myFICO Insider's Guide to 2010 credit card reform and new FHA mortgage rules

[Anonymous]

Thank you Barry!

Question: Does this new credit card law applies for transactions made in 2009? For example if I was late for 30 days or less in 2009 and the credit card company raised my interest rate, should they now bring my interest down as I was paying on time for more than 6 months after that late payment?

[Anonymous]

Oscar, good question, I'm guessing the answer is no though

[Anonymous]

I read the .pdf, thanks for that.  I'm still a bit confused on what the approval process will be for new credit cards starting on feb. 22.  Will banks be required to request financial documentation such as paystubs and/or tax returns from you in order to approve a new card, or will that be optional?

[Anonymous]

Thanks Barry, very informative. It explains why one of my credit cards (Chase Visa) increase their APR  rate to 29.9% as of February. Probably before the credit card reform went into effect and to make up for there lost in overdraft fees . I personally transfer that credit card to a debt consolidation program and what disgusted me the most was that Chase agree to lower the interest rate to 2% with the consolidation program.  However, I rather my credit score take a hit then give Chase all my money! I have to say, I've learned a whole lot about credit cards the pass couple of years and made a promise to myself to keep only one credit card and only use it for emergency purpose only!!  

Thanks Europa  )

[Anonymous]

Won't these new credit rules eventually result in lower scores for many?  If banks jack up the rates and/or impose annual fees, many of us would close those accounts (either right away or after paying off the balance).  And then we would lose credit history on those cards, which would affect our score, right?  I wish they would require the CRA's to keep credit history of closed accounts to avoid this.

Am I seeing this right?

[haulingthescoreup]

Hi, welcome to the forums!

The CRA's do continue to report closed accounts for 10 years, except for Equifax which tends to lose them early. Check out fused's "Closing credit cards" in my siggy below.

Also, if you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)

These will give you the background knowledge you need to understand what you read here on the forums.


eta: also, unless there is an annual fee that you don't want to pay, there's no reason to close an account just because the APR is insane. If you don't carry balances, 29.99% of $0.00 is $0.00. I've closed a few accounts because I was irritated with the lender (and Chase is circling the drain), but not without first calculating the effect on my util, history, and so forth.

Message Edited by haulingthescoreup on 02-21-2010 09:27 AM

[Anonymous]

Thanks much for the reply, welcome and links to more education.  There's always something to learn!

D.

[Anonymous]

In regards to the FHA portion of the pdf.

Will this apply to borrowers who are currently under contract but don't close until after the rule goes into effect (will it grandfather?)?  Or will only apply to those who sign a contract after the rule goes into effect?

I'm currently under contract, but don't plan to close until after May 1st.

Thanks in advance for your assistance.

Message Edited by sugasears220 on 02-24-2010 10:45 AM

[Anonymous]

Yes.  This is a big win for consumers.  The credit card companies are upset but they got so greedy that they killed the goose that laid the golden eggs.  Now they must get their profits the old fashioned way - they must earn them.  A friend of mine paid a credit card off a few years ago.  An annual fee was of $25 was charged to his account.  He got the bill but didn't open it immediately because he knew there was no balance on the account.  By the time he got around to opening the mail it was too late for him to mail the payment on time.  He called the credit card company and they refused to work with him.  They reported his payment as late and it showed up on his credit report.  Fortunately, when he bought his house the lender could see what happened and gave a good interest rate, but who knows how many hundreds or thousands it may have cost him in higher credit card interest on his other cards.

[Anonymous]

Thank you Barry,

One question of clearification; 

Does the new rule “the interest rate must stay at the opening rate for at least 12 months” apply to introductory offers?

thanks for you help,

PJ