Shocked and Appalled with Advanta Credit Card

[wildambitions]

Jill-

All great advice, but it may not always work as well as it has in the past 20+ years. -Russ H.

:iagree: This is especially true with the new FICO rules that went into effect in 2008.

Opening new accounts can negatively effect your credit score -if you already have the maximum number of "acceptable" revolving credit type accounts... the number of "acceptable" revolving credit type accounts was lowered in the new FICO scoring system.

The same holds true for closing accounts.

More credit checks to open new accounts will also lower your credit score... but if you chose to do this, do it all within 45 days - it will effect it less.

Of course the bottom line is sometimes you have to sacrfice (lower your credit score) to meet the end goal (be able to leverage your money to your benefit). Just be sure to know the consequences of any action you take.

 

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[Jill]

I'll be interested to see how it all shakes out. I've transferred higher rate balances to Zero% cards (which I already had open) twice within the last 3 weeks. So while there may not be as many new offers coming down the pike, there are still a few out there that can be taken advantage of. Dave Ramsey probably wouldn't agree, but I don't mind carrying a credit card balance if the rate is less than my mortgage rate, provided that I'm using my cash to earn a higher rate elsewhere. Classic buy low/sell high.

I agree, Wild, about the FICO issue. But opening a single new trade line is a very small part of the overall FICO score. I think it's smart to be as certain as possible that you will be approved before applying to avoid an excess of new inquiries.

 

[AroundTheWorld]

the number of "acceptable" revolving credit type accounts was lowered in the new FICO scoring system.

What is the acceptable number now? Anyone know?

We have several accounts (old construction loans) that show up as revolving credit - 0 balance - open on our credit report. Suddenly, our score has gone down (no other changes)... I wonder if it is due to these accounts.

 

[msa1]

Bank of America tried that with my business card. I told them that it was true that I am having a little trouble right now, but I have not missed a payment.

The guy on the phone pretty much told me too bad.

I replied to him that if he didnt return my rate to where it had been, I would never pay them one more penny.

Amazingly he was able to return my rate to under 10% immediately, no supervisor or anything.

I dont care anymore. I pay all my bills and my score is suffering right now.

If I pay everything every month and still take a hit what difference does is make?

 

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[wildambitions]

What is the acceptable number now? Anyone know?

According to my notes from the fastlane meetup:
- Installment Loans 1-2 best, 3 OK and above 3 is bad.
- Revolving credit 3-4 best, 5 OK and above 5 is bad (HELOC considered revolving).

Other changes for 2008 -
-Debt to limit ratio went from 35% to 10% (greater than 10% is considered High Risk, 30% they are watching you closely and 50% is really bad).
- Make all inquiries to your credit score, credit check etc. within 45 days.
- Open accounts not used will go into an inactive status (this is better than closing the account but may still effect the score negatively for up to 3 years).
- Credit score information on joint accounts is only for the primary holder of the account.

Here is how to improve you score:
1. Correct any score problems in the order they are identified.
2. Check your credit score regularly.
- you get one free report from EACH reporting agency annually
- the three agencies are Trans Union, Experian and Equifax
- check one of them every 4 months to get balanced year round information
3. If you find something wrong, dispute it.
4. If you find something old that is pending collection, DO NOT PAY IT. Dispute it. If you do pay it you have accepted responsibility.
5. Ask for credit line increases regularly to decrease the debt to limit ratio.
6. Don't open new credit card accounts if they are not needed.
7. Don't close the oldest accounts even if they have a fee.
- if they have a fee ask if you can switch to an offer without a fee
8. Pay on time and before the balance is due.
9. Spread your balance out over all your available credit.

Notes of interest:
- Late payment history is "reset" after 3 years.
- 720 is the magic number to strive for in a credit score for 98% of the goals (data from Mar08).

Hope it helps :wave: (thanks Andviv for the info)

 

[PurEnergy]

So we bail them out and they are allowed to turn the screws on us! We'll see how long that works for them.

 

[Russ H]

So we bail them out and they are allowed to turn the screws on us! We'll see how long that works for them.

For Pete's sake, stop this guys.

Buck up, deal with what's happening, and move forward.

You are not a VICTIM unless you choose to be.

-Russ H.

 

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[PurEnergy]

Russ, I like the fact that someone is being tough and saying buck up, face the facts, and deal with it. That's the way I've always felt. I've fought hard to keep my credit/word my entire life. I'm beginning to question now what it is I've been fighting for.

You may not be affected by what's going on. I'm in the car business and am dealing with the fact that for the first time in my life I now have more bills then I have money. It's not so easy deciding who is going to get paid and who is not. I do not like where this is headed.

 

[Russ H]

PurEnergy-

We have over $40,000 a month in payments to mortgages/prop taxes/insurance.

I am not exagerating-- this reflects more than $5,000,000 in debt on our mortgages/HELOCs*.

We still pay off all of our charge cards, every month.

BTW, most of these mortgages are for vacation rentals & B&Bs that generate cashflow.

But the B&B biz is such that for 3-5 months EVERY year, you have more bills than money.

So you don't complain. You plan ahead as best you can.

And you typically have credit lined up if things don't go as planned-- which is where we're looking at additional options, right now.

-Russ H.

 

[PurEnergy]

Russ,

Glad to hear you are knee deep in the party with the rest of us. Seriously though, I wish everyone the best of luck in this thing. I'll stay in the fight until it looks like they've made it impossible for me to win. I have the accounts receivable to pay my debts but I always get nervous when it's not in MY account.

What irks me is the original subject of this post. I don't see how credit card companies raising interest rates is going to better the situation for anyone. Apparently they don't realize that they may be last on most peoples list of creditors if they raise rates unreasonably. Aren't we now their creditors?

People say that credit cards are unsecured debt. It's only unsecured until you stop paying. Once a judgment is issued it's now secured by any assets that you have.

Yes, I have credit card debt. Medical has been a major contributor to my level of credit card debt. I have been paying for major medical insurance for the last seven years. It has cost me on average $8k-$10k per year. I can deal with the monthly premiums, it's the $5k deductible that kills me.

My 16 year old son had a stroke this year and honestly, they can take everything I have so long as I have my son, which I still do thank God.

Oh and rental property, not all that it's cracked up to be. Mine has been more of an expense than anything. I stopped buying rentals a long time ago and PROBABLY will never buy them again. I wish the banks or the government or whoever, good luck in trying to sell all this vacant property. I can't imagine who is going to buy all the inventory.

 

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[Russ H]

I don't see how credit card companies raising interest rates is going to better the situation for anyone. Apparently they don't realize that they may be last on most peoples list of creditors if they raise rates unreasonably. Aren't we now their creditors?

Hmm . . .

The credit markets have CHANGED.

What we are seeing, right now, is substantially different than what we've seen for at least 30 years.

Right now, it is VERY EXPENSIVE for topline companies to get credit.

It only stands to reason that unsecured credit rates will also increase, right?

WE NEED TO PLAN ON NOT GETTING AFFORDABLE CREDIT FOR THE NEAR FUTURE.

Everyone will have their own solutions for this.

Ours was to cash out all of our HELOCs before they adjusted them out of existence, and to cash out refi one of our properties.

Yes, we're paying ~7% on a LOT of money we're not using this second. But it gives us the cushion we need to move our projects ahead-- and it gives us funds to make up the difference during our "not enough cash" months.

Provided that business continues, at a decent pace.

If the economy really slides down, we expect that we'll be reducing room rates to generate occupancy.

And if hyperinflation hits, we may have to have a provision for increasing the room charge based on prevailing rates.

All part of what we're doing/looking at in the months ahead.

-Russ H.

 

[unicon]

As RK states his job is just full time raising money as well as Trumps full time job. One must always be studying value.

You cannot have enough reserves developed from:
1) Equity
2) Credit Cards (as many as you can get)
3) Loan restructuring
4) People
5) Unfunded loan commitments

You can put a dollar amount on your ability to raise working capital and always be attempting to increase that capacity. Even if you don't need it, increase your "looking good" appeal! This is condensing time between making a decision to access cash and the lag time to get it in your bank account!!