My husband has a couple of credit cards that have high limits but no balances. We are considering added my name to those accounts in an effort to improve my debt ratio and credit score. Is this a good idea?
- Traci, Alaska
Whether or not adding your name to your husband’s accounts will improve your credit score depends on a couple of factors. “If the account is new, or young then your score could go down,” says Credit.com’s John Ulzheimer. He adds that if the accounts become overly utilized, it could ding your score as well. However, if your husband’s accounts are well established and you don’t foresee over-utilization being an issue, by all means, add yourself as an authorized user. Here’s why doing so can give your credit score a boost:
It can lower your utilization ratio. When you sign on to your husband’s accounts, it will affect something know as your aggregate revolving utilization ratio, which in turn affects your credit score. Revolving utilization is the amount of your revolving credit limits that you’re currently using. Revolving accounts are those where your monthly payment is based More…
I received a letter from my credit card issuer today stating that since I had not used my card for “an extended period of time” that they permanently closed my account. My goal in not using my cards was to improve my credit score. My question is since the issuer was the one that closed the account, will it reflect negatively on my credit report?
-Lori, New Jersey
It seems logical right? Don’t use your card, you won’t have a balance and you won’t have to worry about paying it off. Unfortunately however, that’s not the case. “Card issuers have been closing out millions of inactive accounts…they are doing this in order to limit their risk as they are facing mounting losses related to card members who are unable to make payments on their credit cards,” says CardRatings.com’s Curtis Arnold.
If you don’t use your credit card over about a six-month period, it may be considered inactive and your issuer may cancel your account. Unfortunately, this will impact your credit score. “Closing out an account that you haven’t used in a while on the surface may seem like a prudent thing to do, but doing so will likely adversely affect your credit score,” says Arnold.
The decreasing of your score has to do with a little something called your utilization ratio. More…
More and more Americans are being hit with increased credit card rates. What’s the best way to cope? Watch the video below to find out.
QUESTION: This morning on your segment, you said we as consumers can opt out of any new interest rate set by the credit card companies as long as we close the account and simply pay off the balance. This theory is correct on four out of five accounts of mine. One company told me there was no opt out options and I would HAVE to pay their new, higher percentage rate. Is this illegal on their part? What can I do?
-Brad, South Dakota
ANSWER: Thanks to new credit card reform laws, it’s becoming easier to opt out when you’re hit with a higher interest rate. However, the date in which the notice reflecting your change in terms was mailed will affect whether or not you’re able to opt out of the new interest rate you’re asking about.
If your notice was mailed before August 20th, 2009, then you may be out of luck. This is due to the fact that the portion of the Credit CARD Act of 2009 that outlined the rules for disclosure of contractual changes went into effect on that day. As the law stands now, your credit card company must give you at least 45 days notice in advance of any interest rate hikes. This wasn’t always so. More…
Interest rate hikes, increases in annual fees and higher balance transfer fees are just a few of the changes taking place in the world of credit cards. How can you protect yourself? Watch the video below to find out.
