Comments on: How is Your Credit Score Determined?

By: Ryan

Ryan — Tue, 09 Feb 2010 14:21:34 +0000

Pat, Many credit card companies are lowering credit limits right now as they are trying to reign in the amount of credit they have extended to people. This is more or less happening across the board, so you shouldn’t take it as a sign against you.

Being debt free is a wonderful position to be in, and I would do my best to stay that way. I don’t think it will hurt you if you continue using your credit cards and paying them off every month. As long as you continue having them, they should work favorably on your credit report.

If you are concerned about your score dropping, then check it once a year or so just to make sure it isn’t changing. You should also periodically check your credit report to verify accuracy.

Best of luck!

By: pat

pat — Mon, 08 Feb 2010 12:51:07 +0000

To keep your credit score high is it necessary to have some type of loan payment.
I have heard that paying in cash and carrying no debt can actually hurt your credit score. Is this true? Our credit score last March was 810. I don’t want to loose the good rating. I am contemplating taking out a loan to have the inside of our home painted just to keep our credit history alive. We have the funds to pay for it in cash, but I hate the thought of paying interest to some one.
We have had no car payments for the last 11 years. Our mortgage has been paid off for 1 1/2 years. We paid off our 15 yr mortgage in about 9 yrs. We have 3 credit cards and pay the balance off every month “if” used. The oldest credit card was established in 1994. We pay ALL bills on time (early). I am 53 years old. I don’t want to end up with a bad credit rating as I age because I want to pay in cash. We have always kept our debt low. In fact, because of lack of credit in our 20/30’s we had some difficulty getting credit. I recently recieved a letter from Master Card reducing our limit by $2000 dollars to refect more of our spending habits. I took this as a negative blow to our credit status.
Your thoughts on this subject.

By: Ryan

Ryan — Fri, 08 Aug 2008 22:00:47 +0000

Hello Vishal,

Your score is based on many factors, such as payment history, amounts owed vs. amount of credit available (credit utilization), age of credit history, new credit, and type of credit.

It seems like you make all your payments on time, which means your payment history should be good. You don’t use much of your available credit, which means your utilization is low, and you’ve had your card for a few years, which means your history is established.

I think the fairly high limit is fine as long as you aren’t looking to take out additional large lines of credit. In fact, a higher limit can help your score because it keeps your utilization lower. Based on limited info, your situation shouldn’t affect your score negatively.

By: Vishal

Vishal — Fri, 08 Aug 2008 21:54:40 +0000

Question for you.

If I have a Credit Card with a credit limit > $10,000, but have used it sparingly over the past couple of years (say, not more than $200 annually with punctual payments), does that affect my credit score negatively ?

Thanks !

By: Ryan

Ryan — Fri, 30 May 2008 19:06:24 +0000

Andrew,

The account is helping you because it helps your average age of credit. The older the average age of your accounts, the better. It also helps your credit utilization rate because you have that amount of credit that you are not (and will not use).

The only way it could hurt you is the type of credit it is – a store branded charge account. These are generally labeled as consumer finance accounts, which tend to have a lower rating than regular credit cards or secured loans like a mortgage or car note.

But, I’m not sure it’s going to be a big deal for your credit score. I would think that overall it is more toward neutral, but I’m not 100% on that.

By: Andrew

Andrew — Wed, 28 May 2008 21:01:43 +0000

Found an interesting oddity on my credit report once. I opened a store-branded charge (not credit) card when I was in college, about 11 years ago. I had stopped using, but never actually closed, the account. The store has since gone bankrupt, but the charge card still shows as an open account on my credit report. It seems that this is one of those no harm situations, based on what you’ve shared, although there has been zero activity on the account for about 9 years. I once tried to figure out who I could contact to close the account, but ran into a bunch of dead ends.

Any thoughts on what action, if any, I should take? Is it helping, hurting, neutral?

By: Jeff Clair

Jeff Clair — Wed, 28 May 2008 20:50:46 +0000

Great job Ryan!

Your post revealed the truth about credit score as this information will help to maintain a high credit score. Thanks for the valuable post.

Jeff Clair

By: Sabrina Young

Sabrina Young — Wed, 28 May 2008 02:09:16 +0000

Over 80% of credit reports contain errors, and 25% contain errors significant enough to deny the person credit. MoneyEnergy is right. Check your credit report regularly.