Money Blue Book

March 2009 has turned out to be a pretty routine month for me. As I’m currently traveling overseas for an extended period of time and won’t be returning home to the U.S. for several months, I haven’t had much time to really closely follow the progression of my financial portfolio. However, even while away, I still find time to occasionally glance at my net worth balances periodically to make sure everything is okay. So far, all basic metrics, bank balances, and credit reports indicate that I’m maintaining a pretty stable and healthy financial position – well positioned to keeping growing for the foreseeable future and weather any significant or further downturn in the economy.

While I’ve had to put my part time ambulance chasing legal practice on hold while traveling overseas for family health reasons, my portfolio of online and real world small businesses have continued to churn out a fairly steady income stream while I’ve been away, much of it passively generated without substantial attention on my part. Much of the hard work, mind numbing stress, and financial sacrifices that I made in the past few years in creating semi-self run businesses have finally paid off, allowing me to generate income and make money even when I’m not actively sitting at my home office desk in Maryland working on the computer or making phone calls.

In terms of my profession, I’m very thankful that I’ve been able to successfully make the transition from traditional 9-5 day job worker into a self employed entrepreneur and sole proprietor. The journey to get to this point wasn’t easy and there were many times when I felt demoralized and extremely lonely during my late night extended hour work sessions to the point of wanting to give up, but fortunately, I persisted. Today, I can confidently say that it was all worth it. Without my humble network of work from home based businesses and semi-self-run real life operations, I would not have been able to take 2-3 months off work to visit an overseas ailing parent – a luxury I’m enjoying today. After all, it’s not always the money – but the flexibility to set your own schedule and working pace that is frequently most sought after by many, myself included. Besides, it’s great being my own boss and not having to work for a psychotic, over-worked and under-loved attorney hag anymore (long story – I’ll save it for another day).

Those who have always desired to become their own bosses one day should make a concerted effort to make it happen and not allow idle hands to delay their dreams. There is an element of natural risk and sacrifice when trying to balance the duties of a full time job and a fledgling home office based business – but then nothing in life that is worth pursuing is inherently easy, at least initially. It’s true what they say – no pain, no gain. Anyhow, I’m sure you didn’t come here to just listen to me ramble about dreams and goals. Here’s my net worth update for March 2009.

My Current Net Worth and Financial Status Update Compared To Last Month

Continue Saving Money In Online Savings Accounts Or Start Investing?

For almost a year now, I have refrained from taking on any new stock, index, or mutual fund positions – instead opting to store the vast bulk of my money in the best bank accounts and in certificate of deposits offering the best CD rates. Thus far, in light of current volatile economic conditions, I’ve been cautiously pleased at the modest but predictably stable  rates of return that I’ve been getting from my conservative savings approach.

However, something strange happened during the month of March. The financial and stock markets actually saw a bit of an extended rally. Could we possibly be seeing the early stages of a substantive once-in-a-lifetime bull market – the likes we’ve never experienced before in our short existences? Very unlikely. Sorry to burst everyone’s bullish bubble, but I sense a massive bear market rally at work here. Sure, the market seems to be staging a bit of a rebound, perhaps soaring 20-30% in a matter of weeks, but there is nothing really tangible or economically positive as of yet to support this sudden stock buying resurgence. At this point in time, our investment emotions and sensibilities are still being artificially propped high by nothing more than mere cotton candy pufferey and wishful thinking from the Obama White House. The economy is still in the tank, unemployment rates across all 50 states are still climbing, housing market prices are STILL grossly overvalued (home owners must start selling at these depressed prices or we’ll never get back to market equilibrium), and the major banks are still struggling to deal with toxic mortgage based assets and trying to stave off a widespread federal government take over.

But with all this said, why do I strangely find myself starting to ponder whether this is a good time to start investing in the stock market and buying up real estate properties again? The answer is – because I’m a greedy capitalistic with a lusty dog nose for opportunity and profit.

As a greedy (but not evil) capitalist bent on maximizing my money and growing my financial portfolio, I subscribe to the age old Warren Buffett mantra regarding investment fear and greed – which calls for one to become fearful when others are greedy, and greedy when others are fearful. Because there is so much greed rampant in the economy and financial markets right now, the potential for massive windfalls and financial gains have never been better. Of course, the biggest problem now is timing. The worst thing I can probably do at this point in time is blindly jumping in and getting myself suckered into one of these bear market rallies, or dead cat bounces, as they are often called – only to see my portfolio get beaten into a whimpering pulp a few weeks later.

However, the winds of opportunity are in the air, and in the next few months, I may start shifting my money into online broker accounts again in anticipation of what lies ahead. While my better judgment will likely prevent me from jumping in and making a premature mistake at this very moment, I must admit, my investing trigger finger has grown a bit itchy of late.

Continuing To Invest In My IRA and Roth Retirement Accounts

While my small retirement portfolio has taken quite a beating from this recession, losing almost half of its value thus far, I intend to continue making annual contributions pursuant to my long term (25+ years horizon) investment strategy. Currently, I have a small amount of funds invested in Roth IRA’s and in traditional IRA accounts. I have yet to hit my IRA or Roth IRA contribution limit for 2009, so I will likely add additional funds in the next few weeks. Those who have not yet opened a ROTH or IRA account should really look into doing so. Stock market prices are at ridiculous lifetime lows and if you are a first time investor, now is the time to open an account with a Roth IRA broker and take advantage of cheap prices.

Filing My 2009 Federal and State Taxes Online With TurboTax

Well, after much procrastination, I’ve finally prepared and filed my 2009 taxes. Even though I’m currently overseas, I was able to bring all of my tax statements, 1099’s, and W-2 forms with me and file my taxes online. This year, I decided to file my taxes via the web again with good old TurboTax 2009. The company has always offered me a fairly efficient tax preparation and filing experience and this year was no different. The only change this year was my decision to go with the TurboTax Small Business edition instead of my usual TurboTax Premier version – mostly because of my growing need for extra assistance with business tax deductions.

This year, my taxes were incredibly high, and combing my federal and state income taxes, I paid out more than $140,000 worth of taxes for 2008. Obviously, it’s time I started looking into converting my current sole proprietorship business into a more tax advantaged business entity. So far, it looks like forming an S-Corporation, or a limited liability company (LLC) with election to be taxed as an S-Corporation are my best bets tax-wise.

Updated Review Of Ways To Get Your Experian FICO Credit Score Now

For credit report and FICO credit score junkies like myself, I was completed stunned and floored when I heard the official announcement that the Experian credit reporting agency would no longer be making its Experian FICO credit score available to consumers from hereon, effective February 14, 2009 (Valentine’s Day no less). However, in an odd marketing twist, the Experian FICO scores would continue to be made available to lenders and businesses – just not to the hapless consumers who are actually concerned about their own personal finances.

For those who work hard at monitoring their credit reports and credit scores, and take diligent steps to ensure the maintenance of perpetually high FICO’s, this news release exploded into our midst like a cruel bomb shell. So am I overreacting or is this move by Experian as significant as I’m seemingly making it out to be?

Lack Of Access To Experian FICO Credit Scores Ultimately Favors Lenders and Hurts Consumers

At a time when banks have grown extra stingy when it comes to lending money and it’s becoming even more important for consumers like you and I to monitor our credit reports and credit scores regularly, we are now losing yet another option of doing so. Experian is one of the three major credit reporting agencies that maintain massive historical databases of how individuals and businesses handle credit usage responsibilities. Fair Isaac Corporation is the company that developed the popular and widely used FICO credit score, which uses a complex formula to convert credit report data into three numerical digits representing credit worthiness. As one of the 3 major credit reporting bureaus, Experian’s decision to stop offering FICO scores derived from its credit reporting data to consumers is a major blow to credit transparency and the further advancement of fair lending practices.

Fortunately, the other two big credit bureaus, Equifax and TransUnion, remain solidly under contract to allow FICO credit scores, so they shouldn’t be disappearing anytime soon. However, by Experian unilaterally cutting off consumer access to Experian FICO credit scores, it essentially means that we now have access to 33 percent less important information than we did before in the past.

The inane aspect of this all is that while Experian has ended its agreement with Fair Isaac and MyFICO to sell Experian FICO credit scores to ordinary consumers, it has chosen to extend its contract to allow Experian FICO’s to be sold to lenders. So while lenders, banks, and businesses will continue to have access to FICO credit scores based on Experian credit report data, consumers will now be partially blind to the precise information that lenders have during lending negotiations. This definitely stacks the lending odds against consumers, who are now going to be in the dark about a key metric component of their financial portfolio.

Frankly, the move by Experian to sever its 6 year partnership with MyFICO, while surprising given the current state of the economy and financial markets, isn’t totally unexpected given the turbulent nature of the ongoing lawsuit between the two companies and the millions of dollars worth of FICO credit score revenue that Fair Isaac reaps each year from its monopolistic stranglehold over Experian. Unfortunately, consumers are still caught in the middle and will likely suffer by not having equal access to the entire array of credit scores and FICO data that Experian continues to offer the big lending banks.

Experian Credit Score Seekers Still Have Alternatives and Options (But Not Great Ones)

While access to our Experian, Equifax, and TransUnion credit reports remain unchanged, and we can still obtain our free credit reports annually courtesy of the federal government and various free online trial offers, Experian will no longer permit the developer of the FICO credit score to sell FICO products to consumers via the MyFICO website that utilize credit data from Experian credit reports. Unfortunately, current federal law under the Fair Credit Reporting Act only requires that the three major credit reporting agencies make our credit files available to us once a year, but there is no legal mandate that guarantees us access to our credit scores, FICO or otherwise, prior to applying for a loan.

However, while Experian will no longer make its credit data available to consumers for FICO credit score generation purposes, borrowers and consumers who desire to gain insight into their own Experian scores still have options. All indicators show that Experian is likely to continue peddling its own custom Experian PLUS Score and VantageScore variations to consumers. Unfortunately, while having them is better than nothing at all, these two credit score varieties are no where even close to the high adoption rates of FICO credit scores in terms of utilization by major lenders and banking institutions, and few lenders even acknowledge the use of the PLUS or Vantage Scores at this time. They are not even scored on the same numerical range or take into consideration the same proportional credit history factors – causing their current usefulness to be extremely suspect at best. Because these third party credit scores are not true FICO scores and are seldom used by the majority of lenders, they are frequently referred to as FAKO scores – mere distant seconds to the real thing.

Experian FICO Credit Scores Are Still Available, But In Very Limited Ways

So I guess the question remains – can you survive without the ability to get your official MyFICO credit score based on your Experian credit report information? Well, sure you can, but it may be somewhat more difficult to manage and improve your credit score over the long term. You can certainly still access your Experian Plus Fako score using Experian credit report data and get a general feel on where you stand in terms of your Experian credit data. The Experian Plus credit score, while not nearly the same as the FICO, uses a vaguely comparable (but not identical) scoring scale, similar to the FICO’s 300-850 point scale for credit scoring.

You can also still purchase your FICO credit scores from Equifax or TransUnion via MyFICO’s official website directly or through the credit agencies. While your Equifax and TransUnion produced FICO scores may be slightly different from your actual Experian FICO credit scores (due to data retention differences between the different credit reporting agencies), knowing these two other scores may give you a pretty accurate prediction of where you stand credit score-wise. Remember, you can still freely access your 3 annual credit reports and compare your Experian credit report data to that contained in your Equifax and TransUnion credit reports for rough comparison purposes.

Another way to project your Experian FICO score or your credit score in general is to utilize a free FICO credit score estimator such as the one being offered by MyFICO. The scoring accuracy of these simulators is debatable, but once again, it’s better than nothing. Until Experian one day returns to the FICO fold (hey – it could happen), we’ll simply have to make do and get by until a better alternative comes along. Aside from somehow being able to fake your identity and pose as a lender to get your hands on your actual Experian FICO credit score (I’ve tried), currently only lenders will continue to get direct access to Experian FICO credit scores.

However, another definitive way to get your genuine Experian FICO credit score is to simply apply for a major loan such as a mortgage for a home, and let the authorized lenders pull your scores for you. Consumers who apply for loans or mortgages can still get all 3 of their FICO credit scores through legitimate lenders. While many lenders usually only utilize the services of one credit reporting agency at a time, home mortgage lenders generally utilize all 3 for greater accuracy sake. When you apply for a home mortgage loan, more likely than not, your lending agent will submit a request for all 3 of your credit reports and all 3 of your FICO credit scores from the three credit agencies of Experian, Equifax, and TransUnion, when evaluating your claim request. Of course, while this is one sure fire way to get your Experian FICO credit score, it is important to realize that by authorizing the lender to pull your credit report and credit scores for lending purposes, you are consenting to a hard credit check that acts as an official credit score dinging inquiry. While personal look ups of one’s own credit report through sites like FreeCreditReport.com or AnnualCreditReport.com result in no impact against your credit score, when banks or lending institutions do it for you pursuant to a loan application, this triggers a hard credit pull that does harm your credit score, albeit usually just for the short term.

Other than taking the hard credit check hit on your FICO to get a peak at your actual Experian FICO credit score, certain consumers may still be eligible to get continued access to their Experian generated FICO scores. The current list of institutions is small, but the list may ultimately expand depending on what type of special future agreements Experian decides to sign.

Currently, customers of the Pennsylvania State Employees Credit Union (PSECU) continue to have access to their Experian FICO scores through the PSECU Free FICO Score Service, thanks to a deal the credit union previously inked with Experian. While other lenders such as HSBC via its Sears Solution MasterCard, and the bank formerly known as Washington Mutual via its WaMu credit cards, offer(ed) similar free FICO credit score programs with Equifax and TransUnion, none except PSECU currently has an active deal with Experian.

I have looked into the matter and it is my current understanding that the PSECU credit union continues to pull free credit reports and free FICO scores via Experian, posting new scores online each month via its online banking site. There is no charge for the generous perk, but to participate in the FICO score service, you must have a checking account with PSECU or an active PSECU Loan.

While I am not currently a Pennsylvania state resident, nor am I related to anyone living in the state, I still made an effort to swindle (I can’t help it, I’m an arbitrage seeker) my way into getting an account at PSECU bank – for the sake of satisfying my FICO mania and getting my hands on one of those monthly free Experian FICO scores. Unfortunately, not everyone is eligible to participate and join the credit union as their qualifications are rather strict, and as such I was quickly denied. Here are the basic eligibility qualifications. Sadly, other than moving there and becoming domiciled in Pennsylvania, that seems to be the only legitimate way to join. However, if you are a Pennsylvania resident, are currently a Pennsylvania state employee, or attended a participating small private college in Pennsylvania, you may be able to qualify for a bank account with the credit union.

Hopefully this cooperation agreement between Experian and the Pennsylvania State Employees Credit Union signifies the beginning of a trend to offer authentic FICO’s and free credit scores for consumers of other banks and credit unions as well. Has anyone out there successfully signed up for a new account with PSECU and successfully gotten access to their free monthly Experian FICO credit scores? Please share your experience!

Updated List Of Free Credit Report Promotional Deals Below

You see the commercials on TV, and those supposed know-it-all financial commentators are always jabbering about them on blog commentaries and financial websites. But behind the media hype, much of the message is true – credit reports and credit scores are important indicators of financial health, and taking appropriate steps to ensure credit reporting accuracy is not something you ought to brush off as trivial or not essential. Pay too little attention, and a stray error or unauthorized credit transaction on your credit report can easily come back to bite you in the butt when you least expect it.

Even those who are not actively seeking a personal loan or on the verge of applying for a home mortgage loan ought to pay regular close attention to what’s continuously being added to or subtracted from their official credit reports. That’s because the financial data on your credit report is necessary for a huge variety of events in your life, much of it happening behind the scenes and without your active knowledge. Your credit report information is used to evaluate your applications for credit cards, real estate loans, personal loans, 0% balance transfers, cell phone wireless services, apartment rentals, car insurance, and even employment. Maintaining a good and clean credit report can have a dramatic impact on your financial stability. Likewise, ignoring what’s on your credit report may limit your financial options and close the door to lucrative low interest offers, cheaper mortgage rates, and improved housing rental possibilities.

Your credit report is so highly regarded and widely used by lenders because it is a definitive compilation of your entire history of active credit based accounts with archived information like when the accounts were opened, balance amounts, and whether payments have been made on time. Credit reports are maintained by the credit reporting agencies, frequently called credit bureaus. Currently, there are three major credit reporting agencies in the United States – Experian, Equifax, and TransUnion. As such, each individual generally has 3 credit reports to his or her name, based on the historically updated credit report data retained by each of the 3 credit bureaus.

Along with the three credit reports for every individual, creditors and lenders also evaluate potential borrowers for risk factors based on their credit score, which is a numerical snapshot of data gleaned from the credit reports from a single moment in time. Presuming you are utilizing the popular FICO credit score developed by the Fair Isaac Corporation, credit scores range from 300 to 850, where higher credit scores are better. Because, the information and data recorded in each credit report directly influences your FICO credit score on a real time basis, checking your credit reports and monitoring your credit scores habitually can help you spot and correct reporting errors and inaccuracies when they crop up, saving you a lot of money in interest rate payments and identity theft related hassles in the long time.

Prevent Identity Theft By Checking Your Free Credit Report Regularly

I think most of us are well aware that it’s important to check our credit card statements every month for unauthorized charges that we haven’t made, but realistically, that only catches identity thieves who steal and use an account that you already know you have. Oftentimes, the most damaging of identity theft cases arise from unauthorized activity on accounts you never knew you even had – credit accounts opened with your Social Security Number and name without your authorization whatsoever.

Your credit report contains valuable information about your personal identity such your name, your Social Security Number, where you live, how often you pay your bills, whether you have have ever filed for bankruptcy, and whether there are any legal judgments against you. The credit reporting agencies of Experian, Equifax, and Trans Union can guard against unauthorized hacking of their data servers, but without the aid of an extra credit monitoring service or routine credit report checking on your part, they can’t protect you from identity theft. Identity theft occurs when someone uses your personal identifying information like your name, your Social Security number, or your credit card number to commit fraud. A typical identity theft ploy is to use stolen confidential information to open a new credit card account in someone else’s name and run up large unpaid balances, stiffing the victim with the charges. Then when the identity thieves don’t pay the bills, the delinquent credit card account is reported on the victim’s credit report as a late payment – potentially ruining the hapless victim’s credit rating in the process if left unchecked.

I’ve been a victim of identity theft before so I know first hand that it can happen to anyone at anytime. Ever since that time some stranger swiped my identity and obtained an unauthorized credit card number in my name, I’ve been hyper vigilant ever since. So far, since I started checking my 3 credit reports and credit scores regularly with the aid of credit tracking programs, I’ve been identity theft and credit reporting-error free. Like a cancer, identity theft activity is something that you can generally detect early on. New accounts opened with your identity will appear on your credit report in a matter of days, revealing new transactions to you as they happen. Because your credit report information is updated frequently, checking your credit reports routinely is one of the best and easiest ways to not only spot clerical recording mistakes (which do happen on occasion), but to also raise the alarm on identity theft and halt unauthorized credit activity before they have the opportunity to hurt you in any substantial way.

Getting Your Free Credit Report From AnnualCreditReport.com

In 2003, the Fair and Accurate Credit Transaction Act (FACTA) added several important changes to the existing Fair Credit Reporting Act (FCRA) – most importantly, it gave all American consumers the right to view their credit reports from each one of the 3 major credit bureaus for free. In response to the growing prevalence of identity theft cases, the federal government now requires the three major credit reporting agencies to offer consumers free access to their credit reports to give them a better fighting chance at combating fraudulent occurrences.

At the present time, the only federal government-authorized site offering truly free credit reports is Annual Credit Report. AnnualCreditReport.com is the only official source for obtaining your free annual credit reports under federal law. However, the Fair Credit Reporting Act only guarantees access to a free credit report from each of the big 3 nationwide credit reporting agencies – every 12 months. Every year, consumers have the option of requesting all 3 free credit reports at once, or staggering them out throughout the year in 4 month intervals. While there is no catch whatsoever in terms of hidden fees or charges, please be mindful that you are only entitled to one credit report from each of the three participating credit reporting agencies, once a year. Once you have exceeded your quota for the year, you will have to wait 12 months more before qualifying for your next round of free government sponsored credit reports again. In addition, credit scores, FICO or otherwise, are extra and not included in the federal government program.

Here are the ways to request your free official credit report, courtesy of Uncle Sam:

1. Get Your Official Credit Report Online – The easiest way to view and print your free annual credit report quickly is to go online. Just visit the government’s official AnnualCreditReport.com website and follow the directions. The website’s designed to be user friendly and accessible.
2. Get Your Official Free Credit Report By Phone – Call 1-877-322-8228 to request your free credit reports by telephone. You will need to undergo a simple verification process over the phone and your reports will be mailed to you via postal service snail mail.
3. Get Your Official Free Credit Report By Mail – If you are truly in no rush and old fashioned, you can request your free credit reports via postal service by filling out the following online request form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

For those who have not requested or obtained their free credit reports for the year, AnnualCreditReport.com ought to be your first stop. However, those who have already used up their free annual credit report quota for the year through the government’s recommended channels still have free credit report options at their disposal. Read on!

Are Free Credit Report and Free Credit Score Trial Offers – Scams Or Legitimate Promotions?

Ever since the free annual credit report legal mandate was passed by the U.S. government, a variety of “free credit report” websites and credit offers have popped up all over the Internet to do business. While some indeed provide valid credit reporting services and feature an outlet for consumers to get a credit report for free after having already exhausted all free government provided free credit reports for the year, many of these supposedly “free offers” come with strings attached. For example, your “free credit report” may come with an automatic enrollment in a credit monitoring service that starts out as a free trial but quickly escalates into an automatic monthly charge on your credit card if you don’t cancel within the free trial period.

So how do you wade through the gunky, confusing morass of free credit report offers without getting ripped off or falling for a shady free credit report scam? Well, the worst thing you can do for starters is start clicking on one of those free credit report solicitations that sometimes lands in our email boxes – oftentimes they are nothing more than phishing scams, so definitely beware of those. The vast majority of people probably type in – “Free Credit Report” into Google or their preferred search engine hoping to strike gold. Unfortunately, the majority of the websites that populate the top search results, other than the one for the government’s Annual Credit Report website, only offer free credit reports with automatic enrollment into some type of free trial for a paid service. While these credit report and credit score monitoring services definitely have their positives and benefits in helping you maintain healthy credit scores and avoid identity theft, many consumers might regard the majority of these trial offers as bait and switch scams at first blush.

The most popular and the most heavily marketed one of these free credit report trial offers is FreeCreditReport.com, the one with the ubiquitous television commercials featuring the catchy jingle that “monitors your credit and sends you email alerts, so you don’t wind up selling fish to tourists in T-shirts.” Run by Experian, one of the big three credit reporting agencies, FreeCreditReport.com is the site that most people probably come across when blindly searching for their free credit reports online. TV Commercials for FreeCreditReport.com featuring the charming host with his guitar and rag tag band playing at seafood restaurants or in the back of some beat up car, have reached such an incredible saturation point in the mainstream media that it’s the number 1 site that first comes to mind when any one thinks of free credit report offers these days.

However, free credit reports via this particular site are only free via automatic enrollment into a trial program for a paid credit monitoring service. Cancel promptly or within the 7 day trial period, and you’ll walk away without paying a single cent, but fail to do so and you’ll wide up with monthly charges that you’ll have to jump through hoops to cancel. Some critics say it’s fundamentally dishonest and a shady business tactic, because an applicant who registers with the site only gets a free credit report after enrolling into a trial offer for a $14.95 per month credit tracking program. Others say the company is surreptitiously and even unfairly taking advantage of the public’s concerns over their credit worthiness during tough economic times. Even the Federal Trade Commission has deemed it necessary to take counter steps to help clear up the ongoing media confusion caused by the success of the FreeCreditReport.com commercials – releasing its own free credit report videos to the public that spoof the popular FreeCreditReport.com trademark gimmicks, while promoting the official AnnualCreditReport.com website.

On various message boards and anti-scam blogs across the web, you’ll probably come across consumers complaining about the recurring credit card charges after having ordered what they initially thought was a free credit report. Unfortunately, the vast majority of consumers who succumb to the free credit report trial offer traps fail to read the disclaimers and fine print before clicking the “I accept” or “submit” buttons.

The truth is that these so-called free credit report sites do indeed provide consumers legitimately issued free credit reports, but only after they have agreed to trial membership enrollment into a paid credit monitoring service (after having been offered the opportunity to examine the terms and conditions). The free trial offers may last as short as a week or even as long as a month, but in either case, if the consumer fails to cancel the trial membership in time, they get charged. Some call these free credit report sites scams or impostors, but at the end of the day, it’s just clever (albeit somewhat sneaky) marketing strategy. Perhaps consumers like you and I ought to exercise a bit more responsibility in reading everything carefully before we dive head first into anything.

The reality in this world is that nothing is ever truly free – there is always catch. Companies are willing to promote their products for free by dangling carrot-like trial periods to get you in the door, but yes, there is always a catch. However, in almost every single legitimate case, the catches can be beat with the aid of some common sense, careful due diligence, and adherence to the fine print. In the case of these free credit report trial period offers that exist out there, simply by canceling on time within the promotional time constraints allotted, you can indeed walk away with free credit reports and free credit services.

Review Of Free Credit Report and Credit Score Offers From Experian, Equifax, and TransUnion

AnnualCreditReport.com remains the only authorized source to get your free annual credit report under federal law today, however it’s usefulness only goes so far. The following free credit report offers are meant for those who have used up their free credit reports for the year from each of the 3 credit reporting agencies, courtesy of the federal government’s program. All of the free credit report trial offers below offer essentially the same service, merely repackaged by different credit reporting agencies. In exchange for your free credit reports or free credit scores from Experian, Equifax, or TransUnion, you agree to be automatically enrolled into a trial offer for a 24 hour credit report monitoring service. However, simply sign up for one of the free trials and cancel immediately or before the trial period ends, and pay nothing for the free credit report you get at the time of sign up. The free credit report offers listed below are indeed legitimately free, but you must cancel promptly within the trial period to avoid the extra credit monitoring service charges. Some of you may ultimately enjoy the benefits afforded by a paid credit report tracking service (I kept mine), but I’m assuming most people reading this are motivated primarily by credit report freebie offers and nothing else.

My Recommended Ways To Get Your Credit Reports For Free (Just Cancel During Free Trial Offer):

1) Free Credit Report.com – Free 7 Day Trial Period (Experian) – The most important catch to this offer is that you must cancel within the 7 day trial period to truly walk away with a free credit report from Experian. With FreeCreditReport.com, you can indeed get your free Experian credit report and Experian credit score upon sign up. Simply cancel immediately or within the 1 week trial period and you pay nothing. Trial enrollment into Experian’s credit monitoring service offers unlimited Experian credit reports and credit scores on demand. The complete credit watch program monitors all 3 major credit rating agencies and provides continuous updates and instant alerts to you regarding any notable changes to any one of your triple credit reports. This free trial offer is probably the most popular option for free credit report seekers.

2) Credit Check Total - Free 7 Day Trial Period (Experian) - Cancel within the promotional 7 day trial period after sign up, and your 3 credit reports and 3 credit scores from all three credit reporting agencies are completely free. The important catch is that you must remember to cancel immediately after sign up or within the one week trial period to avoid all charges. Those who stay on to take advantage of the credit monitoring service will receive free unlimited access to their 3 national credit reports from Experian, TransUnion, and Equifax, along with unlimited access to their regularly updated PLUS credit scores and credit reports, for $19.95 a month.

3) Privacy Matters 1-2-3 – Free 7 Day Trial Period (TransUnion) – With the Privacy Matters 123 offer, powered by TransUnion, consumers can get 3 free credit reports and 3 free credit scores from all three credit bureaus. As always the case with these types of offers, there is a mandatory 7 day trial membership enrollment into Privacy Matter’s credit monitoring service, which offers unlimited access to all of your 3 credit reports and credit scores from the agencies using TransUnion’s scoring system. Simply cancel immediately after sign up or within the one week trial period and get all of your three credit reports and scores for free. Else, it’s $19.95 per month. Don’t forget to cancel if you’re just interested in the free credit report and free credit score promotion.

4)  MyFICO Credit Score Watch – Free 30 Day Trial Period (Equifax) - Take advantage of the My FICO credit score watch 30 day trial period to get a free Equifax credit report and genuine FICO credit score from Equifax. Simply cancel immediately upon sign up or within the 30 day trial period and you’ll pay nothing. If you forget to cancel within the trial period, there is an annual charge of $89.95 for the continuous FICO credit score monitoring program. For those interested in purchasing the product long term as I did, there is even a MyFICO discount code or two available for additional extra savings at 20% off.

5) Equifax Credit Watch Gold with 3-in-1 Monitoring – Free 30 Day Trial Period (Equifax) – This deal from Equifax offers you the ability to get a free FICO credit score from Equifax along with a one time 3-in-1 consolidated credit report from all 3 of the major credit agencies – Equifax, Experian and TransUnion, with unlimited access to Equifax credit reports. The monthly cost is $14.95, but simply cancel after sign up or within the 30 day introductory trial period and your Equifax FICO credit score and 3 credit reports are completely free. Don’t forget to cancel!

Borrow Money Or Invest In Interest Earning P2P Loans With Lending Club

With the lowering of interest rates by the Federal Reserve in response to the current economic climate to the lowest levels we have seen in years, the interest rates offered by high yield savings accounts and high interest certificate of deposits are now simply not as attractive as they once were, only a few years ago. With the stock market still suffering from unstable price swings and massive volatility across all sectors, it makes present day sense to look towards alternative investment ideas to make some money.

While I have been a quiet Lending Club member for a few years now since the online company opens its doors to loan investors, I haven’t felt the need to review the program until now. Until recently, the top high yield savings account and best CD rates at most banking institutions offered a reliably consistent rate of return on deposits. But with market turmoil ever present and the specter of worsening bank failures looming, I’ve begun to turn my attention to other investment possibilities in an attempt to diversify my portfolio risk and seek a higher rate of return. The ability to earn a reasonably competitive interest income with the added ability to diversify risk via peer to peer lending networks like Lending Club and Prosper is becoming more and more attractive. At the very least, P2P lending programs offer potential profit seeking investors like myself the ability to play the role of the banker and help people out with their loan needs, while at the same time earning interest income that’s higher than what’s currently available in a regular savings account or bank CD.

What Is Lending Club and What’s P2P Lending and Borrowing All About?

Lending Club is a person to person, also known as a peer-to-peer, lending website that matches ordinary borrowers with ordinary local lenders (who are ordinary people themselves) through a pairing system that combines social networking, a computerized search algorithm, and manual credit worthiness checks. Essentially, Lending Club is a way to offer low interest loan rates to borrowers with good credit, while at the same time offering willing potential lenders like you and I the ability to earn a reasonably high interest rate of return with a relatively low risk of default on the loans that we extend to these borrowers. It’s an alternative way (that’s growing in popularity) for ordinary Americans to borrow money, get qualified, and get funded for loans expediently without the complex hassles of applying for traditional bank loans or having to deal with the riskier side of 0% balance transfer credit card offers or getting mired into the clutches of payday loans. On the whole, Lending Club offers borrowers better interest rates than can be obtained from any credit card offer, even those that purport to be low interest.

The whole business concept behind P2P lending networks like Lending Club is built on the premise that borrowers will be less likely to default to members of their own local communities. The Lending Club online system offers anonymous borrowers and local micro loan lenders a way to find each other and get matched up based on personal preferential demographic factors like geographic location, educational and professional background, and activity within a particular social network like Facebook (the social networking site where Lending Club had its upstart roots).

Still don’t believe Lending Club or peer to peer lending and borrowing programs are legit? Just take a look at a recent article from the Harvard Business Review, which notes the remarkable rise of peer to peer lending programs and documents the rise of such emerging programs as the next big wave of important financial innovations in the coming years, especially in light of the ongoing economic recession and the collapse of traditional lending institutions. It looks like P2P lending is here to stay, one way or another.

My Lending Club Experience – Investing In High Interest Bearing Loans

As a person who’s always up for trying out new financial products, I signed up for Lending Club when it first came out and have been using the online service ever since. So far, my Lending Club experience has been pretty positive, yielding fairly respectable returns in the process. Currently, my entire Lending Club participation has only been that of a lender and I have yet to participate as a borrower. However, while I can’t comment on Lending Club through my own personal experiences as a borrower, I have had numerous extended online conversations with actual people who have used the Lending Club service for their borrowing needs, primarily to help pay down existing high interest debt. Most of the Lending Club borrowers I’ve come into contact with have been pretty receptive to the user-friendliness of the Lending Club online platform and pleased with the convenient access to reasonably priced loans that the website affords, particularly when compared to last ditch lending alternatives like car title loans or payday cash advances.

One of the reasons why I slightly prefer Lending Club over other peer to peer lending networks – is its non-eBay auction-like nature. Having to engage in a convoluted bidding process for loan offers or loan investment prospects would inject too much complexity into an online loan matching process that’s trying to cater to the ordinary masses. Fortunately for investors in particular, Lending Club offers its loans on a take it or leave it store front basis. If you find a loan and the credit characteristics and interest rate of return strikes your fancy, you can buy it on the spot, or pass.

As primarily an experimental investor and cautious lender, I have mostly sought out high quality, lower risk of default type loans. As a relatively risk adverse lender with an infrequent appetite for riskier loans, I am not to keen on the prospect of any of my loan investments ever defaulting. However, at the same time, I understand that it’s a trade off – safer loans generally yield much lower interest rates of return, while riskier loans almost always yield much higher rates of return to compensate for the higher risk of default and nonpayment. The vast majority of my Lending Club loans as a lender have been A-grade, personally-chosen loan investments. Thus far, I have stayed away from using Lending Club’s computerized LendingMatch program to pair me with desired loans. I guess I have confidence in my own ability and prefer to retain control, rather than let some computer software do the leg work for me.

Currently, I have a little more than $800 invested into numerous micro loans with local borrowers. I’m always on the look out for high quality, attractive loan prospects but unfortunately, they are not always available. When they do become available, I try to snap them up quickly. These A-grade Lending Club loans have become quite a set of high yielding cash cows for me. Thus far, I’ve been very lucky and relatively fortunate as none of the Lending Club loans that I’ve extended have been significantly late or have entered default. Intriguingly, my Lending Club loans have earned me a steady interest rate of almost 8%, which is 2-3 times higher than what I earn with my best CD rates, best high yield savings, and even best money market accounts. As Lending Club continues to grow in popularity, its borrower base will inevitably grow larger in size, and the volume of attractive loan investments are bound to increase. If my default-free track record holds, I may decide to dabble in slightly riskier Lending Club loans in the near future to see if I can snag a higher rate of return but still maintain my default-free streak. Stay tuned!

For those wondering about the prospect of income taxes levied on the earnings off of Lending Club loans – yes, you are personally responsible for paying ordinary income taxes on all interest income that your Lending Club investing activities generate (you are issued a handy 1099 form at tax time).

Setting Up A New Lending Club Account Is Free and Quick

Opening an account with Lending Club is easy and efficient, and as expedient as opening a new online bank account. To open an account and start lending money through Lending Club, you simply submit your personal information, bank name and bank transfer account numbers, along with some optional background information. Thereafter, the account registration process wraps up with the obligatory bank test deposits to verify true bank account ownership

Opening a new Lending Club account for borrowing purposes on the other hand entails a stricter registration process that necessitates that the applicant provide a Social Security Number and other identifying information for a full credit report and  FICO credit score background check (try looking up your own free FICO credit score beforehand). Though Lending Club imposes a rather strict set of prime standards for borrowers, this attention to credit quality over mere quantity ultimately ensures a better experience and loan exchange for both lenders and borrowers in the long run.

Borrowing Money and Getting A Loan From Lending Club

For prospective qualified borrowers, Lending Club offers an attractive way to obtain a loan at comparatively affordable rates – offers that beat out most personal bank loans and credit card interest rates. However, do be forewarned that Lending Club’s qualification standards for borrowers are high grade and rather stringent. Lending Club pretty much only wants prime, or near prime borrowers with good to excellent credit. Those with very bad or subprime credit are probably out of luck when it comes to Lending Club, and will probably have to resort to less than advisable, bottom tier loan alternatives such as bad credit credit cards or payday loan borrowing.

The process of applying for a Lending Club loan is surprisingly straightforward. Approved Lending Club borrowers get a 3 year unsecured fixed interest rate loan, with repayment obligations managed by Lending Club. There is no haggling or negotiations to contend with as you simply submit an application for a loan, and based on your FICO credit score, credit report, and background check, you are offered a fixed interest rate loan to accept or reject. At Lending Club, you can borrow anywhere from $1,000 to $25,000 as an unsecured loan, to be used for just about any purpose, including but not limited to, high interest credit card repayment or small business financing.

To get started as a Lending Club borrower, simply open a new Lending Club account as a borrower, and submit a loan application. At the time of registration, Lending Club will obtain a credit report and FICO credit score check of the borrower in order to rate and assign a credit risk grade (ranging from A thru G) and determine the appropriate interest rate the borrower can solicit on the site. Once approved, the borrower is free to list his or her loan request on Lending Club for prospective lenders to review and examine. During the credit risk scoring process, particular attention is paid to the borrower’s credit rating history, the amount of the desired loan balance, and the borrower’s current debt to income ratio.

Lending Club’s standards for borrowers are high and the program only currently accepts members who can meet the followings status and credit history requirements:

• Must be a U.S. resident.
• Must have a FICO credit score of at least 660, with a debt to income ratio (excluding mortgage) below 25%.
• Credit history report must indicate that you are a responsible borrower.
• Have at least 1 year of credit history, showing no current delinquencies, recent bankruptcies (7 years), open tax liens, charge-offs or collection accounts in the past 12 months.
• Must have no more than 10 inquiries on your credit report in the last 6 months.
• Must have a revolving credit utilization of less than 100%.
• Must have more than 3 accounts in your credit report, of which more than 2 are currently open.

For their middle man loan matching services, LendingClub charges a processing fee (ranging from 0.75% to 3.50% based on Lending Club’s assessed credit risk grade), which is included in the annual percentage rate (APR) and is subtracted from the loan proceeds prior to disbursement to the borrower.

Lending Money and Earning A Comparatively High Interest Rate On Lending Club Loans

To qualify as a Lending Club loan investor, you must meet and satisfy certain preliminary state and financial suitability conditions – translation: you must belong to an approved state and/or pass certain income and net worth requirements. With exemptions for certain states such as California, you generally must have an annual gross income of $70,000 or a networth (including your home) of at least $250,000.

As for the state residency requirement, you must be a resident of one of the following states below. Your state not on the list? Fear not – Lending Club has submitted proposals to all states and new ones are being added as they are approved.

• California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, Nevada,New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.

As a prospective Lending Club loan investor, you can start with as little or as much money as you’d like. Once you have opened a Lending  Club account and transferred in the appropriate funds for lending purposes, you will be asked to indicate your level of risk tolerance (credit risk ratings that range from A – G) and prompted to search for loans either manually, or get matched up with prospective loans with the aid of Lending Club’s computer algorithm based LendingMatch software. The Lending Match program generates a suggested loan portfolio based on your level of risk desired and your connections with the borrowers in your account. As mentioned above, I have chosen to stick with manual loan evaluations (with great success thus far) as I feel more comfortable with my own ability to assess loan prospects than entrust that duty to a random computer program.

Those who are new to peer to peer lending may wish to start with small incremental investments and tinker a bit with the seesaw effect of risk and interest rate of return, before diving into larger denominational investments. Those who get the hang of it may actually find the loan investment hunting and evaluation process rather interesting and personally rewarding (remember, you are potentially helping out someone who is in desperate need of a loan to get his or her life going again).

There are two loan components that will be of paramount importance to prospective Lending Club loan investors – the interest rate of return offered, and the rate of default risk. The current range of interest rates that Lending Club lenders and investors can potentially earn varies from 7.37% to 20.11% (depending on how risky the loan is in terms of risk of default, as determined by the automatically assigned Lending Club loan grade.

The worst case scenario for any Lending Club loan lender or investor is the dreaded loan default, which occurs when the borrower refuses or is unable to fulfill the obligations of his or her loan principle and interest rate repayment. Lending Club’s website indicates that the current overall default rate is less than 3%. However, and probably due to my personal strict and stingy loan evaluation tactics, I have yet to experience a loan default on my Lending Club loan investments. On the downside, I probably earn a much lower interest rate of return on my loan investments than I would be able to garner if I opted to invest in slightly more riskier B and C grade loans.

As a Lending Club loan investor, one of the general statistics and trends I track closely is the company’s continuously generated performance stats for all loans. As you can see from the current Lending Club loan stats, Lending Club does a pretty commendable and transparent job of providing updated statistics relating to all late and defaulted loans for all members to review and assess. As the updated loan default statistics demonstrate, rather surprisingly perhaps, the vast majority of loans (particularly the A graded ones) are current and not late or in default. The B and C loans are also not as horrendous in terms of late payments or defaults as one may have assumed. Those who are into mathematics and willing to play the odds of probability may find it worth the slight risk of partial loan default to capture the higher interest rate of return on their investments. As always, smart Lending Club investors ought to spread their loan investments around to minimize the chances that one unexpected loan default will torpedo their entire Lending Club portfolio.

Lending Club Loans Are Now More Liquid Than Ever And Can Be Traded Like Securities

As Lending Club has completed the SEC registration process, all Lending Club notes and loans issued on or after October 14, 2008 can now be purchased and sold as securities, as they now represent Lending Club security investments rather than direct loan obligations of the underlying Lending Club borrower.

Now instead of waiting for the 3 year locked in loan commitment notes to reach maturity, they can now be traded on the secondary market through Lending Club’s trading platform agreement with FOLIOfn Investments Inc, greatly enhancing their liquidity and versatility as investments. While only loans and notes issued after Lending Club’s October 14, 2008 SEC registration date may be traded, in due time, it is reasonable to expect the number of trade-able notes to balloon in the coming future.

For those concerned about the safety and security of their invested loan funds as a lender in the event of a Lending Club failure or bankruptcy, Lending Club actually addresses this issue on their webpage. According to Lending Club, in the event the company, for whatever reason goes out of business or is no longer able to continue servicing loans, in order to ensure continuity, Lending Club has a backup servicing and successor agreement with Portfolio Financial Servicing Corporation (www.pfsc.com) for PFSC to take over loan servicing.

While the Lending Club business entity itself is still burning through venture capital cash like it’s going out of style, particularly as it focuses on promoting the growth and adoption of peer to peer lending, I personally think the concept of P2P social network lending is here to stay. Whether companies like Prosper or Lending Club will be around forever, or whether they ultimately will be bought out by more traditional banks eager for a piece of the peer lending pie, remains to be seen.