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Building credit can be a catch-22. You have to use credit in order to build it. In other words, you usually have to open a credit card or loan account to demonstrate that you are a responsible borrower. The promptness of your credit payment and amount of debt remaining are factored into your credit report and credit score, which ranges from 300 to 850 — the higher the score, the better your credit.

There are three main credit bureaus (Equifax, Experian, and TransUnion) that collect information about you; this includes your credit account payment history (go here for a full explanation).

Unfortunately, the payment of most common bills (such as utilities or rent) are not factored into your credit report from the “big three.” That is unless you pay them late — in which case they will have a negative impact on your credit score.

However, there’s a new credit bureau on the scene — PRBC, and it’s accredited by the Better Business Bureau.

By registering, PRBC gives you a credit score based on your utilities and rent bills. They keep track of on-time payments, not just late ones, which allows your positive payment record to be part of your credit score. They do charge some fees, but getting credit for paying common bills on time might be a safer and easier way to build credit than through traditional methods like credit cards and loans.

For more tips check out, this Ask brass article and Extra Credit.

–Jens

I recently received an official-looking envelope in the mail that said “Final Notification” on the outside. It was a bit foreboding, but I didn’t receive a first notice, so I didn’t get too worried. When I opened it, there was an official-looking ticket, a voucher for $1,600 and a confirmation number. Woohoo! I won!

It said: “Your responsible Financial history has earned you this $1,600.00 travel voucher.” I may never know why “Financial” was capitalized. I suppose they thought it was important. That aside, I had just checked my credit report and found it to be squeaky clean, so receiving this gave me a warm fuzzy feeling inside. Ahh, good credit has its rewards.

There wasn’t any fine print about what I was expected to pay, but I decided to be cautious anyway. I googled “Ramada Plaza Resorts.” The first thing that the search found was Consumer Affairs–not a good sign. Google also found ripoffreport.com and a few other websites that warned me away from my prize.

Read and check everything before you jump for something “free.” Consumer Affairs (consumeraffairs.com) and the Better Business Bureau (bbb.org) are both good places to check up on companies before you use their services.

Yes, scholarships are amazing. Still, many students rely on federally subsidized loans to make ends meet in college. The caps for such loans are often set between $3,500 and $5,500; when this isn’t enough, students must turn to private loans, which almost always have higher interest rates.

As a student, I had to take out a private loan to handle the higher cost of out-of-state tuition. While I don’t regret attending my alma mater, I wish I tried harder to establish residency in the state. Today, my private loan rates make me cringe each month.

With the current credit crunch, private loans for students are becoming more costly and difficult to access, according to a report on NPR. Those wanting to attend for-profit schools and trade schools have been hit first. For students, the unstable credit market translates into more stringent restrictions on credit scores for interested borrowers and in some cases, less available private loan options altogether.

So does this mean no college (or no more college) for you? Not necessarily. But it will force you to more closely examine which schools you can afford to attend. If anything, the credit situation should really encourage you to look at the programs offered in your state–maybe you won’t have to go as far as you think for school. Check out this brass article for more information.

It may make sense to attend college in your home state first, and then transfer to that perfect school out of state once you know what degree you want. Coming from someone who wishes she had thought a bit more about this herself, it’s worth it to evaluate your options–not just on where you’re going and for what degree, but on how you’ll tackle the tuition costs too.

– Sarah

Note: this is the second entry in a two-part series on real estate. Check out the first post to catch up.

When my parents bought their home in Hawaii in the 70s, they put most of everything they had into the deal. The time was right and they went for it. The result was a beautiful two-story home nestled in a small valley named for its swirling winds.

Over the past 30 years or so, the house has been a constant. My parents twice opened a home equity line of credit, a loan that has a limit based on a percentage of the total value of your home, minus the balance still owed on the mortgage. They tapped it once to buy a new car, then again several years ago to make some renovations.

The house is likely my parents’ largest investment (other than me; kids are expensive!) and their largest single asset — its value has appreciated ten-fold over time. Traditionally speaking, the home has usually been the greatest asset for many Americans. But as a whole, the concept of someone’s home being their monetary bedrock is starting to shift.

In early March, it was reported that for the first time since 1945, home equity rates averaged below 50 percent. So what does this mean? In a nutshell it means that on average, American homeowners owe more for their homes than they own.

Traditionally, a home has been an asset. But with this big housing downturn, we’re starting to get stuck with depreciated money pits instead. Home equity lines of credit can’t work well if you don’t own a decent stake in your home. With their backs against the wall between resetting mortgage rates and plummeting home values (which were overinflated to begin with), some folks are choosing to walk away. This is when a beleaguered homeowner literally hands over the house keys to the creditor, says “I’m through,” and walks out. Obviously, this is not what creditors or the Federal Reserve want. Cutting your losses by quitting a mortgage wrecks your credit, but for some people, they’d rather get hit by foreclosure rather than bankruptcy, which stays on your credit report for 10 years. Since some owners entered the market paying little to no money down, they’re attempting to cut their losses and increase their rebound time by walking away. The idea is to wait a few years, try and heal their credit and then buy a new home - for a lower price. There’s even a new industry that has developed from people choosing to walk away from mortgages, which was recently covered by ABC News. If you’re in a mortgage bind, check out what the FTC has to say about your financing options before throwing in the towel.

In March, Fed Chairman Ben Bernanke urged lenders to go beyond scaling back interest rates and start cutting the size of mortgages, a move that would hopefully persuade homeowners not to walk away, according to a report in the LA Times.

If you’re thinking about buying a home down the road like I am, it’s good to keep at least a casual eye on all this news. Right now, the housing climate is cutting both ways - not only forcing some owners into bankruptcy, but swinging back and bopping lenders on the nose too as folks walk away from their houses. The concept of home equity is shifting, especially for our generation. It may take a while before the homes we buy become a resource rather than a liability.

– Peter

Note: this is the first entry in a two-part series on real estate. This first entry deals with housing depreciation in today’s current housing market. Check back on Friday for Part 2, where I will talk about home equity.

Forget about the flashy sports coupe, my greatest material goal is home ownership. Cliché, I know. Obviously, the picture here is not of me, but in a few years I hope to stand in front of my new home and scream jubilantly just like these two - my neighbors will be thrilled.

Anyway, graduating from school and starting a career does weird things to your outlook on life. You start thinking in terms of years rather than semesters and realize, “Hey, in time I think I could actually afford a home.”

I’m an idealist and an optimist. But it’s both a strength and a weakness someone could exploit to push me into a risky real estate deal. Take a good look at me, because I could be the kind of person predatory lenders would go after. Predatory lenders don’t go after our account numbers like identity thieves; rather they prey on our optimism. In turn, we’ve been lured into acquiring mortgages we ultimately can’t handle.

A recent article in The New York Times says many economists blame “overly loose credit and abusive loans” as a large source for the current housing downturn, one that’s had a far reaching impact on the entire U.S. economy and beyond. Basically, aggressive lending to sub-prime borrowers (note the definition of sub-prime, as in not ideal), coupled with low interest rates, fueled a housing boom which greatly inflated market prices. I’m no expert on real estate, but it sure sounds like building a shopping mall over a sinkhole to me. But for many (homeowners and lenders alike) I guess the dream was just too tempting. Here’s a link to a no-holds-barred Slate report on MSN, with links to other helpful articles about foreclosure. Here is a link to an article by the U.S. Department of Housing and Urban Development on how to sniff out and avoid predatory loans.

The bubble has popped, and today many young home owners have been left to pick up the slack. Many borrowers financed with nontraditional loans like zero-down mortgages have run into big trouble. Folks were lured in by low initial teaser rates, but then found themselves drowning as their mortgages reset and payments mushroomed. This has led to scores of foreclosures and a market flooded with excess homes.

A flooded and troubled market means falling home prices. This has translated into a fierce case of depreciation for many. Home prices are down 15 percent on average from their high in July 2006. The California housing market has been especially hard hit, with home values falling 26 percent from just a year ago. According to the Slate article, a house in San Bernadino purchased for $310,000 in 2005 would now be offered for $199,900.

I want a house pretty badly, but I know I’m in no shape money-wise right now to handle it. On the other hand, if you do have the money, now would seem to be a great time to buy since prices are low. After seeing what’s happening, I think I’ll do things the old fashioned way — pay my dues, save up for a solid 20 percent down payment, and sign on with a fixed-rate mortgage. This is my dream, and it’s one I’m willing to wait for.

The federal government started its check distribution of the much-touted economic stimulus bill this month. In the end, the U.S. Treasury will send checks to about 130 million taxpayers by July.

Individuals who filed taxes in April and make less than $75,000 annually should be receiving a check for $600; couples should receive $1,200; and parents will get an additional $300 for each child.

Direct deposit payments are well under way, but payment via paper checks will take a bit longer. Want to know when your check will be sent? The stimulus payment schedule is arranged according to the last two digits of your Social Security Number. You can check out the schedule HERE.

In the end, with Americans spending their checks on all sorts of things across the economic board, the government hopes to start the U.S. economy on a swing toward recovery.

So what are you planning on using your stimulus check for? I asked brass staffers what they’re planning to spend their checks on, and the answers were pretty diverse.

• Katie Kacvinsky plans to do her part in “boosting” the economy by traveling around the Pacific Northwest and to “kick back, drink wine and love life.”
• Jennie Bartlemay also says she wants to use the money to travel. She’ll be heading to Las Vegas this summer with friends.
• Brady Sahnow says he will put his children’s portions into their investment fund. For himself he might splurge on an Xbox 360 game and save the rest to pay for groceries.
• Joel Ranck is thinking about stashing his check in a rainy day fund, or throw it into the pot for an eventual down payment on a house.
• Zack Marker is likely to spend it on high-quality groceries. Having miraculously recovered from his ketchup only diet, he gave a great link to a site listing what other people are spending their stimulus money on. Check it out HERE.
• Sarah Higginbotham says she will be taking a big bite out of her student loan debt.
• As for myself, I will invest in my photography business. I recently upgraded to a Nikon D300, and my stimulus check will help make up part of the cost.

At brass, we’re doing our part in all kinds of ways and having fun while we’re at it. Well, some of us at least. Happy spending.

– Peter

Katie Kacvinsky, our brass|STUDENT PROGRAM Curriculum Facilitator, has some experience with student loans. As a result, she keeps a eye out for info about easing student loan stress and wanted to share her latest find with you. Here’s the update from one of our favorite guest bloggers:

The latest numbers reveal that each graduate in 2006 owned roughly $21,100 in student loan debt. Ouch. Student loans are usually categorized as “good debt,” but let’s all be honest, there is nothing pleasant about making those monthly payments, especially when money is tight.

The good news is that there is help on your horizon of impeding monthly bills. Check out the Student Loan Borrower Assistance for information about many different kinds of student loans. You may be able to save money by changing your repayment plan, and there are a (very) few ways that you can get your loans canceled altogether.

One way you can lower your payments is to extend the term of your loan, but that isn’t for everybody. The catch-22 is that the longer you defer your loan, the more interest it accumulates and the more you pay in the end. If you want to minimize your loan to afford more brand-name jeans, maybe you need to rethink your budgeting strategy. But if you’ve been eating ramen for the past two years to save money and can feel your arteries getting clogged, maybe it’s time to make some changes. Read Destination Debt-Free to find out more about getting out of debt.

– Katie

You know what’s been great about this week? Free birthday treats. Thanks to Brady and Wayne getting one year older, everyone has been making extra trips to the break room to grab Laura’s thoughtful and celebratory cupcakes (which Sarah was extremely excited about–see her staff bio to understand why) and our traditional brass birthday bagels.

It got me thinking–you know how some places will give you free treats, like ice cream or a birthday hat, for your birthday? Wouldn’t it be cool if you knew which places offered what birthday deals so that you could take advantage of them on your special day? I poked around a little, for Wayne and Brady, to find out what they could get for free on their big day.

On your birthday…

• You can get a free Hollywood Film Library rental. And the free rentals extend to everyone on the account, so if you share an account with your roommate, siblings, family, friends, or whoever, they get a free rental too. Movie night!
• Ice cream is almost always free. If you’re in the Blizzard Fan Club at Dairy Queen, you get an email coupon on your birthday. Join the birthday club at Cold Stone Creamery to get a free “creation” on your birthday. The birthday club at Baskin Robbins gets you a free scoop on the big day and a discount on a birthday cake.
• Some restaurants like Ruby Tuesday and Red Lobster offer coupons and other bonuses if you’re in their club. Even cooler, Red Robin eClub members get a free burger on their birthday!

Check out birthdayfreebies.com to see what your city may offer on your birthday. Also check out other sites and articles that have lists of freebies you can ask about. It’s also important to read the fine print when you sign up for clubs and things–getting email and snail mail offers can be great for your wallet, but it can potentially clog up your inbox with junk mail. Consider using an alternate email address for freebies, so your primary email account doesn’t get bogged down with spam.

Oh, and keep in mind that some birthday freebies are for kids 12 and under (sorry Brady and Wayne). Some days it’s just not your day after all.

In addition to my work at brass, I run a wedding, portrait and event photography business. I absolutely love it, and I love making people happy. I’ve made good friends and colleagues in the industry–some are new upstarts like me, others have been around for years. But one conclusion we can all agree on is the danger and fear of getting hit by a lawsuit.

Here’s some advice for all you young entrepreneurs out there from another young business owner — hope for the best, but plan for the worst. What’s the worst that can happen, you might ask? How about getting sued by an angry client?

What can young professionals do should the unthinkable happen? The answer is having professional liability insurance. This kind of insurance coverage protects you against loss from someone claiming you acted negligently, made a mistake, screwed up, or somehow didn’t perform your professional obligations.

Think of it as an airbag for your business — you hope it will never be used, but it’s in place to save you should you need it.

Let’s say I shoot a destination wedding in Costa Rica, and everything is perfect until my camera and all of my equipment is stolen at the airport. My equipment is insured, but the couple is devastated by the loss of the pictures I was hired to capture. They get angry and decide not only do they want their money back, but they want additional money for damages. What a nightmare! It makes my skin crawl just imagining it. I was a starving college student just two years ago. I don’t have that kind of money right now–I have money for the good things in life… like food and heat.

It’s in a worst-case scenario like this where professional liability insurance can save your bacon. Visit nolo.com or investopedia.com to find out more about this and other insurance you might consider getting as a small business owner.

- Peter

If you’ve kept up with the news at all, you know that basically anyone who files a 2007 tax return on time should be getting a check from the U.S. government come May. It’s all part of the $150 billion economic stimulus plan meant to kick our economy back into rhythm like a jolt from the biggest pacemaker in the universe.

So you know the gist of the stimulus package, but you still have questions about getting your check. Well, don’t stress. Turns out the IRS (in association with the American Payroll Association) posted a series of short informational videos on YouTube to help out.

In my mind, the IRS using YouTube as a vehicle for public service announcements proves how much streaming online video has made an impact on society. The web is the new “it” medium to distribute video content easily and quickly. The IRS gets it — and that’s pretty cool.

Each 30 second clip lays out basics like how to qualify for a stimulus check, what form you need to file and how to avoid the scam artists who’ve come out of the woodwork to try and sucker you out of your stimulus money.

Tons of folks will be clamoring for your stimulus money — retailers, businesses and crooks alike. But just remember, in the end it’s YOUR money and you spend it however you’d like. The IRS is trying to help by keeping you informed — check out what they have to say.

Stay classy.

– Peter