10 Credit Questions and Answers at CreditMattersBlog.com (December 17, 2008)

As I have said before, I can see how my readers find CreditMattersBlog.com. I don’t collect any personal information, but I can see search terms that people use to find the site. This information is like the center of Lifesavers candies. Or doughnut holes. Rather than letting them fall by the wayside, I figure that I should put these search queries to good use. Here are the rules: I will edit search queries for syntax purposes. Otherwise, I will leave them alone. I’ll also phrase queries in the form of a question whenever possible. By request, these Q&As are published whenever I have received 10 questions through Google and other searches. Q: What happens to other credit cards when you opt out of an interest rate hike?A: In a vacuum, nothing. One has nothing to do with the other. However, if you happen to opt out of a card, and close the card immediately, the closed card’s credit limit will no longer be factored into the utilization portion of the FICO-scoring system. Utilization is counted two ways: per individual card and overall. Thus, if you have several cards that have quite a bit of utilization, losing one of your credit cards and its limit could hurt your overall utilization ratio. If you realize that you’ll be hurt by opting out and closing a card, you’d do well to pay off your other credit cards as soon as you can.–Q: Does Amex report charge cards to the credit reporting agencies?A: Yes, indeed. I have an American Express charge card. American Express reports the balance each month. Just one caveat, though. American Express is well-known for being a bit behind in its reporting. For example, American Express is currently reporting a balance on my card that’s nearly two months old. –Q: Does American Express do periodic credit checks on customers?A: Yes. It reviews my credit report about twice a month. The inquiries are soft, so they don’t hurt your credit report. They show up as ‘American Express Co’ and ‘Amex Account Review.’ American Express peeks at credit reports so that it can see how you’re handling your non-Amex accounts. –Q: How to keep credit card company from closing account for inactivity?A: The easiest way to keep a credit card from being closed for inactivity is to use the card periodically. If you allow the card to go dormant because you’re not using the card, don’t be surprised to see a card issuer close your account for inactivity. I use my cards every other month. –Q: I APPLIED FOR AMEX, GOT APPROVED, AND NOW THEY WANT TAX — BUT MY INCOME ON TAX RETURN IS WAY LESSA: Welcome to American Express. At least you’re getting the financial review before it issues a card to you. In this particular case, though, American Express likely won’t be pleased that your reported income is ‘way less’ than what you’ve reported on your income tax returns. It’s not as though it would matter, though. American Express is notorious for requesting tax returns that are not in line with your current income. That’s because American Express is known for asking for tax returns that are often two years old. If you’re interested in keeping the card, my suggestion is to provide the tax returns and let the chips fall where they may. At this point, you’ve got nothing to lose. –Q: What do credit card [issuers] tell credit reporting bureaus when it closes you account due to inactivity?A: Nothing in particular. Your account will be closed at consumer’s request or closed by credit grantor. If it’s closed by you, it will say so. If it’s closed by the issuer, it will say closed by grantor. However, some card companies, even when they close the account on their own, will say that you requested the closure — which is cool. Fact is, though, that closed is closed. FICO doesn’t care about the notation that accompanies the closure. –Q: Can you change your mind after you opt out of credit card hike?A: Yes and no. If you opt out of a change of terms but want to opt back in, you can do that as long as you’re still within the time frame of when you are permitted to opt out. In other words, let’s say that you received a letter from Citibank. It says that you have until January 31, 2009, to opt out. On December 17 you call in to opt out. On December 28, though, you change your mind. You now want to opt back in — and keep your credit card open. Citibank will allow you to change your mind since January 31, 2009, has not come and gone yet. If you decide to opt out before January 31, 2009, but don’t try to opt back in until after January 31, 2009, you’ll be on a case-by-case basis. It’s possible that a card issuer will allow you to opt back in. Or there is a chance it won’t. You’ll simply have to call and see what they say.–Q: Is having too many good credit cards on your credit history bad?A: I know plenty of people with well in excess of 30 credit cards. Some of these people have FICO scores that are north of 800. Too many credit cards, in other words, has not been a problem. As for me, I have around 15 cards. My score is just under 800. Thus, I haven’t had a problem either. The biggest problem with having too many cards is that it can hurt your credit score when you get a lot of cards at one time. Remember, though, that the impact will eventually eventually fade with age. The more time you put between the applications the better. Time is your friend.This question is a lot like asking if having too much credit is bad. Here is an article that quoted a FICO representative. He says that it is a myth that too much credit can hurt your score link here.–Q: Does American Express report monthly balances or just when the balance increases?A: American Express reports your balance each month whether your balance moves higher or lower. –Q: What are my rights when a credit card account is shut down due to inactivity?A: You don’t have any ‘rights’ when it comes to this. If a card issuer wants to close your account for inactivity, there is nothing you can do. That’s the cold, hard reality of the situation. Use the card regularly and you won’t have to worry about this. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

This entry was posted in Uncategorized by . Bookmark the permalink.

0 thoughts on “10 Credit Questions and Answers at CreditMattersBlog.com (December 17, 2008)

  1. how about a post on some of the more 'exotic' queries that people used to find your site? i've seen others do this before, & it's amazing (and funny) what sort of sex-related or just plain bizarre searches can bring someone to a site.

  2. Lion, it absolutely would be. I have some interesting searches. Some make me laugh. Others make me sad. It’s interesting how some people find my site. The searches would amaze you.

  3. Hey Marcus,Come to think of it, I don’t recall how I found your site, but as you know, I’m glad I did. Maybe you can tell me, lol. By the way, no mercy–I called Nordstrom yet again and guess what? They gave me my increase–very excited. Hope everyone is excited about the holidays. Marcus, you celebrating any?? Best, Jon

  4. Jonny, not sure how you found my blog, but glad you did. Sweet on Nordstrom. Nice work.By the way, you should follow me on Twitter as well. I supplement my blog there. Stuff that doesn’t quite make the grade here at CreditMattersBlog.com does often make the grade on Twitter. Finally, it’s going to be a very conservative holiday for us. We’ve got some major expenses coming up in the next five months. Bar prep, new car, moving, etc.

  5. What type of account is AMEX charge card shown on credit report and how does it effect credit utilization as it as no credit limit.

  6. Anon, the Amex charge card is considered an OPEN account — as opposed to revolving. On my Equifax and TransUnion reports, it’s reported as OPEN. On Experian, it’s reported as revolving. The catch on Experian, though, is that it shows ‘terms’ of one month, which indicates that it must be paid monthly. Impact on score? I have not noticed any impact at all. My guess is that FICO excludes it from the utilization calculation.

  7. Could you explane please,how you can benefit from having Amex charge card?…I understand about revolving Amex,but charge card I think is simply trash.Thank you.

  8. I benefit because it’s just another option. There is nothing per se great about having a charge account. It’s just another option that I have. I got the card because I wanted to diversify and I had heard great things about customer service. Other than that, I can’t argue that it’s great to have a charge card. Fact is, my decision was not based on charge vs. credit. It was based on diversification and having yet another option.

  9. I think charge cards are better than credit cards. Charge cards are same as debit cards, but shows up on credit report. You use it for what you can afford & make full payment when its due. This will show a good sign for lenders.

  10. Rate hike/Opt-out? case:FICO: 720, as of a check last weekPortfolio:AMEX Gold Charge Card, since 2000Merril+ VISA @ 8.9% fixed, $11,300 limit, since 2004Discover Miles @ 11.9% variable, $5,500 limit, since 2006…and a just opened Saks Mastercard with $0 balance (applied/approved online, and as it was just opened, I am unsure of my limit at this time. Coming in the mail this week). For argument’s sake, I will estimate the minimum potential limit offered, a $3,600 limit ($2,000 for the actual MC, $1,600 for the Saks Store account)Just got a note from Discover about a rate hike to 14.99% starting March 1.The note says the account will be ‘closed’ if one elects to opt-out. As it is a revolving account, I take this to mean that the balance will still be reported, though the limit will be reported as ‘0’ for FICO calculations.I can opt-out before Feb. 25.I have rather high utilization on both the Visa and Discover cards. Utilization, I know, is calculated per card, as well as across all cards. Were I to opt-out and ‘close’ the account, I would keep the lower rate, though it would ding my utilization component of FICO.Thoughts?So, my per card utilization would be hit because I’d have a balance on the Discover, but a limit of ‘zero’, correct?Across cards, utilization may not be so bad, as I’ve just added the Saks card and that new credit line will offset somewhat the balance on the Discover. The $3,600 figure I put down above is a conservative estimate. I won’t know for sure what my limit will be until I receive the card in the mail.As it’s my most recent account, history is not my biggest concern.I have over a month to decide, but would appreciate your feedback on this scenario. Would you suggest I wait until I at least receive the Saks card to make a move? What about applying for a low-balance card to transfer to? Any card recommendations for a low-rate, with at least $5,500 initial CL?Thanks so much in advance.

  11. Matt, sounds like you already have the utilization factors and everything else in hand. I’ll let you figure out the rest on that.As for Saks MC (World Elite), the minimum limit is $5000. If you don’t get $5000, then you get the platinum MC instead (which isn’t the World Elite card). Also, when you get the Saks store card, be sure to call and ask for a credit limit increase at activation. They’ll usually double whatever limit you got. Also, there is no guarantee that Discover will report the limit as $0 when it’s closed (though it’s my rule of thumb to expect that scenario). You don’t have any Citibank cards, Matt. Have you thought about applying for one of their cards? How about a credit union? Not sure what your income is, but maybe a Pentagon Federal credit card?

  12. Will definitely call RE: upping the Saks limit. Thanks.The letter from Discover said the account will be ‘closed,’ but I was planning to call them, as well, to see how it would be reported.No, Citibank cards. Will look into what the latest offers are.I looked at the Pentagon cards after I read your portfolio breakdown, though are those cards only available to ex-Armed Services personnel?If not, you made them sound mighty attractive.Thanks again for the help.

10 Credit Questions and Answers at CreditMattersBlog.com (December 17, 2008)

As I have said before, I can see how my readers find CreditMattersBlog.com. I don’t collect any personal information, but I can see search terms that people use to find the site. This information is like the center of Lifesavers candies. Or doughnut holes. Rather than letting them fall by the wayside, I figure that I should put these search queries to good use. Here are the rules: I will edit search queries for syntax purposes. Otherwise, I will leave them alone. I’ll also phrase queries in the form of a question whenever possible. By request, these Q&As are published whenever I have received 10 questions through Google and other searches. Q: What happens to other credit cards when you opt out of an interest rate hike?A: In a vacuum, nothing. One has nothing to do with the other. However, if you happen to opt out of a card, and close the card immediately, the closed card’s credit limit will no longer be factored into the utilization portion of the FICO-scoring system. Utilization is counted two ways: per individual card and overall. Thus, if you have several cards that have quite a bit of utilization, losing one of your credit cards and its limit could hurt your overall utilization ratio. If you realize that you’ll be hurt by opting out and closing a card, you’d do well to pay off your other credit cards as soon as you can.–Q: Does Amex report charge cards to the credit reporting agencies?A: Yes, indeed. I have an American Express charge card. American Express reports the balance each month. Just one caveat, though. American Express is well-known for being a bit behind in its reporting. For example, American Express is currently reporting a balance on my card that’s nearly two months old. –Q: Does American Express do periodic credit checks on customers?A: Yes. It reviews my credit report about twice a month. The inquiries are soft, so they don’t hurt your credit report. They show up as ‘American Express Co’ and ‘Amex Account Review.’ American Express peeks at credit reports so that it can see how you’re handling your non-Amex accounts. –Q: How to keep credit card company from closing account for inactivity?A: The easiest way to keep a credit card from being closed for inactivity is to use the card periodically. If you allow the card to go dormant because you’re not using the card, don’t be surprised to see a card issuer close your account for inactivity. I use my cards every other month. –Q: I APPLIED FOR AMEX, GOT APPROVED, AND NOW THEY WANT TAX — BUT MY INCOME ON TAX RETURN IS WAY LESSA: Welcome to American Express. At least you’re getting the financial review before it issues a card to you. In this particular case, though, American Express likely won’t be pleased that your reported income is ‘way less’ than what you’ve reported on your income tax returns. It’s not as though it would matter, though. American Express is notorious for requesting tax returns that are not in line with your current income. That’s because American Express is known for asking for tax returns that are often two years old. If you’re interested in keeping the card, my suggestion is to provide the tax returns and let the chips fall where they may. At this point, you’ve got nothing to lose. –Q: What do credit card [issuers] tell credit reporting bureaus when it closes you account due to inactivity?A: Nothing in particular. Your account will be closed at consumer’s request or closed by credit grantor. If it’s closed by you, it will say so. If it’s closed by the issuer, it will say closed by grantor. However, some card companies, even when they close the account on their own, will say that you requested the closure — which is cool. Fact is, though, that closed is closed. FICO doesn’t care about the notation that accompanies the closure. –Q: Can you change your mind after you opt out of credit card hike?A: Yes and no. If you opt out of a change of terms but want to opt back in, you can do that as long as you’re still within the time frame of when you are permitted to opt out. In other words, let’s say that you received a letter from Citibank. It says that you have until January 31, 2009, to opt out. On December 17 you call in to opt out. On December 28, though, you change your mind. You now want to opt back in — and keep your credit card open. Citibank will allow you to change your mind since January 31, 2009, has not come and gone yet. If you decide to opt out before January 31, 2009, but don’t try to opt back in until after January 31, 2009, you’ll be on a case-by-case basis. It’s possible that a card issuer will allow you to opt back in. Or there is a chance it won’t. You’ll simply have to call and see what they say.–Q: Is having too many good credit cards on your credit history bad?A: I know plenty of people with well in excess of 30 credit cards. Some of these people have FICO scores that are north of 800. Too many credit cards, in other words, has not been a problem. As for me, I have around 15 cards. My score is just under 800. Thus, I haven’t had a problem either. The biggest problem with having too many cards is that it can hurt your credit score when you get a lot of cards at one time. Remember, though, that the impact will eventually eventually fade with age. The more time you put between the applications the better. Time is your friend.This question is a lot like asking if having too much credit is bad. Here is an article that quoted a FICO representative. He says that it is a myth that too much credit can hurt your score link here.–Q: Does American Express report monthly balances or just when the balance increases?A: American Express reports your balance each month whether your balance moves higher or lower. –Q: What are my rights when a credit card account is shut down due to inactivity?A: You don’t have any ‘rights’ when it comes to this. If a card issuer wants to close your account for inactivity, there is nothing you can do. That’s the cold, hard reality of the situation. Use the card regularly and you won’t have to worry about this. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

This entry was posted in Uncategorized by . Bookmark the permalink.

0 thoughts on “10 Credit Questions and Answers at CreditMattersBlog.com (December 17, 2008)

  1. how about a post on some of the more 'exotic' queries that people used to find your site? i've seen others do this before, & it's amazing (and funny) what sort of sex-related or just plain bizarre searches can bring someone to a site.

  2. Lion, it absolutely would be. I have some interesting searches. Some make me laugh. Others make me sad. It’s interesting how some people find my site. The searches would amaze you.

  3. Hey Marcus,Come to think of it, I don’t recall how I found your site, but as you know, I’m glad I did. Maybe you can tell me, lol. By the way, no mercy–I called Nordstrom yet again and guess what? They gave me my increase–very excited. Hope everyone is excited about the holidays. Marcus, you celebrating any?? Best, Jon

  4. Jonny, not sure how you found my blog, but glad you did. Sweet on Nordstrom. Nice work.By the way, you should follow me on Twitter as well. I supplement my blog there. Stuff that doesn’t quite make the grade here at CreditMattersBlog.com does often make the grade on Twitter. Finally, it’s going to be a very conservative holiday for us. We’ve got some major expenses coming up in the next five months. Bar prep, new car, moving, etc.

  5. Anon, the Amex charge card is considered an OPEN account — as opposed to revolving. On my Equifax and TransUnion reports, it’s reported as OPEN. On Experian, it’s reported as revolving. The catch on Experian, though, is that it shows ‘terms’ of one month, which indicates that it must be paid monthly. Impact on score? I have not noticed any impact at all. My guess is that FICO excludes it from the utilization calculation.

  6. Could you explane please,how you can benefit from having Amex charge card?…I understand about revolving Amex,but charge card I think is simply trash.Thank you.

  7. I benefit because it’s just another option. There is nothing per se great about having a charge account. It’s just another option that I have. I got the card because I wanted to diversify and I had heard great things about customer service. Other than that, I can’t argue that it’s great to have a charge card. Fact is, my decision was not based on charge vs. credit. It was based on diversification and having yet another option.

  8. I think charge cards are better than credit cards. Charge cards are same as debit cards, but shows up on credit report. You use it for what you can afford & make full payment when its due. This will show a good sign for lenders.

  9. Rate hike/Opt-out? case:FICO: 720, as of a check last weekPortfolio:AMEX Gold Charge Card, since 2000Merril+ VISA @ 8.9% fixed, $11,300 limit, since 2004Discover Miles @ 11.9% variable, $5,500 limit, since 2006…and a just opened Saks Mastercard with $0 balance (applied/approved online, and as it was just opened, I am unsure of my limit at this time. Coming in the mail this week). For argument’s sake, I will estimate the minimum potential limit offered, a $3,600 limit ($2,000 for the actual MC, $1,600 for the Saks Store account)Just got a note from Discover about a rate hike to 14.99% starting March 1.The note says the account will be ‘closed’ if one elects to opt-out. As it is a revolving account, I take this to mean that the balance will still be reported, though the limit will be reported as ‘0’ for FICO calculations.I can opt-out before Feb. 25.I have rather high utilization on both the Visa and Discover cards. Utilization, I know, is calculated per card, as well as across all cards. Were I to opt-out and ‘close’ the account, I would keep the lower rate, though it would ding my utilization component of FICO.Thoughts?So, my per card utilization would be hit because I’d have a balance on the Discover, but a limit of ‘zero’, correct?Across cards, utilization may not be so bad, as I’ve just added the Saks card and that new credit line will offset somewhat the balance on the Discover. The $3,600 figure I put down above is a conservative estimate. I won’t know for sure what my limit will be until I receive the card in the mail.As it’s my most recent account, history is not my biggest concern.I have over a month to decide, but would appreciate your feedback on this scenario. Would you suggest I wait until I at least receive the Saks card to make a move? What about applying for a low-balance card to transfer to? Any card recommendations for a low-rate, with at least $5,500 initial CL?Thanks so much in advance.

  10. Matt, sounds like you already have the utilization factors and everything else in hand. I’ll let you figure out the rest on that.As for Saks MC (World Elite), the minimum limit is $5000. If you don’t get $5000, then you get the platinum MC instead (which isn’t the World Elite card). Also, when you get the Saks store card, be sure to call and ask for a credit limit increase at activation. They’ll usually double whatever limit you got. Also, there is no guarantee that Discover will report the limit as $0 when it’s closed (though it’s my rule of thumb to expect that scenario). You don’t have any Citibank cards, Matt. Have you thought about applying for one of their cards? How about a credit union? Not sure what your income is, but maybe a Pentagon Federal credit card?

  11. Will definitely call RE: upping the Saks limit. Thanks.The letter from Discover said the account will be ‘closed,’ but I was planning to call them, as well, to see how it would be reported.No, Citibank cards. Will look into what the latest offers are.I looked at the Pentagon cards after I read your portfolio breakdown, though are those cards only available to ex-Armed Services personnel?If not, you made them sound mighty attractive.Thanks again for the help.

Leave a Reply

Your email address will not be published. Required fields are marked *