The Credit Game and You

Part Two

In Part 1 of this article, which you can find at below, I mentioned that FICO, the most widely used credit score determining service, had recently opened its “secret vault”. As part of our normal research for our clients at Silkin Management Group, I ran across this information and thought it would be valuable to share with anyone interested in addition to Silkin clients.

I’m sure you have noticed that it is not uncommon to see credit companies mysteriously lowering credit limits, and many are even closing accounts that have no delinquencies or violations on the part of the consumer.

Why is this?

Some credit companies have just tightened up the amount of credit they are willing and/or able to extend and the consumer can’t do much about it. If this has happened to you, then the best advice is to switch credit companies. With a good credit score, you should be able to procure another line of credit easily enough. Of course be aware of the fine print—check for annual fees, rewards programs and, if you plan to carry a balance month-to- month, then obviously search for a card with the best interest rate.

To help you with this there are many websites that offer information and comparison between individual credit cards. creditcards.com is one of many you can try.

However, there is another reason that you might be getting cut off from your lenders, and that is your FICO score. This is a constantly changing number, and it depends on not only on how promptly you pay your credit card bills (of course that is a primary factor), but also on a number of other spending habits. Here are some examples: If you’ve maxed out a card your score will be reduced. How much? Well that’s another interesting point and depends on where your score was. For example if your score is about 680, it will be reduced anywhere from 10-30 points. However, if your score is about 780, then it will drag it down 25-45 points!

If you are 30 days late on a payment, your score can be reduced 60-90 points if you have a 680 score and for the higher FICO range, it is a 90-110 point reduction!
If you choose to go with a debt settlement service, your score will suffer by 45-65 points for the lower FICO range, and 105-125 points if you start with the higher FICO range.

Foreclosures will cost you 85-105 points low range or 140-160 points in the higher range.

And the worst-case scenario, bankruptcy, will take off 130-150 points in the lower credit-score band. For a higher score, count on losing 220-240 points.

Keep these points in mind when using your credit cards and dealing with credit card companies. As noted above, if you max out one of your cards it can cause a significant change in your score, so think about that before you do something like that.

If you’d like more information about Silkin Management Group and its services, visit our website at: www.silkinmanagementgroup.com. You can also email us at: info@silkinmanagementgroup.com or call Silkin Management Group at 800-695-0257.

Lyn Ribisi
Appointment Coordinator
Silkin Management Group