Q: Is it better to consolidate all credit to one credit card, or should I keep multiple cards open?
A: Credit scores evaluate the total credit available to you, the current limits on the cards, the percentage of availability per card, and the payment pattern on those cards. It would not be advisable to transfer all credit to one card if the total owed was near the maximum credit available. While your monthly payment might be less, the appearance of minimal credit availability could adversely affect your credit rating.
Q: Can a lower credit score really cost me more money?
A: Mortgages, auto loans, credit card companies, and even student loans are based on the credit risk associated with the loan. In many cases, those borrowers with higher scores will receive lower interest rates, saving thousands of dollars in interest.
Q: How often should I review my credit report?
A: It is advisable to review your credit history every six months. Simple errors can occur when creditors report to the credit agencies. It is easier to correct these errors if found early. Other considerations include monitoring your credit report to prevent identity theft. While many creditors will insure against identity theft, there have been countless cases where an individual’s credit was impaired for an extended period of time due to the theft of one’s identity.
Q: How many credit reporting agencies are there?
A: The three credit agencies are Equifax, Experian, and Trans Union. All companies that report credit will utilize one or more of these agencies. When reviewing credit, it is important to note which agency has reported the item in question.
Q: Can a credit repair company really get negative items off my credit report?
A: Negative items which appear on your report in error can be removed. However, no one can remove legitimate items which have been, or are delinquent. Be cautious when dealing with credit repair companies, as there are many scams that could cost the consumer hundreds, if not thousands of dollars, and do nothing more than you could have done yourself.
Q: Will the three credit agencies tell me how to improve my credit?
A: Yes. The agencies offer an evaluation service that will recommend certain actions, and give you a range in which the credit scores will improve if those actions are completed. An example might be: “if the $4,300 Visa bill is paid down to $3,990, your credit scores would improve by: Experian – 12 to 14 points, Equifax – 10 to 13 points, Trans Union – 11 to15 points. In most cases, several recommendations will be offered. Any combination of those recommendations could improve your score greatly, affording you a much lower rate.
Q: Should I close out my credit cards, or am I better off keeping them open?
A: The credit scoring model evaluates your ability to manage credit. If you close out your credit cards, your ability to manage your credit is difficult to determine. Consider keeping them open with little or no balances. This will better demonstrate your ability to manage credit without abusing the credit limits.
Q: I have some old collection accounts on my credit report. Should I pay them now?
A: It depends on how old the collection is. In most cases, the negative evaluation has already been calculated into your credit score. Paying against it at this time could possibly drop your score. The best advice would be to consult the credit scoring evaluator to determine the best action.
Q: Should I open more accounts?
A: This depends largely on the number of accounts you have open, and the balances on those cards. If you have one credit card with a $20,000 limit and an $18,000 balance, it might be advisable to open two additional cards, and transfer $6,000 to each of the other two cards. This action would give the impression of three cards, each with $20,000 limits, and only $6,000 balances on each. The higher credit availability could prove more favorable in the credit evaluation process.
Q: I would like to consult a credit scoring evaluator to find out my three credit scores, as well as get recommendations to improve my score. How do I do that?
A: Click on the “CREDIT IQ” link below to go to the evaluator. Complete the “secured” form and submit. There is a nominal charge by the credit reporting company for this service. Once submitted, you will receive your credit scores from all three agencies, plus recommendations on how you could improve your scores (if applicable) with a range of how much your score will improve.
Bankers First Mortgage, Inc - HC1 Box 2400 - Tannersville, PA 18372 Office Phone: (570) 620-9561
