Danger of Credit Crunch?

[Gilberto de Piento]

Twice today I have heard the term "credit crunch." I looked it up but I'm not sure if this is something I should be worried about and what I could do about it. Any thoughts?

[ertyu]

This question is too vague. Worried about in what sense? Stocks? Mortgage? ??

Also, where are you geographically. Lots of factors.

[ScrewTheAverage]

You probably don't need to worry too much since you're on the ERE forums (we're thinking your financial house is in 'order').

With that being said, you could still be impacted if you use credit cards (your credit line could be suddenly lowered or card closed), have a line of credit (the loan could be suddenly called), or are looking at buying a house/car/etc. with a loan (you may not meet the new lending requirements).

[ZAFCorrection]

I was researching credit cards a month or two ago and a bunch of people on reddit were complaining that their limits were getting unceremoniously reduced. Standards are apparently also getting tightened up for applying. Though, that is only at the consumer level and probably irrelevant to anyone here unless they also happen to be a churner.

Corporate debt is pretty high and that could lock things up if daddy Fed can't keep all the plates spinning. That could create higher-order effects such as being unemployed having a fucked up portfolio.

[jennypenny]

I had a MasterCard cancelled on me this week because of (only) six months of inactivity. When I complained and asked for it to be reopened, they said I could reapply. I told them to bite me. I mostly kept that card because I've had it 30 years and it keeps my average credit length longer on my credit report. Luckily, it only lowered my score two points.

Still, my credit score is 800+ and I've had the card 30 years and they cancelled it anyway. Not a good sign (For them, I mean, not me). From now on, I'll make sure to use the cards I want to keep regularly. Maybe I'll put an autopay bill on each one.

[classical_Liberal]

@JP
Same thing just happen to me. Although I hadn't used the card in years. I also apply for one rewards card per year, to get a bonus. I've been looking and there seems to be slim pick'ens in the free bonuses in the spend range I can meet this year.

[flying_pan]

I had a MasterCard cancelled on me this week because of (only) six months of inactivity. When I complained and asked for it to be reopened, they said I could reapply. I told them to bite me. I mostly kept that card because I've had it 30 years and it keeps my average credit length longer on my credit report. Luckily, it only lowered my score two points.

Still, my credit score is 800+ and I've had the card 30 years and they cancelled it anyway. Not a good sign (For them, I mean, not me). From now on, I'll make sure to use the cards I want to keep regularly. Maybe I'll put an autopay bill on each one.

@jp, out of curiosity, why do you care about your credit score at all? I was looking into credit cards for some time and concluded that the only time you need credit score is when you apply for a mortgage, or want to get good rates when financing a car (if one wants to). So I can't imagine myself needing credit score after I get mortgage.

[jennypenny]

Credit scores matter for other things like insurance rates, bonding, and clearances.

[flying_pan]

Does it really affect your insurance rates that much? I mean, are we talking 5-10% difference, or 50-100%?

I am genuinely curious because after buying a house I want to never worry about it without losing anything major.

[Seppia]

If you live frugally you'll never have anything other than very good credit scores, so why bother flying_pan?
I've been out of the USA for almost 5 years, only lived there for 6, never opened a mortgage or bought a car, and only have one active CC left there. My credit score is still 780+
I mean you'd have to try hard to have a bad one.

[jacob]

I have no idea what my credit score is. I've never checked it. Anecdotally, I'm currently getting more spam wanting me to open a savings/money market account for an $n00 bonus than I do credit card offers.

[7Wannabe5]

My friend with net worth over 100 million does not have a perfect credit score. In part it’s a measure of how robust you are, but it is also a measure of how easily you can be milked.