@Anonymous wrote:
So I have been trying to pay down my balances lately. Recently I have had three seperate credit limit to just over my current balance.
This lowers my credit score, which raises my interest rates and makes it harder to pay off my balances!
I have no other things that would cause this! No late payments, no over limit charges, no defaults of any kind.
Can I fight this? Is it legal? What can I do to stop it other than pay off my balances in full - which is not remotely possible at this time?
GPeters
If you have only lately attempted to pay down your balances, that is most likely the risky behavior that brought on the Adverse Action. Carrying (revolving) balances for long periods of time is probably what got you targeted for credit limit decreases and interest rate hikes. Your creditors are in "collection" mode. they are trying to collect as much money as possible while keeping you from running up more debt. That is the primary reason for chasing your balances.
Additionally they don't want you borrowing more money elsewhere to make ends meet or to pay down your existing balances. That is one reason they don't mind trashing your credit scores.
They can do this and it is legal. In fact the new "reform" laws going into effect next year gives them the excuse to stick it to the consumer in such a manner.
Congress got together with the big banks and enacted rate "price fixing" legislation. The new law prohibits them from raising interest rates on balances such as yours, even if you should actually become less creditworthy while being in debt to your creditors. This feature of the new law allows the big banks to raise rates and lower credit limits without fear that smaller banks and credit unions will compete for customers by offering lower rates. No lender will be able to raise interest rates on existing balances after July of next year. All lenders, will therefore have to levy unnecessarily high (permanent) interest rates whether they want to or not.
The competition will take place by offering temporary lower rates for a specific time frame. Needless to say people who revolve balances for longer than 6 months will be paying very high interest rates with no way to transfer the debt elsewhere.
You are just one of the first who has been bitten by the phenomenon. The good news is that your lenders might be willing to offer you a short term interest rate reduction if you ask. Make no mistake about it. It is definitely time to pay down the balances as fast as you can. The situation is only going to get worse. The only defense is to not have any revolving debt. As soon as your credit scores recover enough, an installment loan to pay off all remaining revolving debt might be the way to go.
Needless to say all new purchases should be made with cash. Any purchases made by credit card carry an interest rate surcharge.
Message Edited by CreditAble on 03-24-2009 03:06 PM
