We got an email via Ask The Expert recently with some great questions about credit. I thought all of you might benefit from a little credit Q&A as well, so here are some highlights of my response to the reader:

Q: Is it a good idea to get a credit report for myself? I have heard that requesting your own credit report decreases your score; I don't even know what my score is.
A: Anytime a person requests their own credit report or score (also known as a self-inquiry), neither is affected. You can request a credit report from each of the three credit reporting agencies (Experian , TransUnion  and Equifax ) annually free of charge . However, you'll have to pay for your credit score, which you can do at any of the previously mentioned credit reporting agencies. To find out where you stand currently, I'd recommend purchasing your score.

Q: I have one credit card that is two years old with a $3,000 limit that I don't use — have never used — what is this doing to my credit score?
A: This credit card that you don't use increases the available credit you have, so you're using less of your possible credit, which is a good thing. You've also had it opened for a while, so it may be helping your length of credit history. One thing you want to consider with this card is that because you don't use it as frequently, you might not catch any fraudulent activity as quickly.

Q: I have another credit that my mom thinks I should switch to a miles rewards card. Is switching the balance a good idea and what will it do to my credit score? Can I ask them to decrease my interest rate?
A: If you decided to switch the balance to a new card, you may have an inquiry by the credit card company that could affect your credit score. If you think that the rewards you'd get from a new card would be worth it, switching may work for you — be sure that you research all the terms of the new card before you make any changes. If you stick with your current card and are interested in lowering your rate, I'd say ask. If they say no, at least you tried!

We'd like to talk more with you about credit in some upcoming posts! What credit questions do you have?

Posted by Barbara at 10:00 AM |  Contact Barbara |  Permalink  |  Comments (2)
Found in Credit, Credit cards, Credit history, Credit score, Financial education, Money management, Reader questions, Wells Fargo Bank

Post car breakdown, my father suggested I start thinking about purchasing a new vehicle when summer rolls around.

A car loan can be a large undertaking. Before I got too committed to the idea of a new vehicle, I decided to first research my credit score and credit report. Both affect the rate I would get on a car loan.

There are a number of ways to see how you're using your credit. I chose to take advantage of a free trial of FICO® Score Watch® —a program that allows you to check your credit score and credit report through Equifax, one of the nationwide consumer credit reporting agencies.

The program lets you know what’s helping your score and what’s hurting it. I found out that my history of no late payments is an advantage, while my short credit history is one of my pitfalls.

You can also check your various credit accounts, any inquiries by lenders or business looking into your credit, reports from collection agencies, and any public records you may have like tax liens, bankruptcies, foreclosures, and garnishments.

For me, the coolest part of the program was the Score Simulator. This tool allows you to see how different scenarios would affect your credit score. It also gives you a best course of action—the plan of attack that will help your credit score the most.

So I simulated applying for an auto loan. Applying for this new credit in my current situation could lower my credit score by 30 points. It really got me thinking about what I could do to improve my current credit score before applying for new credit.

Just for fun (well, it wouldn’t be fun if it actually happened), I simulated my score if I maxed out all my revolving credit accounts—those include credit cards, store cards, and lines of credit. With that, my score dropped about 100 points! Yikes!

Better just follow my best course of action and pay off my credit cards over the next 24 months.

If you’re curious about your credit score, what you could do to improve it or what future actions could hurt it, Score Watch might be something to check out.

Do you check your credit/scores on a regular basis?

Posted by Barbara at 10:05 AM |  Contact Barbara |  Permalink  |  Comments (2)
Found in Credit, Credit cards, Credit history, Credit score, Default, Paying, Private loans, Wells Fargo Bank

Now that we are fully into the holiday shopping season, I have to admit, I'm feeling kind of ignorant about how college students treat Christmas shopping these days. My college junior stepdaughter is not a big shopper in general, and limits her Christmas shopping to just a few affordable gifts for family. And I don't remember buying people much of anything when I was in college.

However, as I wander the mall these days trying to wrap up my own shopping, I see one big temptation that's probably even bigger for college students: the store credit card.

I actually promoted these when I was in college. I worked for JC Penney  and we got reimbursed for every application we turned in. It was a nice way for me to take home some extra cash, so I definitely encouraged any and every customer to apply.

But these days, it's not just the big department stores that offer credit cards — almost every single store pushes them. And some of their offers are pretty tempting. They quickly tell you exactly how much you can save today just by signing up, and go on about their valuable rewards programs. It always sounds like a great deal, and it can be hard to say "no."

Admittedly, I sometimes have a problem refusing these offers when I'm making a big purchase, or when it's being made by a store I visit frequently .

As a college student, however, it's not a good idea to start opening up a bunch of new credit cards — even if you can save $20 here and there. Even if you promise yourself you'll cut it up as soon as it arrives. Some people have the discipline not to use these cards or to cancel them right away — you don't want to find out the hard way which type of person you are.

Even if you don't use the card, having too many open lines of credit can hurt your credit score  since it's an open door for you to quickly get into debt. And if you don't have a proven credit history, this looks dubious to potential creditors. Also, having a number of open lines of credit leaves you increasingly vulnerable to fraud and identity theft — especially if they are accounts you don't pay much attention to.

Your best bet is to stick to just one credit card while you're still building your credit history, and find another way to save during the holiday season.

Posted by Caroline at 11:54 AM |  Contact Caroline |  Permalink  |  Comments (0)
Found in Credit, Credit cards, Credit history, Credit score, Financial education, Fraud, Identity theft, Looking back, Money management, Wells Fargo Bank