In fact they knew very well about the chance they took, but they did it anyway. Their greed was stronger than their common sense. When banks found themselves in big trouble and some of them collapse, the tax payers came to the rescue and the sharks kept on swimming.



As they were swimming in our blood and sweat, they were rewording themselves with big bonuses; why not? They did a hell of a job to bring us all on the brink of irremediable disaster.

It seems though that banks have learned part of their lesson; they tighten the credit and it made almost impossible for regular people and businesses to get the money that will keep them afloat. With total disregards for the necessity of freeing credit as a way of jumpstart the weak economy, this time around, banks are looking for any little thing to justify their unwillingness to extend credit.

Credit is extended to individuals and businesses alike according to two major factors:
1) the ability to repay the debt

2) the willingness to pay it back according to terms.



The problem starts when “according to terms” begins.



Most people will assume that paying on time or paying off the balance will insure a good credit. Not exactly.



Paying on time is expected and recommended, but no lender wants you to pay off your balance. Their business is to make money and collecting interest is their daily bread. No credit card or loan officer will ever tell you that paying in full will negatively affect your credit, just like nobody will tell you that excessive available credit will lower your score.



The three major agencies that determine your score and your worthiness in terms of credit have slightly different standards, but according to all of them “nobody is perfect”; the best one can hope for is a score of 840. Since when 84% is the equivalent of perfection?

Over the years, credit cards that I only use once in a blue moon (just to keep them active) extended me lines of credit in excess of $30.000.00

I never asked for it, nor do I want it, but unless “we the people” specifically request a reduction of the limit, will become a “red flag” and our credit score will be negatively impacted.



Reading my credit report (with an “impressive” score of 775) I got a clue about what the industry wants and expects;

- have at least 3 credit cards, but not more than 5 (including department stores and gas cards)

- make payments on time, but not in full

- keep your cards active by using them at least 2-3 times a year

- have a mortgage and a car loan

- don’t make balance transfers too often and don’t get carried away by the 0% interest promised for a year. Most cards are charging a “transfer fee” which is up-front interest, no matter what they call it

- have a reasonable credit limit (whether you use it or not) and require a reduction of credit availability if you are not anticipating immediate considerable expenses

- do not close your credit card accounts; that will negatively impact your credit score check your credit report at least once a year for possible mistakes and fight them (keeping accurate records is a must)

- buy a “credit report” alert that will inform you about an eventual request for a loan on your name that may not be yours (it usually cost about $12 a months, but in an era when identity theft is rampant, buying protection and peace of mind is worth the money)

Another consideration on determining good credit is the number of inquiries on your credit report. There is not much we can do about it. Like it or not, financial institutions will look into your credit history and tray to send pre-approved cards and loans.



Common sense is not what drives the industry of credit; doing your best and being responsible will only take you that far. It will improve your credit, but will not make it perfect.