From the Boston Herald - Associated Press

MIAMI — Home prices rose for the sixth straight month in November, fueled by tax credits for homebuyers.

The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analysts’ estimates that it would fall by 5.1 percent.

The index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in May 2006.

Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Consumer confidence rose for the third straight month in January, reaching its highest level in more than a year, the Conference Board said Tuesday.

Price increases also help restore home equity for the one-in-four homeowners who currently owe more on their mortgages than their homes are worth.

In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that current price trends could lead to a $1 trillion year-over-year increase in homeowner equity by the first quarter of this year.

Karl Case, a co-creator of the index, pointed to signs of stability that were in stark contrast to rapidly falling prices a year ago. “Flat is good,” he said.

Phoenix and San Francisco posted the highest month-to-month gains, on a seasonally adjusted basis, while New York and Chicago had the largest declines.

The tax credit for first-time homebuyers had been scheduled to end Nov. 30, but Congress extended the deadline through April, and expanded the program to include a tax credit for current homeowners.

“A lot of people are thinking now is the time to buy because they are going to get a great bargain or a steal,” said Bill Wilkerson, a real estate agent with ZIP Realty in Phoenix. “I’m looking forward to a very active springtime.”

Prices increased for the seventh straight month in San Francisco, where sales in the $500,000 to $750,000 were strong. Buyers took advantage of the tax credits and low interest rates, said Chuck Colliver, president of Century 21 Alliance in Daly City, Calif.

“Those people who have been thinking about buying a house this year are probably going to put it on the front burner” because of the low rates, Colliver said.

In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.

The list of cities with price increases, on a seasonally adjusted basis, also included Los Angeles, San Diego, Denver, Boston and Charlotte, N.C.

While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.

“Until we get job growth, we won’t get complete healing of the housing market,” said Jeff Humphreys, an economist with the University of Georgia.

Data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended, Humphreys said.

UBS analyst David Goldberg estimates that prices could drop another 3 to 5 percent before unemployment levels out, possibly in the second half of this year.

“We’re probably in the latter stages of seeing home price declines,” Goldberg said.

Home prices fell for the third straight month in Tampa, Fla., where sales of distressed properties comprise about half of total sales, said Cathleen Smith, a regional vice president with Coldwell Banker.

Prices also dropped in Washington — which had posted seven straight monthly increases — Miami and Detroit.

The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.

From MarketWatch.com

From The Boston Herald

By Amy Hoak / Marketwatch.com
Friday, November 20, 2009

Mortgage giant Fannie Mae has decided to let thousands of Americans who lose homes to foreclosure rent their properties back.

“This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period and helps to stabilize neighborhoods and communities,” Fannie Mae’s Jay Ryan said in unveiling a new “Deed for Lease Program” earlier this month.

The initiative aims to help homeowners who either don’t qualify for or haven’t been able to negotiate loan modifications. (Those are deals where lenders unilaterally cut homeowners’ monthly mortgage bills to prevent foreclosure.)

Under the Deed for Lease Program, homeowners facing foreclosure can voluntarily sign their property deeds back to their banks. In exchange, lenders will lease the houses back to former borrowers at market-rate rents for up to a year.

Rental arrangements beyond one year are also possible but not guaranteed.

However, the program only applies to borrowers or tenants facing the loss of primary residences. Second homes don’t qualify.

Consumers seeking Deed for Lease deals must also:

be no more than 11 payments behind;

have made at least three payments since getting or modifying mortgages;

receive releases from any second mortgages or other subordinate liens;

prove that market-rate rents don’t exceed 31 percent of applicants’ gross incomes.

Additionally, the plan only covers mortgages controlled by Fannie Mae.

Fortunately, millions of homeowners have Fannie Mae loans without even knowing it.

That’s because the firm buys up thousands of mortgages each year from lenders that no longer technically own the loans, but keep collecting mortgage payments on Fannie’s behalf.

To see if you have such a mortgage, go to FannieMae.com.

Dean Baker of the Center for Economic and Policy Research calls the Deed for Lease Program a “very big step” toward helping people who face foreclosure.

From MSNBC.COM

Why some people cut up their credit cards and live a cash-only lifestyle

Since then it’s been cash and debit cards only for Brough, 50, who has no debt of any kind.

How does she do it? She buys secondhand furniture and electronics, gets her husband’s medicines from Canada at cut rates, has a $10,000 emergency fund and thinks long and hard before she opens up her wallet.

“When you use cash you think about what your needs are because you’re paying a big chunk of money at once,” she said.

This concept is probably a foreign one to many Americans who are addicted to buying almost everything on credit. But believe it or not, it is possible to survive and thrive without depending on credit cards. In fact, Brough is part of a small but growing debt-free movement, some joining because of personal or economic hardships, and others just looking to simplify their lives.

It’s all about economic empowerment. “Times are tough and people want to take control of their finances,” says Denis Cauvier, a financial psychologist and co-author of “The ABCs of Making Money.”

“When people look at what’s happening, all the ups and down of the stock market, housing prices, people getting laid off, they get a sense they are out of control,” Cauvier says.

As a result, “we’re seeing a huge rise in the use of cash and debit cards,” he says. “It’s a positive way of gaining self control.”

While there are no hard numbers on how many people are giving up the credit-card lifestyle, more consumers have been trying to reel in their debt levels.

Consumer credit has been falling at record levels after years of climbing. In April, credit card borrowing fell at an annual rate of 7.5 percent, and revolving credit, mainly credit card debt, decreased 11 percent, according to the Federal Reserve.

JD Roth, who writes the “Get Rich Slowly” blog, says more of his readers want to move in the debt-free direction. “It’s this whole movement back to basics,” he says.

However, he adds, “Our culture is so accustomed to getting what they want right now and using debt to do that, it may not be realistic for every individual.”

Indeed, going debt-free is no cakewalk.

“We have to always plan ahead now and make sure we have the cash,” says Jeff Pelletier, who stopped using credit cards after a series of unfortunate financial events. He lost his job nine months ago producing training videos for a St. Louis company, lost his house to foreclosure,   ended up $50,000 in debt and filed for personal bankruptcy late last year.

Without credit cards, he has been unable to make major purchases. “We’re sort of living hand to mouth,” says Pelletier, who relocated to Boise, Idaho, for a job with a general contractor and is renting a home with his wife and two sons.

“The thing that hit me the hardest was that plastic has no emotion to it. Whip it out, use it, done,” he says. “Cash is harder to part with.”

The couple also has had to be creative. It’s a bit easier today to do things like rent a car or buy things online without a revolving credit card, say experts, because you can use a debit card instead.

But Pelletier still sometimes has to find alternative payment methods.

“My wife is going to see a dying friend in Texas, and we had a friend put it on her credit card and we gave her the cash,” he says.

Brough, of Cary, does use her debit card for some online purchases, but she’s more likely to use sites such as Craigslist that allow her to meet sellers in person and pay them cash.

Her daughter recently wanted a new, lime green Dell Inspiron laptop, and Brough went on Craigslist and found one for $1,000 slightly used. “I offered him $500 cash, and he took it,” she says.

Ironically, one drawback of living debt-free is that it can hurt your credit score, which could affect your interest rates if you ever want to borrow again, says Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc. and author of “Credit Hell – How to Dig Out of Debt.”

“A lack of a credit history is sometimes as bad as having a bad credit history,” he says.

But even if you stop using credit right now it will take eight years before you have no credit history, he said. In any case, he added, the positive impact of being debt free on overall economic health generally outweighs any negatives.

“I don’t see a need to have a credit rating,” says Jay Craig, 44, of Seattle, who has been cash-only since 2003. “I used to have a house, a couple of car payments and some credit cards, but over time and through a series of events I got back to where I was before I got married and started a business — cash-based and stress-free.”

Craig, who is divorced and lives on a boat, didn’t even have a bank account until earlier this month and has been using a Western Union debit card for any shopping needs.

While he’s never been big on debt, he does miss having a credit card for emergencies.

“I still have a little bit of debt from my business and from a few hours in the hospital — I have no health insurance, which is stupid — but I should be free of all that by the end of the year,” he says. “And without debt or credit, I can live very well on under $40,000 a year.”

Craig admits it would be harder if he had a wife and kids.

Indeed, as life and responsibilities change, some debt-free zealots wonder if they’ll be able to keep it up.

Brough’s post-owing lifestyle is going well right now, but she said paying for her kids’ college education may send her back to the debt till.

She’s hoping her kids can get scholarships and she’s launching a nutritional products business that may help handle some of the costs. There may also be a need for more family budget cuts and jobs for the kids to cover some of the tuition costs.

“But worse comes to worse, if they need a college loan, the debt will be in their name,” she says.

From the Boston Globe

By Megan Woolhouse Globe Staff / November 6, 2009

Some top 30% as new rules loom

Credit card companies are rushing to increase interest rates to historic highs of more than 30 percent, cut credit limits, and add new fees, even for customers who pay their bills on time.

Lenders are making the moves in advance of tougher federal regulations for credit cards scheduled to take effect on Feb. 22. The new rules will limit how companies can modify credit card agreements, specifically prohibiting them from retroactively raising interest rates and fees on existing balances.

After years of complaints from consumer advocacy groups about credit companies’ pricing practices, some rules have already been changed. For instance, portions of the new law enacted in August require banks to give customers 45-day notice of any changes in an agreement. Consumers can opt out of an impending increase, keeping their card at the lower interest rate, but only until the card expires. After that, they must apply for a new card. They can also avoid the interest hike by closing the account and arranging to pay off the balance at the lower interest rate.

Ken Clayton, a senior vice president of the American Bankers Association, a trade group, said recent rate increases were not an effort to circumvent the new regulations, but the result of massive losses faced by the credit card industry because of the recession. More than 10 percent of all credit card customers have defaulted on payments this year, he said. “There’s a shared risk here,’’ he said. “Credit card companies are making loans to people every day and the rates people are charged are affected by whether people are paying them back.’’

There are no limits on how much interest a credit card company can charge, and the new law, passed in May, will not change that. Some consumer groups called for a 36 percent cap on credit card rates, but Frank said legislators did not institute a limit because most credit card companies would immediately “go up to that rate.’’

From The Wall Street Journal

By ELEANOR LAISE

Wally Bowman, a part-time security guard in Miamisburg, Ohio, had roughly $15,000 in credit-card debt when he signed up with a “debt settlement” firm last year. The company said it could resolve his debts for far less than the amount he owed and advised the 63-year-old to stop making payments to his creditors, according to Mr. Bowman.

Mr. Bowman paid hundreds of dollars in up-front fees and made regular monthly payments of $249 to Hess Kennedy, but the Coral Springs, Fla., firm never settled any of his debts, he says. By the time he dropped out of the program this summer, Mr. Bowman says, his debt had ballooned to about $20,000, due to interest and late fees, and creditors were threatening to garnish his wages. Finally, he filed for bankruptcy last month.

“I wish I had done that to begin with,” Mr. Bowman says. “I’d have been much better off.”

As the economy weakens, a growing number of consumers are paying big money for services from debt-settlement companies that purport to help them settle their debts for a fraction of what they owe. But as Mr. Bowman’s experience shows, customers can end up wishing they hadn’t sought such help.

At financial-services Web site Credit.com, the number of complaints about debt-settlement companies received so far this year is already double the number received in all of 2007, says John Ulzheimer, the site’s president of consumer education. The Federal Trade Commission, which has also seen an increase in consumer complaints, was concerned enough about the issue that it held a workshop late last month to examine debt-settlement business practices.

The Florida attorney general’s office has received more than 1,400 complaints about debt-settlement and other debt-relief companies this year through early October, compared with fewer than 890 for all of last year, and Attorney General Bill McCollum plans a push for licensing requirements and to strengthen other rules governing the industry.

Some major creditors, including American Express Co., say they won’t even work with debt-settlement companies, though the companies dispute this. “There’s no service or benefit that a debt-settlement company can offer our card members that they don’t receive from working with us directly,” says Lisa Gonzalez, a spokeswoman for American Express.

Regulators, consumer advocates and industry groups are taking a closer look at debt-settlement firms. But even some nonprofit organizations that offer alternatives, such as credit counseling and education, have come under scrutiny, with the Internal Revenue Service examining their ties to for-profit outfits.

Hess Kennedy, the firm hired by Mr. Bowman, was sued by the Florida attorney general earlier this year for allegedly violating the state’s laws on unfair and deceptive trade practices. The firm was placed in receivership in July, and on Monday, a Florida Circuit Court judge entered an order to wind down the firm and approved a process for consumers to apply to get their money back. The firm referred questions to an attorney, who didn’t respond to requests for comment.

Hefty Up-Front Fees

Debt-settlement companies generally advise clients to make monthly payments into a special account instead of paying creditors. The firm promises to use the accumulated cash to settle debts for pennies on the dollar. They often charge hefty up-front fees, and their tactics can trash customers’ credit scores, boost their tax bills and leave them in greater debt than when they started.

Rules governing these firms vary by state, but a number of states have recently passed laws allowing for-profit credit-counseling and debt-settlement firms to do business within their borders. Membership in the Association of Settlement Companies, a debt-settlement industry trade group, has roughly doubled in the past year, to more than 150.

Because the industry has so many new people, “there’s a lot of misunderstanding about how a company should be run, what are good standards and business practices,” says Wesley Young, an executive board member at the trade group. In recent months the association has begun monitoring its members’ sales practices and Web sites to be sure they meet the group’s standards, he says. It hasn’t yet taken any action.

Regulators are concerned about misleading debt-settlement sales practices. In a string of recent cases against such companies, the FTC alleged that firms misled consumers about what services they could deliver, how long it would take and how much it would cost, says Alice Hrdy, an assistant director of the FTC’s division of financial practices. And though many debt-settlement companies are set up to look like legal services, “usually it’s a sham,” says Norman Googel, an assistant attorney general in West Virginia. Consumers often don’t receive any legitimate legal services, “and the lawyer is like the Wizard of Oz back there behind the curtain,” Mr. Googel says.

The high fees charged by debt-settlement firms can prolong the process of paying off debts. The companies often charge an up-front fee of 10% or 15% of the total amount owed. They may also charge monthly fees of about $50, and a back-end fee of about 20% or 30% of the amount “saved” for clients in a settlement.

Credit-Card Lawsuits

Meanwhile, creditors aren’t getting any payment, so interest and late fees accrue, debt rises and clients get a steady stream of calls from creditors and collection agencies. They may even be sued and have their wages garnished. Lawsuits against credit-card holders are becoming more common as card issuers increasingly sell delinquent accounts to debt purchasers, regulators say.

Debt-settlement companies often refuse refund requests, says West Virginia’s Mr. Googel. And though regulators may try to get money returned to customers, these companies are generally not well-capitalized, “and often the consumer harm vastly outstrips whatever assets the company would have,” says the FTC’s Ms. Hrdy.

Consumers in debt-settlement plans often see their credit scores tank. While they’re not making payments, of course, their scores will drop. But settling a debt for less than the amount owed is also “a serious negative on your credit score” and stays on your credit report for seven years, says Barry Paperno, consumer operations manager at Fair Isaac Corp., which developed the widely used FICO credit score. Debt settlement can also boost consumers’ tax bills, since they generally must pay income tax on the amount of debt forgiven in a settlement.

Even when companies deliver, many customers drop out of the programs early. David Gillson of Sherwood, Ark., a 38-year-old quality-control manager at a construction firm, signed up with debt-settlement firm Elite Financial Solutions of Fort Lauderdale, Fla., in 2006. He owed more than $71,000 in seven different credit-card accounts. Elite helped him reach two settlements within the first year or so.

‘Just Horrendous’

But the collection-agency calls were “just horrendous,” Mr. Gillson says, and his credit score was plummeting, two creditors sued him, and his wages were garnished. Given his reduced wages, he couldn’t afford to put anything in the debt-settlement account, and he dropped out of the program in June.

Elite’s contracts “clearly explain all the negatives, such as garnishment, that interest rates will accrue and that late fees will apply,” says a supervisor at the firm.

Consumers who can’t work out debt problems on their own do have alternatives. Many nonprofit credit-counseling organizations offer “debt-management plans,” in which consumers steadily pay the full balance owed but often get concessions from creditors such as lower interest charges and waived fees. Such nonprofit programs come with some consumer protections. For example, they must provide services tailored to the needs of individual clients and charge reasonable fees.

But even here, consumers must tread carefully. The IRS began examining nonprofit credit-counseling organizations several years ago and found that many were funneling fees to for-profit companies, or doing little or nothing to educate consumers. In its initial examination, the IRS looked at 63 organizations, and in 49 of those cases either the IRS issued proposed or final revocations of nonprofit status, or the organization went out of business or became a for-profit firm on its own.

Write to Eleanor Laise at eleanor.laise@wsj.com

From the Boston Herald

By Thomas Grillo
Thursday, October 15, 2009

The number of Bay State residents filing for Chapter 7 bankruptcy protection increased 35 percent in the first three quarters of 2009 compared to a year ago, according to a report released this morning by The Warren Group.

“A growing number of people are being forced into bankruptcy because job losses and salary cuts have made it difficult for them to pay their bills. Some have relied on credit cards to pay for even basic living expenses and now are seeking protection under bankruptcy law as a last resort,” said Timothy Warren, CEO of The Warren Group in a statement.

Chapter 7 bankruptcy filing is the most common option for individuals who are seeking relief from their debts and accounted for 82 percent of bankruptcy filings tracked by The Warren Group in Massachusetts during the third quarter of 2009. People seeking Chapter 7 bankruptcy protection can eliminate most debt after non-exempt assets are used to pay off creditors.

There were 11,872 Chapter 7 bankruptcy filings in Massachusetts from January through September, up from 8,777 during the same months in 2008 and almost double the 6,229 filings during the same period in 2007.

Third quarter Chapter 7 filings totaled 4,098, a 34 percent increase from 3,055 in the third quarter of 2008, but 8.7 percent lower than the second quarter’s 4,489 filings.

While there has been a significant increase in the number of Chapter 7 bankruptcy filings this year compared to the prior three years, the number of filings is below the level in the first three quarters of 2005.

Filings soared in 2005 shortly before a federal law went into effect that made it tougher and more expensive for consumers to file for Chapter 7 bankruptcy protection. The law requires debtors to file under Chapter 13 if their income exceeds the median income in their state. While Chapter 7 essentially wipes away debt, Chapter 13 requires debtors to arrange for a three- or five-year debt repayment plan.

Chapter 13 bankruptcy filings in Massachusetts dropped 23 percent to 2,463 in the first three quarters of 2009 from 3,216 in the first three quarters of 2008, The Warren Group reported. There were 869 Chapter 13 filings in the third quarter, down 7.2 percent from 936 in the third quarter of 2008 and 5.4 percent fewer than the 919 filings in the second quarter of 2009.

From the Wall Street Journal

By JANE J. KIM

If you are curious about your credit scores, you may have tried one of the plethora of Web sites and services that offer some free credit information, then lure you into paying for your scores, usually as part of a credit-monitoring package.

Consumers are entitled by law to a free credit report—which is simply a record of your borrowing and repayment history—but the numerical scores derived from these reports will cost you, in part because credit-reporting agencies aren’t required by law to provide them for free to consumers along with the reports.

Now, a handful of companies are launching services that give consumers at least a glimpse at their credit scores free of charge. The sites—Credit.com Inc., Credit Karma Inc.’s CreditKarma.com and Quizzle.com—also offer a window into the key factors that go into calculating your score, what you can do to improve them and how your credit stacks up against others. Last week, for example, Credit.com launched a free Credit Report Card that shows consumers how they’re likely to rate across five credit-scoring models.

All three sites, which have ties to the credit industry, aim to make money through advertising or fees if users sign up for products their partners offer on the site, such as credit-monitoring services, credit cards or mortgages.

As banks clamp down on lending, it’s become more critical than ever to know your credit score. Financial institutions use them to determine the granting and pricing of everything from credit and insurance, to cellphone usage and, in some cases, employment.

For years, the best way consumers could get their scores was to buy them from one of the three major credit-reporting bureaus—Equifax Inc., Experian Group Ltd. and TransUnion LLC—or from Fair Isaac Corp., the maker of the widely used FICO credit score. Consumers can also get a free credit report at AnnualCreditReport.com once every 12 months from each of the three bureaus, but the site, which was created by the bureaus, sells scores separately, usually for about $8 each.

The reports can span pages of detailed account history, and can be hard for most people to decipher. And even if you pay for a numerical score—which financial-services companies use as a quick way to assess your creditworthiness—the information can be confusing.

There is variation among credit scores, depending on which scoring model is being used and which credit bureau the data are pulled from. Lenders can choose from FICO, the VantageScore—a score developed by the three credit bureaus—or from any one of the credit bureaus’ own scores. Adding to the confusion, lenders can choose from multiple versions of the same scoring model. FICO, for example, recently rolled out its latest version, FICO 08.

To gauge how easy-to-use and accurate the three new sites are, we pulled our credit scores—which may or may not be the actual scores lenders see—and compared the data with information in the credit reports and scores we obtained from AnnualCreditReport.com. (All three sites do a “soft pull” on your credit file, which they pay for, and which doesn’t hurt your score, according to the companies. In other cases, applying for new credit is considered a “hard” query, and can hurt your credit score.)

Getting the scores from the sites was relatively quick and painless. To get started, you have to set up an account and answer several “identity verification” questions. While you don’t have to sign up for any services or provide a credit-card number, you do have to provide your Social Security number at Credit.com and CreditKarma.com.

Quizzle.com, by contrast, uses information you provide when setting up your account to locate your credit report at Experian. Then it tries to verify your identity using information in your credit report. But if those questions are based on incorrect information—or if you can’t remember the answer—you might be prompted to enter your Social Security number.

Encrypted Data

All the sites say they encrypt any data that are stored in their files. CreditKarma, for example, strips out any personal account information from users’ data and immediately deletes the Social Security number once it is used to pull a credit report.

Overall, the information the free sites provided matched closely with what was in our actual credit reports. But the credit scores varied from the ones we bought through AnnualCreditReport.com, since they relied on different credit-scoring models. Despite the variations, the free scores were in the same credit tier as the scores we bought, giving us a good sense for how lenders would view our credit.

All the free sites provided a top-line summary of our credit by highlighting the pieces of data that they thought we were most likely to be interested in, such as how many open and closed accounts we have, our total balances and whether there were any red flags that we should be concerned about.

Credit.com’s Credit Report Card boiled down our 20-plus-page TransUnion credit report into an easy-to-digest format. The report graded us on a scale of A to F across key factors that went into calculating our score, and showed us how important each factor was to our score. While we scored a C-minus on “inquiries” (in part because we recently refinanced our mortgage), that category made up only 10% of our score. By contrast, we scored an A-plus on our payment history, which made up 35% of our score.

Credit.com doesn’t yet provide an exact credit score, but estimates where your score will likely fall across the credit-risk spectrum as defined by five major credit-scoring models, including FICO, VantageScore and other consumer credit scores. The site allows users to get updated scores once a month for free.

Report Cards

CreditKarma.com, which also relies on TransUnion data, gives you one of the same credit scores that TransUnion sells directly to consumers. In addition, it provides a report card grading consumers from A to F across seven key components affecting their scores and ranks the importance of each factor on a scale of high, medium or low. Users can also play around with a credit-simulator tool to see how their scores might change if, say, they applied for a new credit card with a $10,000 credit limit, or foreclosed on their home. The site allows you to check your score every day.

One thing Quizzle.com offers that the others don’t is a free credit report—and the ability to dispute errors on your Experian credit report on the site. In addition to the free score and report, Quizzle.com also offers a number of mortgage-related tools, so you can see how much the value of your house has changed. The site limits users to a new score and report every six months.

All of the sites have been retooling their models to make their scores more consistent with the scores most lenders are likely to use. On Wednesday, for example, Quizzle.com—which is owned by Rock Holdings Inc. and is in the same family of companies as mortgage lender Quicken Loans—replaced the Experian score it had previously offered. The new score is still based on users’ Experian credit files, but is designed to more closely track FICO scores, which range from 300 to 850, the higher the better.

The free sites also offered some helpful tips on how to improve our credit. To keep our overall debt usage low, for example, Credit.com warned us not to close any of our credit-card accounts, since that could cause our “utilization rate”—the amount of available credit that we’re using—to go up and our credit score to go down.

Instead, it advised us to cut up the cards to prevent them from being used fraudulently. Quizzle.com also launched on Wednesday a fee-based service ($75 for four months) that gives users personalized, specific advice on what they can do to improve their scores.

None of the free sites share or sell your personal information with other third parties, although they do aggregate users’ demographic data to help other people see how their credit compares to others.

Pitching Products

There is some product pitching on the new Web sites. Given its ties to the mortgage-lending industry, Quizzle.com’s advice seemed more tilted toward mortgage-related solutions. The site recommended that we consolidate revolving credit-card debt into a mortgage as a way to improve our credit score.

CreditKarma.com pitched us various offers based on our credit profile, while Credit.com offered us the chance to buy our credit report and credit-monitoring services from its TransUnion partner.

We still aren’t convinced these sites are an adequate substitute for getting your own credit report. The actual reports from AnnualCreditReport.com provided many more specifics about our payment history, previous employers and addresses. They also included account numbers—making it easier in some cases to track down certain accounts—and showed us which lenders had recently inquired about our credit.

Write to Jane J. Kim at jane.kim@wsj.com