10 Credit Questions and Answers at CreditMattersBlog.com (October 29, 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 game 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 will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: What happens to inactive bank accounts at Citibank?A: It depends how long the account has been inactive. Bank accounts are no different than credit card accounts in this regard. If you leave an account open for long enough, the bank will close it. I recently received a letter from JPMorgan Chase asking if I wanted to keep my old Wamu account open. But the letter was generic — and only applied to accounts that were inactive. Because my account is active, I ignored the letter. I imagine that if I did have an inactive account, and did ignore the letter, that my account would have ultimately been closed. If that happens, the bank will send you a letter detailing the closure. You’ll also receive a check for the amount of money sitting in the idle account. –Q: What triggers an American Express financial review?A: No one knows the answer to this question. People have tried to figure it out, but it’s a mystery. Some people think that having a mix of credit cards and charge cards can trigger it I don’t agree. Others think that unusual spending patterns can trigger it maybe. Others still wonder if it’s just a random event like winning the lottery. Perhaps. Whatever it is, no one knows what triggers it. And I wouldn’t waste time thinking about it. –Q: What is revolving debt experience?A: I imagine someone got denied for a credit card. That’s one of the reason codes that is often generated for a denial. Lack of revolving debt experience means that you don’t have enough experience with credit cards and other credit instruments that allow you to revolve balances from month to month. The best way to avoid this kind of reason code is to acquire a few credit cards. Over time, after you’ve shown some history with these cards, you’ll likely not receive that kind of reason code in the future. –Q: Restore slashed credit limit American Express?A: Unfortunately, it’s very difficult to change American Express’s mind once it has slashed your credit limit. That’s not to say that you won’t be able to eventually get your limit higher down the road. But if you’re asking if you can get your limit restored immediately after a credit limit reduction, I would say that it’s extremely difficult to do. American Express, as I have written extensively about link here, is on a mission right now. On a relative basis, it is cutting more limits than it has in the past. Previously, American Express used to cut limits on just 4% of its customers during the year. Now it has upped that amount to 10% of its customers. –Q: Citibank hard credit inquiry — how do you get inquiries off?A: If this was a legitimate inquiry, I would not dispute it. Disputing inquiries can result in fraud alerts and closed accounts. Why? Because if you are disputing the inquiries not yours, then the creditor would likely wonder who tried to open the account. If not you — then who? Same goes for the fraud alert. If you contact the credit bureau, it could place a fraud alert on your report. Here’s the bottom line, though: inquiries aren’t score killers — unless you have a slew of them. Although inquiries remain on your credit report for two years, they only impact your score for 12 months. That said, if a creditor has placed duplicate inquiries on your report, then feel free to call the credit reporting agency. Just be sure that you are disputing the inquiry because it’s a duplicate. You’re not saying that the original inquiry isn’t yours — you’re just saying that the second one shouldn’t be there. –Q: Getting Amex account backdated?A: Even though American Express is disliked for a lot of reasons, this isn’t one of them. Indeed, this is one of the bright spots about having an American Express account. Here’s how it works. If you had an old American Express card that you closed back in the 1980s or whenever, and you apply for a new card today, your new card will reflect the age of the old account. That’s great because it will be reported to the credit bureaus that way. Think about it. How nice would it be to apply for a card today and be able to pick up 30 years of history? Assuming you opened a card in January of 1982, and opened a new card today, here’s how the new card would show up on your credit report: Date Opened 10/1982. It would reflect the year of the old card and the month in which you opened the new card.By the way, if you do get a new card today — there’s a good chance that the new card the physical card will not reflect your history with American Express. Your ‘member since’ date will likely show 2008. If that happens, here is how you get it changed. You call the ‘card replacement’ department and have them reissue a new card, with the correct ‘member since’ date. If you had an old account from 1982, American Express’s card replacement department will be able to verify that. They’ll then reissue a new card. American Express will — at their cost — send the replacement card to you immediately. The card will arrive at your home within 24 to 48 hours. You can call the customer service number 800-528-4800 at American Express and ask to be transferred to replacement cards. –Q: To request a increase limit for cards, do you have to give a reason?A: Nope. You can just call up and ask for an increase. It doesn’t hurt to have a readily-available reason, but it’s not necessary. I usually have a reason, though. These are just some of the explanations I’ve used in the past:Limits on my other cards are significantly higher assuming that’s, in fact, true. I’d like to bring this card’s limit in line with the rest of my cards.I’d like to make this my primary card, but the initial limit won’t allow me to do that. The limit just doesn’t allow me to put a lot of purchases on it — at least not without getting me into trouble with my utilization ratio.Because I care about my credit scores which is what helped me get this card in the first place, I put a lot of emphasis on not maxing out my cards. This initial limit makes it difficult for me to keep my utilization in check making it more difficult to keep my scores high.I have some fairly large expenditures coming up in the near future. I was hoping to put those expenditures on this card. With the low initial limit on this card, it will be difficult, if not impossible, to put those purchases on this card. I’ll be forced to use another card.And on and on it goes. You’ll have to come up with one of your own if you don’t like mine.–Q: Not paying credit card in full to improve credit score?A: No. No. No. I hear this one a lot. People think that they’ll somehow curry favor with credit card companies if they leave a balance each month and pay interest. No. All you are doing is enriching the company. You are better off paying in full each month — showing that you can afford what you’re buying. But to answer this question more specifically, there is no reason to not pay your bill in full each month. The balance that you pay in full still gets reported to the credit reporting agency each month. Here’s how it works: I buy $500 in goods and services during the month with my Capital One card. Capital One generates a billing statement for me. I then pay the bill in full a few days after receiving the bill. When the billing statement was generated, Capital One reported that balance to the credit reporting agencies. Next month, assuming that I don’t make any charges on the Capital One card, my balance will be zero. That zero balance will get reported to the credit reporting agencies. Or, if I do have a balance due because I made more purchases after I paid my previous bill in full, that new balance will get reported to the credit reporting agencies.As you can see, there is absolutely no point in not paying your bills in full. Your balances will continue to get reported to the credit reporting agencies — whether you pay in full or leave a balance. Knowing that, you are better off not enriching your credit card companies by paying interest each month.–Q: FRIEND BORROW MONEY ‘DESPERATE’A: Stay away from that friend. Desperate people do desperate things. Lend moral support to your friend, but try to avoid lending monetary support. Friends and money often don’t mix well. That said, if you want to give your friend a gift, without any strings attached, I am all for that. You won’t have any expectations of being paid back and your relationship won’t go south. I’m even more rigid when it comes to people putting their credit history at risk link here.–Q: Does closure of first credit card account affect credit history?A: Not immediately. Eventually, though, that closed account will fall off your credit report typically about 10 years from when you close it. The most immediate impact to closing cards relates to utilization. For a full explanation of what happens when you close cards and what happens to FICO, see my story here link. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

10 Credit Questions and Answers at CreditMattersBlog.com (October 28, 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 game 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 will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: Easiest way to get an American Express card?A: Is this a trick question? You can apply online link here, apply over the phone 800-223-2670, or apply using a paper application that’s so old school. Beyond that, the easiest way to get an American Express card is to be as creditworthy as possible. The better your credit history, the easier time you’ll have getting approved.Good luck!–Q: I have multiple credit cards and I want to have one number to call in case of lost or stolen.A: Many credit card companies offer a service whereby they will contact all of your creditors in the event that your wallet is lost or stolen. If you call your card company and ask about credit card registration services, a service where the card company will contact all of your other card companies, they’ll know what you’re talking about. There will be an annual fee for the service, however. I’d rather save my money and just keep the phone numbers of your credit card companies in a handy place. Last month I wrote a story about losing your wallet or purse. In the story, I provided a list of phone numbers link here to some of the biggest credit card companies. Still, if you simply feel more at ease with a card registration service, feel free to call your card company and see if they offer the service. –Q: How often does AMEX review your account?A: At least once a month — and sometimes more. American Express checks my Experian report once a month. The entry is always the same: AMEX ACCOUNT REVIEW.American Express is checking in to see if I am ramping up debt or seeking new credit. Which reminds me: I am sure that American Express subscribes to a service with the credit bureaus that alerts them to new inquiries on credit reports. Any time you apply for a card, American Express is sure to do an account review a soft pull to see what it is. I’ll tell you, American Express is the most proactive card company I can think of. –Q: Was National City bank sold?A: Yes. National City was acquired by PNC Financial Services Group on October 24, 2008, for nearly $5.6 billion $5.2 billion in stock and $384 million in cash to certain warrant holders. The deal is expected to close by the end of the year. The press release announcing the deal can be found here link.–Q: What to do when you can’t pay the full balance on Amex?A: You have very few options here. If you signed up for the extended payment option, you can set aside some of your purchases so that you can pay them over time. According to American Express: ‘Once you enroll, all eligible travel-related charges and purchases of $200 or more are automatically itemized in a separate section of your monthly statement. You decide whether you want to pay the charges in full, pay the minimum due or anything in between. Each month, you must pay the other charges on your bill in full.’ If you can’t pay your bill in full, you might want to check into that feature. Beyond that, if you can’t pay your bill and full, and you’re not eligible for sign and travel and the extended payment option, you’re in a bind. Your best bet is to call American Express and see if it will work out a payment plan with you I’ve heard they do have a program for customers who can’t pay their bills under normal repayment terms. Of course, once you tell American Express that you need a payment plan, it will likely take some kind of adverse action on you lower credit limit or exposure limit. You’ll want to jump on that, though. You’ll be delinquent as soon as you’ve been late by 30 days or more. Soon thereafter, American Express will consider you in default and likely begin collection efforts. –Q: Is Juniper a subprime card?A: Subprime is all in the eye of the beholder. While I know a lot of people who don’t like Juniper, because of their business tactics, I know many people who think highly of them as well. I know several people who have credit limits in excess of $50,000 on a single Juniper card. That does not smell like subprime to me. That said, Juniper can often have a subprime feel to it. I don’t like the fact that Juniper doesn’t allow for customer-requested credit limit increases. That’s subprime to me. Washington Mutual does that as well. And it’s one thing I don’t like about the card company. By and large, though, I don’t consider Juniper subprime. But ask someone with a $300 limit and a host of complaints what they think of Juniper. I’m sure they’ll likely say that Juniper is subprime.Again, it’s all in the eye of the beholder.–Q: What should I do if my credit card account get closed due to inactivity?A: You’ll get a letter in the mail link here notifying you of the closure. If you want to do something about the closure, you should immediately call the company and ask them to reopen it. Assure them, though, that you will use the card in the future. Lots of card companies are closing cards because of inactivity. The best way to avoid closure is to use the card periodically. Anyhow, that’s neither here nor there. I’d call the card company and see if they can’t reopen the card. While you’re at it, you might also tell them that the limit was too low or the APR was too high. That’s why you weren’t using the card. Maybe they’ll increase your limit or reduce the APR while they’re at it. –Q: Does American Express waive balance?A: Man. I sure have received a lot of American Express questions lately. Not quite sure what this Google query was getting after, but let me be blunt. If you’re looking for American Express to forgive your debt, forget about it. I’d be more likely to ignore a $20 bill sitting in the middle of the sidewalk than American Express is to forgive even a dime of the debt you owe them. That said, if you are in default, and American Express is coming after you, Amex has been known to settle the account. It’s not unusual to get an offer from American Express where the account will be satisfied if you’ll pay 50%-60% of the balance you owed. But do know this: you will not be able to get a card with American Express in the future until you’ve paid off the entire debt. You might get American Express off your back by paying 50%-60% of the balance but you won’t be helping your chances of eventually getting back in with American Express. –Q: American Express card flexible payment terminated suspended.A: This is very common. If you take advantage of American Express’s flexible payment option — and leave a balance for several months — don’t be surprised if American Express suspends your flexible payment privileges. American Express wants you to pay your bill in full. But if you do use the flexible payment option, it wants you to pay the outstanding balance as quickly as possible. If you don’t pay the balance quickly, American Express will suspend your privilege. It’s as simple as that.–Q: Chase is canceling my card for inactive use?A: Welcome to the club. I’ve written extensively about this link here. Card companies are closing inactive accounts. Do your best to use the card periodically every other month at least. If you’re leaving your card dormant, don’t be surprised if your card company closes the account. You’re not profitable. The card company is looking to cut costs. Inactive accounts are ripe targets for closure. As I said previously, though, you might give Chase a call and see if they’ll reopen the account. There is no guarantee that Chase will reopen it, but you won’t know unless you ask. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

10 Credit Questions and Answers at CreditMattersBlog.com (October 27, 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 game 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 will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: What good does it do me if my FICO is over 800?A: Not much. But at 800 and above, you do join a select group. Just 13% of the population have a score of 800 or higher. But, by and large, a 760 score will do just about anything an 800 score can do. That said, I’d feel more comfortable with a score of 780 in this crazy credit environment. I’m suggesting that 780 is the new 760. Who knows if I’m right, though. –Q: IS A FICO SCORE OF 715 ENOUGH TO GET A CREDIT CARD?A: I had to take this question. This is either GEORGE, a prolific online message poster, or a relative asking the question. Generally speaking, 715 is a decent score. However, it’s still below the median FICO score of 723. In other words, 715 is still in the bottom half of those who have a FICO score. For the most part, assuming you have a clean credit report, you would likely get an approval with a 715 FICO score. That said, there are tons of things that go into approvals. Do you have a lot of recent inquiries? A lot of new accounts? Utilization too high? In a vacuum 715 should get the job done. But it will depend on a host of other things as well. –Q: FICO 689 able to finance BMW? A: Excellent timing for this question. I have a friend who just bought her first BMW on Friday couldn’t have happened to a nicer gal, either. She used BMW Financial Services for financing. She put down one-third of the purchase price in cash. BMW Financial Services financed the rest. The car is three years old 2006 model. She got an interest rate of 3.96%. BMW Financial Services pulled her Equifax report — and nothing else. She had a 691 FICO score. Is a 689 good enough to get you financed for a BMW? It would seem so. But, just as my previous answer stated, there is more to an approval than just a score. Debt-to-income ratio will also play a part in the approval process as well. –Q: How to bring up credit score from 780 to 800?A: I’m in the same boat. One of my scores is right around 780. The answer for me is to stop applying for new cards. I’m being dinged because my average age of credit history is just four years. By not applying for new credit, my overall age will continue to move higher. As it does, my score will climb as well. Still, there is always more than one way to skin a cat. While average age is my bugaboo, your problem could be something different. My advice is to read the story I did on working your FICO score link here during the credit crunch. That might help you figure out where you need to do some work. Finally, a 780 score is excellent. You’re golden. Getting to 800 is just for bragging rights. Nothing more. –Q: Cash advance from American Express at my bank?A: I am sure you can do a cash advance from your bank. I’ve never done a cash advance, though, so don’t quote me. You’d likely have more luck just using an ATM machine. Of course, you’d need a PIN from American Express. Still, let me make a recommendation: try to stay away from cash advances. Cash advances raise red flags with card companies. If you’re tapping cash at 24%, a card company probably has good reason to wonder what’s going on. American Express will wonder if you’re strapped for cash. If you’re strapped for cash, then you’re likely a high-risk customer to American Express. If you’re a high risk to American Express, it’s going to reduce your credit or exposure limit substantially or cancel your card altogether. I’d stay away from cash advances if at all possible. Indeed, I would not do cash advances with any credit card company. –Q: What happens to credit rating after bankruptcy?A: Here’s the thing. Most people who go bankrupt already have trashed scores. That’s because they’ve likely been late on a slew of debt obligations or defaulted on their debts altogether. Much of the score damage has already been done before the consumer steps into the bankruptcy attorney’s office. The bankruptcy will remain on your credit report for ten years. The bad accounts and history, which led to your demise, will remain on your credit report for seven years. Ultimately, you can recover from a bankruptcy. Indeed, it’s not unusual for people to have scores of 700 within three years of a bankruptcy. Still, there will always be some credit-card companies that will not approve you — even if your score is respectable.The key to recovering after bankruptcy is changing any bad habits that landed you there in the first place. When you get new cards after bankruptcy — and there will be plenty of offers trust me — make it a habit to pay those bills in full. Develop that good habit and you’ll eventually be just fine. –Q: Why does having good credit matter?A: My entire site is devoted to this question. Start back in July, when I launched this blog, and read from there. You’ll likely need strong credit to land your first job and your second job, and your third job, and your…. Employers are increasingly pulling credit reports to vet would-be employees. Additionally, if you decide to attend graduate school after college, you may have a need for a private loan to help finance part of that education. If that’s the case, you’ll need good credit to land that loan. Beyond that, there will be mortgages and auto loans. In other words, the need for good credit is never ending. A person who doesn’t understand or appreciate the need for good credit is an idiot, indeed. –Q: What happens when creditors increase my limit?A: A couple of things happen. One, it gives you more spending power. It also helps your utilization ratio assuming you don’t ramp up your spending. If your utilization ratio goes down in a meaningful way, because your credit limit goes up, you should get a FICO score increase unless your utilization ratios are already so low that a credit limit increase doesn’t help in that area. I would not use a credit-limit increase as a license to go out and spend. That’s what fools do. Instead, welcome the increase and let it help your utilization ratios. –Q: Get a credit increase from Bank of America.A: If you are interested in a credit limit increase from Bank of America, you can do that by going to your online account. There you will find a button that says ‘request a credit line increase.’ Unless otherwise notified, the credit limit request will result in a soft inquiry — which will not hurt your credit score. Bank of America says that it will notify you if it needs to do a hard inquiry. Therefore, credit-limit-increase requests with Bank of America are soft — unless Bank of America tells you otherwise.–Q: If you don’t use credit will you lose your credit report?A: If you never get any credit, you won’t have a credit report that can be scored. It will be empty. It won’t house any information. Now, if you do have cards, but never use them, the cards will continue to stay on your credit report. And as long as the cards remain open, the accounts will remain on the credit report indefinitely. More than likely, though, these accounts will eventually be closed for inactivity. Once they are closed, they will remain on your report for up to 10 years. It’s theoretically possible that all of your closed accounts could fall off your report and you’d be left with an empty report. The key is to get some accounts and keep them open. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

10 Credit Questions and Answers at CreditMattersBlog.com (October 23, 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 game 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 will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: How to increase limit with Juniper card?A: Juniper is very quirky. In the past, the company has said that if you want a credit-limit increase, you’ll need to have $250,000 in income. Seriously. I laugh every time I think about it. What Juniper is really saying is that we don’t grant customer-initiated credit-limit increases. Instead, it evaluates your record on a regular basis, and grants limit increases on its own. –Q: What happens when American Express account goes in default?A: American Express can immediately call your outstanding balance due. Officially, this is what American Express says: ‘we may require payment of a portion of your outstanding balance greater than the total minimum amount due, declare the entire amount of your obligations to us immediately due and payable, and/or suspend or cancel your account, any component of your account, and/or any feature that may be offered in connection with the account.’ Additionally, the company could also initiate collection proceedings. Meanwhile, you agree to pay all reasonable costs associated with those collection efforts. –Q: Does having more credit available mean higher FICO score?A: Not necessarily. Having a lot of available credit, in and of itself, doesn’t guarantee anything. To be sure, having a low utilization ratio definitely helps your score. But it’s just one component of the FICO score link here. What’s more, the question is really asking whether having a lot of credit results in a higher score. The short answer is no. I know plenty of people who have a lot of credit. But they also use a lot of that credit resulting in high utilization ratios. The best way to boost your score is to not utilize a lot of your available credit. –Q: What is the average FICO sore?A: I’ve seen several numbers bandied about. I’ve seen 678, 686, 692, and other scores in the high 690s. I have my doubts, though, about whether those are actually average FICO scores. My guess is that they’re fake scores that have nothing to do with FICO. I pay attention to the figure that Fair Isaac, the creator of FICO, uses. Fair Isaac says that 723 is the median half above the score and half below. Until I see Fair Isaac come out with an ‘average’ score, I’ll stick with the median score.–Q: Is the Merrill Lynch Visa card tough to get?A: I personally don’t think it’s that tough to get. I’ve seen friends with low 700 scores get approved for the Merrill + Visa card. See my write up on the card link here. What’s more, I have seen these very same people get initial credit limits of $10,000 and above. –Q: Combining my Washington Mutual and Chase credit cards?A: Even though Chase has acquired Washington Mutual, there is no guarantee that Chase will be keeping the Washington Mutual credit card portfolio. I think we all assume that Chase will keep a portion of the portfolio, but there’s no guarantee. That said, nothing is happening right now. I would not expect the two card platforms to be merged for at least a year at the earliest. Chase has a Q&A link here that should be read by all Washington Mutual customers.–Q: Is it possible to get a perfect credit score of 830?A: This person must be talking about the Plus score, which ranges from 330-830. It’s a score that was developed by Experian link here. What’s more, it’s a score that should not be relied upon. Most lenders use FICO scores when making lending decisions. They do not use PLUS scores. For more on scores that are not used by lenders, see my story on FAKO v. FICO link here. But to answer the question: it’s theoretically possible to get a perfect score of 830 on the Plus score. –Q: I pay the bill in full each month and it does not help FICO.A: Ahh, I see this one a lot. Even though people pay their bills in full each month, the balances still get reported to the credit bureaus. Remember, even though you pay in full, the balance, when the billing statement gets generated, still gets reported to the credit bureaus. If you are using a lot of your available credit each month, you can still be hurt — even if you do pay in full. Here’s how it happens. You have four credit cards. Each has a $1,000 limit. You make purchases of $800 on each of the cards during the month. When the bill arrives in the mail, you immediately pay the $800 that is due on each card. Great, right? Not exactly. Even though you are paying your bills in full each month, you are using 80% of the available credit. As a result, your FICO score is likely getting hammered. As a general rule, it’s best to keep utilization at less than 30%. I personally believe that people should use no more than 10% which is also better for scores. If you are running into this scenario, you should probably ask for a credit-limit increase. It’s clear that your credit limits are not high enough for your usage pattern. I’d call the credit card company and tell them that you pay in full each month they’ll know this. Also tell them that you are nearly always maxed out on the card because the limit is too low. This is hurting your FICO score. If your card companies are unwilling to give you a limit increase, then you’ll need to do one of two things. You can either not use the card as much keeping the utilization ratio down, or you can make payments on the card during the month during the middle of the billing cycle — so that the balance that gets reported to the credit bureau is lower. I’d rather have a higher limit than have to keep making payments during the month. –Q: Why does my FICO score that WAMU provides me not match the credit scores from the 3 credit bureaus? A: My guess is that this reader wants to know why the FICO score provided by Wamu does not match the scores from FICO. I have written a nice story link here on the topic, which should answer this question nicely. –Q: What to do with credit cards that I am not planning to use anymore?A: It depends on how old the cards are, whether there are annual fees, how high the limits are, etc. The reader is probably trying to figure out whether it makes more sense to close the cards or whether it makes more sense to leave the cards open — and toss the cards in the sock drawer. My rule of thumb is to leave the accounts open and just toss the cards in the sock drawer. Of course, you’d also want to use the cards on occasion so that they are not closed for inactivity. Read this story on how closed accounts affect your FICO score link here. After that, you’ll be better informed. Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

10 Credit Questions and Answers at CreditMattersBlog.com (November 20, 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 game 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, Yahoo, and AOL searches. Q: Macy’s credit card flex vs. revolving?A: These are actually one and the same. Macy’s credit-card employees refer to the Macy’s store account as both a ‘flex’ and ‘revolving’ account. The terms are interchangeable. If you called a Macy’s representative and used the flex language, the customer-service representative would know exactly what you’re talking about.–Q: Does lowering your credit limit help your credit score?A: It certainly won’t help your score. And for good reason. Reducing your credit limit really just means that you have less credit. It also means that if you have balances on those cards, your utilization ratio will move higher that’s bad. There is an inverse relationship when it comes to credit limits and utilization. Assuming you have a balance, your utilization ratio would go higher if your limit goes lower. If your limit is increased, your utilization ratio would go lower. That’s why it’s never smart to lower your credit limits. It may not hurt you because you don’t carry high enough balances to matter, but it certainly won’t help you, either. For more information on utilization, please read my previous story on the topic story link here. –Q: Is it legal for a retailer to ask for drivers license when using credit card?A: Legal and illegal have no role in this question. It’s a non-issue. Merchants sign an agreement with MasterCard, VISA, Discover, and American Express. The agreements stipulate that the merchants should not ask customers for identification when the card is properly signed. Does that mean merchants won’t violate the terms of their agreement? Of course not. Merchants pretty much do what they please these days — merchant agreement be damned. I wrote a story about merchant agreements and identification. Read it here link.–Q: Credit score impact after a credit card replacement?A: Two years ago I had my BMW VISA compromised. BMW closed the account and sent me a replacement card. Impact on my credit score? Nada. Nothing. No impact. It simply gets reported as lost or stolen. The card company then issues a new card with the same history that your previous card had. Thus, if your stolen card was opened in 2000, your new replacement card will show the same history on your credit report. –Q: Citibank request credit line increase link gone?A: That’s standard practice for Citibank. It does that from time to time. My credit-limit request button disappears from time to time. If you’ve recently received an increase, that could explain the disappearance. But there doesn’t seem to be any rhyme or reason for its appearance and disappearance. It comes and goes. By the way, when it does show up again, don’t expect an increase to be waiting for you. I’ve been suckered into hitting the button after it reappeared only to be greeted with the form the form that you fill out if you want an increase. No thanks. If you do fill out of the form, you’ll get a hard inquiry for your trouble. –Q: What FICO scores do I need to get various credit cards?A: Most credit cards don’t operate that way. FICO is just one aspect of your credit application. You could have a 745 FICO score but still get turned down because of too many new accounts reporting on your credit report. Or you could get turned down with a 769 score because you have too many recent inquiries. See? That’s why credit-card companies don’t grant cards by FICO alone. The sooner that consumers realize that FICO is just a part of the overall process, the better. Utilization ratios, new accounts, inquiries, income, age of credit history, these all play a part. –Q: Does being an authorized cardholder get reported to credit bureaus?A: Most card companies do report authorized user information to the credit bureaus. But I always suggest that people call to make sure. It doesn’t take but five minutes of your time. Read my story on authorized users link here.–Q: Is citibank shutting down accounts?A: Citibank is mostly just increasing interest rates on customers for now. But I am sure that some customers have recently had their accounts closed as well. In fact, I know that Citibank has been closing inactive accounts. If you haven’t used your Citibank card in a while, I would advise that you do. You don’t want to get the account closed because of inactivity.–Q: Sears MasterCard closed my account — can I reopen it?A: Maybe. You should give them a call and see why the card was closed. If it was closed because it was inactive, you’ll have a shot at getting it reopened. If, however, your card was closed for a different reason, you might have a more difficult time. Still, give Sears a call and see what it says. Good luck!–Q: Is USAA having trouble with the credit crisis?A: USAA has been very quiet during this crisis. I haven’t heard too many stories about USAA. I can tell you, though, that my search traffic the Google searches that readers use to find my stories has seen a slight pickup in USAA credit-limit decreases. There aren’t enough yet for me to think that it’s widespread. But I am keeping my eye on the situation. For now, seems as though USAA is doing pretty well. Update December 16: I understand that some USAA customers have been receiving credit-limit decreases. When you log onto your account at USAA.com, you’ll get a notice of the decrease. You’ll also see a note that says a letter is being sent to you. Just FYI.Credit Matters BlogREADER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

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.

1 Family Gets 445 Credit Card Offers In A Year

After years of being opted out, I opted back in toward the end of 2008. I can tell you that I haven’t received much mail at all. I figured with FICO scores of nearly 800, I would be inundated with offers. No dice. If anything, I have seen a drop off in mail. Go figure. Gary Silbar wishes he was that lucky. His family received some 445 card offers from November 2007 through October 2008, according to the Chicago Tribune. For good measure, card issuers sent offers to Silbar’s children, ages 8 and 11, as well. From the story:When the economy soured halfway through the year, he expected the barrage of direct mail to slow to a drizzle. It did no such thing.The reason, experts say, is that Silbar and his wife, Karen, have good credit histories. He runs a public relations firm, Gary Silbar Communications, from his home and banks with Chase. That company, alone, sent 110 solicitations.Silbar wondered if his family was an anomaly and why banks continued to spend a ‘boatload’ of money on people like himself who don’t respond.I would love to know how many offers Silbar received after October 2008. My guess is that the offers dropped off substantially. Read the rest of the story here link.

Your Credit is Already Shot. The Question now is: Where do you go From Here?

This is a different kind of story for me. My usual story assumes that you’re already on an upward trajectory. Today’s story, though, assumes that your credit is thrashed, scraping the bottom of the barrel. Still, sinking to the bottom is easy. Working your way back is where the tough work is. Which brings us to today’s story. What do you do if your credit report is littered with a bevy of negative accounts? Do you try and dig your way out by grabbing a host of tradelines accounts that will overwhelm the amount of negative accounts that you have? Do you just try and grab a few accounts that you can nurture while the negative accounts age? In a lot of ways, these are philosophical questions. For those at the bottom right now, I think it makes a lot of sense to sit back and think about the path you want to take.To be sure, prime lenders aren’t going to be knocking your door down with new credit offers. With a host of bad accounts spread about your credit reports, you’re not in a position to be picky when it comes to new credit. But you do control how many new accounts you’re going to ultimately add to your credit report. Fact is, there are a lot of options out there for people with bad credit. Indeed, there is no shortage of creditors out there that will give you a new card — equipped with usurious interest rates and pathetically low credit limits. It may not be the kind of credit you want, but it’s something.Considering how important new tradelines are to the credit-repair process, deciding how many to add is an important question that must be asked — and answered. I think there are three ways that you can play this.One, you can get a plethora of new accounts, thereby overwhelming the negative accounts. Two, you can get a handful or less, and nurture them as the negative history ages away from the credit report. Or, finally, you can do nothing. I don’t think option three is a very realistic option, so I’ll discard that from my choices. Option three, just for the record, is a bad choice because you’ll be left with nothing when those bad accounts finally age off your reports. You’ll be left looking like a credit beginner when that happens. So option three is a bad choice.Option one, adding a bunch of accounts, whether you need them or not, is tempting. It’s tempting because you’ll want to add new credit limits that will help your utilization ratio. The more limits you get, the easier it will be to keep utilization low when you do use the credit cards. Given that 30% of the FICO calculation consists of utilization, getting a lot of additional credit seems appealing.Adding a lot of accounts also makes sense because, as I have preached many times, having options is a good thing. If one of your creditors does something to irritate you, you can always sock drawer the card and put it in time out. So, having options is a good thing. And it’s another reason why getting more than a handful of cards could make sense. Moreover, there’s a chance that adding a lot of new credit limits could result in a short-term approval, an approval that could hinge on a higher credit score. Of course, there’s no guarantee that a bunch of new accounts would actually result in a score increase. Those new accounts could end up costing you points instead — as inquiries and new accounts drive your credit score down. It’s a crap shoot at best.Sub-prime accounts strewn about the credit report may haunt you laterHowever, there is also a downside to grabbing a bunch of new cards. Because your credit sucks, you’re going to be offered a lot of low-limit cards. What’s more, you’re going to be offered cards — by sub-prime lenders — that aren’t likely to grow with you over time. Additionally, you’re likely going to apply for cards that you’ll never use especially if you’re applying solely for utilization purposes. The risk in all of this is that you’ll end up way down the road with a bunch of cards that scream sub-prime. And I mean scream. Even when the bad accounts age off, you’ll be left with a slew of cards that you’ll probably regret having. In a nutshell, your credit report will look like credit road kill. Surely, though, this person’s credit score will be significantly higher when those bad accounts finally age off the credit report. It’s at this point that I worry most about the choice — made long ago — of adding a bunch of lackluster tradelines to the credit reports. Now that the scores are up, and the bad accounts are gone, you’re in the market for some prime accounts. But will the prime lenders want to play ball with you? Is Chase, Bank of America, Citibank, or American Express really going to be enamored of your clean credit portfolio? What’s more, even if creditors are willing to give you an approval, what kinds of credit limits will you get? If higher limits beget higher limits, then I imagine lower limits beget lower limits. Indeed, why should American Express hand out a nice credit limit when so many of my other creditors only trusted you with $300 and $500 limits?I’m also worried about creditors wondering why the credit report is littered with all of these sub-prime accounts that were acquired years ago. If your credit history is subjected to a manual credit review, I don’t think there’s any question that an analyst will wonder if something extremely negative occurred during your past life. Quite frankly, that’s not the kind of scrutiny that you should welcome. I’d be worried that an approval assuming you got one would result in a credit limit that doesn’t work very well.I have a saying about higher credit limits begetting higher limits. I can extend that thinking to quality as well. Quality tradelines beget quality tradelines. Credit card companies aren’t difficult to understand. They’re like lemmings in a lot of ways. If your card portfolio is full of high-limit, quality names, there’s an excellent chance that you’ll get a high-limit approval from the credit card company that is evaluating your application. Creditors follow the leader. Because other lenders have showed you love, new lenders feel more comfortable showing you love. My own portfolio is living proof of that.Fewer accounts at the beginning create less stress at the endSo what about option two? Would getting fewer accounts, that you use on a regular basis, be more beneficial once all of the negative accounts age off the credit report? There is no definitive answer here. And I can’t, with an assurance, argue that this is definitely the correct way to proceed. Still, you read this blog because I take positions. You’d be unhappy if I waffled and vacillated on tough issues. Therefore, I’m going to take a stand and argue that option two makes the most sense to me.At the outset of the credit-repair process, nothing comes easy. I’ll acknowledge that right up front. Quality approvals will be difficult to come by. Still, I’d rather be selective when it comes to the sub-prime lenders that I choose to do business with. Although I’d be pigeon-holed into the same kind of approvals that our option-one friend is saddled with, I’d still try to be as methodical as possible when applying for cards. I’d be looking for creditors that have both a sub-prime arm and a prime-lending arm.Consider HSBC, for example. HSBC offers the Orchard card, a sub-prime card that plenty of people grab when they’re rebuilding. It’s not the kind of card that people with good credit would want, but it has its place when the borrower is not in a position to be choosy. The good thing about the Orchard card, though, is that it’s underwritten by a lender that also offers a host of prime offerings as well. HSBC underwrites the Saks Fifth Avenue World Elite MasterCard, for example. That’s a great rewards card that prime borrowers would be extremely interested in. Indeed, I have the Saks MasterCard in my own credit portfolio. Thus, if a borrower manages to get an Orchard card, and shows a history of using the card responsibly, there’s a better chance that a prime offering from HSBC will be extended to this person when the credit reports finally look better.There are other lenders out there that cater to sub-prime borrowers as well. Juniper and Washington Mutual, for example, are both known to be bankruptcy friendly. They’re both willing to overlook blemishes and bad marks that might be on the credit report. The good thing about these particular lenders is that they’re also appealing to prime borrowers. Indeed, just as I have the Saks Fifth Avenue World Elite card, I also have the Washington Mutual Platinum MasterCard and the Juniper US Airways credit card. In other words, these two lenders offer cards that appeal to sub-prime and prime borrowers alike. Sub-prime borrowers may not receive initial limits that are hefty, but I know people who have grown their limits over time with both of these card companies. Again, because you’re not in the best position to dictate terms, you’d probably be content to add these kinds of tradelines to your credit history. In addition to working with lenders that play to both crowds, potential lenders won’t be able to tell — by looking at your credit report — if you have a subprime or prime offering from the previously-mentioned credit-card companies. They all look the same when HSBC shows up on your credit report. Ditto Washington Mutual. Potential lenders simply won’t be able to tell if you were a subprime customer once upon a time — or if you were always prime. In addition to adding credit cards, there is also the option of adding a secured card — provided that you can find a bank that’s willing to give you one. If you’ve got some cash handy, you can always look for a secured credit-card option. There are plenty out there; you’ll have to do your homework to find one that’s willing to work with you. Not every sub-prime borrower will have a lot of loose cash laying around if they did, they likely would have paid their bills, but not every sub-prime borrower is broke, either. I know plenty of people who have high incomes but have terrible payment histories. When they get serious about credit repair, getting a secured card is a wise option for these kinds of borrowers. Anyhow, don’t forget about secured cards when you’re beginning credit repair. There is no guarantee that a lender will work with you, but it’s a great option if someone is willing to give you a chance.As you can see, there is no ‘right’ way to rebuild your credit history. There are several ways you can do it. Given the choice, though, I’d likely opt to pick up fewer accounts at the beginning. They’re easier to manage which is something that should appeal to people who’ve had a tough time managing their credit in the past. They’ll be less conspicuous when all of your bad accounts fall away from your credit report. And you’ll be more likely to use the cards even after you’ve graduated to cards that were only a dream to you many years back.I can understand why people want to bury their past with a bunch of positive tradelines. What worries me is that you won’t be able to hide all of these sub-prime accounts when your bad accounts fall off the report. I think it’s going to be an uphill climb trying to overcome not just the bad history, but the sub-prime history that follows.I believe that fewer tradelines — in the beginning — will yield more fruit in the end. Still, you’ll ultimately have to figure out what’s right for you.Best of luck in whatever course you take. Credit Matters Blog

Your Bailout Dollars Hard At Work — Citibank Style

Citibank cardholders are being offered a nice deal right now. If they sign up for a Citibank checking account, and fund it with $1,000 by January 31, 2009, Citibank will give them $100. If that’s Citibank’s way of saying thank you for bailing out its parent company, then I’ll take it. You’re welcome, Citi. Of course, if you’re not a Citibank cardholder, you can’t participate in this deal. But rest assured that your taxpayer dollars are going to a great cause. Is this where I put in my sarcasm indicator? Here is a picture from Citibank’s Web site click picture to enlarge:I give Citibank a lot of grief around here, so I thought it only fair to highlight Citibank’s benevolent side as well.Citibank, if you’re crawling around my site today, I thank you. And, though I cannot speak for all of them, I would suspect that taxpayers thank you, too. Viva la Citibank.

You Need a Spreadsheet to Manage Your Credit Cards

My best friend once gave me this advice: you can’t think clearly if your workspace isn’t clean. The same advice is applicable to managing your credit cards as well. Keeping track of due dates, statement dates, annual percentage rates, and utilization ratios, for example, requires a management tool. Without one, I’d argue that you’re no different than the kid who can’t think clearly because his desk is cluttered with a bunch of garbage. Because I have a host of credit cards, with different pay dates, it’s imperative that I track my cards closely. To do that, I use an Excel spreadsheet. The spreadsheet should track pay dates, annual percentage rates, utilization ratios, credit limits, credit balances, etc. I use a spreadsheet that was created by a member of creditboards.com. It’s the best spreadsheet I’ve ever seen. And I use it religiously.Given how important it is to never be late — especially in the current credit environment — having a spreadsheet that tracks your financial life is a no brainer. Let’s face it, without a spreadsheet that keeps track of our various credit cards, it’s easy to miss a payment. It’s just the nature of the beast and it’s the nature of having a bunch of cards without also having a plan to keep track of them. None of us are infallible. Using a spreadsheet, however, minimizes the risk for us. It ensures that we won’t have an excuse for ever being late.Now that I have sold you on the idea of tracking your credit card portfolio, head over to creditboards.com to download a copy of the spreadsheet I use. It’s free and it’s not a commercial product. I’ll let Joe — the creator of the spreadsheet — know that all of my readers thank him for the new tool. Without further ado, then, the spreadsheet can be found here. Credit Matters Blog