October 10th, 2008 4:34 PM by BILL WILBANKS
No matter what your credit scores have been in times past, there are a few things you may want to be aware of and monitor in relation to your current credit card accounts and even Home Equity Lines of Credit (HELOC).
Credit history and available credit are and have been major parts of all our credit score dynamics for quite a while. But trends are starting to happen that you need to watch on your monthly statements out there.
Revolving charge cards like VISA, MC, or whoever, are beginning to change the rules on us and many folks aren't paying attention. Many of these companies are reducing the billing cycles from 30+ days to 28 or even 26 days each month. Why does that matter? Well, you probably are not getting your statement until 3 to 5 days (if that many) before payment is due now and if you pay the statement by check the day you receive it, there's a reasonable chance it won't arrive in time one time or another and that's all that is needed nowadays to (1) bump your rate to as much as 28%, (2) increase your minimum payment requirement and/or (3) suddenly drop your card limit to the current balance. You may have paid perfectly for years. It doesn't matter. Yes you can pay electronically, but what if you miss seeing it or get busy by a couple days?
Ok, how can that effect you other than the rate bump issue? Simple the fact that your payment can suddenly increase is enough, but credit scores are heavily effected by the available credit on the line. Example, say you have had a $10,000 limit on the card. If the card provider finds a reason (and none needed) to cap your limit at the current balance let's say, you now have no available credit on the card and that is reviewed negatively by all the credit scoring systems out there and can lower your scores. Having available credit to access should you need it is looked upon positively of course. Though you may pay the balance monthly as many folks do, the report may be pulled showing a balance before your payment hits and the lower line can effect the score should it be pulled that particular month.
Same can be true on a HELOC. Most lenders have the capability to limit available credit lines midstream or close the line altogether if you have a zero balance and in today's declining value real estate markets in many states lenders are doing it. If they cap your line at your current balance or reduce it to a lower loan-to-value reducing their exposure, that can have the same effect as the credit card shown above on your credit scores. Why care? Next time you want to borrow on a auto loan or other major purchase, most rates of interest are heavily score oriented. Many examples apply. Just be aware we all need to monitor our finances and actually do it.
Bill Wilbanks www.orlandomortgagemasters.com