77 votes
Accepted

How to recover from credit score hit from paying off loan?

First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not ...
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67 votes
Accepted

Is it ever a good idea to close credit cards?

Yes, it can be a good idea to close unused credit cards. I am going to give some reasons why it can be a good idea to close unused accounts, and then I will talk about why it is NOT necessarily a bad ...
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61 votes
Accepted

Should I open a credit card when I turn 18 just to start a credit score?

Yes, it is a very good idea to start your credit history early. It sounds like you have a good understanding of the appropriate use of credit, as a substitute for cash rather than a supplement to ...
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45 votes

$7300 medical billing error reported to credit agencies

My question is what more can I do to ensure this doesn't happen again. Credit monitoring services can be helpful at detecting things like this early, but they can't actually prevent them, clerical ...
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  • 62.9k
42 votes

Credit score and financing new car

CC debt is My Hair Is On Fire!! debt, because the interest rate is so high. So... yes, you should pay that off first (unless you like subsidizing my 1.5% Cash Back Rewards and "Fat Cat Bankers" while ...
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  • 48.7k
38 votes

Purpose of having good credit when you are well-off?

Your dad may have paid an "opportunity cost" for that outright purchase. If the money he saved had been invested elsewhere, he may have made more money. If he was that well off, then his interest ...
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38 votes

Open many credit cards while I am young?

I just turned 19 years old and want to start planning for a future of good credit. A laudable goal. Should I open many credit cards now so that in 10 years I will have a good history with many ...
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  • 48.7k
30 votes
Accepted

Is it common practice for credit card company to demand to see your income tax forms?

A number of lenders - American Express and Discover are most notable for this in recent years - may ask or require you to verify your income via an IRS 4506-T form. Typically, they'll do this if they'...
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  • 2,535
29 votes
Accepted

Should I, as a young person, get a credit card with "bad" conditions?

There are several things that go into your credit history. I believe this applies to most credit systems, but I should warn you that most of my information is US-centric. There may be variations in ...
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  • 7,775
28 votes

Purpose of having good credit when you are well-off?

Credit scores, or at least components of them, can sometimes factor into how much you pay for car insurance. Source: Consumer Reports: How a Credit Score Increases your Premium
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  • 50.4k
26 votes

Purpose of having good credit when you are well-off?

Because even if you won the lottery, without at least some credit history you will have trouble renting cars and hotel rooms. I learned about the importance, and limitations of credit history when, ...
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  • 875
25 votes

Is it better to have/use more credit cards to build credit history/score?

Increasing the number of cards is a double-edged sword credit-wise. There's a trade-off between the amount of credit used (utilization), number of inquiries and open accounts (fewer is generally ...
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  • 113k
24 votes
Accepted

Confused: Should I be opening more no annual fee credit cards to improve my score with the intention to not use them?

In the long run, yes. In the short term, no. Having more accounts and higher total credit limit is a good thing. From the potential lender's perspective, someone else has apparently reviewed your ...
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  • 1,799
21 votes

Purpose of having good credit when you are well-off?

A $250K earner might have $4M in retirement savings and $500K in available funds, but doesn't wish to spend all his liquidity on the house. In general, a house might cost 2-3 times one's annual income....
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21 votes

Will closing a checking/saving account have a bad effect on my credit report?

I want to know will this has a bad effect on my credit, etc? Closing a checking and/or savings account should have zero impact on your credit score. There is a risk if you close the account, and you ...
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20 votes

Credit score and financing new car

You're asking several related questions - about credit scores, how to use cash, and how to buy a vehicle. If we break them all down and start with what to do with your $5k in cash - it makes sense to ...
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  • 16.7k
19 votes
Accepted

What is the full formula for calculating a FICO 9 credit score?

The FICO score is an invention of one company, FICO (formerly called Fair Isaac). The exact formula is a trade secret that the company does not reveal. This allows them to maintain a monopoly on ...
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  • 23.8k
19 votes

Should I, as a young person, get a credit card with "bad" conditions?

Would it be a good decision for someone ... to build up his credit history to apply for credit cards with "worse" terms than average, such as larger interest, shorter or no grace period, etc.? It ...
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  • 45.2k
17 votes

Open many credit cards while I am young?

Your credit score is devised by 5 components. Age of account Credit utilization Payment history New Credit Credit mix https://www.myfico.com/credit-education/whats-in-your-credit-score If you get a ...
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17 votes
Accepted

What happens to your credit score on prolonged absences from the US?

Neither paycheck deposits or rent are factored into your credit score. Only lines of credit. If you don't close the credit cards and you use them at least once in a while, then pay off the bill on ...
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  • 50.4k
14 votes

Can credit cards look at your credit report without your authorization (and reduce existing credit limits)

Yes. Check your credit-card agreement that you signed. You will have given them authorization to periodically perform "soft" pulls of your credit report to recompute your credit score and adjust ...
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  • 1,767
14 votes
Accepted

How to build up credit fast?

Credit is like dignity - it takes a long time to build but a short time to lose. Your credit history is mostly made up of your prior activity for several years. There's no "quick fix" to raise your ...
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  • 113k
13 votes

If Sears is canceling my account that hasn't been used in years, will it hurt my credit score?

Potentially. A large part of your credit score is the average age of your credit history. So if you have, say, four cards with ages of 14, 10, 9, and 3 years, your current average is 9 years, which ...
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13 votes
Accepted

Multiple hard inquiry for a single loan from car dealer?

(I'm a bit surprised that nobody talked about the impact of multiple inquiries on a loan, since OP is concerned with credit building. Probably an answer as opposed to a comment is justified.) Is it ...
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  • 1,799
13 votes

Will paying off an old $8 collection hurt my credit?

Mostly agree with JohnFX here, but one difference perhaps worth considering. Since it's medical debt, once it's paid off it should not hurt your credit any more, as long as it's reported paid. (...
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  • 34.6k
13 votes
Accepted

Should I max out my first credit card in order to build credit if I can pay the balance immediately?

If it were me, I would max out the card with the purchase, then pay it off in full shortly after so you can continue using the card for more purchases. The only reason I suggest doing this is because ...
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  • 45.2k
13 votes

Can you build credit history without getting a credit cards or taking on debt?

Get a credit card. I know you said you don't want one, but they build credit and don't have to cost you money. They also offer more protection than a debit card. If you pay it off by the due date ...
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12 votes

Should I open a credit card when I turn 18 just to start a credit score?

The length of time you have established credit does improve your credit score in the long run. As long as you can avoid paying interest, you might see if you can get a card with cash back rewards. I ...
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  • 121
12 votes
Accepted

Will paying off an old $8 collection hurt my credit?

Contact the creditor, explain the situation, and if they agree to take it off your credit be sure to get it in writing from them. If they fail to remove it you can use the letter to petition the ...
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  • 50.4k
11 votes

Is it ever a good idea to close credit cards?

It is an issue of both utilization and average age of accounts. If your cards with $0 balances on them are: A) newer cards than the ones you are carrying balances on and you don't want them B) much ...
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  • 20.1k

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