MotorSeven
Elite Member
Reb,
HGM was right-on. I too learned alot about the effect a credit score has on one's life. To make a long story longer /forums/images/graemlins/wink.gif, my score was in the high 700's(over 25 yrs) prior to my divorce. After, it plummeted to the mid 500's. I made the mistake of hiring ont of those credit clean-up companys and wasted $300 i didn't have at the time. So, i began to research, learn, and watch my score as it clawed it's way back to the low 700's over a 3 year period. The facts are:
-Longer credit history is better.
-Any "over 30 day late" kills you. Over 60 days and they fill in the grave.
-Any balance over 25% of the credit limit lowers your score.
-"Soft" hits on your credit(like a card Co paying to see your score to send you an offer) do not affect your score.
-"Hard" hits(YOU applying for credit) lowers your score for 1 year each hit(and it's about 3 points...although they will not tell you that).
-If you are shopping for rates like when buying a car, and the dealer makes let's say,10 "hits" to different Co's. Those hits in a 24 hr period are supposed to only count as 1 hit( they very often are counted against you scorewise unless challenged by you).
-High debt to income ratio lowers your score.
-open accounts with zero balance raises your score(however, i was actually told once that too many of these can lower your score because of the instant availability of all that unused credit........?...)
Ok, here is where i get angry.....Let's say you have a borderline "good" score of 700. You apply for and are approved for a couple of zero interest cards to finance a project. You are given a 20K limit between the 2 cards so you max them out but faithfully pay the min payment. The Credit Co(equifax,esperian, etc) sees that you are way over their 25% guidlines, so they LOWER your score. Then they lower it again because you applied for credit that you were qualified for. Even though you QUALIFIED for the exact amount that you are using and paying properly......... /forums/images/graemlins/confused.gif
This is just one small example of how these companys have us by the short hairs. What i found is that these companys make more money off the poor sap with a lower score than they do with a guy that has a very high score. You see, the high score guy doesn't have to shop around for a good rate, but the low score guy does. They make money by selling your credit info to each inquirer. The credit card/loan companys make more money off the low score guy because they charge higher rates to cover their higher "risk". This risk factor can be real or it can be a product of an industry that has free reign to manipulate scores for profit. They also charge YOU to see your own darn score! Yes you can get a free credit report once a year, but if you want a score it's gonna cost you around $6.
I wish i knew how we let this industry wield an unbelieveable amount power with very little avenues of recourse. /forums/images/graemlins/mad.gif
I check my credit and score twice a year(yes, it smarts to pay them to see my own score) and i challenge all items that are incorrect. I em, phone, and write letters until the issues are resolved.
If you have a good score, dropping one card won't make much difference. If you have a low score, you may get denied when you re-apply for another card.
Sorry for the long post, but this one still eats at my craw!
(backing off the soap box quietly)
RD
HGM was right-on. I too learned alot about the effect a credit score has on one's life. To make a long story longer /forums/images/graemlins/wink.gif, my score was in the high 700's(over 25 yrs) prior to my divorce. After, it plummeted to the mid 500's. I made the mistake of hiring ont of those credit clean-up companys and wasted $300 i didn't have at the time. So, i began to research, learn, and watch my score as it clawed it's way back to the low 700's over a 3 year period. The facts are:
-Longer credit history is better.
-Any "over 30 day late" kills you. Over 60 days and they fill in the grave.
-Any balance over 25% of the credit limit lowers your score.
-"Soft" hits on your credit(like a card Co paying to see your score to send you an offer) do not affect your score.
-"Hard" hits(YOU applying for credit) lowers your score for 1 year each hit(and it's about 3 points...although they will not tell you that).
-If you are shopping for rates like when buying a car, and the dealer makes let's say,10 "hits" to different Co's. Those hits in a 24 hr period are supposed to only count as 1 hit( they very often are counted against you scorewise unless challenged by you).
-High debt to income ratio lowers your score.
-open accounts with zero balance raises your score(however, i was actually told once that too many of these can lower your score because of the instant availability of all that unused credit........?...)
Ok, here is where i get angry.....Let's say you have a borderline "good" score of 700. You apply for and are approved for a couple of zero interest cards to finance a project. You are given a 20K limit between the 2 cards so you max them out but faithfully pay the min payment. The Credit Co(equifax,esperian, etc) sees that you are way over their 25% guidlines, so they LOWER your score. Then they lower it again because you applied for credit that you were qualified for. Even though you QUALIFIED for the exact amount that you are using and paying properly......... /forums/images/graemlins/confused.gif
This is just one small example of how these companys have us by the short hairs. What i found is that these companys make more money off the poor sap with a lower score than they do with a guy that has a very high score. You see, the high score guy doesn't have to shop around for a good rate, but the low score guy does. They make money by selling your credit info to each inquirer. The credit card/loan companys make more money off the low score guy because they charge higher rates to cover their higher "risk". This risk factor can be real or it can be a product of an industry that has free reign to manipulate scores for profit. They also charge YOU to see your own darn score! Yes you can get a free credit report once a year, but if you want a score it's gonna cost you around $6.
I wish i knew how we let this industry wield an unbelieveable amount power with very little avenues of recourse. /forums/images/graemlins/mad.gif
I check my credit and score twice a year(yes, it smarts to pay them to see my own score) and i challenge all items that are incorrect. I em, phone, and write letters until the issues are resolved.
If you have a good score, dropping one card won't make much difference. If you have a low score, you may get denied when you re-apply for another card.
Sorry for the long post, but this one still eats at my craw!
(backing off the soap box quietly)
RD