Edward G asked:


I have several credit cards that have annual membership fees required. But I do not use them and have no plans on using them in the future. I’ve been told that if I cancel these cards that my credit scores will suffer because of the cancellations. Is there a way to cancel these cards without causing anymore danage to my credit scores?

FICOTechTalk asked:

Going to credit counseling doesnt hurt your FICO® score — as long as the agency pays your bills on time! Find out more in this video, where Darcy Sullivan and Craig Watts answer one of your questions about FICO® scores.

leisha asked:


I recently opened a new credit card and noticed that my fico score plumetted 50 points after doing so. How long will it take for credit score to get over the fact that I opened a new account and regain those 50 points?

Have you wondered how loan and mortgage companies decide whether or not to lend you money when you apply for a loan? For nearly all, the decision is based on one version or another of a ‘credit score’ based on your credit report. The most commonly used credit scoring ‘device’ is the FICO – software developed by Fair Isaac and Company to evaluate credit histories.

When you make an application for a mortgage loan, the finance company or bank makes an inquiry to a credit reporting agency. The credit reporting agency takes the information given them by the finance company and compiles a report based on information in its own records and other information that’s a matter of public record. That information is not only compiled, it’s fed into a software program that uses a series of algorithms to estimate the likelihood that you’ll pay the loan back. It makes that estimation by comparing information about you with a profile created by compiling the ‘ideal borrower’. The closer your information tallies with the ‘ideal’ profile, the higher your credit score.

Among the things that the FICO software evaluates when coming up with a credit score are:

- the length of time you’ve been in your current job

- the length of time you’ve lived at your current address

- how long you’ve had credit of any kind

- how many credit cards and loans you have

- whether you’ve ever made any late payments (or made any in the past four years) on credit accounts

- if you’ve paid off any loans in full

- if you’ve ever had an account referred to a collection agency

- how much debt you carry

- how much credit you have available to you

Those are only a few of the factors that affect your credit score. But just how much does your credit score affect your chances of getting the mortgage you want?

According to many financial experts, while your credit score is a large factor in determining whether or not to grant a loan or mortgage to you, banks and finance companies take many factors into account. Most have their own underwriting rules and scoring systems of which the FICO is only a part. Those may include your employment history, the local job market and many other things. Based on all of those factors, a company may decide to extend a mortgage to you despite a low credit rating – or refuse you credit even if your credit rating is high.

One common belief is that a low credit score is forever. Nothing could be further from the truth. Your credit score is very fluid – it’s meant to represent a picture of your current circumstances and ability to repay a loan that’s extended to you. For that reason, new information added to your credit report will affect your credit score – and the further in the past that credit mistakes are, the less they matter. In some cases, it takes as little as 4-6 months of on time payments to bring your credit score up high enough to qualify you for a new loan or mortgage. A new job, a raise in salary, or paying down one or two credit cards could make the difference between a rejection and getting the mortgage that you want.

By: Joseph Kenny

About the Author:

A credit score is a general term used for a number assigned to you based on your credit report. A FICO score is one of these scoring models and is a brand of credit score. What that does for the consumers is sometimes increase confusion. There are some things to understand.

The first thing is, if you are talking about credit scores, you are talking in general. It is a myth that there is only one credit score. There are several different scores that are available. Each of the three credit bureaus has their own. There is also a joint project called a VantageScore that was developed by all three bureaus in conjunction. These are only two of what could be a thousand different credit scores in use today by lenders.

If you are talking about a FICO score, you are talking about a type of credit score. It was developed by Fair Isaac and they have been in the credit scoring business since the 1950’s. It is the most recognized face of credit scores. The history comes from the recommendation of Freddie Mac and Fannie Mae to use FICO scores in mortgage lending.

To further complicate things, there are different versions of the FICO score. You will find you also have a Beacon score. This is specific to Experian, the largest credit bureau. This is the marketing name they use for the FICO score.

The scale of all these credit scores can also differ. For example, the VantageScore uses a credit score range of 501 to 990. The FICO score uses a range of 300 to 850. Your credit rating could vary based on the scale. Meaning, you could have a good rating with one and an average with the other.

The question for consumers is which credit score should I worry about. It could be a question of what model is the lender using, but the starting point is your FICO score. This is the market leader and is often used in the majority of mortgages. It could also be the basis of many of the other scores. You should also get a score based on all three credit reports. You will find that the scores are different on each. This is because of reporting by your accounts to one bureau and not the other. If you want your FICO score, you need to go to the source and visit Fair Isaac credit score website, MyFICO.com

By: Kyle Gentile

About the Author:

Your credit history is a tangible representation of your reputation. This can practically dictate your career path and the loans that can be extended to you. There are only a few financial institutions willing to extend credit to someone that they could not check on. Although there is a card for no credit history, getting approved will be a lot complicated than usual.

Since you are just about to establish your credit history, lenders can’t look at your FICO score to determine your credit worthiness. Instead, they would consider other factors in approving card for no credit history. Usually, they will look at your employment and residence history. Your ability to hold a steady job increases the chances of getting approved. This reflects your financial stability. The same goes with your length of stay at your current residence.

Having utilities under your name is also helpful in getting your credit history started. Signing up for as many utilities as possible may not build your credit score, but it can be considered in approving card for no credit history. Opening a checking account can also contribute in getting a loan or credit approved for a first timer. Although bank account is not reported to the credit bureaus, its history is vital in getting a credit card for the first time. You may even get your first credit card through your bank.

There are also major credit card companies that offer accounts for people that are new to credit, usually with a low credit line and high APR. This is the best option to take if your intention is to establish a credit history. The terms may not be ideal for you, but good payment history and spending habit can boost your credit score.

You can also look into credit cards offered by retail stores. They are usually willing to take a chance on applicants with no credit history. Department store cards are typically not a good idea because the discounts offered may tempt you to rack up charges that will be assessed of a high APR. Just remember to manage your account well. After all you are building your credit history.

When all else fails, secured card for no credit history is your last option. It is easier to obtain secured credit card, all you need is a security deposit as collateral. As most accounts offered to someone who is new to credit, this kind of account has a higher APR and a yearly membership fee as well. Your credit line is determined by the amount of money you will be depositing.

Building your credit profile takes time. Obtaining a credit card for no credit history is more difficult. So once you are approved of your first credit card, be sure to keep the account current and below the limit. And do not forget to ask the lender if they will be reporting your account history to the credit bureaus. Maintaining the credit card account history in good standing is futile if it will not help you build your credit.



By: Jodi A Bennett

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lightning_strikes asked:


I’ve heard that “baddies” stay on a credit report for 7yrs from the date of first delinquency.

In 2002, I had a Visa lateness recorded on my credit report. Next to the lateness, it said “due to stay on credit report until 3/2005″ which is only 2.5yrs not 7. Then in spring 2005, the lateness vanished from my credit report! (hooray!)

But in early 2005, I fell into financial problems again(job loss) and a few more 30day credit card latenesses got recorded on my credit report. In the past month, one of these 30day latenesses has vanished from my TransUnion report, along with any mention of the account(which is a good thing, since it’s been closed and was only open a short time anyway; the account was not beneficial to my Fico score)

I was wondering if the remaining 30day lates will disappear from my report once they hit the 2.5yr mark? Or, have the credit reporting regulations changed since 2002, and I will be stuck with them for the next 4.5yrs? Any experience w/ cc lates?