FICO Scores are Starting to Drop - But Why NOW?

Back on August 10, 2008 I wrote a blog post about the tightening credit and its ramifications and I ended the title of it with "...and Watch Your FICO Scores DROP!"

And it's begun to happen - I just don't understand why it didn't start sooner. When some of your available credit is taken away your ratio of outstanding debt to your available credit changes, for the worse. Whereas you may have had a credit card with a $10,000 credit line and only $2,500 owed on it you had a 25% debt ratio. If they reduced your credit line to $2,500 you would now have 100% debt ratio - not good for your FICO score.

I have monthly monitoring of my credit reports and score and have been surprised to not see any change at all to my FICO score even though as with many others I have had credit card companies reduce some of my credit lines.

But today I checked my daughter's report and saw her score dropped 28 points and yet not one thing has changed in her file since last month and surprise of surprise, last month it dropped 28 points as well! Absolutely nothing in her file had changed over those two months but her score has dropped almost 60 points. She has "excellent" in all the categories except for "length of credit history" because she's only got a few years of history.

I hadn't gotten my monthly notice on my account so I popped over there and lo and behold my FICO score is now beginning to drop as well.

What does this mean? Well, I'm not sure...it should have happened months ago when credit began being shut off, but it didn't.

But now suddenly the scores are adjusting downward. Odd isn't it? The government is pushing for the financial institutions that they gave bailout money to to actually use it to give credit to consumers again, but suddenly all of us don't look as good on paper any more - in some cases for no apparent reason. Are these institutions now going to point to our lower FICO scores and use it as an excuse not to lend?

Just what is going on? Seems like your guess is as good as mine, but it doesn't look good any way you look at it.


5.25% APY on a Free Checking Account? For Real!

Well leave it to my son (just about to turn 20!) to tell me about a deal that sounds too-good-to-be-true, but seems to check out!

He learned early that you want your money to make money, so he's always looking for ways to do that...earlier there were some creative ways that didn't really make sense (LOL!). But talking them through gave him a better understanding of what he could and should look at.

So he and I were talking last night and he told me he found a site that lists the best interest rates at banks and found www.americanetbank.com that is giving 5.25% APY interest on their Rewards Checking Account. So, not wanting him to be "taken" I checked them out. And they seem to be for real.

A totally online bank (no branches) and a part of All America Bank in Oklahoma City, OK that was established in 1969. AmericaNet Bank® is a trade name and trademark owned and used by All America Bank®. A division of All America Bank® - Member FDIC.
There are reviews by both BankRate.com, which I have followed for a number of years for their articles and information, and BauerFinancial.com which was new to me but also seems to be a good resource. I also googled them and couldn't find any complaints, etc. (which some of the other online banks did have, BTW). And here is a link to the most recent FDIC data and report on it: FDIC Report

Both BankRate.com and BauerFinancial.com give it 4 stars out of 5 . The information on BankRate.com which they used to evaluate it is free, the information on BauerFinancial.com is available for a small fee, but the rating is published for free.

Now, there are, of course, requirements in order to get that interest rate - but they are not difficult, you just need to be aware of them (this is from their site):

"The only requirements are:

Make 10 AmericaNet Bank® VISA® CheckCard sales transactions**
All statements are received electronically

At the end of your statement cycle, ATM fees charged by any bank worldwide are automatically refunded in one lump sum. At the same time, you will be paid interest earned by your account. Interest earnings of 5.25% APY* are calculated on your average daily balance of up to $25,000. Amounts over $25,000 will earn 2.25% APY*."

REWARDS CHECKING is a free personal checking account that offers the highest possible interest rate of 5.25% APY*. No minimum balance is required. REWARDS CHECKING offers the added convenience of an AmericaNet Bank® VISA® CheckCard to access ATMs worldwide and for secure debit card purchases. Enjoy all of the great benefits of a REWARDS CHECKING account: 5.25% APY* FREE Online Banking FREE Checking FREE AmericaNet Bank® VISA® CheckCard FREE Customer Service FREE Daily Email Notification if Overdrawn FREE ATM Transactions Worldwide Overdraft Privilege Available NO MINIMUM BALANCE
*APY is Annual Percentage Yield **Requirements must be met each monthly statement cycle to receive the rewards. There are no rollover transactions. The monthly statement cycle ends on the 3rd Wednesday of every month. Qualifying VISA® CheckCard sales transactions include each time you use your VISA® CheckCard to make a purchase from a vendor or merchant. ATM and ACH transactions do not qualify. Limit of two Rewards Checking accounts allowed per individual.

Some other places that I found information on them was at http://bankdeals.blogspot.com and at www.bankaholic.com - so check it out for yourself...I'm not a financial advisor so do your own research and make your own decisions.