Speaking of your credit recently, has this happened to you?

You open up your credit card statement and your shocked to see that your credit limit has been reduced to what you currently owe! Or worse, your American Express card was just declined due to your credit limit being limited (and you thought AMEX didn't have a limit).

As the economy continues to slide off a proverbial cliff, credit card companies/banks are looking at record default and bankruptcy.  Their taking swift action to shore up their losses, and they may end up doing it at the consumers expense.

Credit Reporting has become a science, and the "evil" empire, Transunion, Experian and Equifax have created companies that have created the current system that banks use to analyze risk. You most likely have a credit score, and unless you live under a rock you know that having a 700 plus score now days is a must.  The problem is there are several scores that the your are not privy to, and these scores are where the credit card companies are ambushing their clients.

The first culprit is called the Bankruptcy score.  This score evaluates the likely hood of any of their clients risk of falling into bankruptcy.  With over a million bankruptcy's in 2008, this number is bound to explode in 2009 with the deteriorating job market.  As your probably can deduce, these scores are going to be looked at even more closely in preceding months.  If your mysteriously cut-toff from your available credit, it could be a number of factors, the most likely being that your considered a high bankruptcy risk.  This can happen even if you have no late payments or other risk factors that normally are considered important.

The problem with this system is that you the consumer have no rights in terms of knowing the factors used to determine your bankruptcy risks.  Unlike many of the consumer friendly models, the Credit Bureau's are digging in their heels and refuse to release specific factors regarding how they make these determinations.  The results can be devastating, from frozen credit accounts to higher interest rates, the consumer is left in limbo as to why and how their situation was made even worse.

What's even more alarming is the scoring model that is called "transactional scoring".  If you use your credit cards at Nordstroms, then use them for cash advances or Walmart, the transactional score could alert your creditor that you maybe using your credit to mask cash flow issues.  The creditor then responds and freezes credit and raises rates.   What's tough for the consumer is that they could be just fine financially, but the transactional score, normally reserved to detect fraudulent activity, is now used to determine if your a risky credit user.

I hope this makes you mad as a consumer, because the credit card companies and credit scoring companies are employing ever trick in the book to keep their system secret.  Consumer groups have fought for years to force the Credit Bureau's to provide some type of accountability to consumers in regards to reporting errors.  But Banks and the credit reporting system is in for the fight of it's life right now, and the old rules of fair play maybe just ignored as they scramble to plug the dike.

If a score is used against you for any reason, you should have a right to see that score, know how it was calculated and protest any errors in the data used to calculate it.  Therefore you need to contact your US Senator or US Congressperson and let them know that , Experian, Trans Union and Equifax need to change their disclosures and include consumers.

You also need to speak to someone who is well versed in credit law and reading credit reports.  Not all mortgage professionals understand credit, and you may need to search in your community for someone who understands the "credit game" as I call it.  There are a number of excellent of online sources as well, including the one your reading.