Credit Score News

This week’s USAToday ran a helpful story analyzing changes in credit scoring in the face of developments in this Great Recession. Highlights:

• Lenders are closing credit card accounts and lowering credit limits for millions of consumers and business owners who have never paid late. Some lenders are reporting mortgage modifications in a way that dings consumers’ scores, dealing a setback to those trying to get their finances on track.
• More lenders also are adopting a new scoring model the financial industry believes is better at predicting risk — but that could move consumers’ scores more than 20 points up or down.
• Lenders say they’re taking steps to reduce their risk in a difficult economy. Some admit they’re concerned about the impact of their actions on consumers’ credit scores but say they have no control over how scores are determined. But consumer advocates say regulators and Congress need to address lender actions that are unintentionally hurting credit scores. They say that as underwriting standards tighten, even a small change in a credit score could affect what rate consumers get on a loan — if they get one at all. Some analysts also say the fact that consumers’ credit scores can fall even if they’ve never missed a payment or exceeded their credit limits raises questions about the score’s usefulness.

If you are struggling with your debts, call us for a Credit Card Debt Counseling session before agreeing to a debt settlement proposed by your lenders.