effects of walking away and other credit

[angel83]

Wondering - if one decides to walk away - what happens to other credit? I know you take a huge hit, but do the cc companies close your lines?

[scottdog]

I myself haven't walked away yet but I will be doing a deed in lieu soon.. I guess I'm trying to live rent free for as long as possible. But after 4 months of not paying any mortgage one of my credit cards that is now almost paid off reduced my limit from 15000 to 5000. so it seems as if they still want my business.

[LHarveyMadman]

The credit card companies are looking for any reason to slash credit limits. They do check your credit periodically, and if there is a major change in your credit profile, they may cut your credit limit. It's hard to say whether they would cancel your card altogether, especially if you have a history of on-time payments with them. If you are carrying a large credit card balance, they might cut your limit down to the exact amount that you owe, so be careful about that because you might go over your new, lower limit without realizing it.

I have good credit, and one credit card company canceled an inactive card, and another cut $10,000 of my credit limit. It's happening to everybody.

[cactus77727]

One of my three cards was closed by the issuer.

My experience Oct 2008 to foreclosure April 2009:
Of three credit cards, one has been closed, getting statements and still making minimum payments. 2nd had credit limit reduced to balance owed. The interest rate 12% has not changed yet. Third card, no change yet, only $500 credit limit, which I pay off every month. The rate on it is 28%.

As for FICO, well after drop of 300 points and falling , who cares. I will not be using credit for many years. I knew this when I decided to walk.

[azpoor]

I haven't missed a payment yet but I might this month. Will my bank report me as late to the credit bureaus on May 16th(day they add a late fee) or on May 31st when I am 30 days late?

[mirkus35]

Haven't paid mortgage since April 2008 or so. My FICO has taken a 150 pt hit last time I checked.
Almost all of my credit card accounts have closed without ever missing a payment. I may still have a Macy's account, lol. I was pissed about my AMEX closing I had like 31k unused pts.

[mpfxtrader]

What about those credit cards that still has a balance with a fixed low APR (balance transfer special offer fixed low rates till the balance is paid off type of a deal)? Will they jack up the interest rate to their regular high rates? Anybody experienced this yet?

[azpoor]

Originally Posted by mirkus35

Haven't paid mortgage since April 2008 or so. My FICO has taken a 150 pt hit last time I checked.
Almost all of my credit card accounts have closed without ever missing a payment. I may still have a Macy's account, lol. I was pissed about my AMEX closing I had like 31k unused pts.

mirkus35 - They closed all your accounts on you even though you were a good customer with them? Did you have balances on any of them?

[mirkus35]

my accounts with Amex were in good standing with no late payments, EVER. I had a balance on one of about $250 (I pay it off every month) when it was closed. The other had zero balance. They started out with limits of $30k & $1.7k then $1.7k & $700 then $700 & $500 then closed.

[azpoor]

mirkus35- Did you have any VISA, Mastercard, or department store CC's that got closed on you? I don't have an Amex but it would suck if they closed everything else on me.

[LHarveyMadman]

Originally Posted by azpoor

I haven't missed a payment yet but I might this month. Will my bank report me as late to the credit bureaus on May 16th(day they add a late fee) or on May 31st when I am 30 days late?

The credit card companies report 30 day lates, then 60, 90, and so forth. If you pay your credit card after the 16th but before the 31s, then you'll pay the late fee but it will not be reflected in your credit reports.

[calinitemare]

I am interested about mpfxtrader's question.

"What about those credit cards that still has a balance with a fixed low APR (balance transfer special offer fixed low rates till the balance is paid off type of a deal)? Will they jack up the interest rate to their regular high rates? Anybody experienced this yet?"

If I am always on time with the payments, they can't possibly increase the interest rates that was promised...can they?

[ultimate4799]

Originally Posted by calinitemare

I am interested about mpfxtrader's question.

"What about those credit cards that still has a balance with a fixed low APR (balance transfer special offer fixed low rates till the balance is paid off type of a deal)? Will they jack up the interest rate to their regular high rates? Anybody experienced this yet?"

If I am always on time with the payments, they can't possibly increase the interest rates that was promised...can they?

hey calinitemare, I stopped paying since jan2009 and all my credit cards limit got reduced to what I owe only+ APR went up from 6.99% to 18% or so on all. I wish obama plan about CC take into effect asap but not really..

[calinitemare]

I'm wondering about the balance transfers where they promised a fixed low rate until the balance is paid off...as long as I keep paying the cc on time, they don't have the right to increase the interest rates right? Just because I foreclose, that doesn't give the cc company the right to increase the rates, right?

[LHarveyMadman]

If you have an agreement in place to keep your interest rate fixed for a certain period of time, the CC company will probably honor that promise. However, you should definitely expect that your APR will soar once the fixed rate is up. Your credit limit will most likely be slashed. If you have a zero balance, there is a good chance that your card could be canceled.

As for the credit card law, I think it's going to have little overall benefit to customers. The CC companies are going to make up for lost revenues in other ways, and they are going to find other ways to deal with customers who are considered to be poor credit risks because of default on other obligations.

[calinitemare]

Thanks LHarvey for the response.

Someone told me that if you're 1 to 29 days late on a credit card payment or mortgage payment, it won't affect your credit whatsoever, as long as you make the payment by 29 days. It's only when you're "currently 30 days late" meaning that you're at least 30 days late on the payment, that's when the credit bureaus start putting a ding in your credit. Is this true?

If that's true, then technically, can't we be 29 days late on all our payments (assuming there's no late fees charge)?

[LeavingAZ]

I may be able to shed a bit of light regarding special offers and such, after foreclosure. My house foreclosed almost three months ago (April) and all those awesome special offers (i.e 0% bbuy cc, lowes card, discover, walmart) have NOT defaulted. I keep on paying them religiously and they've kept the initial rate for the agreed upon term. Of course, this is MY experience and can only comment regarding the aforementioned companies and realize that they may/may not, change without warning in the future. I'm banking and hoping that they will continue to honor our agreement and that they realize I've been diligently paying them without huffing and puffing. Hope your experiences are the same as mine in this regard!

[LHarveyMadman]

Originally Posted by calinitemare

Thanks LHarvey for the response.

Someone told me that if you're 1 to 29 days late on a credit card payment or mortgage payment, it won't affect your credit whatsoever, as long as you make the payment by 29 days. It's only when you're "currently 30 days late" meaning that you're at least 30 days late on the payment, that's when the credit bureaus start putting a ding in your credit. Is this true?

If that's true, then technically, can't we be 29 days late on all our payments (assuming there's no late fees charge)?

I'd like to find a credit card that allows me to be nearly a month late without charging any late fees. Even if such a card exists, you'll be accruing finance charges (interest) on the unpaid balance up until your payment posts.

Also, though the credit card companies won't report you as 30 days late to the credit reporting agencies, they will know for themselves that you are persistently late. If your low fixed-rate agreement states that you have to make payments on time, then being late by just one day could void that agreement, even though you won't be reported to the CRAs. We're talking two different issues here - credit reporting and credit card policies.

Even if you follow that tactic and they don't change the terms of the low introductory fixed rate, the credit card company might do other things. They could slash your credit line, which in and of itself could hurt your credit score because your utilization of available credit will go up. They could hike your interest rate after the introductory period, and you'd be in a poor position to negotiate a lower rate.

Paying your CC on time also earns goodwill with the company. I have a nearly perfect history of on-time payments. On a few occasions years ago, before I initiated automatic payments, I did send in some late payments. However, all I had to do was call the CC company and apologize and explain my error, and they refunded all late fees and extra finance charges without a fuss. Requesting increases in credit limit is pretty easy for me too.

[LHarveyMadman]

Originally Posted by LeavingAZ

I may be able to shed a bit of light regarding special offers and such, after foreclosure. My house foreclosed almost three months ago (April) and all those awesome special offers (i.e 0% bbuy cc, lowes card, discover, walmart) have NOT defaulted. I keep on paying them religiously and they've kept the initial rate for the agreed upon term. Of course, this is MY experience and can only comment regarding the aforementioned companies and realize that they may/may not, change without warning in the future. I'm banking and hoping that they will continue to honor our agreement and that they realize I've been diligently paying them without huffing and puffing. Hope your experiences are the same as mine in this regard!

That's what I would expect - as long as you are honoring your obligation to those creditors, there should be no reason for them to alter their terms.

However, you might want to check to see if they have done anything with your credit limit. cactus77027 (can't remember his exact screen name) reports having his credit limit cut to the balance owed on one of his credit cards. So even though your interest rate might still be low, you might not have any purchasing power left. I'd recommend checking your credit limits before making another purchase, because overlimit charges can be quite hefty. It's probably a good idea to repeatedly check your credit limits, too.

[LHarveyMadman]

Oops, just noticed that cactus77727 actually posted on this subject earlier on this thread. See his post above.

[LeavingAZ]

Yes, I did read up on Cactus' response. Fortunately, the banks haven't decreased my credit limits and have slightly upped my interest rates. Not by much, for now at least. I'm planning to shed many of these cc's, without closing them, I will probably just let them sit dormant with exception of my monthly mani/pedi fix and hope that minor purchases will start my credit going. Not really worried about it

[knownick]

I had two cards when I missed my first payment (Nov 08). Never had a late payment on either of them. American Express noticed about 30 days after the first late and cut my credit limit from $28k to $2,800. About three months after that they lowered it again to $1,700 along with a nice letter that said they look forward to continuing our business relationship assuming I stay current with then and honor the card agreement. A few weeks ago they apparently changed their mind and closed the account altogether.

Second card is a Chase card with a $4000 limit. I have never used this card for purchases, just rather used it a couple years ago on a balance transfer teaser (1.9% for the life of the balance). I've paid the minimum on that every month, bringing the balance down to about $3000. Just last week they lowered the limit on the card to $3100. As of now they are still honoring the promotional APR and I expect them to continue. I also expect them to continue lowering the credit limit to my available balance as I pay it down.

[LHarveyMadman]

Originally Posted by LeavingAZ

Yes, I did read up on Cactus' response. Fortunately, the banks haven't decreased my credit limits and have slightly upped my interest rates. Not by much, for now at least. I'm planning to shed many of these cc's, without closing them, I will probably just let them sit dormant with exception of my monthly mani/pedi fix and hope that minor purchases will start my credit going. Not really worried about it

Yup, you don't want to close your credit cards - this will have a negative effect on your credit score, and you want to do everything you can to boost it up in the wake of your foreclosure. Make sure you dust them off every once in a while, otherwise you'll wake up one morning to find that they've been canceled.

[LHarveyMadman]

Originally Posted by knownick

I had two cards when I missed my first payment (Nov 08). Never had a late payment on either of them. American Express noticed about 30 days after the first late and cut my credit limit from $28k to $2,800. About three months after that they lowered it again to $1,700 along with a nice letter that said they look forward to continuing our business relationship assuming I stay current with then and honor the card agreement. A few weeks ago they apparently changed their mind and closed the account altogether.

Second card is a Chase card with a $4000 limit. I have never used this card for purchases, just rather used it a couple years ago on a balance transfer teaser (1.9% for the life of the balance). I've paid the minimum on that every month, bringing the balance down to about $3000. Just last week they lowered the limit on the card to $3100. As of now they are still honoring the promotional APR and I expect them to continue. I also expect them to continue lowering the credit limit to my available balance as I pay it down.

Did you actually go 30 days late, or did you just miss the payment due date?

Sorry to hear about your troubles. You are not alone - everyone, regardless of credit history, is getting hit with credit limit decreases.

[AZ Meltdown]

My foreclosure was completed in january.
I have several credit cards with $10K- 15K limits.

I always have paid my CC in full and on time and haven't heard a thing from them.

So far anyways......