Is it just me or is credit tightening the lending standards and cutting back......

[Babybear]

How many people have experienced a credit card bank suddenly asking you to varify you last years tax returns or they will cancel your card and lower your limit? I have


How many of you had a large line of credit and as you ran up some other cards and became more in debt but still were paying them all on time, were suddenly sent a letter lowering your credit limit on one of your acounts that had lots of open credit?


I have had these things happen a few times in the past 6 months and was wondering how these credit cards operate. Do they run your credit monthly? Do they get a report when your debt to income is higher and pull back? why ask for a tax return after making minimum payments and in good standing for a year? And why is my mothers credit score 100 points less now than when we bought a house a year ago and it was 750? I have made all the payments on time. Was it lowered because of the number of open cards and the amount of outstanding debt. I thought it was only effected by keeping current . I guess I was wrong. What factors most influence your score? And lastly where does medical debt and bills appear on a credit report? I cant find it and today one card said we have delinquencies on the credit report but I have no idea what they are referring to. When I called trans-union all they do is have a recording to send you a report. who can actually explain the credit report to me?


Thanks

[PushRestart]

My understanding of how credit works is not good enough to answer your question, but I too have experienced the situation you described. Many types of credit, all paid on time for a long time and a good credit score, but someone's computer program said I was a bad credit risk and slowly, all of my credit began to constrict. The biggest loss I took was when my business line of credit got turned off by Chase, because paying on time for 5 years, paying a $150 annual fee and lots of interest, along with having a mid-700s credit score was no longer good enough for them. As a commission-based worker (realtor), that line of credit was critical to keeping my business working between paychecks and when it went away, our meltdown really accelerated.... My best geuss is that my large debt load outweighed my income so much that even with a good credit score and a perfect history of paying on time, I appeared to be a big risk. Kind of a self-fulfilling prophecy really, cause here I am now, prepping to go into the chap 7 land just in order to breathe.

Actually, I have to resist that attitude; my overspending put myself into the position that I am in, not anyone else, nor any of these evil, piece of crap banks. Am I bitter about my credit constricting even after I played by the rules? Yes, a bit, but I also know that I carry my own share in my own problems and I sure as hell hope to never repeat my mistakes after my BK is done...

Hang in there BabyB, this forum is amazing, a good place to get support and recharge your batteries, I love it here and am glad I found this place.

[tcreegan]

Hi Babybear,

Medical debts violate patient privacy clause in HIPPA, all your medical records have tight privacy.They tolk are weapons


I making minimum payments and in good standing for a year?[/I] ....apparently not anymore, it would take more than my fingers and toes to
huge, personal attention has vanished, you get run through a risk analysis program which generates a form letter. And yeah, they run your credit periodically.

Was it lowered because of the number of open cards and the amount of outstanding debt. I thought it was only effected by keeping current . I guess I was wrong. What factors most influence your score? ....there are general guidelines, but the actual program used to calculate scores is proprietary, not revealed to mere mortals. And propriety programs output propriety scores...which the company sells. So don't get suckered by a flashy website promising free credit scores.

~35% payment history (on-time vs late, how late) (always on-time is best)
~30% outstanding debt, available credit, debt to income ratio (25% debt : income is better, debt-to-income ratio 20% or lower is better)
~15% length of time on credit line (more time is better)
~10% new credit applications ("hard pulls") (less is better)
~10% types of credit (more diverse = better)

Go to: http://www.ftc.gov/bcp/edu/pubs/cons...dit/cre34.shtm for more explanation.

http://ezinearticles.com/?Governments-Free-Credit-Score-Report---Federal-Trade-Commissions-Information&id=4495331

Best of luck to you!!!

Tom in colo

[Babybear]

wow so interesting and so informative. thanks to both of you. Its unfortunate I only took the time to really understand all this because I am in a bad position credit wise. I try to listen to Suzie Orman when I can but never really took the time to learn or care how all this works and yes much of it does seem secretive. I guess once you reach the point where even given all your effort to make those payments on time and still your score drops and lines of credit dry up, it kinda makes you not want to pay anymore. Its like how can they do that to me when I played by the rules. So I guess one thing leads to another. Its really a vicious cycle and yet it seems it will continue for many more people to come. what proportion of people never take out credit cards? you need it to get a good score. Than you have to not spend too much or pay if off all the time. And for many who want more than they can afford, it becomes addictive. Than one or more unforseen events and boom your in over your head. Its just as bad as any addiction if you ask me. Well maybe I am just going thru the withdrawl phase now and wish I could still take a hit..........lol. I guess I need to go to rehab or find another addiction. I do love to shop. Not sure I can ever give it up. Even if I have to return things to buy new ones I will probably fight this addiction til I die.


Tom where is my referal to a good shrink.......lol................do you know any who take visa?

[daylate]

As a result of the recent financial crisis/recession/high unemployment, etc. banks have become much stricter with their credit. I forget the name but in many instances as a person pays down his or her credit card the banks simultaneously lower credit limits. Which negatively affects a person's credit rating because part of the formula is how much of your available credit you have used. By lowering limit, then usually this makes the % used higher. Vicious cycle.
Another thing I read recently that some companies use is a process whereby they look at where you shop. lets say you shop at a chain that has a lot of shoppers with poor credit/chargeoffs/bk's, etc-the company will count that against you even if you are paying on time,etc. Guilt by association thing. I think American Express just was pressured/embarrassed into stopping such a practice. My opinion is credit will be harder to obtain and terms will be much tougher for a while to come until the recent crisis is forgotten and banks once again throw caution to the wind in their search for their next billion of profit.