Category Archives: Speaking of Credit

Despite 90% utilization, Dad’s cards can still help your score

This post originally appeared November 16, 2017 on CreditCards.com as “‘I’m an authorized user on high-balance cards; what to do?

By Barry Paperno

Dear Speaking of Credit,
I am an authorized user on six of my dad’s credit cards, but his credit utilization is well over 90 percent on all cards. I am a freshman in college and this is affecting my credit score. Should I ask him to remove me, or will this hurt my score even more?

I have a Discover card in my name now, which I am paying perfectly. I usually pay my small balance off each month or every two weeks.

What should I do to improve my score? The simulator shows that if he pays down his cards $10,000 plus, my score will go up drastically. Should I be patient or not? – Cole

Dear Cole,
When you consider that having your name removed as an authorized user can be as simple as you or your dad making a phone call to the card company, why even wait to drop those 90 percentage points off of your credit utilization?

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How does your credit score measure your oldest account?

By Barry Paperno

Dear Speaking of Credit,
I came across an article you wrote and thought I’d ask you a question I can’t seem to find an answer to – hoping you might know.

I know the age of your credit history matters, but I’m confused… is it the length of age since you’ve opened your first credit card account or is it the length of age of the oldest credit card account you currently have opened? Or is it both?!

I have a card that’s relatively new but still a few years older than other cards that I have, but I want to close this account. But not if the fact that its a couple years older than my others keeps my credit score higher. Thanks! -Jim

Dear Jim,
Along with your newest account and average credit age, it’s the age of the oldest account on your credit report that matters to your score. This is regardless of whether not it was truly your first credit account.

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When you have recent collections, ‘pay for delete’ is best bet

By Barry Paperno

Dear Speaking of Credit,
I’m trying to buy a house but my score is to low but I only need another 40 points to qualify for a FHA loan. That being said I have 3 accounts is collections that I plan on paying off next week. The most recent is June 2016 and the other 2 are 2013 and 2011. Unfortunately I don’t have any cc but I do have 2 car payments.

One collection agency has already said they’d delete upon payment, but I haven’t heard back from the other 2. If I can get all 3 deleted from my record what will that do to my score? Thank you. –Sylvia

Dear Sylvia,
Any impact to your score from deleting those collections will mostly be determined by the dates those collections were assigned to the collection agencies.

In trying to get the collections deleted, something to be aware of is that it doesn’t matter to your score how many collections there are. For collections, only the item with the most recent assign/open date will be impacting your score to any serious degree.

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Behavior scores are another measure of creditworthiness

This post originally appeared November 9, 2017 on CreditCards.com as “‘Q&A: How cardholder behavior can impact your credit

By Barry Paperno

Dear Speaking of Credit,
I have a question about credit scores and how they might be affected by a declined charge.

Here is what happened that prompts my question: I recently had to buy new tires for my vehicle, and it was over $500. My credit line is $500 and I tried multiple times to pay using my credit card, until I remembered my credit limit is only $500.

Now it shows up in my recent transactions as declined. My question is, will this affect my credit score?

I have tried searching this on many sites and even asked my credit card company. I have been finding different answers to my question. Some say I will not be affected, and others say I will.

Any clarification on this matter would be great. Thank you. – Tom

Dear Tom,
Multiple rejections for a charge that would have exceeded your credit limit may or may not affect your credit score. It depends on the type of credit score.

Usually when we speak of credit scores, we mean the “credit bureau risk scores” that rely entirely on credit information from your credit reports at the three national credit bureaus – Equifax, Experian and TransUnion.

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Authorized user card could help your score in different ways

This post originally appeared October 26, 2017 on CreditCards.com as “‘Will adding myself as authorized user to spouse’s card boost my score?

By Barry Paperno

Dear Speaking of Credit,
I just read your article “How average credit account age affects your FICO score,” which I found to be very informative and beneficial.

I have had only one credit card (American Express) since 2001, but noticed that some critical institutions, such as the Social Security Administration, asks users to supply Visa, Mastercard or Discover for the enhanced security features on its website.

If I became an authorized user on my spouse’s Visa card, would they use her start date for calculating my new average age, or would it be as of the date I was added as an authorized user? Thanks for your response. – Dex

Dear Dex,
As more consumers have come to know, an authorized user is someone who has been given permission to use a card account by the primary cardholder.

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First credit card can lead to car loan approval in 6 months

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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Old debt, new collection about to report. Should I pay it?

This post originally appeared October 12, 2017 on CreditCards.com as “‘Q&A: How to handle old debt soon to be sent to collections

By Barry Paperno

Dear Speaking of Credit,
When is it advisable not to pay a years-old account that is just reaching collections if it is going to be reported to the credit bureau as a delinquent account anyway? This account is for time-share maintenance. – Doris

Dear Doris,
It can seem hopeless when you know a collection or other derogatory item will be added to your credit report and remain there for up to seven years. It can also seem hopeless when you know that most of the credit scores used by lenders will continue to allow that collection to keep your score down regardless of the course you follow, whether:

  • You pay off the debt or reach a settlement with the collection agency, or
  • You allow the debt to go unpaid, knowing you cannot be or are not likely to be sued for payment.

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Married or single, to your credit score you’ll always be single

This post originally appeared October 5, 2017 on CreditCards.com as “‘Q&A: How credit utilization is calculated in a married couple’s scores

By Barry Paperno

Dear Speaking of Credit,
How is the credit utilization part of a credit score calculated when a married couple has some credit cards in both names and some in individual names? – Dorothy

Dear Dorothy,
Without realizing it, you’ve provided me with the opportunity to explain not only how a married couple’s credit information makes its way to each spouse’s credit reports and impacts their credit scores, but also to show how easy it can be to raise one or both credit scores when credit card accounts aren’t currently being reported in both spouses’ names.

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Utilization: 0% to 92% leads to huge one-month score drop

This post originally appeared September 28, 2017 on CreditCards.com as “‘Q&A: Sudden spike in credit utilization can cause major score drop

By Barry Paperno

Dear Speaking of Credit,
I have always had a 0 percent credit utilization on my credit card. This month it was at 92 percent because the payment cleared the day after it was reported. My credit score dropped about 100 points.

My question is, when the credit card company reports again and my card is back to 0 percent utilization, will my credit score rebound by about 100 points, or will it slowly creep back up? – Amanda

Dear Amanda,
Hats off to you for being willing and able to pay your card in full (almost) every month. There is nothing better for your credit score and your bank balance.

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Reporting error says ‘you’ closed card? No harm no foul.

This post originally appeared September 21, 2017 on CreditCards.com as “‘Q&A: Should I contest credit card wrongly reported as closed by me?

By Barry Paperno

Dear Speaking of Credit,
I had a long history with a personal line of credit with Bank of America in the amount of $30,000. In May 2016, I was advised that BofA was no longer offering the product and therefore the credit line was “closed.”

I contacted BofA to see if there was a replacement product, other than a credit card. There wasn’t. At the time it was closed, it had a balance and there remains a balance. It has been reported as closed by me.

Should I contest this to find a way to report it as product no longer offered or some other indication, or is it best to leave it as it is? I appreciate any thoughts you may have. Thank you. – Angela

Dear Angela,
From your question, you seem to be well aware that different credit scoring impacts can come from even the slightest of reporting variations.

For example, a card account with a payment history accurately reported as “current” can be better for your score than that same account reported as “current – was 30 days delinquent.”

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