The credit system is a scam! How to get out from high interest?

[myscorerocks]

My post is twofold. First, it really pisses me off that I've never been late on a payment and I have numerous types of loans/lines/cards and yet my score is low (hovering above 600). My problem is that I'm dealing with health issues and I've had to use up most of my credit to survive. Unfortunately, credit scores are drastically affected by utilization. What pisses me off even more are that card companies can (without notice) lower your available credit thereby screwing your score even more. How can this be legal?! I'm going to start writing my representatives, as this seems completely unfair and illegal. The credit card companies make more money on interest because they can lower my available credit which drastically drops my score?! 

Anyway, I need to figure out how to lower my interest rates until I can pay off my cards later in the year. I can't consolidate because I don't have collateral and my score is too low because of my high utilization. Essentially they're forcing some people to file for bankruptcy which I refuse to do, but at this point, all I'm doing is making the minimums on my cards and it's a ridiculous amount! I want to figure out a way to pay off without hurting my relationship with banks/card companies. Suggestions? 

[Down_2Bizness]

Unfortunately payment history is just one of several factors that impacts your score. Utilization has a large impact, so it sounds like the high utilization of your credits cards is costing you points on your score.
You may want to call your creditors and ask for a hardship arrangement to lower your interest rate while you work on paying down your balances. Also, search for the snowball method on here, this is what I am using currently to bring down my utilization.
Wish you the best, I’m sure it will turn around soon.

[myscorerocks]

Will asking for a hardship arrangement hurt my relationship with card companies? I would hate for them to lower my limit further for asking, once I'm able to start paying down my balances. Thanks!

[Anonymous]

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@myscorerockswrote:

My post is twofold. First, it really pisses me off that I've never been late on a payment and I have numerous types of loans/lines/cards and yet my score is low (hovering above 600). My problem is that I'm dealing with health issues and I've had to use up most of my credit to survive. Unfortunately, credit scores are drastically affected by utilization. What pisses me off even more are that card companies can (without notice) lower your available credit thereby screwing your score even more. How can this be legal?! I'm going to start writing my representatives, as this seems completely unfair and illegal. The credit card companies make more money on interest because they can lower my available credit which drastically drops my score?! 

Anyway, I need to figure out how to lower my interest rates until I can pay off my cards later in the year. I can't consolidate because I don't have collateral and my score is too low because of my high utilization. Essentially they're forcing some people to file for bankruptcy which I refuse to do, but at this point, all I'm doing is making the minimums on my cards and it's a ridiculous amount! I want to figure out a way to pay off without hurting my relationship with banks/card companies. Suggestions? 

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Have you heard of Dave Ramseys baby steps? That might be a really good starting point for you. Step 1 is to gather up a $1000 emergency fund. Step 2 is to list out all of your debts smallest to largest and attack the smallest first with all your energy and then move on to the next etc. You can look up more info. Its a way for you to never have to be caught in the world of credit cards and card debt again

[myscorerocks]

First, I'm not working and I'm doing everything I can (side jobs, renting out apt, selling stuff) to make the minimum payments because my credit is so important to me. There's no way I can save up 1K, but I'm going to attempt to pay off the 2 low limit cards. From what I researched tonight, hardship programs can mess with credit scores. I guess all I can do is pay the minimums and then pay off my cards when I get my upcoming settlement from a car accident. 

[myscorerocks]

Also, the only reason I'm in debt is because of a severe car accident that left me unable to work for 2 years. I'm hopeful my health will get better and I'll go back to work before I get my settlement. Thanks for the advice, but I'm not sure the snowball method or the hardship program is the way to go at this point. I hope I can survive another 6-8 months without permanently damaging my credit... 

[Anonymous]

Not sure what your medical conditions are nor your financial situation, but if you want to increase your credit score i would suggest becoming independent of your credit cards. You should always carry over a zero balance and pay in full before statement cuts. Using a high optimization makes you a risk to lenders that is why they cut your credit limit. Technically what theyre doing is not illegal, but if youd like you can re-read the agreement you signed when you opened whichever account/s youre talking about. Generally you would start with the snowball system in your case. Pay off smaller balances and then contribute the paid off accounts payments towards your next target debt ( youll be surprised how quickly this method will work ). Unfortunately you wont get anything with lower interest especially not with a score of 600. You need to raise that over 700/750 before you see better deals regarding APR / other incentives. 

[myscorerocks]

Thanks, but I'm very well aware of how credit works. I was in a very serious car accident as a passenger in a vehicle that was hit as we were stopped. Not sure if you know anything about lawsuits, but... they take FOREVER unless you accept a very low offer. I appreciate your comment, but I think we can all agree that having a zero balance is the way to go. Seems like a no-brainer to me. I'm using my credit to survive, as I've been unable to work since the accident, but that's about to change. It's also kinda obvious that lenders will consider me at risk with a score hovering over 600. I think that credit card companies lowering limits which then hurt the consumer after they use the credit offered to them is bs and should be illegal. It's up to all of us to call banks out on this shady practice. Some cards only had 1K limits and I had never paid late, so dropping the limit on a few hundred dollars and increasing the card utilization thereby decreasing a person's score is shady AF. I'm sure paying off any cards will help, but with NO regular income and NO job, it's a little tougher to do. I need to focus on paying my minimums and keeping the cash I have. I just wish there was a way to tackle high-interest rates without hurting my credit in the process. I guess only banks are allowed to get handouts and bailouts. I'm choosing not to go bankrupt, but I would certainly qualify. I'm lucky I've been able to manage my minimums without being late. Also, there are plenty of 0% offers out there with scores above 650 (I know because I've had them) but they're usually offered when one doesn't need them. I have no problem with paying what's owed, but after the 0% deal was over I ended up with interest rates around 15-25%. I never expected I would still be injured or that the settlement would take this long. I do appreciate that you took the time to respond. I'm not the only one, bad things happen to people who have done the right thing in the past but were forced to take on debt because of unfortunate circumstances beyond their control. I don't want this to affect me for the next 7-10 years, so I'm trying to evaluate my current options. 

[Anonymous]

As far as your Zero % APR options those are usually only on cards that offer promotions for balance transfers. Chase Slate is easy to be approved for, and a good option for repayment. When you mentioned lower APR i thought you meant you were trying to get a lower set APR not a balance transfer 0% APR which is why i said youd need good - excellent credit in order to qualify. Ive been through my fair share of the lawsuit side of things. I went through probably something very similair to what youre going through right now. Was rear ended by a drunk driver at 75 mph when i was waiting at a red light. Had surgery on my neck and couldnt work for 3 years. Disability whether short term or long term and you can also ask your lawfirm for an advance to help pay your bills if theyre confident you will be getting a large settlement they will lend you the money 9/10 times. A little word of advice since youre talking settlements. Dont use their financial advisor and dont put the money into an annuity unless you can wait the extended time period to pull funds. Take the money and use your own financial advisor and put the money into an account where youll be able to use it if you need to. Wish you the best with recovery i know thats the longest road of them all. 

[Anonymous]

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@myscorerockswrote:

 I'm choosing not to go bankrupt, but I would certainly qualify. 

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Credit card companies lower their risk by lowering the borrowers credit limit.

They can see your whole credit profile and if your balances are growing and minimum

payments are happening, then they want to mimimize their risk of you owing them even more!

That is law on their side.

Law for our side is your quote above. Bankruptcy.

a legal way to screw them out of THEIR money that YOU borrowed.

Higher risk, higher APR, and also lower limits. all makes sense.

I am sure some of your cards offered insurance if u lost your job or were 

not able to make payments. Also could ask about reduced apr among other things.

I choose no to these benefits, but they are an option on many cards.

If you have a settlement coming, that is great. Accidents happen and 

insurance/lawsuits are there for a reason. 

Good Luck!