Comments on: A Life Without Debt: Not Immune From The Credit Crisis

By: John

John — Thu, 12 Nov 2009 15:53:15 +0000

@whiteeyebrows: The item you are missing is that one part of the FICO score is age of accounts. If a old card is dropped the average age of accounts is affected. If there are only a few card this average can be hit dramatically. You are correct the utilization is not affected but other items are. I try to ’stroke’ all my cards every year even with a small charge then pay it off even before I get the bill to keep my accounts active. The card companies do get a small fee for every purchase in addition to the interest they charge. A card that is out there not being used is an expense as well as a liability.

By: WhiteEyebrows

WhiteEyebrows — Fri, 06 Nov 2009 13:41:29 +0000

Contrary to popular belief, if you DO NOT CARRY A BALANCE on your credit cards, you do not get a credit score ding when your credit limit is dropped. Why?

Because the CC companies are looking at the ratio of available credit to used credit. If you have an available credit ratio of 0/10,000, your credit ratio is 0. if you have 0/300, you’re credit ratio is still 0. Ratio unchanged = credit score unchanged.

If you have outstanding balances, then you get screwed on this ratio…

By: Honour

Honour — Fri, 06 Nov 2009 13:22:38 +0000

I figure these shenanigans are affecting the staff at insurance agencies and possible future employers in the same way it affects/lowers my score. FICO is just a rating company that’s gotten too full of itself. Who trusts it’s ratings now after the fiasco we’ve just witnessed.

I too choose CC for rewards that I use. In the not-to-distant future, they will be pleading for our business once again, as they need the merchant fees and the pendulum has swung to far the other way as we over-react.

By: Financial Samurai

Financial Samurai — Thu, 05 Nov 2009 01:47:01 +0000

That’s a pretty shocking cut.

I say screw them, and just get another one. It’s annoying, but they don’t deserve your business!

By: Minny

Minny — Wed, 04 Nov 2009 18:24:04 +0000

In the UK the credit card company has a liability that protects the user. So, when we bought a bed from a company that went bust, because we paid with our credit card, we got our money back from them.

Because of this we use the card to buy items over £100 which is the magic figure. We have a direct debit to pay anything owing on the credit card every month. This means we pay no charges, get the protection and keep our rating.

By: Heibi

Heibi — Wed, 04 Nov 2009 17:58:33 +0000

I agree with bob. I think you are stressing out too much on minor dings to your credit score, that aren’t going to affect you anyway.

By: Credit Card Chaser

Credit Card Chaser — Wed, 04 Nov 2009 07:23:41 +0000

Yep, I actually had the exact same thing happen to me just a month or so ago. I ended up applying for another rewards credit card which was even better (the Costco True Earnings American Express) so that was nice but it was still very annoying to get that letter especially because I have close to perfect credit.

By: Steven

Steven — Wed, 04 Nov 2009 05:01:19 +0000

I struggled with credit dards during my college years and when I met my future wife she was struggling with them as well. Since then we have given them up and gone to a two debit card system.

One card is with a financial firm where we hold all the emergency cash and savings and the other has the monthly expenses plus $1000 float we can adjust online. We never went back to credit cards but kind of use this system in the same way.

I know we lose out on the credit history and rewards systems, but enjoy 800+ credit rating and have very little fear of our scores going lower or someone lowering the available balance.

And while I hate the idea of using the larger card unsecured online – in an emergency we could use a cell to transfer the needed funds in a matter of seconds.

Just some food for thought.

By: Joan

Joan — Tue, 03 Nov 2009 16:17:24 +0000

Last year a CC company sent notice that my card was cancelled, some weeks _after_ that cancellation took effect! I have an oil company card that I have heard is probably cancelled(!), but they have not sent notice. I read people are finding out this oil company card account is closed when they try to pay for gasoline. I try to use my third back up card once a month to keep it active.

By: Bob

Bob — Tue, 03 Nov 2009 15:06:44 +0000

the entire problem with credit is that we have it and don’t need it. Why be so worried about your credit score? If people were as worried about their health as they are their credit scores we would not have a health crisis today. Ask the millions of people who for whatever reason during this recession lost credit worthiness- they feel better and are getting on with their lives. Almost 1 billion Chinese live without it and their economy is growing. Imaging that.