October 15, 2009
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Woe to Us 0% CC Freeriders, Pt.1
CC Rider.It's been nice -- holding thousands of dollars borrowed on credit cards for ten years while never paying any interest. I know there are more than a few others like me out there. But, from what I can see, the free ride is almost over. The entire credit card industry is reining in rapidly on our sweet little scheme. No more introductory "0% credit card offers" arriving in the mail every week anymore. At least, not if you don't carry a FICO score close to 900.
Also, the "free 0%; fee-less balance transfers" have gone away. Last week the national average credit card APR for new balance transfers was 13.10%. Up from 10.80%, six months ago. The standard 3%-rule on credit card transfer fees was often waived a year ago. Now it's jumping to 5% all around us. What's a consumer to do? You mean we have to actually pay to borrow money over a long time now. We've been spoiled. Time to work on that FICO score again.
Not sure how long it takes to raise a FICO score. I always thought that I was in pretty good shape with my mid-700 score. Always got sweet offers in the mail. Now, I'm finding out that mid-700s are just barely making it and all those new sweet deals we see advertised are really only for those close to the top (900). I've always had hundreds of thousands of dollars extended to me. Now I'm seeing my $20,000-limit credit cards reduced all the way down to a piddley $300.
To start with, I know I must:
1) Bring all my credit card "utilization ratios" down below 30%. I must owe at any given time less than 30% of my credit limit.
2) I must appropriate my free annual credit report (from Annualcreditreport.com) and look for unwarranted "derogatories". I must respond and contest those with plausible detail.
3) It is well if I secure my FICO score from Fair Isaacs. Then, I must seek information to find out the easiest way to raise my score.
4) Then, I must wait at least a month or two. But, more on this later.