16 CFR Part 610 Amendments to Rule to Prevent Deceptive Marketing of Credit Reports and to Ensure Access to Free Annual File Disclosures #545091-00448

Submission Number:
545091-00448
Commenter:
MR. Richard Gonzalez
State:
VA
Initiative Name:
16 CFR Part 610 Amendments to Rule to Prevent Deceptive Marketing of Credit Reports and to Ensure Access to Free Annual File Disclosures

We are told by lenders that the FICO credit scores developed from each of the three credit reporting companies (TransUnion, Experion, and Equifax) dictate whether we are approved for a loan or not and what loan rate we are given. These scores govern our credit worthiness, and ultimately the cost of our credit. Nowhere in the literature of these three companies does it explain how these scores are developed. These scores are critical and the public does not know how they are developed. We do know that late payments and delinquencies hurt our scores but that is all we know. As an example, I use one credit card for almost all my monthly purchases and daily expenses. I typically pay off the outstanding balance each month entirely. I do this intentionally for three reasons. One, it greatly reduces the amount of cash I have to carry. Two, it centralizes the majority of my financial transactions for record-keeping and analysis purposes. Thirdly, and most importantly, I can maximize the advantage I get from the cards "rewards" program. I use the rewards program to obtain free air travel. Each month the outstanding balance equals 50% - 60% of my available credit line. Unbeknown to me, this situation hurts my credit score. This happens even though I'm up-to-date with payments and fully pay off the outstanding balance each month. The credit companies want to see outstanding balances no higher than 30% of the available credit. This doesn't make any sense what-so-ever but more importantly the consumer does not know this. If the consumer did understand this they could change their behavior and get better scores. For example I now make multiple credit card payments each month to keep my outstanding balance at statement rendering time below the 30% mark. Also working against the consumer is the fact that card issuers are reducing credit lines. My suggestion is that if the credit scores are so important then the consumer should know in detail how these scores are developed. There may be other behavior changes I could make to enhance my credit scores. Thank you for your consideration. Richard Gonzalez