The Next Looming Crisis

The Next Tsunami about to hit you is the Looming Credit Card Crisis!

Credit card companies across the board are immediately dropping risky card holders, raising interest rates on others, and lowering credit card limits and doing this all without any warning to the consumer.

Through June of this year, credit card defaults have totaled $21 Billion dollars and another $55 Billion is expected to mount before 2010!

How does this affect you? Well, it may not…provided you pay off your credit card balances monthly and carry no recurring debt. However, if you are like most Americans and maintain balances on your credit cards while making that minimum required monthly payment, you could be in for a huge shock when you next review your credit score (officially known as your FICO score).

Why? You may ask. It’s simple. About 1/3 (if not more) is derived from your debt to limit ratio. If you appear to have very high debt to limit ratios, your score will be much lower than someone that carries no recurring balances.

So, let’s pretend for a moment that you feel like your balances are relatively low compared to your limits (and you feel you have great credit) and you are out shopping for a new car or a new mortgage and apply for financing that new purchase. Your credit report is ordered and you’re informed you that due to your credit score you don’t qualify for the best interest rates that are available.

What happened? Well guess what? Without notice, your credit limits were lowered to those of your actual balances essentially freezing your available credit lines. You now appear to be “maxed-out” on your credit cards and your FICO just took a dive! The catch 22 here is that credit card companies monitor your credit report and notice what the competition is doing and to protect themselves usually follow suit with each other. Also, since your cards are now “maxed-out”, that initial teaser rate may now be raised to 18% or higher because you now seem like a higher risk of default.

There is a way to correct this if it has happened to you. Feel free to call me for a proven script that will raise your limits to what they once were but keep in mind, you may have to re-qualify for that limit by providing proof of employment and updated financial information.

I have had several clients in the last 3 weeks that have been victims of this practice but have since had their limits restored.

Cordially,


J. Michael Nash
Financial Strategist
The Michael Nash Group
1911 Rio Grande
Austin, Tx 78705
(512) 494-0300 office
(512) 494-0301 fax
(512) 731-8818 mobile

"Good, Better, Best! Never let it rest! Never let it rest until GOOD gets BETTER and better gets BEST!"