Complaint Review: Fingerhut - Internet

Aloha Robert, thank you for the exhaustive response.  I have spent the past 4.5 years getting my credit score back on track and know all of the triggers.  Believe me Fingerhut did not hold me at bay for too much of an effect but every little bit can hurt someone struggling to regain a higher score.  I watch my score continually and was alerted when the credit limit was reduced.  I hope others that are reading have learned something from both of us and will fight back when and where they can. 

I, as well understand that this a tactic being used by other companies offering revolving lines of credit so the caution to select the best credit is important to a better credit score. 

Thank you again.   

 The first one I received got me interested in looking at Fingerhut opportunities however, when I did not use the minimum required to maintain the increased line of credit, it dropped back down.  Low and behold so did my Credit Score.

- Your score is made up of several factors.  For your FICO(the most widely used scoring model) your score is made up of the following items.

Payment History - 35%

Amounts Owed - 30%

Length of Credit History - 15%

Types of Credit - 10%

New Credit - 10%

Do you notice the one thing that is NOT a factor?  Your credit limits.  The reason is that your credit lines are NOT a direct determination of your credit score.  They go into your usage score(Amounts Owed).  There is a debt to credit ratio that ideally you need to be under 30% usage, the best credit is under 10% usage.  This means that if you have total credit lines of $1000, you should not be using more than $100 of your credit for the best scores.  If you get above 50% and especially into the 80-90% range you are considered "maxed out" and that is a huge negative.

Now why is this important.  Because let's say you had a $1000 credit limit with Fingerhut and you had used $400.  Your usage then becomes 40% and can bring down your score.  Now, you get an increase to $1600, you have still used the $400 but now your usage is only 25%.  So when they increased your limit...they also increased  your score.  Then your limit goes back down to $1000 and yep...your usage is back at 40%...right where you started.

Of course your score is dynamic and can change every single day, it all depends on what is being reported on that specific day.  Contrary to what you think there is no "rolling" reports that keep track of your credit line increases or decreases..only what they are at that time goes into your score.

Now, while I applaud you for actually standing up for what you believe in by closing your account.  That may not have been the best move.  As you see another factor is credit age.  The longer you have had credit..the better.  If this card was one of your longest cards, or even your longest you have just shorted your credit age along with your available overall credit.  For example if this card was 10 years old, and your next closest card was 6, you have just reduced your credit age to 6 years.  Also, if you had a total credit line of $5,000(for example) and you closed this card of $1000(for example) your new credit is only $4000 and  your ratios will be determined off of that.

Now, I am sure you are dismissing every single word I wrote and probably are going to accuse me of working for Fingerhut.  So let me first just say that no I do not now or have I ever worked for Fingerhut.  And if you don't want to believe me then at least take the time to talk to a banker, mortgage broker, credit counsler or any one who actually WORKS with credit on a daily basis.  Just don't be surprised if they tell you basically the same thing.

So let me repeat.  At least you have the backbone to actually do something and instead of just whinning...you went and closed your account.  Even though that may not have been the smartest move That puts you well above many people who post "ripoff's" on this site.  As they would prefer to just complain and sit on their *ss.