Thursday, November 27, 2008

TAKING YOUR CREDIT BACK

It's pretty obvious that we are in some kind/form of recession. I just didn't think it would come to me, or come to me so soon.

You see, several weeks ago, I received a letter from my mortgage company telling me that my home equity line of credit no longer exists. The letter continued, stating something about if I can prove my home is worth my loan value, then they would consider returning my line of credit.
Interesting.

Then last week, I received a letter from American Express telling me that they were going to reduce my credit line $15,000.00.

Then this week, I recveived my AT&T bill stating that my interest rate was going to go up from 9.9% to 24.99%.

All of this happened even though I have maintained an unblemished credit report. So, the way I see it, the financial institutions are taking credit back from the consumers in order to stay in the black (or to minimize the red).

I do understand what lending institutions are going through. I have been lending money on Prosper.com for the past couple of years. In those years, I have gambled on loaning money to all credit grades. Granted, the lower the credit rating, the higher the interest I would receive, but that's because of the higher default rate. After earning $584.24 in interest, I have lost $541.35 in defaulted loans! That does still leave me in the black, but by only $42.89! If I were a financial institution, it would not be enough of a return to stay in business. Several months ago I quit lending to credit grades other than AA, A, B and I have not lost a penny on those loans! Guess what? If you don't have a credit score worthy of a B or better, than you will probably NEVER get a bank loan again!!!

So, having good credit is more important than ever before. If you want to check your credit reports for free (no gimicks), log on to http://www.annualcreditreport.com/. I don't believe you can get your credit SCORE for free, but you can get your credit REPORT for free.

Well, sit back and enjoy the ride. It's going to be a bumpy one!!!
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