You pay your bills and attempt to maintain a strong credit score to keep your interest and insurance costs low and make yourself employable. However, your credit score is declining. What is going on?
Banks and lenders are shoring up risk by closing a record number of credit card accounts and reducing many individuals’ credit lines. As this happens, people with excellent credit records are seeing their credit score decline as much as 50 points. Credit scores range from 850, which is excellent, to 300 which is very poor. When a lender reduces your credit limit, this can reduce your score because your balance has a higher probability of being a larger percentage of the limit. Other lenders may close accounts with low or no activity, which can also reduce the credit score. This can impact many of you.
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.