March 19, 2009
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Tending to Your FICO Score, Pt.4
Final Tips and Advice.Some of the final tips and pointers here apply to various areas of your credit card score in varying ways:
High balances: High balances on your credit cards generally, only modify severity of other factors. Like, say, the recent Circuit Court case with B of A where a woman's APR was jacked to 32% after the 2nd time she over charged within a 12-month period. Because she always carried a credit card high balance (close to the edge) the judge wasn't in a lenient mood. Read about it in the article entitled: [ "B of A vs. Us – It's Not About "Us vs. Them"."].
Inactive Cards: "Just take take those ol' records off the shelf..." and get those old credit cards from the sock drawer. Use them or lose them. What difference? Credit depth draws heavily from credit history. An old card still in good standing can really strengthen a person's credit score. Credit card lenders are closing these ‘Inactive Accounts' left and right. If they're old, they can strengthen your standing considerably. So make a habit of using each them at least once every 6 months.
Collection Agencies: Once you're stuck here, well...you're stuck for 7 years. However, note this: After two years, ‘derogatories' will have little effect on your credit card score. So, don't worry too much about paying them off. That doesn't mean that collectors won't heckle you or even take you to court. But, just paying the minimum each month will probably keep you okay.
Hard Inquiries: These take place when you apply for new credit or, even when one of your existing creditors have reasonable concern over your continued creditworthiness. Each time this happens, you can lose 10 points from your credit card score. Don't get carried away with too many applications in a short time (except for huge loans, like buying a house).
Other Ramifications: Although this article has mainly focused on credit cards, your credit score can also effect you in many other ways. For example, prospective employers may believe that your honesty is compromised by dishonest credit dealings. If your applying for an apartment lease, buying a house or car or even, applying for an insurance policy or some other type of loan, a bad credit rating can hurt you.