10 Credit Questions and Answers at GlobCredit.com (October 29, 2008)

As I have said before, I can see how my readers find GlobCredit.com. I don’t collect any personal information, but I can see search terms that people use to find the site. This information is like the center of Lifesavers candies. Or doughnut holes. Rather than letting them fall by the wayside, I figure that I should put these search queries to good use. Here are the game rules: I will edit search queries for syntax purposes. Otherwise, I will leave them alone. I’ll also phrase queries in the form of a question whenever possible. By request, these Q&As will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: What happens to inactive bank accounts at Citibank?A: It depends how long the account has been inactive. Bank accounts are no different than credit card accounts in this regard. If you leave an account open for long enough, the bank will close it. I recently received a letter from JPMorgan Chase asking if I wanted to keep my old Wamu account open. But the letter was generic — and only applied to accounts that were inactive. Because my account is active, I ignored the letter. I imagine that if I did have an inactive account, and did ignore the letter, that my account would have ultimately been closed. If that happens, the bank will send you a letter detailing the closure. You’ll also receive a check for the amount of money sitting in the idle account. –Q: What triggers an American Express financial review?A: No one knows the answer to this question. People have tried to figure it out, but it’s a mystery. Some people think that having a mix of credit cards and charge cards can trigger it I don’t agree. Others think that unusual spending patterns can trigger it maybe. Others still wonder if it’s just a random event like winning the lottery. Perhaps. Whatever it is, no one knows what triggers it. And I wouldn’t waste time thinking about it. –Q: What is revolving debt experience?A: I imagine someone got denied for a credit card. That’s one of the reason codes that is often generated for a denial. Lack of revolving debt experience means that you don’t have enough experience with credit cards and other credit instruments that allow you to revolve balances from month to month. The best way to avoid this kind of reason code is to acquire a few credit cards. Over time, after you’ve shown some history with these cards, you’ll likely not receive that kind of reason code in the future. –Q: Restore slashed credit limit American Express?A: Unfortunately, it’s very difficult to change American Express’s mind once it has slashed your credit limit. That’s not to say that you won’t be able to eventually get your limit higher down the road. But if you’re asking if you can get your limit restored immediately after a credit limit reduction, I would say that it’s extremely difficult to do. American Express, as I have written extensively about link here, is on a mission right now. On a relative basis, it is cutting more limits than it has in the past. Previously, American Express used to cut limits on just 4% of its customers during the year. Now it has upped that amount to 10% of its customers. –Q: Citibank hard credit inquiry — how do you get inquiries off?A: If this was a legitimate inquiry, I would not dispute it. Disputing inquiries can result in fraud alerts and closed accounts. Why? Because if you are disputing the inquiries not yours, then the creditor would likely wonder who tried to open the account. If not you — then who? Same goes for the fraud alert. If you contact the credit bureau, it could place a fraud alert on your report. Here’s the bottom line, though: inquiries aren’t score killers — unless you have a slew of them. Although inquiries remain on your credit report for two years, they only impact your score for 12 months. That said, if a creditor has placed duplicate inquiries on your report, then feel free to call the credit reporting agency. Just be sure that you are disputing the inquiry because it’s a duplicate. You’re not saying that the original inquiry isn’t yours — you’re just saying that the second one shouldn’t be there. –Q: Getting Amex account backdated?A: Even though American Express is disliked for a lot of reasons, this isn’t one of them. Indeed, this is one of the bright spots about having an American Express account. Here’s how it works. If you had an old American Express card that you closed back in the 1980s or whenever, and you apply for a new card today, your new card will reflect the age of the old account. That’s great because it will be reported to the credit bureaus that way. Think about it. How nice would it be to apply for a card today and be able to pick up 30 years of history? Assuming you opened a card in January of 1982, and opened a new card today, here’s how the new card would show up on your credit report: Date Opened 10/1982. It would reflect the year of the old card and the month in which you opened the new card.By the way, if you do get a new card today — there’s a good chance that the new card the physical card will not reflect your history with American Express. Your ‘member since’ date will likely show 2008. If that happens, here is how you get it changed. You call the ‘card replacement’ department and have them reissue a new card, with the correct ‘member since’ date. If you had an old account from 1982, American Express’s card replacement department will be able to verify that. They’ll then reissue a new card. American Express will — at their cost — send the replacement card to you immediately. The card will arrive at your home within 24 to 48 hours. You can call the customer service number 800-528-4800 at American Express and ask to be transferred to replacement cards. –Q: To request a increase limit for cards, do you have to give a reason?A: Nope. You can just call up and ask for an increase. It doesn’t hurt to have a readily-available reason, but it’s not necessary. I usually have a reason, though. These are just some of the explanations I’ve used in the past:Limits on my other cards are significantly higher assuming that’s, in fact, true. I’d like to bring this card’s limit in line with the rest of my cards.I’d like to make this my primary card, but the initial limit won’t allow me to do that. The limit just doesn’t allow me to put a lot of purchases on it — at least not without getting me into trouble with my utilization ratio.Because I care about my credit scores which is what helped me get this card in the first place, I put a lot of emphasis on not maxing out my cards. This initial limit makes it difficult for me to keep my utilization in check making it more difficult to keep my scores high.I have some fairly large expenditures coming up in the near future. I was hoping to put those expenditures on this card. With the low initial limit on this card, it will be difficult, if not impossible, to put those purchases on this card. I’ll be forced to use another card.And on and on it goes. You’ll have to come up with one of your own if you don’t like mine.–Q: Not paying credit card in full to improve credit score?A: No. No. No. I hear this one a lot. People think that they’ll somehow curry favor with credit card companies if they leave a balance each month and pay interest. No. All you are doing is enriching the company. You are better off paying in full each month — showing that you can afford what you’re buying. But to answer this question more specifically, there is no reason to not pay your bill in full each month. The balance that you pay in full still gets reported to the credit reporting agency each month. Here’s how it works: I buy $500 in goods and services during the month with my Capital One card. Capital One generates a billing statement for me. I then pay the bill in full a few days after receiving the bill. When the billing statement was generated, Capital One reported that balance to the credit reporting agencies. Next month, assuming that I don’t make any charges on the Capital One card, my balance will be zero. That zero balance will get reported to the credit reporting agencies. Or, if I do have a balance due because I made more purchases after I paid my previous bill in full, that new balance will get reported to the credit reporting agencies.As you can see, there is absolutely no point in not paying your bills in full. Your balances will continue to get reported to the credit reporting agencies — whether you pay in full or leave a balance. Knowing that, you are better off not enriching your credit card companies by paying interest each month.–Q: FRIEND BORROW MONEY ‘DESPERATE’A: Stay away from that friend. Desperate people do desperate things. Lend moral support to your friend, but try to avoid lending monetary support. Friends and money often don’t mix well. That said, if you want to give your friend a gift, without any strings attached, I am all for that. You won’t have any expectations of being paid back and your relationship won’t go south. I’m even more rigid when it comes to people putting their credit history at risk link here.–Q: Does closure of first credit card account affect credit history?A: Not immediately. Eventually, though, that closed account will fall off your credit report typically about 10 years from when you close it. The most immediate impact to closing cards relates to utilization. For a full explanation of what happens when you close cards and what happens to FICO, see my story here link. READER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

10 Credit Questions and Answers at GlobCredit.com (October 29, 2008)

As I have said before, I can see how my readers find GlobCredit.com. I don’t collect any personal information, but I can see search terms that people use to find the site. This information is like the center of Lifesavers candies. Or doughnut holes. Rather than letting them fall by the wayside, I figure that I should put these search queries to good use. Here are the game rules: I will edit search queries for syntax purposes. Otherwise, I will leave them alone. I’ll also phrase queries in the form of a question whenever possible. By request, these Q&As will now be published whenever I have received 10 questions through Google, Yahoo, and AOL searches.Q: What happens to inactive bank accounts at Citibank?A: It depends how long the account has been inactive. Bank accounts are no different than credit card accounts in this regard. If you leave an account open for long enough, the bank will close it. I recently received a letter from JPMorgan Chase asking if I wanted to keep my old Wamu account open. But the letter was generic — and only applied to accounts that were inactive. Because my account is active, I ignored the letter. I imagine that if I did have an inactive account, and did ignore the letter, that my account would have ultimately been closed. If that happens, the bank will send you a letter detailing the closure. You’ll also receive a check for the amount of money sitting in the idle account. –Q: What triggers an American Express financial review?A: No one knows the answer to this question. People have tried to figure it out, but it’s a mystery. Some people think that having a mix of credit cards and charge cards can trigger it I don’t agree. Others think that unusual spending patterns can trigger it maybe. Others still wonder if it’s just a random event like winning the lottery. Perhaps. Whatever it is, no one knows what triggers it. And I wouldn’t waste time thinking about it. –Q: What is revolving debt experience?A: I imagine someone got denied for a credit card. That’s one of the reason codes that is often generated for a denial. Lack of revolving debt experience means that you don’t have enough experience with credit cards and other credit instruments that allow you to revolve balances from month to month. The best way to avoid this kind of reason code is to acquire a few credit cards. Over time, after you’ve shown some history with these cards, you’ll likely not receive that kind of reason code in the future. –Q: Restore slashed credit limit American Express?A: Unfortunately, it’s very difficult to change American Express’s mind once it has slashed your credit limit. That’s not to say that you won’t be able to eventually get your limit higher down the road. But if you’re asking if you can get your limit restored immediately after a credit limit reduction, I would say that it’s extremely difficult to do. American Express, as I have written extensively about link here, is on a mission right now. On a relative basis, it is cutting more limits than it has in the past. Previously, American Express used to cut limits on just 4% of its customers during the year. Now it has upped that amount to 10% of its customers. –Q: Citibank hard credit inquiry — how do you get inquiries off?A: If this was a legitimate inquiry, I would not dispute it. Disputing inquiries can result in fraud alerts and closed accounts. Why? Because if you are disputing the inquiries not yours, then the creditor would likely wonder who tried to open the account. If not you — then who? Same goes for the fraud alert. If you contact the credit bureau, it could place a fraud alert on your report. Here’s the bottom line, though: inquiries aren’t score killers — unless you have a slew of them. Although inquiries remain on your credit report for two years, they only impact your score for 12 months. That said, if a creditor has placed duplicate inquiries on your report, then feel free to call the credit reporting agency. Just be sure that you are disputing the inquiry because it’s a duplicate. You’re not saying that the original inquiry isn’t yours — you’re just saying that the second one shouldn’t be there. –Q: Getting Amex account backdated?A: Even though American Express is disliked for a lot of reasons, this isn’t one of them. Indeed, this is one of the bright spots about having an American Express account. Here’s how it works. If you had an old American Express card that you closed back in the 1980s or whenever, and you apply for a new card today, your new card will reflect the age of the old account. That’s great because it will be reported to the credit bureaus that way. Think about it. How nice would it be to apply for a card today and be able to pick up 30 years of history? Assuming you opened a card in January of 1982, and opened a new card today, here’s how the new card would show up on your credit report: Date Opened 10/1982. It would reflect the year of the old card and the month in which you opened the new card.By the way, if you do get a new card today — there’s a good chance that the new card the physical card will not reflect your history with American Express. Your ‘member since’ date will likely show 2008. If that happens, here is how you get it changed. You call the ‘card replacement’ department and have them reissue a new card, with the correct ‘member since’ date. If you had an old account from 1982, American Express’s card replacement department will be able to verify that. They’ll then reissue a new card. American Express will — at their cost — send the replacement card to you immediately. The card will arrive at your home within 24 to 48 hours. You can call the customer service number 800-528-4800 at American Express and ask to be transferred to replacement cards. –Q: To request a increase limit for cards, do you have to give a reason?A: Nope. You can just call up and ask for an increase. It doesn’t hurt to have a readily-available reason, but it’s not necessary. I usually have a reason, though. These are just some of the explanations I’ve used in the past:Limits on my other cards are significantly higher assuming that’s, in fact, true. I’d like to bring this card’s limit in line with the rest of my cards.I’d like to make this my primary card, but the initial limit won’t allow me to do that. The limit just doesn’t allow me to put a lot of purchases on it — at least not without getting me into trouble with my utilization ratio.Because I care about my credit scores which is what helped me get this card in the first place, I put a lot of emphasis on not maxing out my cards. This initial limit makes it difficult for me to keep my utilization in check making it more difficult to keep my scores high.I have some fairly large expenditures coming up in the near future. I was hoping to put those expenditures on this card. With the low initial limit on this card, it will be difficult, if not impossible, to put those purchases on this card. I’ll be forced to use another card.And on and on it goes. You’ll have to come up with one of your own if you don’t like mine.–Q: Not paying credit card in full to improve credit score?A: No. No. No. I hear this one a lot. People think that they’ll somehow curry favor with credit card companies if they leave a balance each month and pay interest. No. All you are doing is enriching the company. You are better off paying in full each month — showing that you can afford what you’re buying. But to answer this question more specifically, there is no reason to not pay your bill in full each month. The balance that you pay in full still gets reported to the credit reporting agency each month. Here’s how it works: I buy $500 in goods and services during the month with my Capital One card. Capital One generates a billing statement for me. I then pay the bill in full a few days after receiving the bill. When the billing statement was generated, Capital One reported that balance to the credit reporting agencies. Next month, assuming that I don’t make any charges on the Capital One card, my balance will be zero. That zero balance will get reported to the credit reporting agencies. Or, if I do have a balance due because I made more purchases after I paid my previous bill in full, that new balance will get reported to the credit reporting agencies.As you can see, there is absolutely no point in not paying your bills in full. Your balances will continue to get reported to the credit reporting agencies — whether you pay in full or leave a balance. Knowing that, you are better off not enriching your credit card companies by paying interest each month.–Q: FRIEND BORROW MONEY ‘DESPERATE’A: Stay away from that friend. Desperate people do desperate things. Lend moral support to your friend, but try to avoid lending monetary support. Friends and money often don’t mix well. That said, if you want to give your friend a gift, without any strings attached, I am all for that. You won’t have any expectations of being paid back and your relationship won’t go south. I’m even more rigid when it comes to people putting their credit history at risk link here.–Q: Does closure of first credit card account affect credit history?A: Not immediately. Eventually, though, that closed account will fall off your credit report typically about 10 years from when you close it. The most immediate impact to closing cards relates to utilization. For a full explanation of what happens when you close cards and what happens to FICO, see my story here link. READER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here link.

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