Student Credit Card and Credit Education Blog

On February 13th I added a blog entry titled How My Credit Score Dropped 30 Points in One Day. This entry is a follow-up to that. To summarize the original entry, I paid off and closed my Chase credit card because they were jerking me around by raising my APR because I was paying my balance off too quickly after a 0% interest balance transfer. Aside from that being a highly unethical and downright evil way to treat me, I then screwed up in trying to sever my ties with them and they socked it to me- again.

I paid off my balance plus some extra to cover the interest that I calculated had already compounded for the current month. I then proceeded to pay no attention to the invoice the next month since the account was closed and I assumed they were just going to bug me about a credit of a few dollars. Little did I know, the interest they hit me with was $3 more than I paid with left the account open. Instead of a credit I owed them $2 which I didn’t know about and so didn’t make a payment. Chase was thrilled to charge me a $30 late fee, and then another giving me a balance of $63 which was over 30 days past due. This they submitted to the credit agencies who then rocked my credit score by an average of 30+ points. luckily I use a service that alerts me when somebody dings my credit report so I was made aware of this balance for the first time. I immediately paid the balance off and then called Chase hoping for a goodwill adjustmen. I was fine with surrendering the $60 to cover being late on the $3 but I wanted them to retract the negative mark seeing as it was obviously an mistake. Their answer to me can be summed up by: “too bad, don’t try to rob us of $3 next time”. No, they didn’t want to work with me on that.

Well I’m happy to report that my score corrected itself and went back up today to just a few points less than where it had been a originally. So if you are wondering how a late payment will hurt you it all depends upon how late and how many you have. I researched how this works and here is the deal:

One late payment hurts your credit score in a major way because you could potentially go 90 days late. 90 days late is what lenders really fear because after 90 days their odds of not getting paid without going to collections skyrocket. Once its reported that the late payment was made and you are back on track in under 90 days the penalty eases up on you to show lenders you are no longer a 90-day late risk. If you have a history of being 30-days late this doesn’t work out so well, the penalty can stick for repeat offenders.

Anyway, so I’m back on track and now I can look into taking advantage of the dropping interest rates to try and refinance my mortgage and save some money each month. I was about to do that when my credit score got socked by Chase. With the economy bogging down, credit requirements are getting tighter so that’s why my score dropping was such a killer.

By the way if you are a student who will be looking at private or consolidation loans in the next 12 months, don’t wait! You should apply now before the credit requirements raise higher! You can go here to learn more about how the credit crunch is going to affect your student loans.