By MARY CORNATZER
Raleigh News and Observer
The past few weeks it seems as if everyone I run into has the same story: My credit card's interest rate has jumped despite a good credit history.
With a bunch of new rules set to go into place next year, the industry is trying to minimize its losses. This is also known as getting while the getting is good. The best way to do that is on the backs of good customers, those who can afford to pay annual fees and higher rates.
It might not seem fair, but the truth is, if you don't carry a balance, you shouldn't run into problems.
A Federal Reserve survey last month of senior loan officers was a bit more troubling. It showed that 60 percent had tightened standards and 65 percent had lowered credit limits.
The upshot: Unless you've got excellent credit, it's going to be hard to get a credit card or a personal loan, especially one at a rate that doesn't make your head hurt. So now is the time to keep your credit score healthy and, if it's not, improve it.
Marc Chase, who heads
MyCreditGroup.com, says the key is to know how the credit industry operates because it knows you.
"They realize people often live off their credit cards," Chase says. "You can pay it off when it's due and assume you're OK, but what they (the card companies) do is report your balance to the credit-reporting agencies, then mail your bill. While you're making sure your payment is on time, everyone else is seeing that you've maxed out your card, not that you've paid it off."
Chase says to find out when your card company sends its monthly report to the credit agencies and then send your payment before that date. (Warning: This will take some time on the phone.)
Often what's most important on your credit score is your debt-to-credit limit ratio. Chase says you should never be 20 percent over your available credit. Bill Hardekopf of Low.Cards.com, a Web site that lets you compare credit cards, says 30 percent.
You get the idea.
Other tips from Hardekopf and Chase:
Pay all your bills on time. Having a collection agency on your credit report is one of the top reasons for a bad credit score. If you're moving, make sure everyone you could possibly owe -- doctors, insurance companies, utilities -- all have a forwarding address. A reader recently sent me a horror story about a tiny lab bill that didn't make it to their new address and ballooned into a major credit disaster.
Keep your bank records clean; insufficient funds can show up on your report.
Don't just avoid late payments,
get in the habit of paying your bills -- mortgage, car payments --
before the due date.
Little fixes can save hundreds, Chase says.
A reader asked me recently "how do you negotiate" with a credit-card company? I asked Chase that question since his company makes money by charging people to do just that. He says there's no secret bullet to getting lower payments or consolidating your debt.
"It's sometimes a matter of a lot of calls," he says. "It might take 10 to 15 calls before you get to someone who can negotiate a contract. ... It could take a full day of phone calls."
Once you get the right person, Chase says to
be up front about your problem. Whatever the reason you're having trouble making the payment -- lost job, unexpected medical bills -- explain it and ask about options. See if they can knock off the interest for six months, Chase says. If they agree, and Chase says many will, you'll be sent forms to fill out. Be sure you do so in a timely manner.
What you don't want to do is call any company that advertises on late-night TV that it can improve your credit score or get you out of debt in 18 months or less. There are honest debt-relief agencies (check with your local
Better Business Bureau and get terms and guarantees in writing) and credit counselors (look for members of the
National Foundation for Credit Counseling) that you can turn to for help.
But I really don't think you should pay anyone money that you could be using to get out of debt or build your savings for something that you can do yourself with a little time and persistence.
