Credit Kink on The North Fork of Long Island
October 6th, 2008 category: Real Estate News
http://money.cnn.com/2008/09/25/pf/credit_limit_pullback/index.htm?postversion=2008092612
There’s a new kink for home sellers and home buyers on the North Fork of Long Island.
Not unlike frozen HELOCS, banks are reducing the credit lines offered to consumers.
While it may appear as simple as reducing a credit limit on credit cards, home buyers need to be aware of the potential impact on credit scores, in the event that your credit limit is reduced.
Credit reports, when a credit reduction takes place, may well reflect an unexpected negative aspect: what was indicated as a consumer conservatively using credit vis-a-vis maintaining an available balance will now reflect a borrower who has maxed out their credit limit.
This isn’t being activated solely to those who might find themselves behind on credit cards; to the contrary, even those with perfect payment histories may well find themselves in the maxed out category, despite maintaining an impeccable repayment history.
Don’t get shocked at the counter when your card is inexplicably declined; check your statements monthly, and stay on top of any changes that your credit card company might implement with respect to your available credit by examining your monthly bill.
Be aware, as well, that an unexpected decrease in your credit limit (creating a maxed out card) may well impact your credit score, initiating an opportunity for banks to increase your interest rate on other cards- and create an unexpected issue with a home purchase. If you’re thinking of buying a house, be diligent.
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