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Daze of My Life: A Credit to my Name
Daze of My Life
A Credit to my Name
by Kenneth B. Lourie
But a discredit to my score, credit score, that is.
If I understand the message of a radio commercial that I've heard recently discussing one's credit score that having too much unused credit card balance availability is a negative. So far as loan underwriters are concerned, and if I remember the advice my mortgage banker gave me when I refinanced, which I do--cancel your unused credit cards--then I can't help but wonder, if I have to go along like this...how am I ever going to get-along?
More to the point, how is Joe Schmo, or in my case, Kenneth B. Lourie, an overweight, underpaid, median-income earning worker bee, supposed to maneuver financially if, that which provides year-round, credit-managing flexibility--having thousands of dollars of low or no interest credit card and/or balance transfer availability--simultaneously inhibits my money-borrowing from a non-credit card-type institution like a bank, savings & loan, or credit union, for debt-consolidating, mortgage-refinancing and tax, retirement and overall financial planning?
I'm not special. I don't want to be treated any differently than the next borrower-to-be. I just want to be treated fairly. You can't inundate me with hundreds (literally, over the course of a year--absolutely!) of pre-approval letters from credit cards offering six to 15-month teaser rates and/or balance transfer checks with similarly low interest, often with minimal or even zero transaction costs as well, and not expect me to occasionally sign up.
If I'm paying attention, and if I have credit card debt whose balances I can't pay off monthly, maybe even yearly, and I'm aware that the interest accruing on those credit cards is no longer deductible from my income tax (it's been a while), and I'm trying to manage both my cash flow and my debt yet-to-grow, then I should consolidate as much of my debt as possible at the lowest interest rate that I can find or that is offered to me, right?
I would be foolish not to; especially if transferring those balances frequently minimized the interest that I was paying (or that was accruing on my balance) and cost me zero, or pennies on the dollar, to do so. And the more cards I have with zero balances that are active and without any minimum payments due, the more offers--or so it has been my experience, given the nature of the credit-offering beast--I will receive, to consolidate debt, balance-transfer, home-improve, etc., many with very attractive, extremely low interest rates.
However, in so transferring or maneuvering or maintaining multiple open credit card accounts, yours truly might have a dozen credit cards with available credit of as much as $100,000, only one of which I actually use for charging.
The other cards are simply open to store and/or roll the debt as balance transfer options arise (and teaser rates expire), which enables me, an average consumer with above average debt, the ability to pay and play as if I had more money and less debt.
The downside to all this credit-carding is when, in the midst of it you need or want to borrow bigger money, for a car or college or a house, as a few examples. Then you don't look so good. Then you learn about your credit score. And the credit-scorers don't like when one person has lots of credit cards with zero balances. Rather than understand the means and ends, by which a middle class consumer must exist to prevent them from being consumed by their expenses and debt, they see the high number of credit cards as abusive and irresponsible.
Well, I couldn't be any more responsible with my credit card debt if you put a gun to my head. But I can only do what I'm able to do, and given my lot in life, which is not a lot, I am reduced to a number...a credit score.
And here I thought I wasn't being given enough credit, when it turns out I was being given too much. How's that for mud in your in your eye?
Lourie is a regionally syndicated columnist who resides in Burtonsville, MD.
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