The credit reporting companies dinged my credit score for me trying cover myself

[NNN0LHI]

I have pretty much always had the same two credit cards for 20+ years. One to use and another put away for emergencies in case I lost or otherwise had compromised the one I use and needed to cancel it.

Well feck when I heard about all the bank closings and such I figured I had better have a few more cards in case the banks from the holders of the two credit cards folded I would have some back up. Makes sense doesn't it?

So the fecking credit reporting agencies lowered my FICA score for opening 5 new credit card accounts in the past two years. I don't keep a balance on any of them.

Now this isn't that big of a deal for me because I don't need credit right now but this could hurt someone else on the edge or someone needing a new house or car loan.

I think this is bullshit. Scare everyone into applying for credit cards they might need if their bank folds up and then ding their credit rating for doing the natural thing.

Maybe you guys are right? Perhaps these companies are corrupt?

Don

[marmar]

1. Credit ratings are going to become as useful as Confederate money in the near future.....

..... the system is completely bollocksed up.

[Occulus]

12. One can hope.

I personally have wanted to do away with that entire fucked-up system pretty much since I learned how it worked years and years ago. Now that employers and landlords are using one's credit score to determine whether you can get a job or a roof over your head, at the same time when medical bills push half the people who file it into bankruptcy and the rest of us are only one major surgery away from a ruined credit score- well.

It's time, and past time, for the bureaus to close up shop and be replaced with a new system that cannot be used against any individual so far as essentials are concerned (rent, jobs, heating in winter, etc.). As to what that solution may be, I have no idea, but it should be clear to everyone at this point that the credit score has been allowed to become too important.

[WilmywoodNCparalegal]

2. The whole credit bureau/reporting thing irks me

Why should you pay someone to find out about whether this 'someone' keeps accurate information about you, knowing full well that this 'someone' actually makes money not by maintaining accurate information, but keeping error-ridden records so you have to shell out more money (by means of stamps, letters, certified mail, etc.) to get issues rectified about information that is, technically, your own.

I have yet to resolve an ongoing battle that's being going on for 10 years about the spelling of my name. I sent in certified copies of my birth certificate, copies of my passport (which is in several languages, including English) and so on. Yet, I get letters back saying that my credit file has my correct spelling, thus implying I don't know how to f!@$ing write my own name???!!!!????

[Gormy Cuss]

8. +1

Since credit bureau reports are considered the gold standard for pre-employment, insurance, and credit the full burden should be on them to prove that the report is accurate. Your name story is an over-the-top example of how badly we need reform in that regard. The problem with credit report is that they aren't accurate. The problem with credit scoring is that it's based on behavior modeling and should only be a tool in the box used by lenders (and never by employers or insurers IMHO)not the key determinant.

I'd love to see credit bureaus assessed a fee for each time they use a Social Security number. Fair's fair. That numbering scheme was developed and is maintained at considerable cost to the government. It was not intended as a individual identifier in credit reports.

Oh and your name is spelled WildwoodNHparalegal. That's what our files say and we're always right.;)

[xxqqqzme]

3. My brother, who has a sterling credit rating,

was denied a home loan once because the bank said he had 'too many' credit cards. He had 5 w/ no balances on any of them.

[prolesunited]

5. Yes, but he could go insane at any moment

and max out all of them at a moment's notice despite all evidence to the contrary. :eyes:

[xxqqqzme]

34. Yep, that was the bank's reason.

My brother who still has the first dollar he ever earned - not that there's anything wrong w/ that. He can be generous and never fails to pick up a check but man can he squeeze a Jackson!

[NNN0LHI]

4. Here is the motherscratchers exact wording

Negative Factors

Here are the top factors that lower your score:



You opened 5 account(s) in the past 24 months.

This lowers your score. Having accounts listed in your credit reports is a positive factor because the payment history of these accounts shows lenders how well you pay your bills. Therefore, having too few accounts may be considered negative. However, having too many accounts or adding new accounts too quickly may also be considered negative because lenders worry that you are spending (or preparing to spend) beyond your means, even if you have never been late with any payments. Note that closing accounts will not change this. Also, if you do not currently have credit, getting your first few credit cards may be difficult and may involve high fees, high interest rates, and low credit limits. Note that accounts from personal finance companies (which specialize in lending to people with credit problems) may be considered negative.

[Xithras]

6. You think THAT'S bad? Try this!

About a year and a half ago when the credit crunch started, I was "reevaluated" by one of my credit card companies, who then slashed a $25,000 credit line with no balance to only $1,000. Remember, a big part of your credit score is comprised of a ratio of debt vs. available credit. When my available credit dropped, my debt ratio went up. Which triggered two more cards to slash my lines, which drove the ratio up even higher, which caused my bank to suspend my unsecured lines of credit, which drove the ratio up even higher, which then caused several credit card companies to CANCEL my cards outright (Home Depot & JC Penney). That hit my score even harder.

My credit score went from 810 to 601 in a four month period, and I NEVER missed a SINGLE payment on anything! Not even a late payment! The interest rates on my remaining credit lines skyrocketed, and for the first time in 15 years I found myself turned DOWN for a credit application for a business loan.

And all because one credit card company looked at a credit line that had existed since 1994 without a single late payment and decided that I was too high "risk" to continue offering credit to. Thank you veryfuckingmuch Bank of America!!

[NNN0LHI]

7. That is unbelievable

Your story proves how screwed up this system is.

Thanks for sharing.

Don

[ladywnch]

11. Ditto!!!!! BOA did the same thing to me.....same circumstances

I don't even know what my new credit score is (thanks to Chase). I used to be able to get it from my Providian/WAMu website. Now since Chase took it over they dropped the service. I did get my annual credit report before this all happened and there was NOTHING negative on it. Now this!

And now they have the friggin commercials talking about your credit scores and how we can control our scores......BASTARDS!

[ejpoeta]

14. that's insane!! the way they determine credit worthy is assinine!!

i mean really!! if you have never been late with a payment and your debt/income ratio is altered through no fault of your own.... that is crap.

[Xithras]

19. Yes, though I did have 11 credit cards at the time.

My wife hates using cash, and is a big believer in the whole concept of using store charge cards for discounts, and then paying them off every month before the interest kicks in. We had 11 cards, with a combined credit availability of about $75,000, and a whopping $1,500 in outstanding balances between all of them combined. We had accounts at virtually every store in our area, but because we had the lines so long, the large number of lines wasn't adversely impacting my score.

BofA decided it was too much, even though we'd been in this situation for many years without difficulty or late payment (seriously, I had 11 credit/charge cards and my last late payment was in 1997). When I called them to complain, the rep actually had the audacity to state that I was "probably" going to run those cards all up and that they didn't think I could pay it back. After a decade of good spending habits and no late payments, they decided that I was statistically likely to rack up my debt and walk away. I don't know who their risk modeller is, but it was obviously the same guy who decided that 110% no-doc I/O mortgages were a fine gamble for the bank to take.

I have four cards now, and only about $3,000 in available credit between them. I actually do have financial problems now, but those were indirectly triggered by the banks own actions...the slash to my credit rating caused my credit union to decline a business loan, which helped usher my consulting company out of business, which slashed my income by about 70%, which has caused me to allow the mortage on a rental home I own to go overdue. My credit score is in the 500's at this point.

[Occulus]

15. Your story is why I just don't care if my payments are late any more.

Paying on time obviously doesn't mean jack shit any more. Why should i stress myself, leave myself without money to pay for groceries or god forbid a six pack of beer? Why should I give a shit any more? They're going to find an excuse to lower my rating, whether I'm "responsible" or not.

Why play their game?

[ejpoeta]

9. i believe that has to do with your credit to debt ratio? maybe.

i don't know, because the 'finanical' folks they keep having on the today show and elsewhere keep saying how important it is to have available credit that you don't use. I think the system is messed up! but, that's just me. i don't WANT credit cards. and i don't need them. they want me to have to have them.

[NNN0LHI]

10. I think that was in the list of Positive Factors? Is this what you are talking about?

Positive Factors


Here are the top factors that raise your score:


You have never been late with your payments, and no collection accounts or negative public records are listed in your credit report.

This raises your score. Any history of late payments (including missed payments and derogatory payment statuses) is a negative factor. No reported history of payments on any account is also negative because lenders cannot tell whether you paid on time or were late. Some cases of late payments are worse than others. If you have not been late with any payments recently, lenders may think you are responsible and do not (or will no longer) miss payments. Lenders realize that many people occasionally pay late. Therefore, being late with a single payment is typically not as harmful as being late with two or more consecutive payments. Similarly, being late on many accounts is typically worse than being late on just one. Also, lenders may view late payments as a more serious problem if you have collection accounts or negative public records such as bankruptcies or court judgments. These types of credit records indicate a pattern of credit problems. Finally, it may not be as harmful to be late with your payments if the past due amounts are small, because lenders stand to lose less money if they remain unpaid.


You owe debt on 3% of your revolving accounts.

This raises your score. High balances are a negative factor because lenders worry that you are living beyond your means and may not be able to repay them. This is particularly true for credit cards. For installment loans such as mortgages and auto loans, lenders often use the proportion of the loan that is still unpaid to judge your ability to take on new debt. If very little of your installment loan balances have been repaid, lenders may not give you more credit that could add to your debt. No matter how high your income, having a lot of debt may lower your credit scores because lenders know that adverse changes in your employment and life events such as divorce or illness may make it harder to pay your bills. Low balances, on the other hand, are a positive factor because lenders do not stand to lose as much if you become unable to repay them. However, not using your credit accounts at all may be considered a negative factor, because it does not provide lenders with information about how you typically use credit and repay your debts.

[ejpoeta]

13. just applying for multiple cards can ding your credit score.

or inquiries which i guess are associated with applying...

[Statistical]

16. Good news, bad news

Bad News:
Inquiries and new accounts are considered risky.
Your score goes down.

Good News:
Score recovers quickly. After account is older than 6 mo it has a minimal effect on score.
After 13 months an inquiry has no effect at all on your score. Inquiries stay on report for 24 months but FICO only factors in those in last 12 months.

total of 7 CC is a lot though. May be a small hit to your score but essentially anything >700 FICO is golden. Very little difference between a FICO 720 and FICO 800 in terms of rates, credit offered, etc.

[NNN0LHI]

22. Thank you very much for taking the time to explain that

I learn something new every day here.

Don

[pnutbutr]

17. :rofl:

hahahahahaha!!! Not understanding how credit works and accusing them of corruption. :rofl:

[Ignis]

27. Enjoy your schadenfreude.

Here's hoping nothing bad ever happens to you! :hi:

[pnutbutr]

18. serious answer

when you open a new line of credit you have more credit with the same income. Your credit to income ratio goes up. There is a point where you can have too much credit and it will negatively affect your credit score which is exactly what has happened to you. Opening 5 new credit cards. :rofl: Sorry, I couldn't help myself there. Cancel some of the cards and wait a few years for your credit score to go back up.

[dionysus]

20. here's how it works, and it is BS tho...

when you open or try to open a line of credit, get a car loan/mortgage, ect, they do an "inquiry" to your account. If you have a bunch at once, it will temporarily ding your score. How much did they get you for, if you don't mind?

[NNN0LHI]

21. FICO went from 827 to 794

As I said it doesn't really hurt me but it sure could hurt others.

I can't remember it ever being below 800.

Don

[dionysus]

23. wow... it should rebound fairly quickly. i got hit too. i charged 100 bux on my gap card at xmas,

and because i only use the card once or twice a year, i got hit for "re-opening a dormant line of credit"

[Statistical]

24. Another factor

the further you are from the mean = FICO 680 the more a single event affects your score.

Essentially the higher you are up the bigger hit you are going to take.

[Dreamer Tatum]

25. That makes perfect sense

People who rapidly acquire credit are higher credit risks than people who don't rapidly acquire credit.

And the worst credit risks of all ALWAYS seek credit.

[dionysus]

26. yeah but you can rack up inquiries if you're mortgage shopping, not getting more credit cards.

[Dreamer Tatum]

28. No, those are called soft inquiries, not hard ones

And they don't ding your score at all. Hard ones are when you apply for credit. Soft ones are when you try to qualify for a loanof some kind.

[dionysus]

29. ah, thanks

[Statistical]

30. That is how it is suppose to work but not always.

When we shopped for a loan we got hit 9 times looking at 4 lenders. All hard inquiries. My #1 negative factor was "seeking credit an abnormally high amount of times. blah blah blah your 9 recent inquiries indicate blah blah blah"

turns out not only did the mortgage broker do a hard not soft but so did two different title companies and the broker ended up giving data to pull inquiry (rather than the scores) to 4 lenders on top of the other lenders we applied to.

I tried contesting the inquiries but it is useless. The credit bureaus pretty much don't care about fixing inquiries because they are time sensitive. They spin you around and do nothing.

Luckily I learned that inquiry dings recover quickly. About 9 months later my credit score was back where it was.

So despite it "suppose to work that way" I know first hand often it is done wrong and you have little to no recourse.

Refinancing my mortgage (no cash out being responsible) to lower interest paid and thus improve cashflow = less risk ended up costing my 80 FICO points for 9 months.

The system is broken. You should be able to collect $100 for each wrong item in your report. If you report wrong info and it isn't fixed it should be $1000 for each time you re-report it. If denied credit or employment or paying a higher interest rate as a result of wrong info you should be able to recover 100% damages + 500% punitive damages.

Of course none of that will ever happen.

[Dreamer Tatum]

31. As someone who has worked with all three bureaus

I can tell you that they're fanatical about data correctness and integrity. The vast majority of errors I've seen are in the interface between lender and bureau, and yes, it is plausible that softs get coded as hards. I know it's very popular to think that bureaus are out to screw consumers, but I can promise you that they couldn't give a crap about who has what credit score. They just want the data to be correct. It's cheaper to invest in clean data than it is to hire people to answer phones from irate people.

[Statistical]

32. For most things I agree but not for inquiries

They simply do not care about inquiries because
1) score hit is minimal
2) the "problem" goes away quickly on its own.

One lady from Transunion requested that I some sort of documentation proving that I didn't authorize the inquiry.

Prove a negative? Seriously? I asked them to prove I did authorize it by showing a copy of the credit app and my signature along with evidence that the request was used for CREDIT not for verification of identity.

20 days later they advised me that the "lender" (once again this is a title company who hasn't lent a dollar to me or anyone else) provided sufficient proof and the inquiry would stand.

I asked for copy and was delayed 60 days. By then my score had improved. I asked again and was told no proof existed and once again they asked me for proof that I didn't make the request. WTF?

Finally I gave up.

Reading on the myfico forums I learned this is standard operating procedure for dealing with contesting inquiries. They simply run you around into a loop until time takes car of the problem.

The wrong inquiries are STILL on my credit report but are now 14 months old so have no effect on my score. Who is going to keep fighting to get info removed that neither helps nor hurts their score?

[Trekologer]

33. This reminds me...

I have to send me "if you don't fix it NOW I sue you" letter to Experian.

I had a credit card I opened while in college that I closed two years ago (high interest rate and no perks). Due to a billing error when it was closed, it was reported to the three reporting agencies that I was delinquent. It took until February of this year to get them to admit the error but I have it in writing that I was never late. Credit card company says they reported the update to the reporting agencies.

Two months later the report is not changed. So I contested the entry, in writing and via certified mail, that they were reporting wrong information and provided a copy of the letter stating the credit report data was wrong. TransUnion fixed it right away (I got the confirmation of the correction in the mail the same day I got the return receipt). Equifax fixed it within 2 weeks. Experian sent me a BS response that they won't investigate unless I complete a form "for security verification" (including fine print agreeing to limit of their liability and binding arbitration).

Next round is with Amex to get them to fix the digs they gave me based on the incorrect credit report data...