Do You Know Your Credit Score?

Here in the US, records are kept of every request for your credit record. If a person is going wild getting new cards, it can be a sign of a scam artist. For instance, at one time lenders were offering cards at a beginning rate of 0% or some other super low rate and after a specified amount of time the card went to the normal interest rate. People would sign up for a card, spend to the limit, get another card to pay off the first, get a third to pay off the second and keep doing that until the card companies caught on and refused to offer further credit. These people were never paying interest or finance charges, which is what it takes for the credit card companies to survive. They are betting you cannot pay all at one time, or that you will pay the minimum, which stretches your payments out to several years instead of a couple of months. Or, people would get the cards, write a check for the full amount, put the money in a savings or money market account, make interest on it and just before it converted to the normal interest rate, they paid it off and kept the interest they accummulated. Credit card companies don't like it when we make money on their cards and they make nothing. We, too, can get discrepancies corrected and that is as it should be, but the rules literally fill a book on the number of ways a credit card can destroy rather than make your fortune. Each credit check is a big red mark against you. With the car I had to buy, my rating took a hit because of the loan, but it also lost a few points because they checked my credit. One purchase knocked 14 points off my credit. However, I had a discrepancy that needed correcting. When that was done, my credit went up 44 points. It is always a good idea to check your credit at least once a month to insure nothing is impacting it without your knowledge.

Hmm.. but the whole idea of credit rating is to allow for people to check it before giving out loans or stuff on credit, so it really does not make sense why rating should be reduced if somebody checks it :) Cheers! Ram

Good move on your part, Loverbear. I, too, got rid of all credit cards because it seemed it we got one 'for emergencies' it wasn't that hard to find an emergency. Another thing not taken into account is that if you do not pay off those cards asap, the 10% you save can become the massive interest rate and finance charge you spend. Interest rates on too many cards are 19% and above and even if you get a smaller one, make one mistake, be one day late by THEIR calendar, not yours, they can jack you up to 29% in some instances. Check out spending 29% interest on 500 dollars, using the minimum payment and see how long it takes to pay it off AND how much extra you pay. It's astounding. You discover credit cards are much more profitable than mortgages on houses.

Loverbear, error in above message. The new credit card bill does make the credit card companies give 45 days notice before raising rates.

They HAVE changed their rules and some of them are excellent. They have to show the user what they will actually be paying and how long it will take to pay it off if they use the minimum payoff. For instance, if you had a loan for $1020 and made the minimum payment for 5 years, it would cost you $1,204. If you pay it off at $33 per month for three years, you save a whole dollar. They also put a Late Payment Warning. In one case I saw, it read "If we do not receive your minimum payment by the date listed above, you may have to pay a late fee up to $50.00. The actual amount of the late fee may be less." I wouldn't count on it being less if they are allowed to go as high as $50, the credit card company WILL go for that amount. They cannot raise your rate without 45 days notice now. At that point, if you don't want the increase, you can pay in full and cancel your card. Previously, if you defaulted on your Visa, Master Card could raise your interest rate. That is being stopped. So, many good things are happening, but the interest rate is still allowed to go to what almost amounts to criminal rates.

That is exactly my point the interest rates will kill you. So I rather use cash then a credit card. If I have to use a credit card then I have the money ready to pay it in one shot.

Check Bamafan's answer for just how many ways your credit is impacted. The stores get a little something if they talk you into using their credit cards. It is never your best interest they have in mind, but no one will ever tell you how it impacts your credit score. If you want to catch a mouse, you make the bait smell like peanut butter; you don't tell him the trap the peanut butter is attached to will break his neck. So it is with creditors and the prevalent credit card.

To get rid of those cards, choose the highest one and pay as much as possible on it, even if it means paying minimum on the others. When that one is paid off, pick the next highest, and keep going until they are all gone. Then cut them up or play shredder wars with them! Good luck.

There is no safe haven when someone checks your credit score. We have to be vigilant at all times. And, don't forget, there are the not so nice folks out there seeking to grab your credit info for their own purposes. Check your credit at least once a month.