You might think it’s completely random how they come up with your credit card numbers. But, oh, how wrong could you be! There’s a very complex, and very exact method that credit card companies use to come up with those 10 digit numbers. It’s called the Luhn Formula, or the modulus 10, or mod 10 for short.
The Luhn formula not only helps the credit card companies come up with your numbers. It also allows them to double-check, verify, and validate your card numbers, so they know that cards are actually real when people try to use them for a purchase. Sneaky, right?
Not actually. The Luhn Formula may be complicated, but it’s no secret. As anybody in the credit card industry will tell you (maybe except your customer service rep), one of the most basic rules of the Luhn Formula is the so-called check digit, the last digit in your number. The first digit, on the other hand, simply identifies whether a card is a Visa, a Discover Card, a MasterCard, etc. Meanwhile, the middle digits are dedicated all to you, the customer.
Those first and last digits are used in the Luhn Formula to come up with your control number, and your total 10 digit credit card number. On the other hand, when a company wants to verify your card, they take the control digit, plug it into the Luhn Formula, and see if the other nine digits pop out.
Who came up with the cockamamie scheme? The Luhn Formula was actually created by a bunch of mathematicians back in the 1960s. While others were listening to Jimi Hendrix and going to Woodstock, these guys were figuring out a way to make the credit card companies, and themselves, rich.
Believe it or not, the Luhn Formula is also used by the Canadian government to come up with Canadian Social Insurance Numbers. It goes even further than that. Basically, any institution that uses a long primary account number uses the Luhn Formula to create those account numbers, and figure out if your account number is true.
Finally, here’s how it works. Starting with the second to last digit and going left, double the value of it and all alternating digits. Then take all of the resulting digits, and the unaffected digits, and add them together. When you get to double digits, add those together (e.g., 12 becomes 1+2), and keep going to the end. The grand total must end with a zero to be true.
Joshua Shapiro recommends Find Credit Cards to find a MasterCard credit card application that’s right for you.
Once you became unemployed, did your bills begin to suffer? Maybe you were able to continue paying your bills for a month of two. But the third or fourth month, you began getting behind a little bit more. You were late in paying one or two of you bills. You are sure the next month this will not happen. You will be prepared when the bills come.
The next month comes along and instead of being behind only on one bill, now you are behind on two bills. Your creditors began calling because this is not your normal pattern. What can you do? Do you ignore the calls out of embarrassment or do you take the call and feel worse after you get off the phone.
There are steps you can take to work with your creditor once you are unemployed. If prior to your unemployment, you were faithfully paying your bills on time the next few steps could be crucial. First, I suggest that you do not avoid the phone call. Some creditors are more determined than others to get someone on the phone. Second, one you are on the phone with the creditor be honest about the situation you are dealing with. Assure them that it is not your intent not to pay your bills. You have found yourself in a situation that you are not used to dealing with. Third, ask them if once you have returned to being employed and paying your bills, if they would be willing to add a statement to your file reflecting your determination and willingness to get your bills paid. You might be surprised that some of your creditors will help you.
This will in turn be looked at when you are seeking new credit and trying to re-establish your credit. If you have not ever looked at your credit report, order it from www.annualcreditreport.com for free once a year. Or you can order it from each of the credit reporting agencies individually. The credit reporting agencies are Experian, TransUnion and Equifax. Realize that these should vary slightly.
If you do not understand how to read your credit report, ask a friend that you trust to read it for you. Or I recommend that you contact your bank and try to meet with the personal banker. They should be able to explain to you how to read it. This will assist you in getting your finances in order. Maybe your credit became bad once you became unemployed, the above strategies should help you.
Dr. Taffy W. Wagner is the author of the Amazon.com Bestseller Debt Dilemma. She is the unemployment editor for Bellaonline.com and the Financial Coach for ChristianLadies.net.
Purchase Debt Dilemma at http://www.amazon.com or http://www.paidoff.net.
