Tougher Credit: How Consumers Should Prepare

It will be tougher to get credit in the months ahead. So what should consumers do?

Amber Dakar, a personal finance adviser with Weiss Research’s Money and Markets newsletter, recommends people pay extra attention to maintaining a good credit score of 700 or better.

“Scores of less than 620 are subprime which means possibly being declined the line of credit or being hit with very high rate,” she says.

Credit scores range from 300 to 850 and the average credit card score is 678.

Consumers will also have to pay attention to the fine print.

Travis Plunkett, of the Consumer Federation of America, says there seems to be rising incidences of “back-end pricing abuses” by credit card companies unilaterally raising  interest rates or imposing “high fees for small problems.”

“It is a risky situation for consumers,” says Plunkett. “Not only is there less credit being offered but to the extent that they have existing balances those balances might be more volatile because of these practices.”

Up to 25 percent of account holders are being hit with such arbitrary, but currently still legal, fees which Plunkett says companies resort to make up for declining revenues.

Last week the House of Representatives passed a credit cardholder “bill of rights"’ with strong bipartisan support (312-11) aimed at curbing a range of common abuses the Federation says traps consumers in a vicious cycle of debt.

Americans have about $850 billion in credit card debt, which represents an average of $17,000 in debt for the roughly 50 million households that do not pay their credit card balances in full every month.