The Credit Game - Changing the rules
Two items of interest in the news this past week. Each viewed separately is a cause for concern, taken together they are a train wreck for consumers.
On Thursday, CNBC reported that Fair Issac - the company which determines your FICO score - would be changing the model it uses. The changes will place a heavier weight on total debt - not just the percentage of debt to available credit - all at a time when outstanding consumer debt in the U.S. is at its highest level ever at $13.95 trillion. This change could affect as many as 110 million consumers.
Also on Thursday, Bloomberg reported that credit card providers are raising the limits on credit cards, even if borrowers do not request it. The article highlights the fact that banks boost limits more often for subprime and near-prime clients - those who are already struggling.
This means, that while credit card companies are increasing potential debt levels for consumers without them asking, credit scores will now look unfavorably on these potentially higher debt levels. This is a recipe for disaster.
Does having greater levels of debt help you with any of the dreams you have for yourself, your family or your future?
If you answered no to this question, then there are a couple of things you can do.
First, check your card statements to determine if your available credit has been raised. Then call your provider(s) and tell them to remove the increased credit or to flag your account so that unrequested limit increases are blocked. If they tell you they can't, then it is time to look for a new provider.
Second, develop a plan that focuses on reducing your debt. Credit card companies and Fair Issac - and the games they play - become much less relevant when you do not owe this type of debt.
If you struggle with where to start, you can request a complimentary 30 minute review
to discuss your situation.
The power to change your future is within you.