This is The Wall Street Digest Hotline Update for Tuesday, November 13, 2007, at 6:00 p.m. EST.
Bank of America said it has more than $15 billion in net exposure to collateralized debt obligations (CDOs), but stock prices still soared today. At the close, the Dow soared almost 320 points, closing at 13,307, while the Nasdaq jumped almost 90 points, closing at 2,673. Oil closed down $3.22 to 91.42 per barrel, and gold closed down $6.60 at $801.10 an ounce.
The smart money allowed the Dow Average, the S&P 500 and the Nasdaq to drift down to the 200-day moving average before releasing what appears to be a coordinated buy program to take the market back up to new highs.
Global plans to build nuclear power plants for electricity are growing. China has a plan to build 200 nuclear plants to electrify China. The price of uranium is going to soar. Let's purchase the Nuclear energy ETF, Market Vectors Global Nuclear Energy symbol (NLR). Do not bottom-fish in the financial sector. Do not buy banks or brokerage houses. China and the emerging markets should have a big bounce tonight.
The condo/housing sector will not bottom until late 2009. In the meantime, buyers of foreclosed properties are purchasing them for 50 to 60 percent of the selling price. Home and condo prices will continue to fall as more foreclosed properties add to the housing glut.
Stay fully invested! Stock prices in China, India, Asia and the emerging markets will outperform the U.S. stock market because of the falling dollar. Global/international investments will enhance your investment returns as the dollar declines against other currencies. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, November 16, 2007, at 6:00 p.m. EST.
Thursday, November 15, 2007
Sunday, November 11, 2007
8 secret scores that lenders keep
Lenders track every last detail of your spending habits, then use the data to estimate not just how big a risk you are but how profitable a customer you might be
By Liz Pulliam Weston
Recently my husband and I received nearly identical balance-transfer offers from our respective Bank of America cards. The offers were identical, that is, except for the rates we'd be given. He was enticed with a 0% rate. Mine was 2.99%.
We live at the same address and share the same income. We both have high credit scores (although his are, annoyingly, a few points higher than mine).
So are these different offers evidence of rampant sexism on BofA's part? Hardly. The pitches were the result of complex and largely secret scoring systems that most financial institutions use to boost profits while limiting losses.
You've heard by now of credit scores, the three-digit numbers lenders use to gauge your creditworthiness. Credit scores predict how likely you are to default on a credit account or loan; they're used to help set interest rates and terms.
What you may not know is that credit scores are just the start of the way financial institutions evaluate you, and they're not even the most commonly used scores -- far from it.
While a credit card issuer might check your credit scores once a month as part of its regular account review process, the same company probably checks other kinds of scores every time you pull out your plastic.
"Every single transaction has some sort of score being generated," said credit scoring expert John Ulzheimer, president of Credit.com's education services and author of the book "You're Nothing But a Number." "Generally they're checking whether the transaction is likely to be fraudulent, but there are other reasons as well."
You're being judged by the type of transactions you make, how you pay your bills, how much profit you generate for your lenders and a host of other factors. The scoring formulas might be created by the credit bureaus, third parties or the lenders themselves. Banks and other financial institutions are tight-lipped about many of the details of these other scoring systems, but they're used to determine:
The kind of credit card offers you get.
Whether your credit limits are raised or suddenly lowered.
Whether your over-limit credit or debit transactions are approved.
Whether your card issuer calls you about a suspicious transaction, blocks it or shuts down your account.
How cooperative your issuer is about waiving fees or lowering your interest rate.
How quickly your issuer calls you if your payment is late.
Whether a collection agency contacts you about an old debt and how hard they push.
Your credit scores are just the start
Here are some of the ways you might be scored, roughly following the life cycle of a credit account: You're very familiar with credit-risk scores, but the other eight rarely see the light of day.
Credit-risk scores: These are the credit scores most of us know. The leading credit score, the FICO, was created by Fair Isaac and ranges from 300 to 850, with scores over 700 generally considered to be low risk.
Response score: This score predicts the likelihood a consumer will respond to an offer of credit, such as a new card or a balance transfer offer. Credit card issuers use response scores to decide whom to target and how to customize offers to appeal to particular consumers, said Chisoo Lyons, vice president for analytic research at Fair Isaac, which created the leading FICO credit score as well as many other scoring formulas.
Application score:This score scoops up data from your credit application that's not included in your credit scores, said Ulzheimer, who worked for Fair Isaac and for credit bureau Equifax before joining Credit.com. That data include how much you earn, how long you've lived at your current address and how long you've worked for your current employer. Application scores are typically used in combination with other scores, such as credit and bankruptcy scores, to determine whether to open the account, what rate to give and how much credit to extend.
Bankruptcy score:Credit scores typically predict the chance you'll miss a payment in the next two years. Bankruptcy scores predict the likelihood you'll throw in the towel on your debt entirely and file for Chapter 7 liquidation or a Chapter 13 repayment plan, said David Rubinger, spokesman for credit bureau Equifax, which produces the leading Bankruptcy Navigator Index or BNI. BNIs range from 1 to 300, with the higher the score, the lower the predicted risk. Most lenders use both credit scores and bankruptcy scores, Ulzheimer said, to help assess the risk that you won't pay.
Revenue score: Lenders want to maximize the profitability of each account, and one way they do that is to gauge how much money each account is likely to generate.
Attrition-risk score: Attrition risk refers to the likelihood a user will stop using a card, and attrition-risk scores are typically used in combination with other scores to determine what to do next if you look ready to bolt. If your account generates a lot of revenue and is deemed at low risk for default or bankruptcy, for example, the issuer might aggressively try to keep your business by jacking up your credit limit, lowering your rate and pelting you with convenience checks. If your account isn't that profitable or is deemed risky, on the other hand, the issuer might just let you go.
Behavior score: Credit scores provide a snapshot of how a consumer is handling all of his or her credit accounts. Behavior scores, by contrast, typically focus on a single account (the one you have with that particular creditor) but take in a broad view. Does the user pay off her bills every month, carry a balance occasionally or frequently pay only the minimums on her cards? That information typically isn't available on a credit report, but is contained in the issuer's databases, along with other data that helps the score describe how she handles her account. A behavior score might be used in conjunction with other scores, such as credit or bankruptcy scores, to decide whether an overdue payment is an aberration (maybe he's traveling?) or a sign of impending financial crisis (maybe we should call the consumer today and find out what's going on).
Transaction score: These are the scores run each time you use your plastic to determine whether the transaction should be approved. Issuers are typically looking for signs the transaction might be fraudulent, but transaction data can be used in other ways as well (more on that in a minute).
Collection score: You've failed to pay for long enough that your card has been turned over to a collection agency. These agencies use collection scores to assess the likelihood that you'll be able to pay them and sort their list of debtors accordingly. Collection agencies watch for all kinds of evidence that your financial situation may be improving, Ulzheimer said, from better credit scores to another collector's account suddenly being reset to 0, indicating it's been paid off.
If, on the other hand, your credit is in the dumps or the amount involved is small, the collection agency may make minimal effort.
"Why spend time and effort to track you down if you're not likely to pay?" Ulzheimer said. "Probably the most cost-effective (tactic) is to write you a letter, put it on your credit report and wait for you to call them."
Waiting, watching, hoping
As several of the previous examples show, lenders and others often combine different types of scores to assess you. Sometimes the evaluations become pretty sophisticated.
One scoring model sold to lenders, the TRIAD Transaction Score created by Fair Isaac, takes into account credit risk, attrition, potential revenue and patterns in the user's charging behavior that might indicate higher or lower risk.
Let's say you typically spent $1,000 a month on your credit card, usually on toys, clothes and eating out at family restaurants. Then one month your spending changes -- you still spend $1,000, but now it's to get cash advances, buy groceries and gamble at the local racetrack.
The scoring formula may decide you've gone from Stable Family Guy to Desperate Unemployed Guy and flag the issuer that you've become a higher-risk customer.
Instead of a single three-digit number, TRIAD generates three numbers. Typically the scores will include a credit-risk score and an attrition score, both somewhere on a scale of 50 to 999 with higher numbers being riskier, plus a dollar figure to indicate the account's potential revenue generation.
If the issuer decides the risk of your default outweighs the profits you generate, it might reduce your credit limit. If you're a profitable customer, on the other hand, the card issuer might wait awhile to see if your situation improves.
Yes, it is rocket science
How issuers decide what to do with the scores depends on their companies' policies, and even those are often changing targets. Credit card issuers constantly tweak their systems to maximize profits and minimize losses.
"Those guys at NASA have nothing on the Ph.D.s who work for credit card companies," Ulzheimer said. "They're Mensa-level smart, and they are very, very sophisticated in the ways they use credit data."
Which is not to say issuers, or the scoring systems they use, never make mistakes. Case in point: an issuer sending two different offers to the same household, as they did to ours. Most issuers use software to make sure that doesn't happen, Ulzheimer said; they don't want us comparing notes. (Bank of America didn't return my calls about the issue.)
In fact, financial institutions in general aren't eager to reveal how they make the decisions they do -- and that's not likely to change soon. While you have a federal right to see your credit scores, that's not true with other scores, which lenders often consider proprietary information.
Is that a crisis for consumers? I have mixed feelings about that. You clearly need to see your credit scores, since they influence so much of your financial life across the board. But given how many of these other scores are in use, how different they are and how many ways they're applied, I'm not sure I really want to see them all.
Ulzheimer agrees. "I'm not sure how helpful it would be to get a list of 40 or 50 scores, each scaled differently and meant to measure different things," he said.
What do you think? Share your thoughts on the Your Money message board.
Columns by Liz Pulliam Weston, the Web's most-read personal finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published Nov. 1, 2007
By Liz Pulliam Weston
Recently my husband and I received nearly identical balance-transfer offers from our respective Bank of America cards. The offers were identical, that is, except for the rates we'd be given. He was enticed with a 0% rate. Mine was 2.99%.
We live at the same address and share the same income. We both have high credit scores (although his are, annoyingly, a few points higher than mine).
So are these different offers evidence of rampant sexism on BofA's part? Hardly. The pitches were the result of complex and largely secret scoring systems that most financial institutions use to boost profits while limiting losses.
You've heard by now of credit scores, the three-digit numbers lenders use to gauge your creditworthiness. Credit scores predict how likely you are to default on a credit account or loan; they're used to help set interest rates and terms.
What you may not know is that credit scores are just the start of the way financial institutions evaluate you, and they're not even the most commonly used scores -- far from it.
While a credit card issuer might check your credit scores once a month as part of its regular account review process, the same company probably checks other kinds of scores every time you pull out your plastic.
"Every single transaction has some sort of score being generated," said credit scoring expert John Ulzheimer, president of Credit.com's education services and author of the book "You're Nothing But a Number." "Generally they're checking whether the transaction is likely to be fraudulent, but there are other reasons as well."
You're being judged by the type of transactions you make, how you pay your bills, how much profit you generate for your lenders and a host of other factors. The scoring formulas might be created by the credit bureaus, third parties or the lenders themselves. Banks and other financial institutions are tight-lipped about many of the details of these other scoring systems, but they're used to determine:
The kind of credit card offers you get.
Whether your credit limits are raised or suddenly lowered.
Whether your over-limit credit or debit transactions are approved.
Whether your card issuer calls you about a suspicious transaction, blocks it or shuts down your account.
How cooperative your issuer is about waiving fees or lowering your interest rate.
How quickly your issuer calls you if your payment is late.
Whether a collection agency contacts you about an old debt and how hard they push.
Your credit scores are just the start
Here are some of the ways you might be scored, roughly following the life cycle of a credit account: You're very familiar with credit-risk scores, but the other eight rarely see the light of day.
Credit-risk scores: These are the credit scores most of us know. The leading credit score, the FICO, was created by Fair Isaac and ranges from 300 to 850, with scores over 700 generally considered to be low risk.
Response score: This score predicts the likelihood a consumer will respond to an offer of credit, such as a new card or a balance transfer offer. Credit card issuers use response scores to decide whom to target and how to customize offers to appeal to particular consumers, said Chisoo Lyons, vice president for analytic research at Fair Isaac, which created the leading FICO credit score as well as many other scoring formulas.
Application score:This score scoops up data from your credit application that's not included in your credit scores, said Ulzheimer, who worked for Fair Isaac and for credit bureau Equifax before joining Credit.com. That data include how much you earn, how long you've lived at your current address and how long you've worked for your current employer. Application scores are typically used in combination with other scores, such as credit and bankruptcy scores, to determine whether to open the account, what rate to give and how much credit to extend.
Bankruptcy score:Credit scores typically predict the chance you'll miss a payment in the next two years. Bankruptcy scores predict the likelihood you'll throw in the towel on your debt entirely and file for Chapter 7 liquidation or a Chapter 13 repayment plan, said David Rubinger, spokesman for credit bureau Equifax, which produces the leading Bankruptcy Navigator Index or BNI. BNIs range from 1 to 300, with the higher the score, the lower the predicted risk. Most lenders use both credit scores and bankruptcy scores, Ulzheimer said, to help assess the risk that you won't pay.
Revenue score: Lenders want to maximize the profitability of each account, and one way they do that is to gauge how much money each account is likely to generate.
Attrition-risk score: Attrition risk refers to the likelihood a user will stop using a card, and attrition-risk scores are typically used in combination with other scores to determine what to do next if you look ready to bolt. If your account generates a lot of revenue and is deemed at low risk for default or bankruptcy, for example, the issuer might aggressively try to keep your business by jacking up your credit limit, lowering your rate and pelting you with convenience checks. If your account isn't that profitable or is deemed risky, on the other hand, the issuer might just let you go.
Behavior score: Credit scores provide a snapshot of how a consumer is handling all of his or her credit accounts. Behavior scores, by contrast, typically focus on a single account (the one you have with that particular creditor) but take in a broad view. Does the user pay off her bills every month, carry a balance occasionally or frequently pay only the minimums on her cards? That information typically isn't available on a credit report, but is contained in the issuer's databases, along with other data that helps the score describe how she handles her account. A behavior score might be used in conjunction with other scores, such as credit or bankruptcy scores, to decide whether an overdue payment is an aberration (maybe he's traveling?) or a sign of impending financial crisis (maybe we should call the consumer today and find out what's going on).
Transaction score: These are the scores run each time you use your plastic to determine whether the transaction should be approved. Issuers are typically looking for signs the transaction might be fraudulent, but transaction data can be used in other ways as well (more on that in a minute).
Collection score: You've failed to pay for long enough that your card has been turned over to a collection agency. These agencies use collection scores to assess the likelihood that you'll be able to pay them and sort their list of debtors accordingly. Collection agencies watch for all kinds of evidence that your financial situation may be improving, Ulzheimer said, from better credit scores to another collector's account suddenly being reset to 0, indicating it's been paid off.
If, on the other hand, your credit is in the dumps or the amount involved is small, the collection agency may make minimal effort.
"Why spend time and effort to track you down if you're not likely to pay?" Ulzheimer said. "Probably the most cost-effective (tactic) is to write you a letter, put it on your credit report and wait for you to call them."
Waiting, watching, hoping
As several of the previous examples show, lenders and others often combine different types of scores to assess you. Sometimes the evaluations become pretty sophisticated.
One scoring model sold to lenders, the TRIAD Transaction Score created by Fair Isaac, takes into account credit risk, attrition, potential revenue and patterns in the user's charging behavior that might indicate higher or lower risk.
Let's say you typically spent $1,000 a month on your credit card, usually on toys, clothes and eating out at family restaurants. Then one month your spending changes -- you still spend $1,000, but now it's to get cash advances, buy groceries and gamble at the local racetrack.
The scoring formula may decide you've gone from Stable Family Guy to Desperate Unemployed Guy and flag the issuer that you've become a higher-risk customer.
Instead of a single three-digit number, TRIAD generates three numbers. Typically the scores will include a credit-risk score and an attrition score, both somewhere on a scale of 50 to 999 with higher numbers being riskier, plus a dollar figure to indicate the account's potential revenue generation.
If the issuer decides the risk of your default outweighs the profits you generate, it might reduce your credit limit. If you're a profitable customer, on the other hand, the card issuer might wait awhile to see if your situation improves.
Yes, it is rocket science
How issuers decide what to do with the scores depends on their companies' policies, and even those are often changing targets. Credit card issuers constantly tweak their systems to maximize profits and minimize losses.
"Those guys at NASA have nothing on the Ph.D.s who work for credit card companies," Ulzheimer said. "They're Mensa-level smart, and they are very, very sophisticated in the ways they use credit data."
Which is not to say issuers, or the scoring systems they use, never make mistakes. Case in point: an issuer sending two different offers to the same household, as they did to ours. Most issuers use software to make sure that doesn't happen, Ulzheimer said; they don't want us comparing notes. (Bank of America didn't return my calls about the issue.)
In fact, financial institutions in general aren't eager to reveal how they make the decisions they do -- and that's not likely to change soon. While you have a federal right to see your credit scores, that's not true with other scores, which lenders often consider proprietary information.
Is that a crisis for consumers? I have mixed feelings about that. You clearly need to see your credit scores, since they influence so much of your financial life across the board. But given how many of these other scores are in use, how different they are and how many ways they're applied, I'm not sure I really want to see them all.
Ulzheimer agrees. "I'm not sure how helpful it would be to get a list of 40 or 50 scores, each scaled differently and meant to measure different things," he said.
What do you think? Share your thoughts on the Your Money message board.
Columns by Liz Pulliam Weston, the Web's most-read personal finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published Nov. 1, 2007
5 people who check your credit
It's not just lenders who check your credit score. A bad score can also make it costlier to get insurance, an apartment or a cell phone -- and harder to get a job
By Kiplinger's Personal Finance Magazine
How much do you know about your credit score? That three-digit number is tied inseparably to our financial lives, yet many young adults haven't given it the attention it deserves. Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you'll pay on interest charges, insurance and even cell phone contracts.
Make building a stellar score a priority while you're young and you could actually save hundreds or thousands of dollars over your lifetime. However, if you don't take your credit seriously, a bad score -- or even a nonexistent score -- will cost you.
Who's keeping score?
Your credit score is basically used to predict the possibility that you won't pay your bills. Scores are compiled by Fair Isaac Corp. and are sometimes called FICO scores. The top possible number is 850, but topping 800 is probably unrealistic. A median score usually falls in the 720-to-725 range, meaning half of consumers fall above that point, half below. Even if you haven't given your FICO score much thought, there are plenty of others who have or will, so you'll want to aim for the mid-700s to make the best impression on:
1. Lenders. This group is the one most people associate with their credit score. Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card and even a small business loan if you've got that entrepreneurial spirit. A nonexistent score can make it impossible for you to qualify for a loan or credit card at
2. Insurers. The majority of auto insurance companies use your credit score when determining your rates, and the practice is also common among home insurers. A recent survey by Consumer Reports among eight popular auto insurers found that drivers with top scores could pay up to 31% less on their premiums than if credit scoring wasn't factored in, while those with bad scores would pay as much as 143% more.
3. Landlords. Increasingly, you may need a good credit score to rent an apartment. Landlords view your credit rating as a measure of your responsibility to pay bills on time. If your rating is below par or you don't have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit
4. Employers. When you're applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you'll spend more time fretting about your financial woes than concentrating on the job.
5. Cell phone carriers. Even cell phone service providers may check your credit before signing you up for a plan. They want to make sure you're responsible and will pay your bill each month. Some utility providers may pull your report as well. If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could get turned down.
True cost of your score
So, how much does your credit score affect your finances? Say we have two friends, Jim and Mark. Both took steps right out of college to start building a credit report by getting their first credit cards and an auto loan. Jim made all his payments on time, never maxed out his credit cards and often paid more than the minimum required. Mark, however, frequently paid late, overextended his cards and applied for new credit to bail him out of his mismanaged debts.
Now both are ready to buy homes, and they each apply for a $250,000 30-year mortgage. Through Jim's responsibility, he's been able to build a score of 750, qualifying him for a loan with a 6.2% interest rate, according to Fair Isaac, the scoring bureau. Mark's score comes in around 650, netting him a rate at 7.3% interest. Jim's monthly mortgage payment is $1,536 while Mark pays $1,718 -- a difference of $182 per month. If they both live in their homes for 10 years before selling or refinancing, Mark will pay $21,840 more in monthly payments than his friend. Ouch.
Mark also gets burned on a new auto loan -- paying $1,332 more over three years on a $20,000 loan than Jim. Plus, Mark probably paid much more for his car insurance than Jim.
How to get started
Even if you don't plan on applying for a loan or getting a new apartment or a new insurance policy anytime soon, it's a good idea to start building your credit score now so it's there when you need it.
When you're starting from scratch, a good place to begin is in college, where lenders hand out credit cards like candy. But don't rush to indulge. Janet Bodnar, Kiplinger.com's Money Smart Kids columnist, advises students to get just one card their junior or senior year, use it occasionally and pay off the balance each month. It's much easier to qualify for a credit card while you're in school than after you graduate (lenders figure that Mom and Dad will bail you out while you're in college if you can't pay your bill).
If you're already out of school, or you don't trust yourself with a full-fledged credit card yet, a secured card will help you get off on the right foot. This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one. And after making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card and get your deposit back.
A new scoring system from FICO may soon help young adults trying to build a credit history. It is based on alternative data such as whether you pay your electric bill on time and maintain a clean checking account. So you'd do well to keep all areas of your finances in tiptop shape.
Boost your score
Knowing what goes into your credit score can help you manage your debts well. Here's how to make the best impression on your credit history:
Pay on time. 35% of your score depends on your payment history.
Don't max out your cards. 30% of your score is based on how much you owe. You want to keep your "credit utilization" ratio -- the percentage of your credit limit that you've actually used -- no higher than 30% of your available credit limit.
Start while you're young. 15% depends on the average age of your accounts.
Avoid opening several accounts at once. Not only will this lower the average age of your accounts, but lenders will worry that you might go on a borrowing binge. 10% of your score depends on new credit.
Get the right kind of credit. This accounts for the final 10% of your score. Your experience with revolving credit, such as credit cards, on which you control how much you charge and pay off each month, carries more weight than installment debt, such as car loans and mortgages, with fixed payments. But don't simply stock up on a pocketful of Visas -- lenders like to see that your money skills are well rounded.
This article was reported and written by Erin Burt for Kiplinger's Personal Finance Magazine.
Published April 17, 2007
By Kiplinger's Personal Finance Magazine
How much do you know about your credit score? That three-digit number is tied inseparably to our financial lives, yet many young adults haven't given it the attention it deserves. Your score can play a role in your ability to rent an apartment, qualify for a loan or even get a job. It can also affect how much you'll pay on interest charges, insurance and even cell phone contracts.
Make building a stellar score a priority while you're young and you could actually save hundreds or thousands of dollars over your lifetime. However, if you don't take your credit seriously, a bad score -- or even a nonexistent score -- will cost you.
Who's keeping score?
Your credit score is basically used to predict the possibility that you won't pay your bills. Scores are compiled by Fair Isaac Corp. and are sometimes called FICO scores. The top possible number is 850, but topping 800 is probably unrealistic. A median score usually falls in the 720-to-725 range, meaning half of consumers fall above that point, half below. Even if you haven't given your FICO score much thought, there are plenty of others who have or will, so you'll want to aim for the mid-700s to make the best impression on:
1. Lenders. This group is the one most people associate with their credit score. Having a good rating can help you qualify for the best rates on a mortgage, car loan, credit card and even a small business loan if you've got that entrepreneurial spirit. A nonexistent score can make it impossible for you to qualify for a loan or credit card at
2. Insurers. The majority of auto insurance companies use your credit score when determining your rates, and the practice is also common among home insurers. A recent survey by Consumer Reports among eight popular auto insurers found that drivers with top scores could pay up to 31% less on their premiums than if credit scoring wasn't factored in, while those with bad scores would pay as much as 143% more.
3. Landlords. Increasingly, you may need a good credit score to rent an apartment. Landlords view your credit rating as a measure of your responsibility to pay bills on time. If your rating is below par or you don't have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit
4. Employers. When you're applying for a job, potential employers can pull your credit report as long as they notify you first. And, in fact, about 35% of them do, according to the Society for Human Resource Management. Why? Bad credit can be a signal of irresponsibility, or employers might be worried you'll spend more time fretting about your financial woes than concentrating on the job.
5. Cell phone carriers. Even cell phone service providers may check your credit before signing you up for a plan. They want to make sure you're responsible and will pay your bill each month. Some utility providers may pull your report as well. If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could get turned down.
True cost of your score
So, how much does your credit score affect your finances? Say we have two friends, Jim and Mark. Both took steps right out of college to start building a credit report by getting their first credit cards and an auto loan. Jim made all his payments on time, never maxed out his credit cards and often paid more than the minimum required. Mark, however, frequently paid late, overextended his cards and applied for new credit to bail him out of his mismanaged debts.
Now both are ready to buy homes, and they each apply for a $250,000 30-year mortgage. Through Jim's responsibility, he's been able to build a score of 750, qualifying him for a loan with a 6.2% interest rate, according to Fair Isaac, the scoring bureau. Mark's score comes in around 650, netting him a rate at 7.3% interest. Jim's monthly mortgage payment is $1,536 while Mark pays $1,718 -- a difference of $182 per month. If they both live in their homes for 10 years before selling or refinancing, Mark will pay $21,840 more in monthly payments than his friend. Ouch.
Mark also gets burned on a new auto loan -- paying $1,332 more over three years on a $20,000 loan than Jim. Plus, Mark probably paid much more for his car insurance than Jim.
How to get started
Even if you don't plan on applying for a loan or getting a new apartment or a new insurance policy anytime soon, it's a good idea to start building your credit score now so it's there when you need it.
When you're starting from scratch, a good place to begin is in college, where lenders hand out credit cards like candy. But don't rush to indulge. Janet Bodnar, Kiplinger.com's Money Smart Kids columnist, advises students to get just one card their junior or senior year, use it occasionally and pay off the balance each month. It's much easier to qualify for a credit card while you're in school than after you graduate (lenders figure that Mom and Dad will bail you out while you're in college if you can't pay your bill).
If you're already out of school, or you don't trust yourself with a full-fledged credit card yet, a secured card will help you get off on the right foot. This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit. The issuer takes on zero risk because if you don't pay on time, it can dip into your account to cover the bill. Most issuers require a deposit of $300 to $5,000. You build a history just as fast with a secured card as with a regular one. And after making payments on time for a year with a secured card, you should have an adequate history to switch to an unsecured card and get your deposit back.
A new scoring system from FICO may soon help young adults trying to build a credit history. It is based on alternative data such as whether you pay your electric bill on time and maintain a clean checking account. So you'd do well to keep all areas of your finances in tiptop shape.
Boost your score
Knowing what goes into your credit score can help you manage your debts well. Here's how to make the best impression on your credit history:
Pay on time. 35% of your score depends on your payment history.
Don't max out your cards. 30% of your score is based on how much you owe. You want to keep your "credit utilization" ratio -- the percentage of your credit limit that you've actually used -- no higher than 30% of your available credit limit.
Start while you're young. 15% depends on the average age of your accounts.
Avoid opening several accounts at once. Not only will this lower the average age of your accounts, but lenders will worry that you might go on a borrowing binge. 10% of your score depends on new credit.
Get the right kind of credit. This accounts for the final 10% of your score. Your experience with revolving credit, such as credit cards, on which you control how much you charge and pay off each month, carries more weight than installment debt, such as car loans and mortgages, with fixed payments. But don't simply stock up on a pocketful of Visas -- lenders like to see that your money skills are well rounded.
This article was reported and written by Erin Burt for Kiplinger's Personal Finance Magazine.
Published April 17, 2007
Thursday, November 8, 2007
Fed officials hint at potential for lower rates
By Ros Krasny Wed Nov 7, 6:06 PM ET
MILWAUKEE (Reuters) - Federal Reserve officials on Wednesday said more interest rate cuts could be needed if economic growth proves weaker than expected, just a week after hinting that rates would probably stay steady for now.
Uncertainty about how events will play out in the housing and financial markets make another rate cut more likely than a rate hike, William Poole, a voting member of the policy-setting Federal Open Market Committee in 2007, told reporters after a speech at Marquette University.
"It could be that the downdraft from the housing industry will spread to other sectors, which might require that recent rate cuts not be reversed, or even that additional cuts would be in order," he said.
The U.S. central bank has cut benchmark interest rates twice, by a total of three-quarters of a percentage point, over the past two months, bringing the federal funds rate at 4.50 percent from 5.25 percent.
In announcing its second cut on October 31, it said risks to growth and the risk of inflation were about evenly balanced, implying a reluctance to lower borrowing costs further.
Even so, financial markets lean heavily toward another one-quarter-point rate cut on December 11, the final FOMC meeting of the year. The implied prospects for a move jumped on Wednesday to 76 percent from 62 percent.
"While the concern over increasing inflation pressures continued to be prevalent, Fed speakers continue to note the downside risks from the housing and credit markets. This, in our view, leaves the door open to further rate cuts," Merrill Lynch economist David Rosenberg said in a research note.
The Fed, along with most other forecasters, anticipates a marked deceleration in growth in the fourth quarter after a surprisingly brisk outcome reported for the third quarter.
Fed Chairman Ben Bernanke is expected to expand on the Fed's outlook for the economy in testimony before Congress on Thursday.
With fourth-quarter economic softness on the radar, it will take an even weaker-than-expected result for the Fed to consider moving rates again, Poole said. A key risk is that falling home prices could cause consumption, the largest component of U.S. gross domestic product, to grow "significantly slower," he added.
LOCKHART SAYS GROWTH OUTLOOK UNCERTAIN
Meanwhile, Atlanta Fed President Dennis Lockhart said the outlook for a return to near-trend economic growth by late in 2008 situation remains uncertain given evidence of business spending retrenchment.
Despite recent signs of a resilient economy in the form of strong employment and personal spending, there is evidence of a business spending retrenchment, Lockhart said in a speech to the Huntsville, Alabama, Rotary Club.
"Recent feedback from our Reserve Bank board members and other contacts on the ground is somewhat more negative than the numbers suggest," he said.
However, in an interview published on The New York Times's Web site late on Tuesday, Philadelphia Fed President Charles Plosser said it would take a "drastic" fall in growth for him to support another rate cut.
Plosser, a well-known policy hawk, will get his first vote on the FOMC in 2008 since joining the Philly Fed in 2006.
The inclusion of that balance of risks assessment in the Fed's October 31 statement was not accidental, but rather a step toward the return to a more normal policy-making approach after the disruptive events of August and September, Poole noted.
On a day when crude oil prices approached $100 a barrel, gold prices spiked and the dollar sank to record lows, policy-makers also confronted the potential for inflation and inflation expectations to rise, only months after inflation seemed to have been brought under control.
"There are also important reasons to be concerned about the outlook for inflation," Fed Governor Kevin Warsh told the New York Association for Business Economics.
Poole looked for the Fed to strike just the right balance on policy to boost market confidence, doing "what is necessary, but not more" on interest rates.
"Excessive rate reductions would run the risk of increasing inflation in the future" and of setting up an "unpleasant environment" of rising inflation fears and higher long-term interest rates, he said.
Still, Fed Governor Frederic Miskin said it was important to not "overreact" to rising oil prices and take a longer-term view on their effect on inflation as the economy slows.
"We find that the impact of the dollar depreciation on the overall price level is actually quite limited," Mishkin said while testifying before the U.S. House of Representatives Small Business Committee.
(Additional reporting by Mark Felsenthal in Huntsville, Tamawa Kadoya in New York and Patrick Rucker in Washington)
MILWAUKEE (Reuters) - Federal Reserve officials on Wednesday said more interest rate cuts could be needed if economic growth proves weaker than expected, just a week after hinting that rates would probably stay steady for now.
Uncertainty about how events will play out in the housing and financial markets make another rate cut more likely than a rate hike, William Poole, a voting member of the policy-setting Federal Open Market Committee in 2007, told reporters after a speech at Marquette University.
"It could be that the downdraft from the housing industry will spread to other sectors, which might require that recent rate cuts not be reversed, or even that additional cuts would be in order," he said.
The U.S. central bank has cut benchmark interest rates twice, by a total of three-quarters of a percentage point, over the past two months, bringing the federal funds rate at 4.50 percent from 5.25 percent.
In announcing its second cut on October 31, it said risks to growth and the risk of inflation were about evenly balanced, implying a reluctance to lower borrowing costs further.
Even so, financial markets lean heavily toward another one-quarter-point rate cut on December 11, the final FOMC meeting of the year. The implied prospects for a move jumped on Wednesday to 76 percent from 62 percent.
"While the concern over increasing inflation pressures continued to be prevalent, Fed speakers continue to note the downside risks from the housing and credit markets. This, in our view, leaves the door open to further rate cuts," Merrill Lynch economist David Rosenberg said in a research note.
The Fed, along with most other forecasters, anticipates a marked deceleration in growth in the fourth quarter after a surprisingly brisk outcome reported for the third quarter.
Fed Chairman Ben Bernanke is expected to expand on the Fed's outlook for the economy in testimony before Congress on Thursday.
With fourth-quarter economic softness on the radar, it will take an even weaker-than-expected result for the Fed to consider moving rates again, Poole said. A key risk is that falling home prices could cause consumption, the largest component of U.S. gross domestic product, to grow "significantly slower," he added.
LOCKHART SAYS GROWTH OUTLOOK UNCERTAIN
Meanwhile, Atlanta Fed President Dennis Lockhart said the outlook for a return to near-trend economic growth by late in 2008 situation remains uncertain given evidence of business spending retrenchment.
Despite recent signs of a resilient economy in the form of strong employment and personal spending, there is evidence of a business spending retrenchment, Lockhart said in a speech to the Huntsville, Alabama, Rotary Club.
"Recent feedback from our Reserve Bank board members and other contacts on the ground is somewhat more negative than the numbers suggest," he said.
However, in an interview published on The New York Times's Web site late on Tuesday, Philadelphia Fed President Charles Plosser said it would take a "drastic" fall in growth for him to support another rate cut.
Plosser, a well-known policy hawk, will get his first vote on the FOMC in 2008 since joining the Philly Fed in 2006.
The inclusion of that balance of risks assessment in the Fed's October 31 statement was not accidental, but rather a step toward the return to a more normal policy-making approach after the disruptive events of August and September, Poole noted.
On a day when crude oil prices approached $100 a barrel, gold prices spiked and the dollar sank to record lows, policy-makers also confronted the potential for inflation and inflation expectations to rise, only months after inflation seemed to have been brought under control.
"There are also important reasons to be concerned about the outlook for inflation," Fed Governor Kevin Warsh told the New York Association for Business Economics.
Poole looked for the Fed to strike just the right balance on policy to boost market confidence, doing "what is necessary, but not more" on interest rates.
"Excessive rate reductions would run the risk of increasing inflation in the future" and of setting up an "unpleasant environment" of rising inflation fears and higher long-term interest rates, he said.
Still, Fed Governor Frederic Miskin said it was important to not "overreact" to rising oil prices and take a longer-term view on their effect on inflation as the economy slows.
"We find that the impact of the dollar depreciation on the overall price level is actually quite limited," Mishkin said while testifying before the U.S. House of Representatives Small Business Committee.
(Additional reporting by Mark Felsenthal in Huntsville, Tamawa Kadoya in New York and Patrick Rucker in Washington)
Microsoft CEO plays down Google threat
By YURI KAGEYAMA, AP Business Writer 1 hour, 8 minutes ago
TOKYO - Microsoft Chief Executive Steve Ballmer, in Tokyo to launch new Windows Live services, played down the threat of Google on Thursday, denying the rival was ahead in any way but in online searches.
"Google is not ahead of us," he told reporters at a Tokyo hotel. "In the area of search specifically, Google would lead."
Microsoft Corp. on Thursday began offering its Windows Live programming package for e-mail, instant messaging, blogging and photo-sharing in Japan. The product was announced in the U.S. Tuesday.
On Monday, Google Inc., which already offers similar services online for personal computers, said it will offer a new free software package for mobile devices called Android, scheduled to hit the market during the second half of next year.
Google is offering its technology to handset manufacturers so consumers will be able to use Google's search engine, e-mail and maps on mobile devices as easily as on personal computers.
Ballmer said it was difficult to comment on Google's mobile plans because they were still "just words on paper" that had yet to begin.
Ballmer expressed hopes for Microsoft's business in Japan, noting that Japanese consumers were ahead of the rest of the world in accessing the Internet on cell phones because of the popularity of the "i-mode" Net-linking mobile service that NTT DoCoMo launched in February 1999.
But Ballmer acknowledged Microsoft expects to continue to lose money in its global online business for some time. Although online advertising revenue is growing, Microsoft is still "in an investment mode" in online businesses, he said.
A Microsoft Japan official demonstrated some Windows Live features, including how 20 digital photos of a waterfall taken from various angles could be edited into a seamless panoramic photo, and then uploaded on a blog — all for free.
More than a dozen Japanese companies have signed on as partners for Windows Live, including top telecommunications company Nippon Telegraph and Telephone Corp., mobile and Internet services company Softbank Corp. and electronics maker NEC Corp., according to Redmond, Wash.-based Microsoft.
TOKYO - Microsoft Chief Executive Steve Ballmer, in Tokyo to launch new Windows Live services, played down the threat of Google on Thursday, denying the rival was ahead in any way but in online searches.
"Google is not ahead of us," he told reporters at a Tokyo hotel. "In the area of search specifically, Google would lead."
Microsoft Corp. on Thursday began offering its Windows Live programming package for e-mail, instant messaging, blogging and photo-sharing in Japan. The product was announced in the U.S. Tuesday.
On Monday, Google Inc., which already offers similar services online for personal computers, said it will offer a new free software package for mobile devices called Android, scheduled to hit the market during the second half of next year.
Google is offering its technology to handset manufacturers so consumers will be able to use Google's search engine, e-mail and maps on mobile devices as easily as on personal computers.
Ballmer said it was difficult to comment on Google's mobile plans because they were still "just words on paper" that had yet to begin.
Ballmer expressed hopes for Microsoft's business in Japan, noting that Japanese consumers were ahead of the rest of the world in accessing the Internet on cell phones because of the popularity of the "i-mode" Net-linking mobile service that NTT DoCoMo launched in February 1999.
But Ballmer acknowledged Microsoft expects to continue to lose money in its global online business for some time. Although online advertising revenue is growing, Microsoft is still "in an investment mode" in online businesses, he said.
A Microsoft Japan official demonstrated some Windows Live features, including how 20 digital photos of a waterfall taken from various angles could be edited into a seamless panoramic photo, and then uploaded on a blog — all for free.
More than a dozen Japanese companies have signed on as partners for Windows Live, including top telecommunications company Nippon Telegraph and Telephone Corp., mobile and Internet services company Softbank Corp. and electronics maker NEC Corp., according to Redmond, Wash.-based Microsoft.
Tuesday, November 6, 2007
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Friday, November 2, 2007, at 6:00 p.m. EST.
Wall Street is worried about Citibank and the financial sector. At the close, the Dow gained 27 points, closing at 13,595, while the Nasdaq rose over 15 points, closing at 2,810. Oil closed up $2.44 to 95.93 per barrel, and gold closed up $14.80 at $808.50 an ounce.
GDP growth of 3.8 percent in the second quarter and 3.9 percent in the third quarter muted numerous forecasts of a U.S. recession. So did October’s Job Creation of 166,000 new jobs. That figure is nearly double what economists were expecting. The unemployment rate held steady at 4.7 percent.
The housing slump was more than offset by surging U.S. exports thanks to the declining U.S. dollar, which enhanced the competitive position of U.S. manufacturers. However, the American consumer suffers from a loss of purchasing power when the dollar declines. Oil and gold prices are rising because of the falling dollar. There is still rising consumer pain in the housing sector. Third quarter residential foreclosure filings nearly doubled to 635,159 year over year. California, Florida, Ohio, and Nevada have the most foreclosure problems.
Stay fully invested! Stock prices in China, India, Asia and the emerging markets will outperform the U.S. stock market because of the falling dollar, which fell to a new low today. Global/international investments will enhance your investment returns as the dollar declines against other currencies. Stay close to our telephone/e-mail/website Hotline Updates.
I have reorganized our portfolio recommendations into just two groups. Allocate no more than 25 percent of your portfolio to Group One: U.S. stock market recommendations, which offer no protection against the falling dollar. Allocate at least 75 percent of your portfolio to Group Two: Global/International investments which enhance your investment returns as the dollar declines against other countries.
The next Hotline Update will be on Tuesday, November 6, 2007, at 6:00 p.m. EST.
Wall Street is worried about Citibank and the financial sector. At the close, the Dow gained 27 points, closing at 13,595, while the Nasdaq rose over 15 points, closing at 2,810. Oil closed up $2.44 to 95.93 per barrel, and gold closed up $14.80 at $808.50 an ounce.
GDP growth of 3.8 percent in the second quarter and 3.9 percent in the third quarter muted numerous forecasts of a U.S. recession. So did October’s Job Creation of 166,000 new jobs. That figure is nearly double what economists were expecting. The unemployment rate held steady at 4.7 percent.
The housing slump was more than offset by surging U.S. exports thanks to the declining U.S. dollar, which enhanced the competitive position of U.S. manufacturers. However, the American consumer suffers from a loss of purchasing power when the dollar declines. Oil and gold prices are rising because of the falling dollar. There is still rising consumer pain in the housing sector. Third quarter residential foreclosure filings nearly doubled to 635,159 year over year. California, Florida, Ohio, and Nevada have the most foreclosure problems.
Stay fully invested! Stock prices in China, India, Asia and the emerging markets will outperform the U.S. stock market because of the falling dollar, which fell to a new low today. Global/international investments will enhance your investment returns as the dollar declines against other currencies. Stay close to our telephone/e-mail/website Hotline Updates.
I have reorganized our portfolio recommendations into just two groups. Allocate no more than 25 percent of your portfolio to Group One: U.S. stock market recommendations, which offer no protection against the falling dollar. Allocate at least 75 percent of your portfolio to Group Two: Global/International investments which enhance your investment returns as the dollar declines against other countries.
The next Hotline Update will be on Tuesday, November 6, 2007, at 6:00 p.m. EST.
Google opens battle for mobile Internet
46 minutes ago
SAN FRANCISCO (AFP) - Google has opened a battle for dominance of the mobile Internet with a broad alliance of companies backing its "open source" software for mobile devices, analysts say.
The announcement Monday of the "Android" platform aiming to bring the full power of desktop computing to mobile devices represents a challenge to Microsoft and Apple, and also firms like mobile phone maker Nokia, which is not part of the "Open Handset Alliance."
The announcement surprised analysts who had expected Google to announce the launch of its own gPhone to compete against Apple's popular iPhone.
"This is not about a Google phone," said telecom analyst Jeff Kagan. "This is about the growing and changing software experience for mobile phones. Cellphones are becoming the third screen in our lives. Television, computer and next is the mobile handset."
Greg Sterling, analyst at Search Engine Land, said Google is taking on companies like Microsoft, which has its own Windows Mobile platform for smartphones.
"Android is clearly competitive with proprietary mobile operating systems such as Windows Mobile, in the same way that the open source movement competes with many of Microsoft's core products," Sterling said.
But he said prospects for the alliance remain unclear, especially with key holdouts like AT&T, the largest US mobile operator, which has an exclusive deal with Apple's iPhone.
"Will Android-phones -- or an actual future gPhone -- be an iPhone killer? Expect in the wake of today's news a range of headlines declaring this to be the case. But until phones come on the market, no one can tell," Sterling said.
Analysts say Google is eager to become the key search engine for mobile phones and to get the advertising revenues that are starting to become available for the platform.
Michael Gartenberg of Jupiter Research said Google's plan may be attractive by sharing some ad revenue with mobile phone operators looking for new sources of cash to subsidize costly smartphones.
"If Google can deliver, the impact could be huge," he said. "At a time when both carriers and handset vendors are looking to cut costs and at the same time consumers are embracing more functionality in their mobile devices, Google could be coming to market with the right product at the right time."
But he added that other competitors may fight the Google effort to control the mobile phone.
"There are going to be challenges," Gartenberg said. "Neither Microsoft, (mobile maker) Research in Motion or Nokia are going to roll over and play dead with this announcement."
Google said the new initiative, which should be available next year, offers first comprehensive mobile operating platform that software developers are free to adapt in any ways they wish for video, audio, social networking and other features.
The 34-member alliance includes China Mobile, HTC, Intel, Motorola, Qualcomm, T-Mobile, Telefonica, LG and eBay.
Google chief executive Eric Schmidt declined to reveal whether the US-based Internet search colossus will release its own phone based on Android, which will allow for services and features supported by online ads.
"If you were to build a gPhone you would build it out of this platform," Schmidt said.
"Imagine not just a single Google phone, or gPhone, but thousands of gPhones made by a variety of manufacturers."
SAN FRANCISCO (AFP) - Google has opened a battle for dominance of the mobile Internet with a broad alliance of companies backing its "open source" software for mobile devices, analysts say.
The announcement Monday of the "Android" platform aiming to bring the full power of desktop computing to mobile devices represents a challenge to Microsoft and Apple, and also firms like mobile phone maker Nokia, which is not part of the "Open Handset Alliance."
The announcement surprised analysts who had expected Google to announce the launch of its own gPhone to compete against Apple's popular iPhone.
"This is not about a Google phone," said telecom analyst Jeff Kagan. "This is about the growing and changing software experience for mobile phones. Cellphones are becoming the third screen in our lives. Television, computer and next is the mobile handset."
Greg Sterling, analyst at Search Engine Land, said Google is taking on companies like Microsoft, which has its own Windows Mobile platform for smartphones.
"Android is clearly competitive with proprietary mobile operating systems such as Windows Mobile, in the same way that the open source movement competes with many of Microsoft's core products," Sterling said.
But he said prospects for the alliance remain unclear, especially with key holdouts like AT&T, the largest US mobile operator, which has an exclusive deal with Apple's iPhone.
"Will Android-phones -- or an actual future gPhone -- be an iPhone killer? Expect in the wake of today's news a range of headlines declaring this to be the case. But until phones come on the market, no one can tell," Sterling said.
Analysts say Google is eager to become the key search engine for mobile phones and to get the advertising revenues that are starting to become available for the platform.
Michael Gartenberg of Jupiter Research said Google's plan may be attractive by sharing some ad revenue with mobile phone operators looking for new sources of cash to subsidize costly smartphones.
"If Google can deliver, the impact could be huge," he said. "At a time when both carriers and handset vendors are looking to cut costs and at the same time consumers are embracing more functionality in their mobile devices, Google could be coming to market with the right product at the right time."
But he added that other competitors may fight the Google effort to control the mobile phone.
"There are going to be challenges," Gartenberg said. "Neither Microsoft, (mobile maker) Research in Motion or Nokia are going to roll over and play dead with this announcement."
Google said the new initiative, which should be available next year, offers first comprehensive mobile operating platform that software developers are free to adapt in any ways they wish for video, audio, social networking and other features.
The 34-member alliance includes China Mobile, HTC, Intel, Motorola, Qualcomm, T-Mobile, Telefonica, LG and eBay.
Google chief executive Eric Schmidt declined to reveal whether the US-based Internet search colossus will release its own phone based on Android, which will allow for services and features supported by online ads.
"If you were to build a gPhone you would build it out of this platform," Schmidt said.
"Imagine not just a single Google phone, or gPhone, but thousands of gPhones made by a variety of manufacturers."
Wall Street rises with energy shares, financials - GOOG $850
By Caroline Valetkevitch 14 minutes ago
NEW YORK (Reuters) - Stocks gained on Tuesday as record oil prices lifted shares of oil companies such as Exxon Mobil Corp (XOM.N), while investors scoured for bargains among beaten-down bank shares after Monday's sell-off of financials.
JPMorgan Chase & Co (JPM.N) rose 3.3 percent to $44.16.
Also, Goldman Sachs Group Inc (GS.N) repeated that market rumors that it may have to write down mortgage-related losses are "still untrue." The S&P financial index (.GSPF) was up 0.7 percent, while Goldman was up 1 percent at $220.40
Crude oil futures briefly rose more than $3 to a record high $97 a barrel on a weaker dollar and supply concerns. Exxon Mobil gained 2.9 percent to $90.18, leading advancers in both the blue-chip Dow average and the S&P.
"My feeling yesterday was that the bad credit market news reached a crescendo," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
"How much worse can the news get? I think it's back to people beginning to realize the financials are deeply oversold and the economy is going OK."
The Dow Jones industrial average (.DJI) was up 43.00 points, or 0.32 percent, at 13,586.40. The Standard & Poor's 500 Index (.SPX) was up 7.63 points, or 0.51 percent, at 1,509.80. The Nasdaq Composite Index (.IXIC) was up 8.76 points, or 0.31 percent, at 2,803.94.
Web search company Google Inc (GOOG.O), whose price target was raised to $850 by broker research firm Sanford C. Bernstein, was up 1.4 percent at $736.03 on Nasdaq.
Shares of Research In Motion Ltd (RIM.TO) (RIMM.O) gained 1.9 percent to $130.45 after Credit Suisse raised its rating on the stock.
NEW YORK (Reuters) - Stocks gained on Tuesday as record oil prices lifted shares of oil companies such as Exxon Mobil Corp (XOM.N), while investors scoured for bargains among beaten-down bank shares after Monday's sell-off of financials.
JPMorgan Chase & Co (JPM.N) rose 3.3 percent to $44.16.
Also, Goldman Sachs Group Inc (GS.N) repeated that market rumors that it may have to write down mortgage-related losses are "still untrue." The S&P financial index (.GSPF) was up 0.7 percent, while Goldman was up 1 percent at $220.40
Crude oil futures briefly rose more than $3 to a record high $97 a barrel on a weaker dollar and supply concerns. Exxon Mobil gained 2.9 percent to $90.18, leading advancers in both the blue-chip Dow average and the S&P.
"My feeling yesterday was that the bad credit market news reached a crescendo," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
"How much worse can the news get? I think it's back to people beginning to realize the financials are deeply oversold and the economy is going OK."
The Dow Jones industrial average (.DJI) was up 43.00 points, or 0.32 percent, at 13,586.40. The Standard & Poor's 500 Index (.SPX) was up 7.63 points, or 0.51 percent, at 1,509.80. The Nasdaq Composite Index (.IXIC) was up 8.76 points, or 0.31 percent, at 2,803.94.
Web search company Google Inc (GOOG.O), whose price target was raised to $850 by broker research firm Sanford C. Bernstein, was up 1.4 percent at $736.03 on Nasdaq.
Shares of Research In Motion Ltd (RIM.TO) (RIMM.O) gained 1.9 percent to $130.45 after Credit Suisse raised its rating on the stock.
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