Been making your credit card payments on time, careful not to exceed your limit, and been shocked when the credit card company cuts your limit or closes the card without warning?

This is occurring more and more because some companies are getting out of the credit card business or trying to limit risk. Even cardholders with strong (720 +) credit scores are having their limits cut or the account closed if it is inactive.

The impact on your credit score can be devastating. Your credit utilization ratio- the amount of debt you owe divided by your available credit- is responsible for about 30% of your credit score. A consumer could easily see a score drop of over 50 points. Worse yet would be if you were on vacation only to discover you did not have the available credit you were counting on. Cardholders should check on the available credit every billing cycle and read every piece of mail sent by their credit card company even if it appears to be junk.

What should you so if your limit is cut? Call the issuer and see why they did it. It is possible the decision was based on erroneous information from a credit bureau. Ask to speak to a supervisor. Try applying for a credit card where you bank or with your mortgage holder. Credit Unions have a reputation for being more reasonable when it comes to credit cards.

Please let me know about your success or horror stories.

Best, Chip

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Your Lender for Life!

When people you care about need a mortgage,

for purchase or refinance, please do not keep me a secret.

You do not have to be Bill Gates to get a mortgage, however, mortgage requirements have tightened up considerably.  Unless you are a vet applying for a VA mortgage, 100% financing is gone.  Stated income programs, programs where income was not verified, have gone the way of dollar a gallon gasoline.  It might come back someday, but I would not count on it.

Factors that lenders focus on include: income to debt ratios, stability of income, down payment, and credit scores.  While these guidelines have been tightened up significantly people are still getting mortgages to purchase or refinance.

FHA is the most flexible of current mortgage programs.  You may still purchase a home with a down payment of 3.5% of the purchase price.  FHA is also more lenient on credit scores, and other requirements, such as reserves.  Reserves are the cash or other liquid assets a buyer has after the closing.

If you have been turned down for a mortgage, find out why.  The problem may be fixable with a little work, or it could be you have an incompetent lender.  It never hurts to get a second opinion.

Next week: Divorce mortgages

Chip Allen

Crestline Mortgage Bankers

A Division of Universal Lending Corp

Direct: 303.947.2109

Fax: 303.987.0676

Loanchip@hotmail.com

Your Lender for Life!