credit scores

[washerboy]

Reading the thread about K-Mart and Lay-a-way...someone made a comment about cridit scores. Does anyone know why a credit score drops when a credit account is closed?..case in point..I co-signed a loan with GMAC for a dear friend to buy a car. I knew better..but if he went belly up his payment was such that I could make it..and I told him if he went belly up without good cause I would personally repossess the car. Belive it or not...for 2.5 years he sent me his car payment faithfully..until someone forgot to stop at the red light and slammed into the side of him. I'm sure the car was repairable..but the repair cost was more than the value..so the insurance company declared it totaled...they sent a check to GMAC and paid off the loan..and GMAC sent me a 20.00 refund for an overpayment...funny thing about this...the loan showed up on my credit report...but my credit score fell from 767 to 730 over the course of 90 days..I did'nt have but one credit card account open (with a balance) and my home mortage..niether of which I ever paid late. When I went to refinance my home loan back in December..I asked the mortage company about this...they did'nt know why...but when one pays off an account it effects the cridet score...but lowering it??? anyone know why???

 

[pturo]

There is part of the scoring equasion or macro that measures total credit outstanding vs total credit granted. The larger the difference, the higher the score in this area.

If you had 100,000 worth of credit ganted including the car and balances were 25,000, it would be more favorable than 75,000 granted(minus the car) with 20,000 outstanding based on the ratio they use because the account is closed.

Also in this algorythm is payment history and length of credit history time wise.

It does seem unfair that they don't seperate secured credit(mortgage/car) from unsecured (credit cards) in this equasion.

I was told it is better to have lots of credit open with very little or no balances and to not close accounts.

I am seeing a lot of tricks the banks are doing, like lowering credit limit amounts on perfectly paid balances due to "the economy" Capital One just sent me one.

This impacts one's credit score negatively, as well if they decide to take your limit from 15,000 to 10,000, even if the balance is only 2,000 and you paid immaculately.

By manipulating these factors, they put more people in the only good range when they used to have excellent credit, to charge higher interest rates.

It's disgraceful. They are changing a contract whose measurement determines how the finacial world looks at you without your consent.

We need to write our congress. We are bailing these banks out who can borrow at zero percent prime from the Treasury and they are increasing interest rates and lowering credit scores?

I think it is a clear and capricious disregard for contract law.

 

[toggleswitch2]

Let's not even discuss usurious rates that are for all intents and purposes UNREGULATED.

Entire banks move their credit card and comsumer credit operations to states that alows double-digit rates as a maximum.

DISGUISTING, truly disguisting.

And the far-reaching effect of my bank lowering my credit limit on an "empty" card to something tiny (it has a very low interest rate) while leaving another with a high credt limit and balance (because it has a very high interest rate) has really screwed me and my credit rating.

 

[iheartmaytag]

Credit scores and Insurance

Our great state of Doo-Dah, and the on the take insurance commissioner has allowed the insurance companies to now use your credit score to assess your premiums.

Because of this, they doubled my homeowner's premiums and increased my car insurance by 50% more. Their reasoning after 30 years with them. I had a large increase in debts in the last year (yea, I bought a house and insured it with you.) But because my credit score dropped, they justify this higher rate.

As a former loan officer, and collector I can tell you that banks can/do maniupulate your credit score by lowering your limits, moving your due dates, and posting your payments to the oldest money first. They then justify charging you a higher rate because you pose a bigger risk. Have you as a person changed? Did your payment history change? Did your income or buying habits change? NO!! what changed is the income level for the greedy banks, and now Insurance companies (who are owned by banks and investors) want in on the game. It's a slippery slope my friends. Raise their rates which increased my mortgage payment $153 per month. Then when someone has difficulty paying it's "see i told you so."

 

[toggleswitch2]

OMG you are a god among mere swine!

I though I was just being paranoid, bitter and hateful. They ARE playing games, aren't they?

Sad that because the government wants to include everyone in everything including home-ownership the rest of us get screwed. And to be honest the very financial foundations of our society appear to be be shaken to the core.

The pendulum swings too-conservativee in this country and then too liberal when are we going to learn to be be more "center". (Can you tell I have Libra in me?)

 

[whirlcool]

What gets me is that these banks get all this bailout money from the government and then they screw us big time.

Well, in 2010 some of this game playing gets stopped.

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