just a bit higher, or if your income went up.  The site will show you some loans and other products you could qualify for if you just improve your credit score.

Why I Like Credit Sesame

Credit Sesame looks like a decent site, and here are some reasons I suggest trying it out.

• Free to use, free credit score! I like the fact that the site costs you nothing since it’s subsidized by referrals.  You can get your Experian credit score free once a month, and possibly save money by finding a better loan than what you currently have!
  
• Credit score check on a regular basis: I love the fact that you can stay on top of your credit score, and stay abreast of any changes.   Monthly checks as they offer should be enough to catch big swings.
  
• ID theft protection: These days it’s easier than ever to have your identity stolen.  Credit Sesame can be a part of your home grown ID theft protection plan.  The site doesn’t cost anything so you can easily check your credit score every month when it updates.  If you see your score go down and you haven’t really done anything debt or credit-wise for that to happen, you know there is probably something there that needs to be looked into.   Of course it should be noted that this only helps if the thief goes through someone who uses the Experian credit reporting agency.  There are still two other agencies, so Credit Sesame can only be a part of your ID theft prevention plan.  Don’t forget to also look up a free credit report from AnnualCreditReport.com for one of the three agencies every 4 months.  And you can get your free monthly credit score via TransUnion from Credit Karma.
• Suggestions for better loans:  If your home loan isn’t currently the best possible deal, Credit Sesame will give you some better options that you can apply for right through their site.

Conclusion

After signing up for Credit Sesame and trying it out for a short while, I think it’s definitely worth signing up and using it as a part of your own credit monitoring plan.   I’ll be using it in conjunction with Credit Karma, AnnualCreditReport.com and Quizzle, all of which will give you a free credit report or score.  Keeping tabs on your credit doesn’t have to be difficult – or cost you anything!

Credit Sesame is free to use and there is no obligation to continue using it if you don’t want to, so you’ve really got nothing to lose.   Head on over today and give it a shot!

Sign Up For Your Free No Obligation Credit Sesame Account

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The Fair Credit Reporting Act was legislation that put in place consumer friendly credit practices, including allowing consumers to obtain one free copy of their credit report each year from each of the three major reporting agencies.  The three agencies include TransUnion, Equifax and Experian.

While you get your credit report for free, getting your actual credit score used by companies in determining your creditworthiness would usually cost you a little bit more.  For example, when you order your free credit reports from AnnualCreditReport.com, you can also get your credit scores, but there is a small additional fee.   Now there is a free way to get at least one of your credit scores – and you don’t need to use a credit card or anything along those lines.

Free Credit Score From Credit Karma

I’ve been using Credit Karma for quite a while – almost since they were launched back in March 2008.  I believe I was part of a beta test having gotten a code to sign up through another personal finance site.  I’ve been using the site since then – over 3 years, but I just now realized that I had never written a full and comprehensive review of the site.

Back in 2008 when the site was still new I believe they were giving users who signed up an Equifax credit score free of charge.  How was the site supported?  By advertising and by giving users offers to sign up for savings accounts, credit cards, loans and other financial products.

Now three years in, the site is now in partnership with TransUnion.  So when you sign up you’ll be given a TransUnion credit score – free of charge.  There are other ways to get your credit score for free, but none as easy as far as I’m concerned. (Note: Getting a free FICO score is a bit more difficult, this one is from TransUnion)

When you sign up you will need to provide name, address, date of birth, and email address. You’ll also need to provide a driver’s license number and social security number as a requirement of the credit bureau to verify your identity.  If you’re uncomfortable giving your information to a third party to get your credit score, you can probably stop right here.  But having used the site for 3 years now I can tell you I’m not concerned and I’m confident my information is safe.  They use secure connections, and it has multiple security certificates to prove it.

Once you sign up and sign in, you’ll be asked to approve them asking for your free credit score. Once you do your dashboard will update and you’ll see your credit score.  Here’s what my dashboard looks like.

In looking back at three years of credit score history it’s interesting to see that my score has stayed relatively constant.  The only dips I’ve really seen were a time back in 2009 when we were looking to refinance. At the time we had a bunch of inquiries to our credit report by mortgage companies, and our credit score dropped by 12-15 points or so.  No big deal.  But you can definitely see when things were happening.

Reasons To Love Credit Karma

There are a lot of reasons to like Credit Karma.

• The cost. It’s Free! While you can get your credit score elsewhere, this is the only place I know of that you can get it for free without giving up your credit card, signing up for a free trial or some other sneaky
• Check your score whenever you want: With other sites where you pay and sign up to see your credit score, you’ll have to pay every time you check it.  With Credit Karma you can check it however often you want.  I check it monthly as it probably won’t update any more often than that.
• Identity theft protection: In this day and age we all need to be on guard against having our identities stolen, and Credit Karma can be a part of your identity theft protection plan.  Since it costs nothing you can check your score monthly, and if your score goes down and you haven’t done anything to cause it to , there may be something there that needs to be checked out.  Of course this will only help if the thief goes through a company that requests the TransUnion score. So Credit Karma should only be a part of your safeguard.  I would also check your credit report once every four months – one from each agency through AnnualCreditReport.com.  Credit Karma can be just that added extra layer of checking.
• Check out how your score is affected using the Credit Simulator:  Ever wonder how opening a credit card or closing your oldest credit account will affect your credit?  Try the credit simulator to see what might happen to your score.
• Figure out how to improve your credit:  Check your “credit report” in Credit Karma and it will tell you how to improve your score. For me about the only thing I can do is to open more accounts and actually use them.  I only have one credit card and it is rarely used.
• Compare rates and save: Credit Karma also has tools to allow you to compare the rates you have on your current mortgages, credit cards and other credit accounts, and see if you can save by moving them elsewhere.  For example, I was shown that I could save by moving my mortgage to one of several other companies, one of which – CapWest – we reviewed a week or so ago.

In addition to your TransUnion credit score Credit Karma will also give you a couple of other scores in the credit center to show you how you’re doing.

• Auto Insurance Score:Your TransUnion Auto Insurance Risk Score represents whether you are more or less likely to file a claim that will result in losses for the insurance company. This score is calculated using information found in your TransUnion credit report
• VantageScore: VantageScore is a new credit scoring model created by America’s three major credit reporting agencies to support a truly consistent and accurate approach to credit scoring.  It will show you your VantageScore.

Sign Up For Your Free No Obligation Credit Karma Account

So with all that said, have any of you used Credit Karma?  If so, what do you think of the site, and how do you use it? Do you find it useful?

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