Released: October 05, 2007

Are credit cards cleaning up their act?

Source: Aleksandra Todorova, SmartMoney.com

The phone call Kevin McKenna received from Chase bank several weeks ago was as shocking as the news: He had been 90 days late on his credit-card bill and, as a result, his account was about to be closed.

This was a first. The 43-year-old computer consultant from Westford, Mass., had never been late with a payment in 25 years. He didn’t use the Chase card much, charging $100 or so a month and always paying it in full as soon as he received the bill.

But in the past three months, Chase hadn’t sent him one bill. Without McKenna’s knowledge — or, he says, authorization — the bank had switched him to paperless billing back in June. Without a bill, McKenna says he simply didn’t think he had a balance to pay off. “I have several credit cards,” he explains. “It’s hard to track what you charge on each. And if you don’t charge anything, you typically don’t get a bill.”

That tiny omission has had disastrous consequences for McKenna’s credit score. Once in the 800-plus range — a score typically only achieved after many years of impeccable payment history, according to Fair Isaac spokesman Craig Watts — McKenna’s score has now slipped to 650, which many lenders consider subprime.

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