This post originally appeared April 12, 2018 on CreditCards.com as “Too many new cards hurt my score. Should I cancel them?“

By Barry Paperno

Dear Speaking of Credit:
I ran into an issue this past year by opening up too many lines of credit. Previously, I had a pretty decent score for being only 25 years old.

I have a few cards that are not carrying any balance, and I’ve had them for more than six years now. The problem is, this past year I opened too many lines of credit and I think it hurt my score.

I went from an average credit age of around four years to now around two, and there probably were too many hard inquiries.

My score dropped around 35 points, and I’m not sure what I can do to raise it. I am only using around 20 percent of total credit, too.

Would it help to pay off and cancel some of these newer accounts? Or should I just ride the bullet and hope for the best. – Jordan

Dear Jordan,
Good for you at having amassed such an impressive credit history at such a young age. Unfortunately, you now seem to be seeing why credit experts always recommend opening new accounts only when necessary.

Despite not knowing your credit score, just knowing you have been able to obtain multiple new accounts with so little prior history tells us your score must have been a good one – over 700 – before the drop.

And even after having dropped 35 points, your credit score might still qualify you for even more new credit.

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This post originally appeared March 22, 2018 on CreditCards.com as “Can decades of excellent credit disappear from my report?“

By Barry Paperno

Dear Speaking of Credit,
I’m 57. I’ve had credit since I was 18. Car loans. Mortgage. Credit cards. Personal loans. Business loans. Always had excellent credit.

About 10 years ago I paid everything in full. Stopped using credit cards, and pay cash for everything. I have no debt.

I recently went to get a new vehicle and they said I have a zero score. They then showed me my credit reports, and all three had nothing on them. It was like my entire credit history had been erased.

So now I’m debt free, need a loan, and no one will touch me. What happened to 40 years of credit? How do I fix this as quickly as possible?

I see offers of secured cards – but is that the best route, and is it safe? I would greatly appreciate any info or help you could give me on this subject. Even my home loan paid off early is gone. Very perplexing. Thank you. – Robert

Dear Robert,
Perplexing is as good a way as any to describe the feeling of waking up one day to find that 40 years of credit history have gone missing.

And though it might feel like your credit just suddenly disappeared when you weren’t looking, what you’re witnessing is the most likely result of a gradual process in which “old” information is removed from credit bureau files little by little over time.

To help you work your way out of this jam, let’s take a look at how long cards and loans remain on credit reports, how long they continue to affect credit scores once paid off and closed, and lastly, what you can do to once again be able to obtain financing when you need it.

But there’s a catch. The remedies to your dilemma all require returning to that world of creditors and credit bureaus you left behind more than 10 years ago.

There’s simply no other way, since few lenders will loan to you without some track record. So, if you’re willing to jump back in the water, read on.

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This post originally appeared January 25, 2018 on CreditCards.com 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.

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This post originally appeared October 19, 2017 on CreditCards.com as “‘Q&A: How to achieve a good credit score as a first-time cardholder”

By Barry Paperno

Dear Speaking of Credit,
This is my first time owning a credit card and I want to know if it is possible for me to finance a car after six months of having the card, while keeping a good credit score. – Joseph

Dear Joseph,
Congratulations on your first credit card! Cards can be both a blessing and a curse. On the plus side, they can help your score tremendously with consistently on-time payments and low credit utilization – the amount you have borrowed compared to your credit limit. And yet just a single missed payment or maxed-out balance can send that score plunging.

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This post originally appeared August 3, 2017 on CreditCards.com as “‘Q&A: Best strategy to raise my credit score beyond 750?”

By Barry Paperno

Dear Speaking of Credit,
I currently have two credit cards ($5,000 credit limit on each). I’m looking to boost my credit score above the 750 mark, and I’m just a few points shy. I maintain less than a $100 balance combined across the two cards, and I know a low available credit/credit used ratio can help boost your credit score.

Should I apply for a third credit card or ask for a credit limit increase from one of my existing cards? If I ask for a credit increase, how much should I ask for? I am gainfully employed and make over $50,000 a year. I have $18,000 of student loans, but I’ve paid $5,000 off in the past four months. – Bronn

Dear Bronn,
You’ve provided us with a great reminder of how the best strategies for raising credit scores are often the easiest to implement. Particularly in a situation like yours, in which you’re already doing right by your score and have a good one to show for it.

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This post originally appeared July 27, 2017 on CreditCards.com as “‘Q&A: Why a recent graduate should get a second credit card”

By Barry Paperno

Dear Speaking of Credit,
I am 22 years old and have had a Chase Freedom credit card for about three years now. I always pay my balance on time and have never been late. I try to use the card as often as possible.

I recently graduated from college and am looking for ways to help increase my credit and set me off in the right direction. This past month I accumulated two hard inquiries on my credit for a car lease and for an apartment. I am going to be attending graduate school for the next two years.

I was thinking of applying for a second credit card, but I am not really sure what to do. I guess my questions would be whether I should get a second card, and if so, which card should I look into? – Vin

Dear Vin,
Congratulations on graduating college. Achieving both a diploma and a three-year credit track record by age 22 says you’re already headed in the right direction.

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This post originally appeared July 20, 2017 on CreditCards.com as “‘Q&A: Missing a card payment to build credit is terrible advice”

By Barry Paperno

Dear Speaking of Credit,
I am 18 years old and have been approved for a card with a $500 limit. I spoke to an associate with my bank who told me that it would be a good idea to not pay the balance on my credit card for the first month. He said that because I have no credit history, and this is my first billing cycle ever, it would be a good idea to let the balance carry over and then pay it off at the beginning of the next billing cycle. He told me to not even make a minimum payment.

From that point on, he said that I should pay my balance off in full each month, which is what I was planning on doing from the beginning. His reasoning for this was to show the credit bureaus that I at one point had a balance, and then I paid it off, as opposed to always having a zero balance because I’ll pay off the card every month.

I was under the impression that letting a balance carry over would always be a bad idea. Is there any truth to what the associate told me? I only care about what will build the most credit. The interest doesn’t matter to me because I have a 0 percent APR for my first 12 billing cycles. I really appreciate the help. – Zeeshan

Dear Zeeshan,
If that isn’t the worst piece of credit advice I’ve heard in a long time, I don’t know what is. Good for you to be questioning it.

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This post originally appeared March 2, 2017 on CreditCards.com as “‘A two-step plan for building young credit”

By Barry Paperno

Dear Speaking of Credit,
Hello! So I have had a credit card for about seven months now and wasn’t exactly using it how I should have and now have a low credit score. Since I found this out, the card has been paid off.

I just opened another account thinking I can use both and keep them under 30 percent of their limit and pay them off monthly to help. Is this a good idea or not? I have already been approved for the new card and it is on its way. Afterward I read that having two cards with a low balance can actually hurt your credit. If so what should I do? Neither of them have fees and both have low interest. Thank you! – Alyssa

Dear Alyssa,
When saying you weren’t “exactly using it how I should have,” let’s assume you were 1) late on at least one card payment, and 2) running a high balance, as late payments and high credit utilization tend to go hand-in-hand. This is especially true when the credit file is thin and the length of history short.

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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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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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