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Tracy Becker
President
North Shore Advisory, Inc.
155 White Plains Rd. Suite 203
Tarrytown, NY 10591
Co-Author
"The Credit Solutions Kit"
Phone 914-524-8300
Fax 914-524-5014
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PAYING DOWN CERTAIN TYPES OF
CREDIT BALANCES TO INCREASE SCORES CAN BACKFIRE!!
There have been some
interesting reactions from creditors when consumers have paid down
revolving debt recently. Prior to getting a mortgage when buying a home or
refinancing many of us advise our clients to pay down high balances. In the
past month or so I have heard regrets from a few Mortgage Professionals
that have needed an increase in their clients fico scores by a few extra
points. They came to us seeking advice on what to do after they experienced
these events. In most of the cases the clients made very large incomes and
had high balances on personal lines of credit and American Express cards. A
few days after reducing their balances Amex or the creditor who issued the
revolving line of credit reduced the limit down dramatically (at least
50%). This caused the scores to decrease and limited the consumers
purchasing ability. Each Mortgage Professional felt as though they failed
their client by giving them advice that ultimately backfired.
When advising clients on
paying down debt the credit profile must be evaluated individually. There
may be some creditors that could be paid first, and updated, to prevent
lines of credit from being cut or closed. The client should be informed
that creditors are, even with consumers that have NEVER been late, reacting
in this way. They need to know there is a possibility, especially with
Amex, that their credit lines can be reduced or closed when they pay them
down. Unfortunately, the professionals that helped bring this new reaction
to light were caught on the frontline of the credit score war and felt the
pain of giving advice that backfired. Because of the constant fear and
changing reactions to the economic environment it is more important than
ever to keep your finger on the pulse of new patterns in credit score
sensitivities. If a client has many high balances and a score needs to be
boosted, promptly, it is important to reduce the revolving credit balance
in a methodical way.
To read the
rest of this article click visit website on the left and go to our
Blog.
For any
questions please feel free to call us!! We welcome the opportunity to help
you and your clients.
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©2009 North Shore Advisory Inc.
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