Author Archives: Barry Paperno

Q&A: Mortgage shopping, forbearance, hard & soft inquiries

From a Speaking of Credit reader….

By Barry Paperno

Dear Speaking of Credit,
What is the best way to shop for a mortgage without getting too many hard inquiries?
Before you start, get your reports and FICO mortgage scores (Experian 2, Equifax 5 and TransUnion 4) from — the exact same scores most mortgage lenders use that are only available there. They will cost you about $60, but the inquiries won’t affect your score and you’ll know where you stand with lenders.

Continue reading

Was paying off a defaulted card balance a good idea?

This post originally appeared January 25, 2018 on as “‘Q&A: What to do after defaulting on a credit card

By Barry Paperno

Dear Speaking of Credit,
I recently got defaulted from a Banana Republic credit card for missed payments. That has affected my credit score, and I am now trying to get back on track.

I recently paid off the remaining balance in full and am looking to cancel this card for good.

My question: Was paying off the remaining balance in full the best decision credit-wise? And what do you recommend for me moving forward? – Daniel

Dear Daniel,
Let’s start with the no-brainer answer to your first question of whether paying off the remaining balance was a good idea. Absolutely!

Despite those missed payments that hurt your credit score, you did right by paying off that card balance, since doing so can:

  • Stop additional interest and late charges.
  • Prevent a collection agency from entering the picture.
  • Start the “credit rebuilding clock” ticking.

Continue reading

After paying late, some points return quickly, others don’t

This post originally appeared January 18, 2018 on as “‘How quickly can my score recover from a late payment?

By Barry Paperno

Dear Speaking of Credit,
My credit score dropped over 50 points and my husband’s fell 105 points for one 30-day-past-due car payment. We had been in good standing for almost two years before that mistake.

Will my late payment be reported as paid now that I have paid it? And if so, will that bring the score back up? A drop of 105 points is a lot!

We’ve been trying to work on our credit to buy a house. Thanks. – Tina

Dear Tina,
Sorry to hear of this setback following your diligent credit rebuilding efforts over past couple of years.

As you will see, despite these score losses, your hard work has not been in vain. Yet a good dose of patience may be required over the coming months as you look to undo the credit score damage from this untimely mistake.

Continue reading

Will pay-for-delete raise score when original debt remains?

This post originally appeared January 11, 2018 on as “‘Pay for delete: When it helps credit score, and when it doesn’t

By Barry Paperno

Dear Speaking of Credit,
Regarding Midland Funding and other “pay-for-delete” practices – will it raise your credit score to pay for delete if the original creditor is still reporting the debt?

When Midland deletes, does the original creditor delete also, or do they still report? – Bridget

Dear Bridget,
Rather than assume, as many do, that whenever something negative disappears from your credit report your score automatically increases, you’re correctly questioning whether that will indeed be the case with a “pay-for-delete.”

pay-for-delete is an agreement between a collection agency and a consumer to remove a collection account from the consumer’s credit report in exchange for payment in full or a settlement for less than the full amount.

Continue reading

Don’t expect much score change with Chapter 13 discharge

This post originally appeared January 4, 2018 on as “‘Is bankruptcy discharge a credit scoring factor?

By Barry Paperno

Dear Speaking of Credit,
I was wondering by how many points I might expect to see my credit score increase when my Chapter 13 debt is discharged next month.

The terms of my Chapter 13 agreement allowed for me to open up to $2,000 in new credit, which I did, and my score has improved some.

Unfortunately, I now have two hard inquiries and a short average age of credit that are keeping the score down.

Can I expect to see a decent rise in my score just due to achieving discharge, or is that not really a factor? – Denise

Dear Denise,
As you reach the discharge milestone of your Chapter 13 bankruptcy, you have good reason to breathe a sigh of relief at finally being free of any remaining debt following the required three- or five-year repayment plan.

As usual, the best way to know where your score is going is to understand how it got to where it is.

Fortunately, that direction has been upward, thanks largely to a couple of important sets of scoring calculations working in your favor:

  • Adding new positive credit, as noted in your question.
  • The length of time since your most recent “derogatory” item – something you may or may not already be aware of.

Continue reading

Some good credit news and advice for apartment hunters

This post originally appeared December 28, 2017 on as “‘How multiple apartment rental credit checks affect your score

By Barry Paperno

Dear Speaking of Credit,
If I need to run multiple credit checks for new apartment rental approval applications, will this affect my credit?

Also, if I get declined by one or two or more complexes before I find one I want, and then get accepted to move in, will the declines from the prior applications affect my credit? – Robert

Dear Robert,
The topic of how inquiries influence credit scores can be an interesting one. Despite inquiries typically making up less than 10 percent of a credit score, they tend to attract a disproportionate amount of attention from consumers, maybe because of the mysterious and nonintuitive nature of inquiries.

Mysterious, since different kinds of inquiries are not always clearly identified on a credit report.

Nonintuitive, because unlike the more obvious measurements of creditworthiness – payment history and how much you owe, for example – it can be hard to see why your score should drop simply because a creditor or landlord checked your credit.

Continue reading

Break off that personal trainer contract with score intact

This post originally appeared December 21, 2017 on as “‘How to cancel a gym contract without hurting your credit

By Barry Paperno

Dear Speaking of Credit,
Hi! I have an awful personal training “contract” with a well-known fitness gym. They haven’t kept any of their promises and all of the trainers are nowhere near qualified. I’m totally done with it. I know it’s not a real contract as far as credit goes, and they can’t report me to collections.

I recently opened two new credit cards to strengthen my credit, which is already pretty good, around 730. I no longer need to use the credit card that I have this account tied to.

If Bank of America will continue to allow the transaction through even if I change the card, my question is, should I close the account or will it hurt my credit since it happens to be my longest-standing card? It’s currently empty, and I have had it for about 11 years, and the other two only this month.

I read somewhere that when you close accounts they are still on your history, and you will only notice a difference if there is a significant difference in the amount of time that your cards have been opened. It may make your credit history look half as long.

This doesn’t really make sense to me. Is this true? Do they divide your time after your close an account? Will it significantly affect my credit if I close this one? Thank you so much for your advice! – Amanda

Dear Amanda,
When a business fails to deliver on its promises or simply doesn’t satisfy you, it can be easy to make a well-intentioned but foolish move that can demolish a good credit score. Considering your excellent 730 score, it’s good that you’re asking these questions.

Continue reading

Is your score always better when it includes a paid-off loan?

This post originally appeared December 14, 2017 on as “‘Adding paid-off credit account to my report; is it worth it?

By Barry Paperno

Dear Speaking of Credit,
I purchased a vehicle from a dealership and paid off that vehicle. How can I add that payment history to my credit report and credit score? – Groanis

Dear Groanis,
It sounds like the dealership provided you with financing that wasn’t reported to the credit bureaus.

The loan’s omission from your credit report most likely resulted either from a reporting error or the lender simply choosing not to report loans to the credit bureaus.

Continue reading

Why do you never seem to see the same FICO score twice?

This post originally appeared December 7, 2017 on as “‘Q&A: ‘Why is there a difference between my credit scores?

By Barry Paperno

Dear Speaking of Credit,
I have been working on my credit for about seven months. All of my FICO 8 scores are around 700, but my mortgage scores are Experian v2 at 612, and TransUnion 4 at 645.

How can I raise these scores? Why is there such a difference? – Charles

Dear Charles,
Whatever depths your credit scores have risen from over the past seven months, you should feel good about those FICO 8 scores reaching the 700 mark.

But then, with those TransUnion 4 and Experian v2 scores so much lower – about a 78-point spread from highest to lowest – you may have good reason to feel like something isn’t right.

Yet there may be nothing wrong with your scores. You may simply be seeing your scores just doing what scores do, as part of a complicated credit reporting and scoring system made up of many moving parts.

Continue reading

Can the ‘high balance’ for a card or loan affect your score?

This post originally appeared November 30, 2017 on as “‘Q&A: ‘High balance:’ What it is, how it impacts credit score

By Barry Paperno

Dear Speaking of Credit,
How is the “high balance” amount on my credit report calculated? Does it affect my credit score in any way? – Patrick

Dear Patrick,
The “high balance” (also called “high credit” or “original amount”) is an oftentimes overlooked item on a credit report trade line that reflects the highest amount owed on that account over a set period of time.

The few score calculations that rely on this information fall within the “amounts owed” credit scoring category, which makes up 30 percent of your score.

For most consumers, these “high amounts” have little effect on their scores. Yet, as you’ll see, there are occasions, particularly with credit cards, when this high amount can seriously affect your score via one of the most influential sets of score calculations – revolving utilization.

Continue reading