7 tips for surviving the credit crunch |
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Charging more than a third of your credit limit could "raise the eyebrows" of the credit card company, notes
Hardekopf. Keeping balances below 30 percent of the credit limit -- even if you pay your balances off every month -- will help
you stay under the radar.
4. Don't neglect other bills
Utility companies and other service
providers sometimes report payment information to the credit-reporting companies, says Steven Katz, director of consumer
communications for TransUnion's TrueCredit.com. An unpaid medical bill, for example, could wind up as a derogatory item on your
credit report, bringing down your credit score.
5. Check your credit reports
Make sure your credit reports contain
accurate information, because inaccurate, derogatory marks could damage your credit scores. Pull a different report every four
months from one of the three major credit-reporting agencies by going to www.annualcreditreport.com. You're entitled to a free
credit report from each bureau every 12 months.
6. Plan ahead if missing a payment
If you know you're going to miss
a payment, don't wait for a collector to call about the delinquent debt. Contact your issuer in advance to see if you can work
out a payment plan.
Hardekopf advises calling your issuer to explain why you're going to miss a payment. Emphasize your good payment
history and say that while you don't want to see your interest rate skyrocket, you aren't trying to skip out on the bill. Ask if
a payment plan could be arranged.
7. Read 'junk mail' from your issuers
People who don't open correspondence
from their issuers may get rude surprises. According to the Truth in Lending Act, an issuer has to give only
15 days' advance written notice before
taking an adverse action -- an undesirable change to the terms of your card agreement.
Your acceptance of the terms change could come in the form of continued use of the card -- known as "debit ratification"
-- or by failing to notify the creditor of your disapproval. Read the notice carefully to find out if you can opt out of the new
terms. Your only choice might be to close the account if you refuse the changes.
Ignorance of a terms change could have disastrous effects. You could be one new furniture set away from exceeding
your limit because you didn't realize it had been reduced. Going over your limit could wreck your credit score, result in an
over-the-limit fee, and possibly, an increased APR if done a second time.
Read anything that comes from your issuer, and if you pay your bills online, set up e-mail alerts that will notify
you when you get close to your credit limit.
Dealing with a rate hike
If you have a good payment history with an issuer and the company
jacks your rate, call your issuer and reference competitive offers
and state your willingness to walk if your rate doesn't come down.
 Watch
video on reducing your rate.
Call back in a month if your request doesn't work,
advises Hardekopf. If nothing comes of your negotiations, try to
pay off the card or consider doing a balance
transfer to a better card. Limit your balance transfers, though
-- too many could create the impression that you're a credit risk.
If escalating payments feel overwhelming, find out if you need
professional help.
Impact of economy on your credit score: none
"In the eyes of FICO, there is no credit crunch," says Ulzheimer.
FICO scores measure credit risk regardless of what's going on with
the economy. If you maintain your credit scores and performance
with each issuer, the terms of your credit card contracts shouldn't
change for the worse. If they do, shop around for a new card.
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