Account access for authorized users can vary among cards

This post originally appeared June 8, 2017 on CreditCards.com as “‘6 questions to ask when adding an authorized user to your card

By Barry Paperno

Dear Speaking of Credit,
I have a few questions regarding adding an authorized user to my Chase Sapphire Preferred card, that I can’t seem to find answers to online. My girlfriend needs to begin building her credit score, and I see this as a potential opportunity to help.

1. Do I maintain full access to the account?

2. By adding her, would my “credit limit” of $5,000 increase to $10,000 because of the second card?

3. Will she have to pay an additional annual fee?

4. Will my account receive the miles/points for the money she spends?

5. Can I pay off balances early to maintain below a 35 percent balance to mitigate the title of “risky cardholder” to credit agencies? For example, if 35 percent of $5,000 is $1,750 per month, but we each spent $1,000, can we do it in a way in which the balance is never over $1,750?

6. How do I keep the authorized user’s purchases separate from mine? Does each card have its own separate balance on my account?

Not sure if you can answer all or any of my questions, but I appreciate you taking the time to reply. – Nathan

Dear Nathan,
It’s good of you to help your girlfriend begin to build a credit score. It’s also good that you’re asking these questions now, before adding her to your card as an authorized user.

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Some consequences of opening & closing cards to consider

This post originally appeared June 1, 2017 on CreditCards.com as “‘How will closing secured card, opening unsecured card affect credit?”

By Barry Paperno

Dear Speaking of Credit,
I have a CD at USAA for $500, which secures my USAA American Express card for a $500 limit.

My FICO score is now where I can qualify for an unsecured card, but USAA will not convert my AmEx to an unsecured card. They insist I have to close the AmEx and open a new unsecured AmEx.

Will that affect my credit score? Will I lose all of the good credit history? – Jerry

Dear Jerry,
Great job of using that secured card to help rebuild your credit! Now that your score qualifies you for an unsecured card, it’s smart to be concerned about any possible credit scoring effects from closing the secured card and opening a new unsecured one.

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Balance transfer could hurt your high score. Do it anyway.

This post originally appeared May 25, 2017 on CreditCards.com as “‘Balance transfer plus new debt will lower your credit score

By Barry Paperno

Dear Speaking of Credit,
I have $12,000 on a Wells Fargo card and $8,000 on a Citi card, plus I need to use about $10,000 more to move across country to work on my doctorate. My scores are Equifax, 765; Experian, 797; and TransUnion, 755. I have a couple of other cards that I’ve had a long time with a $0 balance on them.

I can easily do a $0 balance transfer on them and get what I need to get me moved, plus pay off the existing two cards. I’m really worried about how much this will make my credit score go down if I have an extra $10,000 on a credit card.

I don’t want my score to change too much because I’ve got to rent a place there, too. Is there a way to determine or calculate how much my score would go down? – Jacky

Dear Jacky,
One of the things that make credit scoring such an intriguing puzzle for many of us is that, no, there isn’t a reliable way to calculate how many points are likely to be lost or gained by a specific action. But we can get close if you’ll bear with me.

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Credit or no credit, anyone can have a collection debt

This post originally appeared May 18, 2017 on CreditCards.com as “‘No credit? Unpaid debts can still be sent to collections

By Barry Paperno

Dear Speaking of Credit,
Can someone send you a credit collection notice even if you have no credit yet? Does it affect your credit score in the future? – Renz

Dear Renz,
Yes, you can be sent to collections over that past-due debt, even if you don’t have any credit. And if that collection agency reports the debt to a credit bureau, though you may not have credit or other unpaid debts, you wil have a credit report listing only this collection. You won’t, however, have a FICO credit score just yet.

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Consolidation loan, not BT, may be your best bet

This post originally appeared May 11, 2017 on CreditCards.com as “‘Loan can boost score faster than balance transfer deal.”

By Barry Paperno

Dear Speaking of Credit,
I was offered a balance transfer and a $3,000 raise on my credit line on a card I already have, no hard inquiry. I transferred $1,900 (39 percent use); $600 (38 percent); $1,050 (59 percent); and $400 (5 percent) from different cards to the card that had 66 percent use before limit increase. Now I have seven credit cards at or below 5 percent and the one probably at or near 100 percent with a lower APR than the transfers.

I  also have other things on my credit: a loan with set repayment one-third paid off, and a furniture account that shows as a credit card at about 50 percent use. My credit score is now 668, before all this goes through. What do you think I can expect?

Also, the original balance on the card used for transfers will take my payment first, and, by the time I get to the end of the promotion I will still be paying on that original balance. But the APR is still lower than on the transferred balances. Should I seek to transfer that balance at some point to get a better APR? Or would a new card or loan be better? – Diane

Dear Diane,
Despite all of your hard work reducing the credit utilization percentages (balance/credit limit) on most of your cards, and even though that $3,000 credit-limit increase may have helped slightly, I wouldn’t expect to see a score increase of more than a few points from this balance transfer.

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How does card paid off 10 years ago help my score?

This post originally appeared May 4, 2017 on CreditCards.com as “‘Is credit card paid off 10 years ago lowering my score?”

By Barry Paperno

Dear Speaking of Credit,
How can I delete old credit card records that were paid off over 10 years ago? They are bogging down my credit score?! – Christal

Dear Christal,
You’re going to be glad you asked this question. As you surely know, we consumers cannot simply delete negative information – for example, late payments, collections or bankruptcies – from our credit reports. By the same token, we are also denied the option of having positive information, whether old or new, removed from our credit reports.

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Is paying off a closed card making matters better or worse?

This post originally appeared April 27, 2017 on CreditCards.com as “‘Will paying down closed card debt help my credit score?

By Barry Paperno

Dear Speaking of Credit,
I went through some tough times and wasn’t paying on the credit card I have through my bank. The bank ended up closing the credit card account. I have been making payments on the “closed card” for about six months now. Is this helping my credit score in any way? Or is it making my score worse because I have a “closed” account?

No matter what I do I can’t seem to get my score above 640. I have another credit card I make regular payments on, and I have a personal loan through my bank that is on automatic pay each month. My husband and I want to buy a vehicle and a house within the next couple of years, but I would like my score to be above 700. How do I get there? – Aislynn

Dear Aislynn,
Let’s take a good look at how that closed card might be impacting your credit score now that you’ve been paying on time over the past six months, and what the future may hold.

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Credit basics podcast with Barry Paperno

This podcast originally appeared April 26, 2017 on CreditCards.com as “‘Charged up! podcast. Credit 101

Barry Paperno, a credit industry veteran and columnist for CreditCards.com, is an expert in the credit scoring game. In less than 30 minutes, Paperno educates us on Credit 101: What matters most, how to raise your score quickly, what makes a perfect credit score and the biggest mistake people make when it comes to their credit. Since credit affects our lives in a myriad of ways – from buying a home to getting a job and even renting an apartment, knowing the ins and outs of how the system works can save you a lot of money and a lot of anxiety down the line. Whether you have faced bankruptcy in the past or are new to the credit arena, this podcast will teach you what you need to know to master the credit game.

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Your score could benefit from this credit reporting change

This post originally appeared April 20, 2017 on CreditCards.com as “‘Will removal of civil judgments boost my credit score?

By Barry Paperno

Dear Speaking of Credit,
I have a 5-year-old civil judgment for an unpaid credit card debt on my credit report. I recently read about a new law that will force the credit bureaus to remove judgments and tax liens from credit reports. Is this true? And if so, how much will my credit score benefit from that judgment being gone? – Jake

Dear Jake,
Yes, some new credit reporting practices on the horizon could affect your credit reports and scores. Most notably, beginning July 1, 2017, and arising largely from the 2015 National Consumer Assistance Plan, the big three national credit bureaus – Equifax, Experian and TransUnion – will only be allowed to add tax liens and civil judgments to your credit report if they include a name, an address and either a date of birth or Social Security number.

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Get the most bang for your monthly payment buck

This post originally appeared April 13, 2017 on CreditCards.com as “‘How and when to pay new cards to boost credit score

By Barry Paperno

Dear Speaking of Credit,
I have a couple of open credit card accounts that, in my mind, should be paid off as soon as possible. However, I’ve been advised that leaving them open, paying a little more than the minimum due and paying a few days earlier than the due date each month will increase my credit score. It was further explained that anything less than a year of credit reporting is not beneficial. I can pay off my store card account next month (and was planning to do so), but was advised to leave it open until at least September, which was when the account was opened. Which would you recommend for the best result and outcome for me? – McLean

Dear McLean,
I hope you don’t mind me using your excellent question to point out how the truth about credit scoring is often mixed with some long-held misconceptions. When acted on, these misconceptions can not only prevent your score from rising, but actually send it down.

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