November 24,2008
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Boost Your Credit Rating(201), Pt.1 –
– The down-state we're facing.Now that we've established some ground rules on credit card ratings back in the article series entitled "Your Credit Rating(101)" let us find ways to shore up our credit card standing in this series. There are may ways to improve on credit card ratings. Of course, improving just some of them while ignoring others may not result in the good rating we desire. Recall that the major criteria used in establishing good credit are:
a) Payment history of monthly statements.
b) Length of time a person has maintained a credit card history.
c) How many accounts a consumer has and what kind of a accounts they are.
d) How much outstanding debt the consumer is carrying.
e) How many times and how frequently the consumer has made late payments.
f) The percentage of credit that has been charged against the amount allowable.
g) The frequency and seriousness of problems like charge-offs, collective actions or bankruptcies that person has.
With the credit card industry in such peril, we can expect to see the importance of a good credit rating continue to escalate acutely and many hapless Americans will find themselves out in the cold (both financially and literally). With our nation's two largest credit card lenders struggling to not go under, we are already seeing abrupt changes in their rejection criteria. Surely, the other lenders will soon follow. Just within the past year or so, the qualifications for getting a ‘sweet deal' of interest that is under Prime (even 12 months with zero interest) have been raised from a FICO rating of 580 to 680. This is not for purposes of greed on the lender's part, it's survival. All of our largest lending banks have had to file major losses as this fiscal year comes to end. Their bottom line now is: ‘How can we narrow down to only consumers we know will pays us back?'