Credit Crunch

By
Mortgage and Lending with Young Mortgage & Investment Group

I always listen to talk radio whenever I am in my car, and this is what I've been hearing...

Credit Card Companies are decreasing people's credit limit! And it is not just to those who make late payments or miss payments...but also to those responsible borrowers who continually make their payments on time or pay their balance in full each month.

One gentleman who called in said his limit was cut by more than 50%! He was holding a $1900 balance, had a $5000 credit limit...and then one day was informed his available balance was only $100! That's just ridiculous.

With all the restrictions and tightening of credit, this is only making it worse. One factor that contributes to your credit score is the ratio of your total outstanding balance to your total credit limit. In this man's case, his went from 38% to 95%! 

What does this mean to you?...

It will only make it more difficult for people to borrow money. And not just to own a home, but to buy a car, get a student loan, purchase new appliances or to make home improvements.

I would love to hear your thoughts on this... 

Comments (2)

Jared Pomranky ~ Detroit Foreclosures
Urban Detroit Wholesalers - Detroit, MI

As banks have less access to cash and need to pool money for run on bank accounts (massive withdrawals by customers), money in reserve for defaulted assets, and other items needed during the financial crisis, this is going to continue to happen.

This is a good case for why we need to stabiize the financial market and how investing in banks assets and lending money to banks through the bailout program does affect the consumer.  The plan may not be the best solution but it will make an impact and as the market becomes more stabile, loans to consumers and credit will become more available.

Oct 02, 2008 09:02 AM
Veronica DeCarolis
Weidel Realtors - Flemington, NJ

This is exactly why a bill was needed from Congress. I just hope they got it right. Bonnie

Oct 02, 2008 09:04 AM