The rack is OEM, not an aftermarket accessory.
Posted on 01/11/2009 1:02:07 PM PST by D-fendr
DALLAS, Jan. 7 /PRNewswire/ -- "Many people will have their credit scores lowered this year if they're not watchful, know what to do and take action," said Eddie Johansson, president of Credit Security Group, a leading nationwide credit score analysis and rescoring firm.
Credit scores are used by lenders to determine credit risk. Lower scores result in loss of credit and higher interest rates. Financial analysts predict cuts up to $2 trillion in credit card account lines over the next 18 months.
"This will have very bad consequences for consumers who are not prepared," said Johansson, speaking recently about credit scores at the Texas Bankers Association's Financial Literacy Summit.
Analysts predict many card companies will be canceling unused cards and lowering limits this year. According to Johansson, "This is how the trap will be set: you have a $4,000 balance on a card that the company lowers your limit from $10,000 to $5000. You don't know it, but your credit score has just taken a hit -- and it's only beginning." Johansson says credit companies constantly monitor your credit score, which causes the trap to spring.
"Another company lowers your limit and increases your interest rate, 'due to decreased credit score.' This lowers your credit score further. Another company cancels an unused card. The cycle snowballs with other cards, and then the same ones over again. If you are planning a major credit move -- say, refinancing your house for lower rates, your lower credit score hurts your chances of refinancing and greatly increases the interest rate offered."
Johansson points out that the consumer here has done nothing different, hasn't gone into more debt, hasn't missed any payments. Yet, his rates have gone up and his ability to use credit has been damaged -- while he was unaware. And once ensnared it's difficult to get out. "This is why it's a trap," Johansson said.
"You can prevent this from happening to you," he said, "if you know how."
"The critical piece of this trap is your credit score," said Johansson. "It's what keeps the snowball rolling. Your credit score is also the sole measure used to determine your credit risk and interest rates in the future. You should carefully guard it as it comes under attack this year," he said.
With the amount of credit reduction projected, almost everyone will lose some credit availability, Johansson said. "You can't control credit card companies reducing the amount of credit in the system, but you can make sure it does not hurt your credit score - and this is critical to maintaining your ability to manage your finances in addition to saving you thousands of dollars in fees and interest payments."
Johansson gives specific advice on what to do. The key is in your credit scores -- knowing how the scoring system works and how to avoid hits to your score. In brief, the steps are:
1) Keep your balances low on existing cards.
2) Remember it's the balance/limit ratio that counts -- not the balance amount. If a credit card company lowers your limit, immediately lower your balance if necessary to stay under eight percent. Try to keep all cards under the eight percent guideline.
3) Charge small amounts on your old, unused credit cards. This makes them active which increases the limit portion of your balance/limit ratio.
4) Avoid opening new lines of credit if at all possible. Use new credit sparingly and for your best advantage.
5) Don't price-shop where the seller pulls your credit score. This includes homes and cars among other products and services. If you're not sure, make sure -- tell them not to pull your credit report.
6) Whatever it takes, avoid any negative events on your credit report.
7) Monitor your credit reports; be alert for any changes. Correct inaccurate information in your report, or hire a professional to do so. Besides keeping your score from decreasing, many people increase their scores by correcting their data at the credit bureaus.
More detailed information on these steps and what to do can be found at the Credit Security Group web site, http://www.CreditSecurityGroup.com .
Johansson said that consumers' lack of knowledge about the credit systems is especially costly to them in these times and there is a great deal of misinformation. "Common sense and credit sense are not the same thing."
About Credit Security Group
Credit Security Group serves consumers and lending organizations nationwide and advises major banks and mortgage lenders and their clients on how the system works and how to improve credit scores. CSG President Eddie Johansson has appeared on television and radio programs as the consumer credit score expert.
Available Topic Expert(s): For information on the listed expert(s), click appropriate link. Eddie Johansson https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=84994
SOURCE Credit Security Group
>> This is how the trap will be set: you have a $4,000 balance on a card
Well now, that would be the credit card user’s first mistake.
If one is stupid enough to carry a balance on one’s CC and pay 18%+ interest, that one doesn’t know how to use credit, and therefore shouldn’t be entrusted with credit. If it were up to me, I’d lower their credit score myself.
FICO 08
June 17, 2008
With the changes in the market place and the shifting attitude of consumers towards plastic over cash, Fair Isaac has deemed it necessary to make a few changes. Fair Isaac or FICO is responsible for doling out consumer credit scores when can pretty much make or break a consumer searching for a mortgage, a loan, and even employment.
FICO’s new model is set to debut in a few months but many consumers and lenders are getting ready for the change now. FICO will keep the scale in which the credit scores appear the same. Which means consumers can still expect to see a number ranging from 350 to 800 which the higher the number reflecting the better score.
Many find that FICO 08 will be far more forgiving of consumers then the previous model.
____________________________________________________
Also see:
http://www.mortgagenewsdaily.com/172008_FICO_08.asp
And:
http://www.bankrate.com/brm/news/cc/20080812-authorized-users-a1.asp
Funny thing about the Credit Score scam. I paid off all my cards and my house. Lost 40 points on my score.
Regulators Adopt New Credit Card Rules
Thursday, December 18, 2008
Adam Samson, FOXBusiness
A sweeping reform of credit card rules aimed at helping consumers hit by confusing, and sometimes deceptive, practices by creditors is on the path to regulator approval.
The Office of Thrift Supervision and The Federal Reserve said Thursday they approved of the new rules.
"The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts," said Federal Reserve Chairman Ben S. Bernanke. "These protections will allow consumers to access credit on terms that are fair and more easily understood."
Creditors will have to disclose interest rates when accounts are opened, and will be prohibited from hiking rates unless they are "expressly permitted," according to a release by The Office of Thrift Supervision. They will, however, be allowed to adjust rates after the account has been open with 45-day notice.
Industry participants say the new regulations could dramatically alter the credit card market.
The new regulations "are unprecedented in their scope and signal the beginning of a new market structure for credit cards," said American Banker Association President Edward Yingling.
Yinging, however, notes these changes can potentially increase borrowing costs for consumers, and even cut credit availability.
Creditors are also permitted to charge introductory rates that change after a certain period provided such stipulations are disclosed when the account is opened. Interest rates can also be increased on accounts that are over 30 days delinquent, the release said. These new disclosure rules will give consumers "the ability to easily compare the terms of different credit cards and make more informed decisions about their personal finances," according to Yingling.
The rules, which are expected to go into effect on July 1, 2010, will also require customers to receive a “reasonable amount of time to make their credit card payments,” The Office of Thrift Supervision said. Although exact figures aren't provided, The Office of Thrift Supervision says 21-days would be considered a reasonable amount of time. Excessive lump-sum-fees on high-risk clients will also be curbed.
Billing regulations, such as banning so-called double-cycle billing and increased requirements clients' payment allocation will also initiated. ...more
http://www.foxbusiness.com/story/markets/economy/regulators-adopt-new-credit-card-rules/
>> I paid off all my cards and my house. Lost 40 points on my score.
I’ve been totally debt free for several years. I use the heck out of my CC, because it simplifies accounting, but I pay it in full each month. To get here, I had to forego the McMansion, the flat panel teevees in every room, the jetski, the boat, the vacation home, and the wife’s boobjob, but you know what? IMHO it was worth it.
I have no idea what my “credit score” is. I don’t really care.
The only way we can be sure is for you to post a picture of your wife.
Like staying out of debt? Living below your means? Saving something for a rainy day?
Thanks, ETL, I think it is a bit suspicious that this won’t hit until 2010...
Same here, I'm not in the market for credit and can't foresee a time when I will be.
American Express sent me a notice recently that they were raising my rate. Who cares, I owe them nothing. I have a Visa card through my credit union that I use and don't even know or care what the rate is.
Well, no need to go overboard...
The rack is OEM, not an aftermarket accessory.
I did the same thing. I had one card with a $25k limit. I maxxed it out to move back to Alaska. When I sold my house in MN, I paid off the card, and put it away. They finally notified me that they were closing the account for lack of use. I know my credit score, but only because they told me what it was when I bought this house. But it means less than nothing to me, regardless.
I asked about FICO 08 specifically to these guys.
They said it will help scores, though they don’t think it will as much as some others do.
Most important they said it’s impossible to know when the bureaus will switch until they do - and that what counts is not so much when the bureaus switch but when Freddie and Fannie go to it. Until then, they said if the lender is using the old model, that’s what is still in effect.
So we can hope for it, but it doesn’t look likely as soon as this report indicates.
thanks for the post...
It's definitely not a common sense thing. If you pay off all your cards, keep a token balance, so that FICO counts it as active. Doesn't make sense that owing a little more helps your score, but it does in this case.
I certainly agree here, unless there's some kind of hyper-inflation going on.
You can increase your score though by keeping a very small balance. I think the smartest thing to do is know how the game works and prepare things like this before you make a major credit purchase. It could save a whole lot to get your score up just before you refinance your home for example...
Agree with your main point, but I think there's more to it.
I wonder if you agree that credit is neutral - there are only good and bad ways to use it?
If we don't agree on this, maybe you'd agree that having credit available - being able to use it in emergency or for good financial reasons - is a good thing.
If so, then, unfortunately, that means caring about and protecting your credit scores - that's a large determinate in your ability to borrow and at what rate.
Now, one does not have to live beyond one's means or be in major debt, or not have considerable savings. It does mean playing the credit game a little bit - not a whole lot of dollars, certainly not anything any where near beyond your means.
Between the two extremes of no credit and in debt beyond one's means is right spot for many folks.
Thanks for your post...
LOL!!
Any credit card operation that can't make a profit on 10% is not trying when US bonds are selling at 0%.
These operators should be rolling in investment money.
That should bring credit scores right back up!
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