Repair Credit Score

Archive for February, 2010

Question: When do credit card companies have to comply with the new credit card legislation?

What is the time frame for credit card companies to comply with the new credit card legislation signed into law last month? I read that one of the provisions in the bill doesn't allow credit card companies to arbitrarily raise your interest rates on existing balances. I received a letter in the mail from my card company (Chase) stating that they were raising my rate from 9% to 20% on new purchases AND existing balances. Of course I opted out to keep my rate the same, but I had to close the account. How does closing the account effect my Credit Score? When does the law go into effect so that the card companies comply. I am expecting all of my credit cards to attempt to raise the rates but if you have to close them when opting out, how will this effect your Credit Score?

Answer: The new laws will become effective on July 1, 2010.
As you have seen, many of the major banks have already screwed their card holders by raising rates.

Opting out and closing the account will lower your Credit Score under certain conditions. IT lowers your available credit line which affects your debt utilization ratio (the amount you owe compared to your total credit line).

You now have less credit so depending upon how much you owe, your utilization ration may increase above the 30% threshold which lowers ones score. You will also loose the payment history even though it will remain on your report. If the account is farily new, then the history will have less affect on your score.

Also as one last note, the political powers that be wanted this passed quickly to look like they are helping out the American people, well guess again, this whole bill is just a white wash and will NOT do any good for those who have good credit. The reason being and I will quote:
Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group, says the new law will restrict lenders from tailoring credit card interest rates and terms to an individual borrower’s risk profile. That means consumers in good standing, as well as those who are delinquent, will be hit by higher rates to compensate for the “one-size-fits-all pricing.”

Obama Makes Push for Credit Card Legislation

Question: Is it better for your Credit Score if you pay off credit card debt gradually?

I recently got paid for a large project I completed, and I can now afford to pay off roughly $12,000 of credit card debt.

Answer: You can use Credit Repair agency, for example this one - http://freecreditreport.hotusa.org
They will clean lots of such bad stuff from your Credit Report - and do it much faster than yourself, so your credit will go up.
They can also pre-estimate any changes of you scores for different scenarios of payments.

What's Bringing Down Your Credit Score?

Question: What happens if I let my 5-yr ARM mortgage adjust?

I am not sure if I should refinance or not. If I do not, what happens with my current ARM loan when it resets?

Answer: Your mortgage contract will spell out exactly what index is used and how many points over that index you will be paying. With today's low interest you may actually adjust downward. So calculate what the interest rate will be based on today's rates and you can go from there. Since your loan to value is 93% you may have a hard time refinancing without putting up some cash. Also in order to refinance you may have to pay off the second.

Mortgage Testing/Credit Score Press Conference Part 2 - April 21, 2010