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For most people checking their credit score is almost never done. They have always used credit wisely and have probably never been denied a loan. Long story short, they have never really had a good reason to worry about their credit score.

That is until NOW!!!

Why? Because banks are systematically lowering credit limits on credit cards and HELOCS (Home Equity Lines of Credit), even for borrowers with spotless credit records and this is negatively affecting their FICO credit scores and driving them lower.

When homeowners receive notification from their bank of a drop in their available credit, they usually don't think too much about it at first. They say to themselves that they had no plans to max out their credit cards anyway. And besides, they just got their HELOC as a financial safety net or they only used it to finance a new car at better rates with a nice tax deduction.

But what the banks are not telling them is the negative impact lowering their credit limits will have on their credit score.

As soon as a borrower's credit limit is lowered, it changes their Credit Utilization Rate, (CUR), which is a major component of their credit score. Credit Utilization Rates are calculated by dividing outstanding loan balances by the amount of credit available.

For example, if a borrower has $10,000 in credit card debt with an available credit limit of $40,000, their Credit Utilization Rate is 25%. But if their credit limit drops to $10,000, their CUR leaps to 100%.

The same thing happens when a bank freezes a HELOC (Home Equity Line of Credit).

As a direct result of the Banks reducing credit limits on credit cards and HELOCS, or in some cases closing HELOCS, millions of people who have never worried about their credit scores and who have spotless records are getting a rude surprise the next time they apply for a loan.

That's what Michael Isroff believes happened to him. He had a mortgage on his condominium in Chicago, plus a home equity line of credit with a balance of $12,000. This spring, National City froze his HELOC which had a credit limit of $100,000. National City wrote in a letter that Isroff wouldn't be allowed to borrow any more against his home's equity, and he would have to pay off the balance over time. In effect, his credit limit was reduced from $100,000 to the $12,000 that he owed.

Like most people, he didn't think too much about it at the time because he didn't really need it, it was just nice to have.

But when he went to refinance, his mortgage broker told him there was a problem. The best programs and rates were only available to borrowers with a credit score above 720 and he was two points short. He didn't know it then, but his credit score dropped overnight from 760 to 718.

And he's not alone!!!

There are millions of borrower's just like him throughout the USA who are going to be negatively affected and disadvantaged.  This will no doubt make it harder to purchase a home, rent a decent apartment, buy a new car, get insurance, buy a cell phone or even just get a good job.

What can you do about it?

Immediately go to www.AnnualCreditReport.com and request your Free Tri-Merged Credit Report showing your FICO credit scores from the three credit bureaus, Experian, Transunion and Equifax.  This free report will not show up on your credit report as an "inquiry" and it will not affect your present FICO score. Study the report carefully.  If you have any questions about what else you can do just call (732) 993-3639 and speak with Terrence Tormey from Benchmark Lending or e-mail him at ttormey@BenchmarkLendingSolutionsUSA.com.  Also, go to www.BenchmarkLendingSolutionsUSA.com to get more Free information on "Credit" and how to protect it.

"Knowledge is Power"  Act today and protect yourself and your future!!

Myths The Credit Bureaus Want You To Believe  - Part III

-By Terrence Tormey

"Knowledge is Power"

Myths The Credit Bureaus Want You To Believe - Part II

-By Terrence Tormey

Myth No. 4 – The credit agency permits a 100-word paragraph to be entered on an account to explain the situation. Creditor’s take this statement into consideration when they’re weighing they’re options about extending credit.

This seems reasonable, but it’s not correct. When we talk about creditors, we’re talking about companies who are loaning money – for credit cards, mortgages, cars, department store credit cards. Very few of these companies will consider any information you submit in a paragraph explanation. The only items verified on the statement are the negative items on your report.

The first thing we want to delete from your credit file would be the 100-word explanation. In essence, the explanation is seen as an admission of guilt. It’s actually the last thing you want to do. It verifies that something happened. You don’t want to do that.

Myth No. 5 – Paying off a past-due account (like a collection account or a charge off) will change your account to a "paid" status and it will no longer reflect negatively.

It is nearly impossible to completely fix your credit unless you settle your unpaid debts. However, as strange as it may sound, paying off a debt can have a negative impact on your credit rating. Aside from bankruptcy, which can appear on your credit report for up to ten years, negative items may be kept on your report for up to seven years. The date of last activity starts the 7 or 10-year time period. Making a payment “resets” the clock because it is considered new activity. So if this item was two years old, when you make a payment on the collection, the two years are wiped away and you start at day one again. It appears to the credit scoring computer as an item that happened yesterday.

Anything that happened yesterday affects your credit score more than something from two years ago does. This will damage your report, as it looks like the credit bureau forced you to pay up. Since you can do more harm than good, even though your intentions are right, it is always best to work with a professional when trying to restore your credit.

Myth No. 6 – Some people believe that a poor credit report can be off-set by building new credit.

Even one negative item on your credit report can have serious negative consequences. In today's computer world, the decision to approve a new loan is rarely made by a human being. Your score is determined by a computer program. One negative item can send interest rates soaring.

You can have a small amount of negative credit a year or two ago. The last year or two has been great. A couple of those older accounts, regardless of how much good credit you now have, can cause you to be declined for additional credit, make you pay higher interest rates and waste thousands of your hard earned dollars.

Myth No. 7 – Credit bureaus are part of the government and are unquestionable.

The credit bureaus are in business to make an impression on their stockholders since they are publicly traded companies. They are NOT agencies of the government. In fact, the industry is one of the most heavily regulated. It has recently been revealed in a survey, by an independent group, that over 70% of all credit reports have an error on them. Due to the prevalence of mistakes, consumer protection legislation has been drawn up which allows the consumer the right to challenge the bureaus and force them to remove any incorrect data, information that is out-of-date or data that cannot be verified.

Terrence Tormey of "Benchmark Lending" specializes in helping release his clients from the “credit prison” that too many people find themselves in which denies them the ability to qualify for the best home and commercial mortgage loan programs and interest rates. When you or one of your friends finds yourself needing real answers and real solutions to credit issues, you can confidentially contact him at 732-993-3639 or at ttormey@BenchmarkLendingSolutionsUSA.com

www.BenchmarkLendingSolutionsUSA.com

"Knowledge is Power"

Myths The Credit Bureaus Want You To Believe

Myth No. 1 – It is easy to dispute a credit report. Consumer’s can resolve their own issues.

To be honest, it IS simple to challenge a credit report. However, as an everyday person, it’s amazingly difficult and frustrating to get results from the credit bureaus. Here’s why.

This is a little-known fact. More complaints to the Federal Trade Commission involve credit bureaus than any other type of company. The major credit bureaus have paid fines of $2.5 million over the years due to failure to respond properly to charges.

The main objective of credit bureaus is to protect their profits. They are NOT government agencies. They are for profit organizations. Anytime they have to investigate a consumer disputes it eats into those profits. Investigations take up time and energy too. The credit bureaus do everything in their power to make restoring your credit exceedingly difficult, short of sparking more massive lawsuits.

Attempting to restore your own credit means you must be willing to spend time learning about the process. This is why it is so difficult when you are inexperienced. It most cases you may be less effective than if you hired a professional. Realize that credit restoration will most likely take longer than you expected.

Myth No. 2 –A negative item that is successfully removed from your credit report will simply reappear again.

The reality is that a creditor has 30 days to verify a dispute. If the credit bureau has not heard from the creditor within that timeframe, they must delete the item from your report. Sometimes the bureaus will perform a soft delete. This is where they delete the item from your report but, will reinsert the item if they hear from the creditor within a week or two of the 30 days.

If this happens, the item can be disputed again. However, most of the time, once an item is deleted, it is gone for good. By using our preferred attorney’s, you can be sure your item will be disputed over and over again until it is removed. We have experienced a 96% success rate with this.

Myth No. 3 – Bankruptcies, foreclosures and tax liens can never be taken off your credit report.

Approached correctly, any negative listing can be removed. That is why it is best to work with a professional. They have the experience and know how to remove these items. 

"Knowledge is Power"