# Like Your FICO SCORE? Watch out for your Credit Card Companies! :(



## Girlzndollz (Oct 3, 2007)

HA! As a rule, I do not *close* credit cards I am currently not using. There is a reason for that. My FICO Score. That is like my credit "report card" score. Here's what my Credit Card Company did!

I received a letter from my creditor saying that because I have not used my card in X amount of months, they have assumed I no longer want the card and they Closed IT! They also state they will be notifying the credit bureaus! 

That is THREE Strikes against my FICO! 

First, the credit you *use* is measured against the credit you have *available*. The bigger the gap between the two numbers, the more points you earn toward your FICO. 

Second, when a credit card company notifies the bureau that the account is closed by the creditor, that counts against your FICO score. But if the card is reported by the credit card company as closed by the CardHolder, that does not count against you. (Only affects the used to avaialable ratio.)

Third hit on your FICO is credit history, the older the card, the worse it affects you. A newer card won't hurt as much, but you get points for having cards open for a long time. This one was 9 years old. That is significant.

SoOOOoooo, do you know all those annoying little letters you receive from the credit card? OPEN them, they may be little notices informing you that your FICO is going down, thru no fault of your own!! 

YOu must follow the instructions to avoid them closing the card. In my case, they said they sent a letter for me to use the card within 30 days to avoid the account closing. I did not get/see this letter.

Now, my husband needs to call, have a review, and they will likely reopen the account. That is the opposite of what the Customer Service Rep told me. 

She stated that since I did not make a charge, what's done is done, and that account cannot be re-opened. She stated that twice! I told her that answer was simply unacceptable, twice. She transferred me to another person, who, lo and behold within 2 minutes, was letting me know they can do a review and reinstate the card.

Do not let them mess up your FICO. At a time when everything is so expensive, your FICO can help you save alot of money. 

Better FICOS get better interest rates!

I believe credit card companies are doing this to close down open credit they have extended to protect themselves from people possibly using that credit, protecting themselves from further financial liability in the credit crisis. 

That protects them, but to your detriment, by reducing your FICO score. 

Both of the people I talked to acknowledged that my score would indeed be negatively affected by their actions, but without apology. The first said nothing could be done, and the second person will hopefully do the right thing, and re-instate us. Grrr... 

This is not a rant, this is a Heads UP. Watch out, protect your FICO, this is the latest trick, and it HURTS their customers. They know it and are doing it anyway. Just watch the mail carefully.

Hope you all have a great day. I believe I will, because my FICO should be going back up shortly...


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## Girlzndollz (Oct 3, 2007)

Follow up: My husband called and they DID reinstate the card, thereby re-instating our full credit available, and there will be no reporting by them that *they* closed the account instead of us, and we regained that length of credit history with that card. 

Since I did not know our current FICO score before they *did* literally close the account, I cannot share what the HIT to our FICO score was, or how many points we gained back by getting it reinstated.

Here is a free booklet on FICO scores (at myfico.com) for anyone who would like to find more info, or ways to increase your FICO. It also covers easy to avoid pitfalls of inadvertantly lowering your FICO when you didn't intend to.
[media]http://www.myfico.com/Downloads/Files/myFICO_UYFS_Booklet.pdf[/media]


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## Unik Ink (Nov 21, 2006)

I feel a bit different about credit. I prefer to pay cash for everything. I have a small loan for my equipment, which I make double and triple payments on, so that I can get rid of the debt asap. I don't open lines of credit with vendors, and I only have an Amex which I pay off every month. I will soon be phasing that out as well. Overextending yourself with debt is why our economy is bad right now. I have been listening to Dave Ramsey for some time now, and he has a tried and tested method to getting and staying out of debt. Real Debt Help - Get out of debt with Dave Ramsey's Total Money Makeover Plan.. Cash is king.


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## Girlzndollz (Oct 3, 2007)

I'll reserve my own personal comments on how folks use credit. Each person has to decide how to use credit in their own lives. It's like anything else, it can be used for good, or it can work against one if not used properly and responsibly.

But, if you ever need a *Mortgage* (due to buying your first home, or moving to a new home, or if you need to refinance your home, buy a car, etc. and cannot fully pay in cashola) then FICO will play a role in your life - even if you prefer to pay cash for other purchases. 

Look at these figures for a $300,000, 30 yr fixed mortgage, at the National Avg:

FICO® score... APR [?] ....Monthly payment * 
760-850 ........ 5.675% .... $1,736
700-759 ........ 5.897% .... $1,779
660-699 ........ 6.181% .... $1,834
620-659 ........ 6.991% .... $1,994
580-619 ........ 9.024% .... $2,419
500-579 ........ 10.310% .. $2,702

This info is lifted from the Myfico.com homepage. Here is a link to the page: myFICO - FICO Credit Scores | Get a Free Credit Report Online#


The difference in price from the top tier to the second tier is $43 a month. That might not seem like alot at first, but multiplied by 360 (the number of monthly payments in a 30 yr mortgage) and that becomes a difference of *$15,480*, for the same loan amount, for the same house, for the same duration. The difference being a few points in FICO score. A lower FICO means you will pay more for the same thing.

Of course, if one can pay *cash* for everything in life, cash is king;
but if any finance is needed, FICO is king.  


PS: Thank you for the link to the Ramsey stuff,
I hear alot of good feedback on his programs.


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## wormil (Jan 7, 2008)

Thanks Kelly. Most people are going to need credit at some point in their lives and few understand how FICO scores work.


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## Shuffy (Sep 3, 2005)

the hubby paid for a lifetime membership with --- creditfxonline(dot)com
and about every six months or so . . . we give them a call . . to have them remove the inquiries from about credit report . . . 

did you know . . that EVERYTIME your CC companies take a look at your credit history . . 
it lowers your score by two points . . .
and those little applications you get in the mail . . . even if you don't sign onto that CC company . .
they have checked your credit history . . . that also lowers you score by two points . . .

we have put a block on the inquiring minds and have gain our 24 points back that we lost to those wanting to send us junk mail . . .


I am sure you have heard of "life Lock" which helps protect your identy from being stolen . . .

NOW here's a little sercet peeps don't know about . . . you can contact with each credit bureau and
----put a password---- on each credit bureau . . no one can apply for credit without that password . . . and it doesn't cost you anything . . .
when you go to apply for sometype of credit . . . call the C. Bureau and lift the password . . 



Diane
;o}


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## Girlzndollz (Oct 3, 2007)

Thank you for the added tips to help my FICO, Diane. I do get unsolicited credit offers all the time. I will take that option to stop them now that I know they are bringing me down. To think, I just shredded about 6 of them going thru the mail  wish I had those phone numbers back! 

Thanks again, I am going to follow up with those tips.


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## Unik Ink (Nov 21, 2006)

What about manual underwriting? Isn't that the old school way to get a mortgage, where the bank actually looks at your job stability, income, and your down payment. They assess whether or not you can afford your mortgage, instead of just approving a $250,000 mortgage to someone because of their high FICO score, but a $45,000/yr income.


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## TshirtGuru (Jul 9, 2008)

Unik Ink said:


> What about manual underwriting? Isn't that the old school way to get a mortgage, where the bank actually looks at your job stability, income, and your down payment. They assess whether or not you can afford your mortgage, instead of just approving a $250,000 mortgage to someone because of their high FICO score, but a $45,000/yr income.


Yes they take a look at your overall finances. Well they should have been, lol. Anyway that is the way it is suppose to be, but your FICO score has a lot to do with interest rates on loans and credits (FICO score does not dictate the amount you can loan).

And credit is a valuble resource in our society. Credit is a great way to also rack up airline miles, incentives, cash back on purchases. If you have the cash to spend, just put it on your card to rack up miles or whatever your cc company gives you, and pay it off each month. I myself am a hypocrite on this because I use credit cards with cash back and I get so busy that I keep putting off a credit card with airline bonuses. I travel quite a bit so it should help a lot, it will be my new years resolution. lol 

I also spend a lot of cash for equipment, especially if there is a cash discount, but sometimes putting it on the plastic is a great way of extending cash flow. 

Another thing some people seem to miss is that if you are using your check/debit card online and you do not receive something, it is harder to get the banks attention. Check cards take out your cash directly from your checking account, THAT IS YOUR MONEY!!, so the company could really care less. If you had used a credit card, IT IS THERE MONEY!!, I bet you they would resolve it a lot quicker if you had used their money.


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## Girlzndollz (Oct 3, 2007)

Unik Ink said:


> What about manual underwriting? Isn't that the old school way to get a mortgage, where the bank actually looks at your job stability, income, and your down payment. They assess whether or not you can afford your mortgage, instead of just approving a $250,000 mortgage to someone because of their high FICO score, but a $45,000/yr income.


Ahhh, the good old days... when lenders actually considered whether someone could *actually afford* their mortgage or not.  Wah! If that was the current case, I would not be living in my small/moderate house making my mortgage payments, while my tax dollars will go to pay for someone else's mortgage who bought a house *they* could not afford. LOL. Gotta laugh or I'll cry, lol.  No rant here, I've learned to live with this already... have to - it is what it is. 

I know you've heard these terms before, they are on TV, the net, in the newspaper:

Subprime lending:
Subprime lending - Wikipedia, the free encyclopedia

Subprime Mortgage Crisis:
Subprime mortgage crisis - Wikipedia, the free encyclopedia

Predatory Lending:
_This is a paragraph from the USGOA (US General Accounting Office) I'll give you a link to the report on predatory lending, here is a quote from the report on the Introduction section, The Nature and Attributes of Predatory Lending:_

• ​​_Lending without regard to ability to repay_. Loans may be made without regard to a borrower’s ability to repay the loan. In these cases, the loan is approved based on the value of the asset (the home) that is used as collateral. In particularly egregious cases, monthly loan payments have equaled or exceeded the borrower’s total monthly​
income. Such lending can quickly lead to foreclosure of the property.
[media]http://www.gao.gov/new.items/d04280.pdf[/media]



Long story short, FICO is not the *only* factor considered when being evaluated for a loan, everything you mentioned is supposed to also be factored in, but it is a very important figure none-the-less. 

The above chart I copy pasted from myfico.com for you shows you what a difference in payment your FICO score can make. For more detailed information on how FICO affects your credit costs, click that link to myfico.com or Google "FICO score" on the net. 

I'm sorry, I did have to chuckle because alot of the current nightmare is due to people buying houses they could not afford, and yes, getting mortgages they could not afford.


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## wormil (Jan 7, 2008)

Shuffy said:


> did you know . . that EVERYTIME your CC companies take a look at your credit history . .
> it lowers your score by two points . . .
> and those little applications you get in the mail . . . even if you don't sign onto that CC company . .
> they have checked your credit history . . . that also lowers you score by two points . .


Sorry, that is not true. The only inquiries that count against your credit score are when you actually apply for credit or give someone permission to check your credit (when applying for credit). And actually even if you shop around and several lenders check your credit within a short period of time it will usually count as one inquiry. A few points here or there isn't going to make much difference anyway.

Credit Inquiries: How Credit Checks Affect Your FICO Score - myFICO


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## Girlzndollz (Oct 3, 2007)

wormil said:


> Sorry, that is not true. The only inquiries that count against your credit score are when you actually apply for credit or give someone permission to check your credit (when applying for credit).


Thanks, Rick. I didn't get a chance to go hunt this down yet, but I wanted to. That had me worried, bc like I said, just earlier, I shredded 6 of them, so I had 12 points on my mind for just today's mail. I was starting to fret what the score might be down to bc I keep getting those suckers in the mail. Anyway, thank you. 



> And actually even if you shop around and several lenders check your credit within a short period of time it will usually count as one inquiry. A few points here or there isn't going to make much difference anyway.
> 
> Credit Inquiries: How Credit Checks Affect Your FICO Score - myFICO


 
Yes, I was just reading this today. They say try to keep your shopping to within 14 days of each other, so they can clump them as one event. I was glad to hear they are doing this. 

I'm a little afraid to pull my FICO, kind of like going to the doc when you don't feel quite right, lol, I almost don't want to know, but will feel better when I see everything is fine! 
(please let it be fine, haha).


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## Shuffy (Sep 3, 2005)

here's another example . . .

a few years back . . I purchase a new living room suit . . I paid over $2700.00 and it was all CASH . . .

3 month down the road . . . Rooms to Go had an inquiry on my credit report
with Equifax --- when I paid cash for this purchase . . . I didn't have to fill out any financial paperwork . . . I didn't have to give them my or the hubby's SS# . . . I didn't have to give them my place of employment or my hubby's place of employment

there was no paperwork filled out for a line of credit . . .
I went around and around with Rooms to Go about them doing a credit check
or inquiry . . . after having my attorney send them a letter . . to have the inquiry removed from my report . . I have never done business with them again . . and I do not refer people to them either . . .

it might be true that companies are NOT SUPPOSE to look into or at your credit history . . . but who stopping these companies from doing it . . 
NO ONE but you . . . you have to keep a running track on your credit history . . 
there might be laws in place to keep companies from doing so . . 
but the common man ... do not know how to or where to begin to put a stop to it . . 

there are many people that do not having the knowledge or have the means to fight the corporate world . . . so they go with the flow and work their buns off to repair what others have broken . . .

your creditors -- yes report your payment history every month or every several weeks . . yes . . that "does not" count against your credit score . . 

however . . . those creditor check your credit history several time a year . . 
one for your other payment histories . . and another for your debt ratio . . 
and if you debt ratio is high .. . there goes your interest rate . . . 
----- and this is where you have 2 points ripped from your score----

not to mention . . in some states and with some vehicle insurance companies . . your monthly insurance payment is based on your credit 
history . . .

capitol one is good for making inquiring on your credit report . . . they are one of the companies that send out credit applications all the time . .
2 years ago . . I had 46 inquiries on my credit report . . . I was shocked . . it lowered my score by 92 points. . . . 
THAT is when I put promo block on my credit history . . 
thats awhole lot of points when your purchasing a vehicle . . .


that's my tale and I'm sticking with it . . . LOL*~ 


Diane
;o}

after January 20, 2009 . . . Big Brother will be watch a alot closer . .


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## tshirtsep (Feb 15, 2007)

Shuffy said:


> however . . . those creditor check your credit history several time a year . .
> one for your other payment histories . . and another for your debt ratio . .
> and if you debt ratio is high .. . there goes your interest rate . . .
> ----- and this is where you have 2 points ripped from your score----
> ...



Capitol one sends me dozens of applications... they don't "OFFICIALLY" check your credit history until you fill out the application authorizing them to do so... thats why the application doesn't guarantee you get approved UNTIL they officially check your credit and employment, which is why they ask for your personal info on the application.

Credit card companies can share customer info. with their affiliates so there are many ways "credit" businesses & banks can get someone's general credit info without officially inquiring about it.

I have Creditsecure which notifies me of all OFFICIAL credit checks that can affect my score... so far, I have NO credit checks listed except the 2 companies I authorized to do so... and I get TONS of random credit application offers.

If you have 46 inquiries you don't know about, then you have someone else authorizing it by trying to apply for credit in your name & your identity is being used... or stolen.


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## wormil (Jan 7, 2008)

Shuffy said:


> here's another example . . .
> 
> a few years back . . I purchase a new living room suit . . I paid over $2700.00 and it was all CASH . . .
> 
> ...


Actually Shuffy, companies check your credit all the time and there is nothing illegal about it. You probably get an inquiry each time you get a piece of junk mail but those inquiries do not count against your score and there is no magical 2 point deduction. I suspect you have been sold a load of bull from the company who sold you a subscription to remove the inquiries.

I wouldn't get too worked up about FICO scores. If you pay your bills on time and don't open/close accounts frequently there really isn't anything to be worried about.


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## AustinJeff (May 12, 2007)

For those who pay cash and aren't concerned about credit scores, I have a story for you.

Last year we were shopping around for new homeowners insurance. The rates we were quoted were very high. We were told it was because of my wife's credit score. This was surprising, as she never misses any payments.

I pulled her report and did some research into how credit scoring works. It turns out her credit usage ratio was too high.

So, here's where it gets really strange. Since we didn't have the money to pay off the debt at that time, the other option was to increase the amount of available credit. So she applied for about 10 credit cards. Got 7, with a total of about $40,000 in new credit. Filed them all away.

Her score shot up, and our quote for the homeowner's insurance dropped about $400 per year.

Plus, we got two free airline tickets and a couple of hundred dollars in cash as sign up bonuses.

If you're the type who will run out and charge a bunch of crap because you have available credit, best to stay away. But if you are a responsible adult, there's much to be gained from manipulating your credit score.


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## THX1138 (Aug 17, 2008)

Credit is a wonderful thing used responsibly. It also has some interesting angles. The fixed interest checks can be used for all kinds of things and will give you a lower interest rate and an unsecured loan for the product you are buying. Something to condsider


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