Best Buy Placed on Credit Watch by S&P

Last Wednesday, the shares of Best Buy Co. Inc. fell to 2.55 percent because its corporate credit rating was only one level ahead of the so-called “junk” status.

Best Buy, an electronics retailer in Richfield, was put on credit watch with negative implication by Standard & Poor’s Ratings Services. The statement was made one week after Best Buy revealed it is planning to close 50 branches and take some actions that will cause a lot of discharged employees and approximately $800 million worth of savings after five years.

At present, Best Buy has a BBB- credit rating, which is the lowest investment-grade. After that is the BB+, which is a non-investment grade or simply known as the “junk” status.

According to Jayne Ross, director of Standard & Poor’s Ratings Services, the restructuring of operations was brought about by the problems Best Buy is facing in terms of its business model.

In addition, Ross said that a company placed on credit watch means there is one-half probability the current rating will be the same and the another one-half probability that the rating will be demoted.

Best Buy replied through email that they are conscious of S&P’s decision to put their company on credit watch. In addition, they are willing to discuss with S&P for further information about their business strategy. Best Buy said they have a good overall financial condition as evidenced by their ability to generate cash for operations and free cash flow, and their $2.5 billion credit capacity with major banks.

Moreover, they have a high level of flexibility and financial awareness because of their ability to generate excess cash and conventional capital structure.

However, they refused for an interview asking the company officers to talk about the rating.

The credit agency might demote the rating in a span of 90 days, that is, if there are no actions done by the company to give details or improve factors that cause the credit watch. Standard & Poor’s looks forward to settle the issue after talking with Best Buy’s management.

Borrowers Must Challenge Credit Card Debt Charges

It is recommended that every borrower must challenge credit card lawsuits, according to Felix Salmon, who is a Reuters blogger.

This recommendation is to some extent valid. For instance, the case of Bank of America and its credit card division showed that creditors have the capacity to force collection bureaus to pursue debts that are not valid. This consequently puts the collection bureau into greater jeopardy than Bank of America imagined it would be in itself.

If the debt is in reality not valid, then it would seem right for the consumer to challenge a lawsuit.

In contrast, Salmon’s recommendation becomes odd when he said that borrowers must not be afraid to require a proof out the upright feeling that they must pay off their outstanding debt.

This is not in the best interest of a lot of persons who are in some way associated with the consumer.

First is the creditor, who gave the loan to the borrower for him to use in whatever he thinks he should buy.

Second is the collection bureau, which now has the responsibility to take care of a borrower who believes he is not to blame for the liability he made.

Third are the borrowers who pay their credit card debts in good time.

Fourth are the borrowers who have to sort out higher costs because of the consequences of poor retail debt.

In addition, Salmon has a poor conclusion. He said that if all persons begin to challenge the lawsuits as a whole, then that will certainly lessen the advantages, to the financial institutions, of advertising written-off debt to corrupt collection bureaus as a whole.

However, it is probably unreasonable to classify collection bureaus who buy credit card debt as corrupt. It weakens a significant component of the receivables management business. Also, it weakens the business that places persons to work in all types of profitable settings.

1.5 Million Credit Blunder by Global Payments

One of credit cards’ worst histories of security breach has occurred this year. Visa and MasterCard users are facing the possibility of having their personal information stolen and according to sources Global Payments was the one to blame.

No records of credit card accounts, Social security numbers, house address and much other information were said to be taken from the archives of the company. However, Global Payments admit that they have been the mishap of the system and they estimated that about 1.5 million of their subscriber’s records have been tapped.

According to the company, though personal info was not taken, the possibility of identity theft and fraud may happen. In 2007, Heartland Payment Systems a company that manufactures swipe machines for credit cards also had their system hacked and 130 million credit cards were affected. For this weakness in their security, they had to pay a $139 million worth of legal charges in 2009, and it is very likely that Global Payments will suffer the same fate.

Visa has already removed the company’s name from its official list of providers; this is until they fix their security system. This does not prohibit Global Payment from delivering its job;though the move momentarily marks them for potential danger. The company expects to be restored in the list after they have updated their safety measures.

Last year, Global Payments had over 2.44 billion dealings with its 800,000 merchants all over the United States, making it rank seventh in the business.

Though investors may become hesitant in investing to the company after the incident, this does not mean that it will run out of business. Heartland, which had its blunders, was able to regain its loss. If Global Payments handles this fine, they will get their name reinstated in Visa’s list in no time.

Teens Should be Financially Literate

The month April has been declared as the National Financial Literacy Month. The purpose of this is to educate teenagers to be financially literate. It is very important for your young teenagers to know about credit rating before they are allowed to have credit cards. They have to know that lenders are investigating credit information before they issue credit cards. Educating teenagers to be financially intelligent would help them properly manage their finances in the future.

Avail of your free credit report. You can get a free credit report from the three big nationwide credit bureaus, Experian, TransUnion, and Equifax. These three bureaus have a common website at www.annualcreditreport.com. The free credit report is provided once every 12 months. You can also link to the Federal Trade Commission website at www.ftc.gov for free credit report.

Review with your teen the credit report. Evaluate your own credit report with your teen. Discuss with him or her every detail of information reflected in the report so that he or she can avoid financial pitfalls in the future. Discuss   most especially the importance of paying on time.

Essential information you need to discuss:

The credit report compiles the following information: Payment behavior of consumers, current balances and other information related to consumers’ credit cards and loans. Bankruptcies and liens are also compiled in the credit report. This information is reported by financial institutions to the three big credit bureaus.

What is the purpose of credit report? Credit report is the basis of lenders in approving or denying a loan or a credit card. It is also the basis of determining the rate of interest. A good credit history allows borrowers to get a new loan at favorable interest while a bad credit history requires a higher interest rate or it can even lead to a loan rejection.

Pay your bills before the due date. Credit report records every payment made. Payment made on or before the due date is a major factor in building an excellent credit rating. When the credit rating is excellent, consumers get the best interest rate for future loans, credit card and mortgage.

What Employers Must Know Before a Background Check

An increasing number of employers believe they have to know as much as possible about their staff and prospective employees, thus, it has been common to perform regular background checks. Nowadays, in one way or another, almost all errors an individual commits are documented. This data is now accessible to the employer when performing background checks.

However, there are a few things employers must know before performing a background check.

Select a reliable company when performing a background check. A lot of the online firms do not perform in-detail searches involving local, state and federal criminal databases. To perform a detailed search, employers must also check county records, which will require a Social Security trace.

Some records cannot be used by the employer. It is important to note that employers can take action only when there is a conviction. For instance, a record shows that a prospective employee was arrested for a crime, but there were no filed charges, therefore, the record cannot be used against them because there was no conviction.

Criminal records, specifically convictions, must always be associated with the job description.

Moreover, credit checks must also be associated with the job. Credit checks have become a concern for applicants during hiring. However, there are very strict rules as to when an employer is authorized to perform a credit check and there are reliable background check companies that can help you during the process.

To be able to perform background and credit checks, employers must have permission from the applicant. This can be done by getting the appropriate form from your chosen background check service. Prior to starting the process, employers must offer employment contingent upon passing the background check.

Despite the feelings of invasion of privacy on the part of the applicant, firms must conduct background and credit checks in order to prevent hiring mistakes that will later on cost the firm a huge amount.