Money’s cheap but hard to get!

You might have thought that after seven consecutive interest rate cuts, lenders would be begging to draw you in with juicy low-rate options. That’s sort of true, if you are among the fortunate who sport sterling credit scores. But if you actually need money and have so-so credit, it’s tough to lock in a loan that makes sense.

The problem can be summed with one image: a pendulum. We have moved out of a period where lenders extended money to anyone with a heartbeat to where lending standards are so tight that few can qualify for a loan. The shift can be seen in the Fed's survey of banks' senior loan officers. As reported yesterday by the Wall Street Journal’s Sudeep Reddy (“Banks Toughen Terms on Loans”), “About a third of the 56 domestic banks surveyed in April reported raising their standards for credit-card loans over the past three months, up from just 10% in January. Banks are being tougher on credit-score requirements and are reducing credit limits on card loans [and]…tightened standards for other consumer loans.”

This is bad news for people who are seeking relief from problematic variable loans that they had hoped to refinance “later”. We are at “later,” so here are a few tips that may get you on the road to cleaner credit. The process is a pain in the neck and requires contesting information, letter writing and a persistent follow-up effort.
Make your payments on time! There is no way that you are going to get anywhere by seeming like a deadbeat to lenders.
Obtain a copy of your credit report from each of the three credit bureaus: Trans Union, Equifax, and Experian. If you find items that you believe do not belong there or are inaccurate, write a letter to the credit bureau that provided the report. It is best to send whatever proof you have that the claim is inaccurate.
The credit bureau requests proof of the claim from the credit company and if is not provided within 30 days, the item should be removed from your report. However, the item will remain on your credit report if the creditor can prove its claim, regardless of whether they do so in the allotted time period.
Negative items on your credit report may be removed even if they are correct. If you have maintained good standing with the creditor that reported the information, you can write and request that they remove the item from your credit report. Even if this is not a possibility, items on your credit report remain there for only seven years, after which time they go away on their own.