Credit Card Rules

Paying on time and staying within your credit limit may not be enough to maintain your interest rate and staying in the good graces of you credit card companies.

At this point in time the aggrement you had can change at anytime for any reason. The economy,marketing conditions and business strategies as reasons a consumers rate might change.

Some lenders can reduce a credit card limits just because there is late payments,decline in credit score,and balances that are to close to the credit limit.

Your borrowing power is restricted by your credit card being lowered. For example if your have $1,000 credit line and you charge $ 400.00 if you creditors decide to lower your credit limits to 500.00 suddenly without spending another dime you have used 80% percent of your available credit.

FICO score what is it ?

FICO stands for Fair Isaac Credit Operations. Now what does this mean to you ? It determines you credit score which in turns allows you to get credit at the interest rate set by the creditor.


A score can range from 0-900.Some places even say 0-850 . The most acceptable score is above 700.If it falls below 700 you may still get the credit but you will pay a higher interest rate.

How are your scores determined ? They are grouped into 5 categories. Each category make up a percentage of your score.

35 % Payment History
30% Amounts Owed
15% Length of Credit History
10 % Types of Credit Used
10 % New Credit

100 = Your Credit Score

DO you know your debt to ratio ?

Many people do not know what debt to ratio means. Debt to ratio means the total monthly payments divided by the total monthly gross income.If the ratio is over 50 % the banks may not approve your loan.


Remember in you calculations you must include the following:

Gross Monthly Income

Salary
Child support
Bonuses
Alimony
Commissions
Spouse Salary
Other
Child Support
Total Income



Monthly Fixed Income


Rent or Mortgage
Automobile
Automobile
Alimony
Child Support
Bank Installments
Other


Before taxes Proposed Loan Payment
Total Payments


Evaluate your situation abnd see what ways you can decrease the amounts.You may even have to have a home based business to help with the income.


So what do you do ? Contact the lending institution before apply for any credit to determine what their debt to ratio polices are.

How much is too many credit cards ?

You know you have too many credit cards when you have a credit card for each department store.It definitely can cause you to have a low credit score.People don't realize that by having too many credit cards can definitely affect your credit score.I know it is easy to get them once you have a high credit score but it becomes lowere credit score easily.

You can not have your credit limits to the max or even half way. For example if you have a credit limit of $1,000 and you are at 50% or $500.00 of credit usage or more then you are harming your credit score. That will increase your debt to ratio amount. If you have it on one or all your credit cards you are on the wrong path to financial freedom.

You need to start looking at you credit limits, interest rates and policies of each credit card to see what you can do . It will take time and require persistance .I personally have those matters taken care of for me. I am a Certified Credit Counselor who knows what it takes to get that straightened out.