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Credit card reform

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                           Are you serious?  www.fprec.com

Today, February 22nd, 2010 the Credit Card Accountability, Responsibility and Disclosure (CARD) Act went into effect.  This long awaited legislation has devastated many families over the past months as the lending institutions scrambled to get interest rate increases and fees in place before today’s deadline. 

Unfortunately, there are more tough times ahead for consumers.  As credit card holders reject fees or rate increases and close accounts, their credit scores will no doubt be impacted negatively.  One provision under the new reform is that the card has to be paid off in 5 years at the current rate, if the consumer closes the account.  Depending on your credit card balance and interest rate, your monthly payment could double or triple.  If you have qualified for a home loan amount and you close a credit card that will lead to “a change in circumstance” under the Real Estate Settlement Procedures Act or other undesirable consequences.

If you are planning on buying a home this year, try to get a copy of your credit report at least 6 months before you intend to make loan application.  The official site for free credit reports is AnnualCreditReport.com, where you can check your credit scores every year without cost. 

If you are planning on buying a home in the next month you should really get a copy of your credit report.  When you get your report print a hard copy and review it carefully for errors and changes to accounts.  While you will not have time to make changes to your credit report, you will be able to answer any concerns the mortgage underwriting depart might have. 

If you have closed a credit card account and it does not show up on the credit report, make sure that when you make your loan application the lender knows the account has been closed.  You should also get something in writing from the credit card company showing your balance and the amount of your new monthly payments.

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