The meeting came today, a day after a House of Representatives bill to limit credit card fees and curb levels of penalties was given clearance by a key panel. The legislation – branded the Credit Cardholders’ Bill of Rights – would stop credit card issuers from imposing arbitrary interest rate increases and penalties.

An estimated 4 million Bank of America customers were notified in the past week that their annual percentage rate will move up from less than 10% to a range of about 14% to 16%, according to Emily Peters, a credit card expert at Credit.com.

For some Bank of America customers, the changes represent a doubling of rates. Some issuers, including Capital One, switched fixed-rate cards to variable-rate cards. Capital One notified some customers in February that their interest rates would increase to reflect the current risk environment.

This will raise the payments significantly on many people who are barely treading water. Nothing like kicking a dog when it’s down.

 As the credit card issuers lower the credit limit on many credit cardholders who are making their payments on a timely basis and always have it is another blow to reduce the consumers FICO score. The blow is another strike behind the big blow already struck by so many Home Equity Lines of Credit (HELOCS) being reduced and frozen by lenders.

In an environment where lending criteria is so stringent it will be even harder for well qualified borrowers to receive loans due to lowered FICO scores.

I’d like to see legislators address this issue.  Do you agree? What do you think? 

What is a credit score?

A credit score is a number computed from the information on your credit report: payment history, account balances owed, number of accounts, and length of history. It is supposed to be a scientific way of assessing how likely a borrower is to pay back a loan. It is a measurement of risk a potential borrower represents to a creditor.

The following bureaus provide these scores–

EXPERIAN- FICO Score

Trans Union- Empirica Score

Equifax- Beacon Score

Why are credit scores important to YOU? They can determine whether you are approved or declined for a loan or credit card, how much deposit is required for utility bills, phone company, auto & homeowner insurance, the amount of a down payment needed, and your interest rate, which is determined according to risk. That can add up significantly both up front and in the long run!

Many people are getting very bad advice to stop making payments on their mortgages. That is the worst thing you can if you want to keep your credit score high. Once the late payment hits the credit bureaus your credit scores can drop significantly and your other creditors may decrease your available credit limits.