What Credit May Cost You

I am going to tell you a story about some people who I shall not name. So if you think this story is about you, just look straight ahead and no one will know that I am talking about you!

I have always preached since I was a teenager about the danger of using credit. When I was in my forties, I told someone when they came of age, 18 years old not to sign for anyone’s loans and told that person what can happen if they do. The person did not listen to me and cosigned for a van for a person with very very very bad credit. That person with the bad credit never made a payment on the loan. The bank came and took the Van. No one contacted the cosigner because the person who had the van made sure the cosigner never found out. That cosigner went through 4 years of college. 

Then a big name company wanted to hire the cosigner. All they had to do was check the cosigner’s credit and that person had a high paying  job. That is when the loan came back to bite the person “up the ass.” That person did not get the job and the person who screwed the cosigner had no explanation of why they did what they did.

More and more employers are checking credit reports before hiring people for good jobs.

     

According to AARP, because of bad credit, these items below will cost you more in the long run;

Car Insurance Premium

If you thought car insurance companies kept tabs only on your driving record to determine how much you'll pay for coverage, you'd be wrong. Insurers check your credit report — and poor credit drives up your premium.

Mortgage Interest Rate

If you're in the market for a home loan and your credit is spotty, you'll likely pay tens of thousands of dollars more in finance charges. According to FICO, the credit scoring company, an individual with a FICO score ranging from 760 to 850 would pay $1,426 a month for a $300,000 home loan based on a rate of 3.965 percent. A borrower with a lower score, from 620 to 639, would pay nearly $300 more each month — $1,714 for a 5.554 percent loan. Over a 30-year term, that lower credit rating is costing you an extra $103,444 in interest charges.

Homeowners Insurance

Just as car insurance companies review your credit rating, so do companies that provide homeowners insurance. The National Association of Insurance Commissioners reports that 95 percent of auto insurers and 85 percent of home insurers use credit-based insurance scores in states where it's deemed an underwriting or risk classification factor. So if your credit nose dives, your homeowners insurance premium may head north.

Your Job Prospects

Poor credit could cost you a job opportunity as I just told you. A 2012 study from the Society for Human Resources Management found that nearly half of U.S. employers use credit checks on some or all of their job applicants. I know that my daughter does before she hires anyone for a job. So if your credit history isn't so great, that could scare away potential employers and make it harder to find work. A growing number of states are passing laws to curb these credit screenings, although many states allow employers to use them as part of the hiring process.

Government Clearance

Enlisted personnel and certain federal workers need to maintain good credit in order to obtain various government clearances. Having bad credit could derail military members or government employees who are seeking promotions or career advancement opportunities.

Your Love Life

No one likes to be rejected by potential suitors, whether it's due to a lack of chemistry, your appearance or some other reason — like your credit history. A staggering 75 percent of women, and 57 percent of men, say credit scores play into their dating decisions, according to a survey of  1,000 single adults from FreeCreditScore.com. Most respondents said money management skills were just as important as looks in deciding if someone was worth pursuing. In today’s world who wants someone who is an economic burden. “I can do bad by myself.”, as I heard people say.

Your Physical Health

Financial stress can lead to headaches, sleepless nights, muscle tension, and other maladies. Researchers have even discovered that fretting over financial matters negatively affects people's brains, partially because such mental distractions make you lose focus.

Private Student Loan Rates

Federal student loans have interest rates that are set annually by the government. That's not the case with private loans. If you're considering going back to school to boost your marketability and have a poor credit rating, your student loan interest rates could soar into the double digits if you take on a private loan. Big student loan obligations could leave you with less to sock away for retirement.

Credit Card Options

Applying for a credit card almost always requires a credit check. If your credit is somewhat blemished, a bank may offer you a credit card with an above-average interest rate. If your credit is worse than that, you may be offered a credit card with an interest rate of 20 percent or more. For people who've suffered through a bankruptcy, foreclosure, or other credit catastrophe, a "secured" credit card may be your only option. Secured cards require you to put up a cash deposit as a way to assure a lender that you'll pay your bills.

Your Good Name and Reputation

It's one thing to have bad credit with traditional lenders like banks, credit unions, and other financial institutions. But if your repayment track record is seriously tarnished, you may even have a bad reputation with family and friends. Perhaps you've borrowed money and not repaid it, or you took far longer than agreed to make good on a loan. If that describes you, your good name has been dragged throw the mud. Such financial lapses will make it far more difficult to convince relatives to come to your rescue if a true financial emergency arises.

Your Life is Controlled by your Credit Score

A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced fromcredit bureaus.

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or granting credit is an implementation of a trusted system.

Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has a lot of overlap with data mining, which uses many similar techniques. These techniques combine thousands of factors but they are more or less similar or the same.

In the United States, a credit score is a number based on a statistical analysis of a person's credit files, that in theory represents the creditworthiness of that person, which is the likelihood that people will pay their bills. A credit score is primarily based on credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax. Income is not considered by the major credit bureaus when calculating a credit score.

There are different methods of calculating credit scores. FICO score, the most widely known type of credit score, is a credit score developed by FICO, previously known as Fair Isaac Corporation. It is used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender. All credit scores have to be subject to availability. The credit bureaus all have their own credit scores: Equifax's ScorePower ( FICO score from Equifax ), Equifax Credit Score, Experian's PLUS score, and TransUnion's credit score, and each also sells the VantageScore credit score. In addition, many large lenders, including the major credit card issuers, have developed their own proprietary scoring models.

Studies have shown scores to be predictive of risk in the underwriting of both credit and insurance. Some studies even suggest that most consumers are the beneficiaries of lower credit costs and insurance premiums due to the use of credit scores.  

     Different lending institutions have different considerations on what is a good score for their loans. According to creditscoring.com, Fannie Mae, and Freddie Mac consider that any buyer with a credit score above 620 is good, while Lending Tree and Bankrate.com among others consider anything above 750 to be excellent. CBS.com states "The best number to have is 720 or above. If your score is 720, there's really no need to try and raise it because lenders lump you in the same category as folks with a score of, say, 800 or 820." My credit score is 786. When I want to buy something such as a house or a car, I have no problem getting it. I walk into a bank and ask for a loan and all I hear is “when do you want it?” That is the advantage of having a high credit score.

Part 4: Fighting Cyber Crime

In the past three parts of this Cyber Crime series, you should have gotten the impression that Cyber Crime is unstoppable. It may be unstoppable for now. However, from the United Nations down to individual companies, organizations are becoming aware of the problem and have started dealing with it. Some individuals will attack corporate computers just to make a name for the Cyber Criminals.

This is the continuous war that the United States and western countries are fighting. Click on the link below and see what the FBI has to say about this war.


http://www.fbi.gov/news/videos/fbis-top-cyber-official-discusses-threat

In the past, in the physical world when somebody would rob a bank, the pool of suspects is limited to the number of people in the general vicinity of that bank.

Today when a bank is robbed digitally, virtually, although it is very real for the victims, the money is actually gone; the pool of suspects is limited to the number of people on the face of the earth that have a laptop and an Internet connection, because anybody with an Internet connection potentially can attack any other computer that’s tied to the network. So the barrier of entry is relatively low.

I think that going forward, this is not going away. I mean, we are not backing away from the Internet. We are not going to change technology.

As technology increases, this challenge becomes greater so when I started the threat was really to networks—mostly corporate networks—but since that time we moved into laptops and wireless laptops and then more recently into personal devices, whether it be smart phones, blackberries—those sorts are devices that allow access to the network anytime, everywhere.


In one case, a Cyber Criminal just wanted a job and attacked a large corporation to prove that he was good at his profession. He contacted top management and threatened to change the figures in the Annual Report and threaten to publish it, if he was not given a job. The company contacted the FBI and the FBI sent him an email application for a job in the company. The Cyber Criminal filled it out and sent it in. The next step, the FBI showed up at his front door and insisted on giving him a ride to jail.

Corporations are secretly setting up data bases of people who they tracked, attacking corporate and government computers. They are put on a Black listed data base and they will never get a job in a major corporation in their life time.      

Here are three articles about Cyber Crime:

http://www.independent.co.uk/news/science/the-online-mafia-6155986.html

The online mafia 

Cyber gangsters are using computer networks to blackmail businesses - and they could be making you an unwitting accomplice 

http://www.foxbusiness.com/technology/2011/10/28/from-streets-to-cyberspace-us-gangs-turn-to-white-collar-crime/

From the Streets to Cyberspace: U.S. Gangs Turn to White-Collar Crime

When is credit-card theft a good thing? When the culprits might otherwise be killing you.

http://topnews.us/content/227137-cyber-crime-growing-problem-society

Cyber Crime—A Growing Problem in our Society

Part 3: Dealing with Cyber-gangsters

The Cyber-gangster

I have had to deal with drug dealers and drug gangsters most of my life.  They try to get you to take drugs to increase the demand for their product. You can be walking down the street or sitting in your house when the gun fire starts over a drug territory dispute. You can allow someone to get into your car thinking that all you are doing is giving them a ride to their destination just to find them taking drugs in your car. Some of these people will rob you just to satisfy their habit and will not think twice about killing you.

But times have changed. Not only do you have to worry about the drug gangs in the street but you also have to worry about the cyber gangs on the network.  Cyber-gangsters are smart technical people. They make far more than the drug dealers. These people steal millions of peoples identities in a matter of seconds and sell them to other organizations just as fast. The State of Georgia had over one million names, addresses, social security numbers and other information taken from state data bases without the state knowing about it. They had to payout millions of dollars to taxpayers whose information was stolen from the state to fix their credit.

What I am about to tell you, some of you may think that I am making it up. Here is a clip from NBC News that will give you a taste of reality!

http://www.freebeerandhotwings.com/b/Cyber-Thieves-Steal-$45-Million-Video/19772798381853576.html


NBC News said, "It's safe to say that bank robberies have changed a bit in the technology age we're living in. Gone are the days of people busting through the front doors of a bank in ski masks with guns, demanding money from tellers. There are no more getaway cars and accomplices. All of that has been replaced with really smart people sitting in front of computers."

"These guys managed to steal $45 million by means that we don't understand, but it's super impressive nonetheless!"

Now let's continue....


Andrew M. Colarik of the USA and Lech J. Janczewski of New Zealand state that, "In the context of information security, terrorists may come in many forms such as politically motivated, anti-government, anti-world trade, and pro-environmental extremists". They further state, "Cyber terrorism means premeditated, politically motivated attacks by sub-national groups or clandestine agents, or individuals against information and computer systems, computer programs, and data that result in violence against non-combatant targets".

Let's add the money-motivated hackers, and you see the picture of the enemy.  The goal of money-motivated hackers is to benefit from money inflow;

• Using cyber espionage

• By acting as a "cyber bully" and demand money by various methods of electronic blackmailing

• By breaking into financial organizations' computer systems and transfer money to offshore accounts

• By stealing credit card account information and reselling it

• With identity theft by using stolen information to transfer money out of the bank accounts or to buy the goods from the Internet-based stores with newly opened credit cards

• By writing the software to attack victim’s computers and sell the right to use it.

According to a new study from McAfee, data theft and breaches from cyber crime may have cost businesses last year as much as $1trillion globally in lost intellectual property and resources for repairing the damage.

The goal of cyber-terrorists is to intimidate or force a government or its people to perform the changes that serve attacker's political and social objectives or political motivation. The goal also can be described as a disruption of major infrastructures of the country (e.g. nuclear plants, energy supply systems, defense infrastructure, and similar) in order to gain quick advantage in the pre-planned geo-political action.

State, national, and international political views have various forms and can be the main motivational factor to be engaged in unlawful attacks or threats of attacks against computers, networks, and the information infrastructure.

Neither definition-based anti-virus nor any other single solution is enough to block modern threats. Zero-day attacks, "mutating" viruses, or targeted attacks are all high-risk situations requiring an additional layer of protection. Our widely accepted security standards do not meet the needs either. In fact, the PCI standard for financial institutions and 3^rd-party vendors involved into financial transactions that is considered pretty tough proved to be inefficient. The cyber-gangsters using the sophisticated sniffer software were able to penetrate into Heartland Payment System AFTER they passed their PCI DSS audit. The result of the breach and lost data for the company was disastrous.

Let's look at a short list of "weapons" that are used by cyber-gangsters against personal computer and computer network;

-         Zero-day attacks

-         "Mutating" viruses

-         Targeted attacks (DDoS) utilizing botnets

-         Application exploits (including SQL injection) due to OS and applications design problems

-         Cross-Site scripting

-         Social Networking site exploits

-         Browser exploits

-         Hosted site exploits

-         P-2-P networking infection

-         Smartphone attacks

-         Wi-Fi protocol weaknesses exploits

-         Social Engineering to collect the information for the following attack

-         Malicious e-mails and spam - based infections

-         Creating malicious underground organizations to assist in cyber exploits and attacks

-         Identity theft (which has also been linked to terrorist activity)

-         Keyloggers, mouse-loggers, etc

-         Rogue Blogs pollution

-         Search engine results manipulation to redirect user to malicious web sites

-         Two-factor authentication circumvention

Facebook

http://www.zdnet.com/blog/security/facebook-password-reset-spam-is-bredolab-botnet-attack/4724

Your cell phone is a doorway for cyber-gangsters to steal your stuff. 

Cell Phone Attacks

People have been trying to give me a smart phone as a gift for some time. I refuse to have one. They are so easy to hack into and take over by criminals. Once they get into your phone it is just a few steps to get into other accounts.  Then you will notice new unauthorized bills coming in, money withdrawn from bank accounts, and unauthorized use of your phone.

The attacks on Smartphones will increase in volume. They have already started. The first iPhone was Worm Detected in November, 2009. Users, who have not changed their default Secure Shell (SSH) login password and have “jailbroken” their iPhones to allow third-party applications to run, are vulnerable to the malware. More and more hacking becomes associated with a "ransomware": iHacked: jailbroken iPhones compromised, $5 ransom demanded, New LoroBot ransomware encrypts files, demands $100 for decryption. Once malware-proof, Smartphones actually have enough security holes to be vulnerable to various hacking attacks. I am not surprised that most of the attacks target the most popular iPhone: Second iPhone worm behaves like botnet. It has been identified by security vendor F-Secure, which claims the new worm has botnet capability and is more threatening than its predecessor. SpyPhone “appharvests” personal data from stock iPhones.

Definitions

I have given you a lot of information here. Let’s look at a few definitions that you may not know.

A botnet is a collection of internet-connected programs communicating with other similar programs in order to perform tasks. This can be as mundane as keeping control of an IRC channel, or it could be used to send spam email or participate in DDoS attacks. The word botnet stems from the two words robot and network.

     

In computing, a denial-of-service attack (DoS attack) or distributed denial-of-service attack (DDoS attack) is an attempt to make a machine or network resource unavailable to its intended users. Although the means to carry out, motives for, and targets of a DoS attack may vary, it generally consists of the efforts of one or more people to temporarily or indefinitely interrupt or suspend services of a host connected to the Internet.

Part 2: Corporate Attacks Cost You Money

So you want to shop online and you think nothing will happen to you!

This is part 2 of a four part series.

So just because you have the big dog in your house and an automatic M16 beside your bedroom door plus that high cost home security system, you think that you can’t get robbed? Well what about your home computer?   

Security Management Software for networks is different for all kinds of situations. A small home or an office would only require basic security while large businesses will require high maintenance and advanced software and hardware to prevent malicious attacks from hacking and spamming. You can have the best Security Management Software on your home computer and still get robbed. Criminals may hack your bank account and transfer all your money while you are sleeping. They may go into your brokerage account and sell all your securities just because they can. They may steal your identity and open accounts in your name. 

More than 50% of the employees working for corporations in China believe that they own the software and data that they produce. That is why a great deal of data and software leave the Chinese work place. Some of that data has your name on it.

How? 

Because the government agencies, banks, lenders, or stores that you have shopping relations with will not protect their information like they should. Quite simply, they may not want to spend the money to protect you and them from cyber-attack. 

Do you know that; 

• 70% of all executives have a lack of confidence in their computer security,

• 70% of web sites have security flaws,

• More than 80% of organizations perceive that 85% of disgruntled employees and contractors as a likely source of attack of their computer systems, and more than 70% saw hackers as a likely source.

•  Corporate competitors and foreign governments are not perceived as a likely source of attack.

• There are over 100,000 known computer viruses.  As many as 60% of major US corporations have experienced a virus attack or computer break-in.

• Over 58% of companies have detected outsiders trying to gain computer access.

• 30% of companies don't know if there have been attempts from outsiders to gain computer access.

• Security breaches are created by criminals passing out computer games to unsuspecting users. 23% of PC game playing is done at the office rather than at home.

• Over 90% of Fortune 500 networks have been hacked.

• Client information is the number one theft from company computers.

• 60% of computer abuse is caused by insiders. 85% of computer break-ins occur internally. Insiders still remain as the most serious threat to intellectual property.

• 25% of all organizations reported attempted break-ins via the Internet. An FBI survey of 400 companies showed that only 40% reported Internet break-ins. One out of 5 Internet sites has suffered a security breach. (Reported by CSI)

• Only 17% of companies whose computers were hacked report them to law enforcement. Fear of negative publicity was a key reason organizations did not report them.

• The penetration of information and communications systems is the fastest growing emerging threat.

• Only 54% of Information Technology companies have a security policy. 62% of companies have no security policy for reporting information loss.

• 33% of companies have no mandatory warning banner putting users on notice to be monitored online. 63% of companies with banners do not enforce it.

Knowing these numbers, top managers of corporations and governments will not spend the money to protect their information assets until information starts walking out the door and it starts crippling the company. This is how you the taxpayer and consumer gets hurt in this game of cyber-attacks. 

If I was a young man again, I would go to school to become a Cyber Security Expert. That is where the future jobs are and the money!  

*****

This is the end of the fourth month of 2013 and the DOW is still beating my portfolio in the area of total value. The DOW is closed up 13.25% on April 30, 2013 while my bond portfolio closed up only 6.657%. It appears that the DOW is in at least a short term Bull Market.   

Part 1: Identity Protection and Fraud Protection Depends on You!

First of four in this series.

Transunion has a lot to say about identity protection and fraud. It is not a matter of if it will happen but when it will happen.  Did you know that 8.6 million American households suffered some type of identity theft and fraud in 2010? The latest statistics from the Bureau of Justice paint an alarming picture for families fending off these crimes. The criminals who use your Social Security Number, infiltrate your accounts and steal your personal information are pretty sophisticated. Many take your information and rob you from countries outside the legal boundaries of US law. 

The best protection is taking proactive steps to help stop fraudulent activity and identity theft from happening altogether. While there are services that can alert you to changes in your credit file or finances, or a first sign of fraud or identity theft, you can start with four simple ways to make it harder for thieves to steal your personal information.

Monitor your mail

Your mailbox may seem pretty innocent, but it's a hotbed of information for identity thieves. Think about it, your account numbers, bank information and even private government-based information gets dropped there regularly. If you mail your bills out, you might be putting checks with routing numbers in your mailbox for pickup, as well. You may think about having a lock on your mailbox so only the mail man can get in the mailbox. Know when the mail comes to your house and retrieve it promptly, so it's not left sitting there. If you pay bills by mail, drop them into an official U.S. Postal Service mailbox instead of putting them in your box for pickup. Personally, I take my mail directly to the mailbox inside the post office.

When you are done with your mail or other important paper shred them (somehow destroy them) before placing them in the trash. Don't leave the promotional checks mailed out by credit card companies laying around your car, office, or residence. Anyone can pick them up and cash them. Dumpster diving is a nice profession if you are in the habit of stealing personal information of people and using it.  

Shut down your computer when not in use. Thieves can easily find easy to hack software in your computer to gain entry through the computer's back door. From that they can gain access to bank accounts, IDs and Passwords, as well as your other personal information. They can send emails to everyone in your address book without you knowing it.

Limit your wallet  
       

You might think it's important to keep your credit cards with you at all times, but if your wallet is packed with personal information, one thief could learn a lot by nabbing it. Limit what you carry in your wallet to one or two credit cards and your identification. Leave your social security card in a safe place at home and memorize the number instead. Keep infrequently-used cards out of your wallet. It's also helpful to keep the customer service numbers for your card accounts separate from your wallet so you can call and cancel accounts immediately after a theft for the fastest identity protection.

Men should not carry your wallet in your back pocket. That pocket is known by thieves as the "sucker pocket" because it is the easiest target of pick pockets.  Women should use a pocket book with large strong straps that go over the shoulder. Keep the pocket book in front of you and do not wear it like a back pack. 

Check websites

Online shopping is very convenient, but precautions should be taken. Never order from a website you don't know and trust. If it's a new website, check for the Better Business Bureau (BBB) seal or Trust-e symbol before you order. If you can't find either, run a quick Internet search on the website name and look for reviews from past customers to make sure they were satisfied with their experiences. When checking out, never save your credit card information to your account. If the site is ever compromised, thieves could grab your information and your account number.

Protect your passwords

Remembering a ton of different passwords is a pain, but don't make the mistake of using the same one across the board for online or bank accounts. Too-simple passwords are practically an invitation for identity thieves to break in, so skip the "password" or "1234" codes. Instead, use a combination of letters and numbers known only to you and change each slightly for different uses. For example, a password like “Awy%24L$K” is a strong password to use.  

Keep a hard copy of each password in a secure off line location for your own reference and you'll keep your accounts (and your identity) safer. But it will not be totally safe. We will talk about that next week.