The banks are hurting so much so, that they have decided to share the pain with the consumer. Even if you have been an exemplary customer, the banks will still pass their pain onto you. The pain of our current economic distress is being felt by all of us in different ways. From an all time high unemployment rate to cutbacks in salary or wages.
People are feeling the money crunch just like, if not more, than the banks. As if all this uncertainty wasn’t bad enough, the banks have decided to make everyone, even customers that pay their credit cards on time or consistently pay on time in full. No matter your account status the banks are lowering the limit on credit cards. So this obviously changes you debt to credit ratio. Making your debts appear as if they have suddenly become higher.
The ripple effect is your credit score becomes lower, in some cases plummets by more than fifty points. This sudden down turn then alerts the banks that you are having a financial problem. In essence the banks are creating your newly negative score.
If you apply for a loan or credit card more than likely you will be turned down or given a very high interest rate. Through no fault of your own the bank has lowered your credit limit making you have a lower credit score.
In some parts of the U.S. this stacking of the deck against you, to favor oneself, and make you think it is okay, would be considered a scam, a confidence game. But all things aside, the consumer will need to overcome the new obstacles and challenges the banks are setting us for.
What will happen if you suddenly stop using your credit card, your credit rating will not improve too much. The reason the score will not improve, the banks will still lower your limit, at least until you call them. Even then this still may not help your situation. This only benefits the banks, being at the mercy of the financial institutions that need a government bail out.
If you currently have a high interest rate you may not be able to get a loan to refinance or purchase a home. This is where a seller, who cannot seem to find a qualified buyer by the banks current standards, can help themselves and a buyer. Seller financing for twelve months or longer can make a property more attractive to all buyers, and relieve the stress of all parties.
Seller financing is a great option for all parties, you may have a buyer that can make the payment but may not qualify for conventional bank funding. The new bank rules are strict, and people who would have qualified for a loan not too long ago may not qualify now due to having a lower credit score because of the new banking practice of lowering the credit limit.
A seller may not have a lot of risks when it comes to financing their property. Some of the ways a seller could offer financing would be a lease with the option to purchase, carrying a second if a person cannot qualify for the total asking price, or holding the entire first loan. Each technique has its benefits and perceived pitfalls; But the benefits out weigh the alternative.