Re: myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules
03-02-2010 08:45 AM
Introductory or teaser rates must last for a minimum of 6 months according to the act. The 12 month rule applies only to the standard rates on the card.
In response to another post, where concerns about closing an account hurting a credit score: Since the account remains on the report for an extended period of time, the age factor on the credit scoring models is not affected, HOWEVER, the debt utilization ratio can increase which can result in a dramatic drop in score. For people that are carrying balances, the total of the balances divided by the total of the credit limits on all of the cards gives you your debt utilization ratio. A high ratio can result in a lower score. By closing an account, you have not lowered the total of your balances, however you have lowered the credit available to you. This means the ratio will increase. As I tell all of my clients, the best way to keep a score high is to keep your credit card balances at zero.