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US Consumer Bureau Opens Online Credit Card Complaint DB
chiguy writes "The Consumer Financial Protection Bureau begins releasing detailed information on Americans' complaints about their credit cards online. From The Washington Post: 'The CFPB said it will only publish complaints after it has verified the consumer's relationship with the company. The new database will include not only the name of the company involved, but also the nature of the complaint and the consumer's Zip code. It will also report whether the firm responded in a timely manner, how the matter was resolved and any disputes. The CFPB said it has received more than 45,000 in the year since the bureau was launched.' Complaints about mortgages, student loans, and checking accounts will be added later. Financial institutions are complaining loudly, decrying the enforcement of one of the main tenets of the free market: transparency."
hard inquiries affect your score by 1 to 5 points. FICO also groups inquires -- so if you shop for a mortgage during a period of a month or so, all of those will be grouped together (and will affect your score the same as 1 inquiry)
http://www.bankrate.com/finance/credit-cards/how-credit-inquiries-affect-credit-score.aspx
I've never understood the reasoning with why closing a 0 balance credit card should lower a credit score.
It doesn't necessarily; at least not immediately. Closing a revolving credit account with a zero balance changes your debt:total credit ratio among your revolving accounts. If you have a $0 balance on a $10,000 limit card and a $750 balance on a $1,000 limit card, and you then close the account for the $10,000 limit card, your total revolving credit utilization has gone from 7% (which is actually better than 0% usage) to 75%. Using 75% of your revolving credit is a major red flag that says you're over-extended and may be getting into trouble. FICO scoring has no memory when it comes to revolving account balances. It doesn't give you credit for going from 80% utilization to 10% utilization in a month; it merely gives you one score based on the 80% and one score based on the 10%. Likewise, it does not penalize you for going from 10% to 80% (though you'll take a hit just for being at 80% usage).
The other part of that comes in later. A fairly sizable chunk of your credit score comes from the average age of your credit accounts. Closing a high-interest revolving credit account won't affect your score today in terms of AAoA, but in a few years when that old, closed account drops off your report? Well now your average just got smaller and your score may have just taken a hit. The more accounts you have, the less losing one will matter. At the very least, it will likely eventually cost you a few points years later. However, if it drastically affects your utilization, you could see a big hit today, and if you don't have many accounts, you could also see a big hit years later when the closed account disappears.
You would think the credit tracking companies would look at you closing a high interest, high limit, card as a good thing.
Your credit report is a snapshot of where you are at the moment someone checks the report. The terms of your revolving accounts don't factor into the equation in terms of a basic credit score. They may for one of the niche scores (there are dozens and virtually nothing is known about them since consumers don't have regular access to them), but your basic FICO score has no idea whether a given card has great terms or bad terms. In terms of things like credit cards, it's looking for your debt:credit ratio on that account, your debt:credit ratio across your revolving accounts, and the age of that account (to factor into AAoA). It's also looking for any delinquencies on the account (30 days late, etc) and how recent they are. That's about it.
It's like saying paying off a mortgage should lower your credit score.
Paying off your mortgage has the effect of reducing the variety of credit accounts you have open. It's treated as a type of installment loan. If you have others (like an auto loan, student loans, etc), the impact will be pretty small.
In the end, what you need to understand is that the FICO score isn't about how smart you are, but about how likely it is you'll keep to the terms of credit extended to you at any given time. If you hold a mortgage, car loan, and several (very old) revolving accounts which are all in use and in good standing, you'll have a stellar credit score. If you've got collections, late payments, judgements, etc, then you're showing an inability or unwillingness to pay debts and your score will suffer. The area in between is basically left to showing how able you are to juggle a lot of different credit accounts and how responsible you are about not over-extending yourself just so you can have that dream vacation/new boat/etc. It's also important to remember that things like debt:income ratios, where you live, etc are NOT in your credit score. Your credit score is strictly a snapshot based on your current credit report and does nothing but measure the chances of you sticking to the terms of credit extended to you at that moment.
If you want to know more, you should visit the MyFico.com forums. The people there make a hobby out of understanding how all this stuff works.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."