Some who carry debt manage to maintain high credit scores. They never miss a payment or never send it in late and they struggle yet are able to make debt payments enough to keep their debt-to-credit-limit in check. But things are changing as Kathy Chu at USA Today writes about new trends in credit scores.
- Lenders are aggressively closing credit accounts and reducing credit limits.
- Card holders‘ credit scores can decrease as a result of reduced total credit limits, causing other lenders to tighten up the terms of credit for the particular card holder.
- Auto insurance rates are affected by credit scores, and for many, a car is the preferred mode of transportation.
- The credit scores of job applicants are being checked as a part of the interview process.
- Median credit scores are being strongly impacted by the areas in the country with the highest foreclosure rates.
- Even with an average or above-average credit score, lenders across the board are tightening up their criteria for getting a variety of loans and the best credit terms.
In short, the economy is causing banks to reassess the credit risk of account holders, and someone with debt can get caught in a cycle of credit score reduction. To guard against this scenario, a clear plan to reduce and eliminate debt is key. Anyone with debt should understand the terms of their debt accounts, organize the debt information, set priorities for debt payment contributions, make a budget, and execute and monitor their progress towards debt elimination.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
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