PR - Cambridge Credit Advises Consumers To Prepare For Tighter Credit Policies

Over the last few months, many of America’s major lenders have revised their credit standards. While some experts see such moves as overdue, perhaps inevitable in the wake of the sub-prime crisis, many critics believe that the banking industry is unfairly squeezing the consumer credit sector in an effort to make up for losses in their mortgage divisions. Whatever the motivation, the effects will be felt by nearly all consumers, generally in the form of increased credit card interest rates, more substantial down payment requirements for home purchases, and higher minimum credit scores prior to obtaining new loans.

Unlike past policy adjustments, which generally targeted borrowers with low credit scores, in recent months even those with high scores have been feeling the crunch. As a result, more people are being refused access to credit and experiencing restrictions on the credit they already have.

“It’s typical for consumers with bad credit to be the first to feel the effects of tighter credit standards,” notes Christopher Viale, president of Cambridge Credit Counseling Corp. “This time around, however, things are also becoming difficult for those with credit scores in the 700 range, which has traditionally been an exceptional rating.”

Difficult indeed. Some consumers have recently reported that their home equity lines of credit were terminated on very little notice, while many more have seen their credit card interest rates double or even triple, despite not having missed payments. When pressed, some lenders have reduced their increases for individual consumers, but the heightened emphasis on risk assessment is a sign that it’s more important than ever to be financially sound.

According to Cambridge’s Viale, “Individuals who maintain an appropriate level of savings, approximately 10% of their net income, and have credit scores in the high 700’s, will have greater access to credit, which is often the key to achieving significant financial goals. While these standards may seem out of reach to many consumers, with the proper financial education and discipline, these are levels that almost anyone can achieve over time.”

The first step to becoming financially sound is to create a budget, also known more simply as a spending plan. This requires an examination of one’s finances to identify areas where spending can be reduced, allowing more money to be allocated to establishing savings and paying down debt – an important element in risk assessment.

“I would encourage anyone who would like guidance in establishing an appropriate spending plan to contact an accredited credit counseling agency,” says Viale. “There are many caring and knowledgeable individuals who assist consumers with their finances every day, and Cambridge’s nationally certified counselors are proud to be among their ranks. We’re here to help.”