What You Don't Know Can Be Hurt By Your Credit Card Company

From USA Today:

Apparently in this credit-strapped society, credit card companies are taking it into their own hands to make sure that if you default on your cards, you default on a lower amount.

An excerpt from the article:

"Here's how that happens: Let's say a cardholder has a credit limit of $10,000 and a balance on the card of $4,000. The card company worries that large balance may increase the prospects for default, so it lowers the credit line to $5,000."

But in doing that, it completely changes what is known as the credit utilization rate, raising it from 40% to 80%. That is then factored into the calculation of one's so-called FICO credit score, which measures creditworthiness, according to Craig Watts, a spokesman for FICO-creator Fair Isaac Corp."

Bottom line in my mind is to eliminate the credit card debt and never go there again. They have no concern for the effects their actions have on you. Remember, the borrower is slave to the lender. Prov. 22:7

Declaring Bankruptcy Can Improve Your Credit Score

According to smartmoney.com filing bankruptcy can actually increase your credit score. Review the article here.

There are a number of things that can adversely affect your credit score. This includes Bankruptcy. However, Bankruptcy can actually clear up some of your credit. This is because 1) many, if not all, of your debts will be discharged, so you will no longer have debt and other obligations ahead of the creditor checking your credit report; 2) once you have filed Bankruptcy, there are set amounts of time before you can file again, and therefore any credit your potential lender offers you is relatively safe from Bankruptcy; and 3) taking action, even Bankruptcy, shows you are doing something to improve your credit standing.