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

This post originally appeared December 7, 2017 on CreditCards.com 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.

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

This post originally appeared November 30, 2017 on CreditCards.com 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.

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Balance transfer will save money; what will it do to my score?

This post originally appeared November 23, 2017 on CreditCards.com as “‘How a balance transfer to 0 percent card affects score

By Barry Paperno

Dear Speaking of Credit,
My wife and I have recently gotten our scores into the 700s again. We both got new cards. Mine is 0 percent APR for 21 months. Hers has great flight miles (she has higher-interest cards she would like to transfer to hers as well).

But when I use Capital One’s credit score simulator, it says I would kill my score by 40 points if I transfer balances to the new card. The same thing happens to my wife’s score.

My old cards have high interest. Everywhere I read, it says balance transfers should not hurt.

I’m very concerned about this. What gives? Thanks in advance for your time. – Scott

Dear Scott,
It’s good to hear of your successful credit rebuilding results. You’re now experiencing at least one of the perks of a higher score: qualifying for a 0 percent balance transfer card. Good work!

So, why if your score is supposedly on the upswing should it then drop by 40 points, as the simulator predicted, when all you’ve done is move existing high-interest balances to a new lower interest rate card?

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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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