Make your credit score excellent again!

This post originally appeared February 2, 2017 on CreditCards.com as “Canceling new card won’t restore credit score

By Barry Paperno

Dear Speaking of Credit,
I have three credit cards with average age of 15 months. My credit score was excellent. I applied for a new credit card from at a store four days ago. I got the approval, but it has impacted my credit score negatively. Regardless of the hard inquiry, I want to cancel it to regain the age of my credit history and higher credit score. If I close it, will I regain my previous score? What’s your suggestion? – Hanna

Dear Hanna,
One of the great things about having an excellent credit score is that for the most part you can just continue to manage your credit as you’ve always done, often without even giving it much thought. Another great thing about an excellent score is that as long as payments continue being made on time and credit utilization (card balances/credit limits ratio) is kept as low as possible, the score can recover relatively quickly – typically within six months – from some of the lesser “offenses,” such as opening new accounts.

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Let excessive inquiries fade into the distance

This post originally appeared January 19, 2017 on CreditCards.com as “Credit pulls hurt score, but only once

By Barry Paperno

Dear Speaking of Credit,
I recently went to a dealer, with a finance certificate in hand, to purchase a vehicle. I was advised that they needed my information for their records, but they would not pull my credit. They not only pulled my credit, but they did so seven times. I know my credit score and know that I am not eligible for standard financing at this time as I filed bankruptcy three years ago. This is why I went to the dealership with financing. I had been shopping around for the right car for about 16 days. They pulled my credit. What can I do? I have a 10-point decrease on my score as a result. – Natasha

Dear Natasha,
You were clearly right to prepare yourself with a finance certificate, knowing you wouldn’t be eligible for the better rates with a low post-bankruptcy credit score. The car dealership was clearly wrong to check your credit score after promising it wouldn’t.

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Left country for 6 months & forgot about card payments

This post originally appeared January 12, 2017 on CreditCards.com as “Your 6-months-with-no-payment credit score comeback plan

By Barry Paperno

Dear Speaking of Credit,
I went to travel to India for six months. Forgot a credit card payment for that long and the communications sent to my home were not accessible. In spite of 30 years of an excellent score, it went down from 830 to 640. How can I revert to my good score? The credit card company responsible for lowering my score refused to correct it. What should I do now? – Rajagoapalan

Dear Rajagoapalan,
If it hasn’t happened yet, you’re about to learn from the school of hard knocks just how hard it can be for a credit score to recover following six months of late payments on a single account. As the strongest predictors of future credit risk, missed payments are the hardest mistakes for your score to overcome, particularly when compared to the damage from high card balances, new accounts, inquiries and other red flags to future trouble.

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7 quick ways to a better credit score

This post originally appeared January 5, 2017 on CreditCards.com as “7 steps: Clean up your credit by spring

By Barry Paperno

New home or other major purchase coming up this spring? If so, the time to start shaping up your credit score is now. Unlike slimming down at the gym, a buffed score doesn’t have to cost anything or even require getting up from the sofa.

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With late payments, what you’ve done lately matters most

This post originally appeared December 29, 2016 on CreditCards.com as “Late payments’ recency, frequency, severity dictate score damage

By Barry Paperno

Dear Speaking of Credit,
We have huge amounts of credit card debt, but yet to date we have never been late on a single one. It is getting harder and harder to make those payments. What if I quit paying one but continued to pay all the others on time? How does that affect credit scores? – Jim

Dear Jim,
I hope you’re not seeing this scenario – letting one card go unpaid while paying the others – as a true solution to your debt problem. Unless you can soon find a way to begin paying at least the minimum amount required on each card, I’m afraid you’re going to lose this battle.

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Credit score is more crystal ball than report card

This post originally appeared December 15, 2016 on CreditCards.com as “How credit scores attempt to predict the future

By Barry Paperno

Dear Speaking of Credit,
Barry, not a question. A comment. I read your explanation as to why “hard pulls” lower your credit score. What I think I boiled it down to is this: it is based on statistical trending, not on me. Now, my score is 825, so I am not particularly worried, except that I do NOT dip in my likelihood of paying on time because of, say, a new loan for a (used) car. So I take exception to the assumption that I will perform like the statistical masses and start paying with lower consistency.

This feeling is further exacerbated because they know enough intimate detail about my history to be 99.9 percent certain that there will be no fluctuation, since there never is. So, in the end I take exception to the practice as unnecessary on such a broad scale and with so much INDIVIDUAL historical information available. – Christopher

Dear Christopher,
Considering the abundance of historical credit information on file at the credit bureaus, I agree that your 825 credit score – out of a maximum of 850 – should leave no doubt that over the years you have managed your credit exceptionally.

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Maxing-out credit limit for balance transfer can hurt score

This post originally appeared December 8, 2016 on CreditCards.com as “With balance transfers, watch your individual card utilization

By Barry Paperno

Dear Speaking of Credit,
One of my older cards is offering me a 0 percent interest rate until May 2018. I’m tempted to transfer my Wells Fargo card balance of $4,750 at 9.5 percent to it. It will be the second time this year that I’ve moved money to take advantage of a 0 percent offer. Will my score take a hit or not? Note that these two cards in question are already on my credit report. – Heather

Dear Heather,
Whether your score takes a hit will likely hinge on a seldom discussed set of card utilization (balance/credit limit percentage) calculations within the “credit utilization” scoring category – the individual card calculation.

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Lower utilization, higher score, thanks to paying early

This post originally appeared December 1, 2016 on CreditCards.com as “Small credit line? Pay early to boost your score

By Barry Paperno

Dear Speaking of Credit,
I have a credit card that has two late payments on it from two years ago. I only have two credit cards in total (and no other open loans or other credit). This card has been open the same amount of time as my other card (in fact, two months less than my other card). I usually carry a zero balance on both cards (using them only for small amounts, and clearing them each month). Problem is, the two old missed payments are bringing my payment history down to “poor” (97%) and as I don’t have a lot of credit, it’s taking years to get it up. Would I be better off closing this card? It wouldn’t alter my “age of credit” at this time (unless I took out a new loan/card – which I’m not planning on). Thank you. – Charlie

Dear Charlie,
There are times when the best thing you can do is simply more of the same. You’re about to find out how that might just be true for your situation.

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Beware of mixed credit files when SSN & DOB are not used

This post originally appeared November 24, 2016 on CreditCards.com as “Mixed credit files: how to avoid them, fix them

By Barry Paperno

Dear Speaking of Credit,
I noticed when I was added to my spouse’s credit card as an authorized user, information such as my Social Security number was not requested. How does my spouse’s credit card history appear on my credit reports without pertinent info such as my Social Security number not being asked of me? Thank you. – Rey

Dear Rey,
As you have learned, it doesn’t take very much identifying information for an account to appear on your credit report. It has happened to you as an authorized user, and it happens to many others. In your case, it’s benign. You wanted to be added as an authorized user, and without fuss, it happened. But for others, it’s a big problem.

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Overcharged! What if I refuse to pay?

This post originally appeared November 17, 2016 on CreditCards.com as “Witholding payment after dispute goes against you

By Barry Paperno

Dear Speaking of Credit,
I was overcharged on my credit card by a merchant who used his brother to distract me while signing the credit card slip. If I refuse to pay the amount on my credit card bill because the credit card company sided with the merchant and is holding me liable, how much damage will that cause to my credit? How do I best get out of this situation without long-lasting effects? I am sick over this whole transaction. He overcharged me $3,000. Any help or advice will be greatly appreciated. – Diana

Dear Diana,
It’s unfortunate that you weren’t able to work this out with the merchant. It also doesn’t help that the card company took the merchant’s side in your dispute. Having been left without much in the way of options, you are right to be asking about the consequences to your credit of simply refusing to pay the bill.

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