Wednesday, October 29, 2008

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

As I have said before, I can see how my readers find 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.


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).


TheVibeRAIDER said...

I might hold off re-establishing with Amex until times get better.

Anonymous said...

Hmmm.. good to know about AMEX history update...does it work if you already have a new card and want to call and ask for that account to refelect your earlier closed card date? AMEX was one of my first cards when I got out of college...20yrs wondder if I can get that reflected on my current card...and which one? Of course the earlier card was the green charge card that I have a Gold, Clear, Blue and Blue Cash...which one or all would be updated? said...

Anon, if you had a green card back in the day, your new cards should reflect that history. Have you checked your credit report lately? If not, you should.

If you have a new card, and your "member since" date is this year, call Amex and asked to be transferred to "replacement cards." They'll hook you up by changing your member since dates and sending new cards.

You can get all of your cards to reflect the member since date of your oldest card. said...

Virgil, read my American Express Game Plan story from back in July. I got that card right after American Express's second-quarter earnings call -- when American Express laid out its plan to "surgically" go in and start reducing exposure to risky customers. At that time, I wrote that it was smart to get a charge card. I still feel the same way today.

I think that if your credit report is clean, and you don't have anything on your report that would spook Amex, I think it's a fairly innocuous relationship.

American Express is still extending credit to those who are low risks, V.

Anonymous said...

Okay, I found a receipt with a charge I made 6/1998...but AMEX could not go back that far, all they had was my cards as early as 2004. They no longer except faxed documents to change 'member since' information. If they cannot pull you information for older cards, they cannot make the change. Thanks for the inforamtion, it was certainly worth the effort to search for the receipt and talk to someone about a possilb change. said...

Anon, did you talk to card replacements? I'm amazed that they couldn't find the record. They keep everything. I have a friend who recently got backdated to 1983. Amex had no problem finding the record.

Anonymous said...

On the first call, yes they transferred me, and that's when she explained if I had some documents to show, since she could not find it in the database, they would accept faxed information. The second time, when I found the receipt and was calling back, the initial rep put me on hold to try and reach someone on the department, he came back on the line and explained I had been mis informed the first time. So I'm not sure what else I can do...try again for a more knowledgeable representative in the card replacement dept?? said...

You got it, Anon. Call back. We call it dialing for dummies. Eventually you'll find someone who can make it happen. Don't give up.

Anonymous said...

Okay..will keep trying...let you know how it turns out said...

Anon, good luck. Make it happen!

Anonymous said...

Did your friend have the physical card? Neither system can bring up any information for member since...even found an AMEX acccount listing on my Experian CR...that was opeened 8/1997 and closed 2001...but it doesn't show the number and AMEX would need the physical card. No chance of that..this representative was more accomodating...she found an older account, but it would not let her see any member since information. The good news is EX shows my credit history as 20yrs. said...

Anon, absolutely guarantee that friend did not have physical card. Card replacements was able to see the date of his first card, though. Maybe your record is just lost. Most of the time, that does not happen, but we all it must happen every now and then.

How does your EX show history of 20 years? Is that coming from an Amex account you have?

Anonymous said...

I had a store card, Spiegel, in 12/ that was a great card:-) said...

Anon, sweet.

Regarding that American Express card, you were the primary cardholder, correct? Just making sure that we're not missing something.

I'd keep working that phone. Someone has to know something about that account.

Anonymous said...

Yes...I was the primary holder. I'll give a try again from time to time...Glad that card is still showing..that was when I was credit naive...but of all the cards from my early days, glad something is still showing from my initial fray in the credit card world. Equifax goes back 12yrs 5months, and Transunion goes back 11yrs 2months said...

Anon, I take it that your Spiegel account is now closed. The bad news is that it will eventually fall off your report. What is your next oldest account after Spiegel?

Anonymous said...

Ah..yes I recall you writing about that...dang! I think that would be my Dupage Credit Union Visa..opened in 2001 and still soon will it take for that closed acount to fall off? I have some other accounts that were opened in the 90's but they are all closed...other than my home mortgage which was opened in 1998.

Anonymous said...

Hey..does Citi re age accounts...I have older Citi cards that are now closed...wonder if I could get those Open since dates changed to the earlier dates? said...

Re: Citi reaging. As far as I know, Citi will not reage accounts. American Express is the only card company -- that I know of -- that does this. said...

Re: how long it takes for a closed account to fall off credit report. Closes accounts typically fall off the report 10 years from the time you close the account. I've seen some fall off sooner, though. Some fall off later. But generally, it's 10 years from account closure.

Anonymous said...

Well..the report doesn't show date of closure, but my last activity reported was June 1999...based on that drop off, I'll look for a drop in my current 762 fico score next summer :-( said...

Yep. Good chance it will fall off next summer. But it could fall off sooner. Or later. One never knows. But the 10-year rule is the one to stick with. Anything beyond that is gravy.

Anonymous said...

***Update on getting AMEX to re age current Member Since information from a closed 1997 account***

Called again this morning, said I lost the card from 1997, had the account number (actual receipt from July 1997 showing purchase), the rep found the account, but my current password was not accessing the information, so she transferred me to Password Reset, they changed it to the requested password and said they would send out the replacement card immediately. First scary thing...could I have been anyone with a receipt(from a trash can I searched) trying to re open an account? Okay, so I think that card was a Platinum and I currently have the Gold, so I will have to see how this turns out and if all my accounts re age to Member Since 1997. Here's hoping I haven't created havoc with my current accounts :-) Stay tuned.... said...

Anon, I think you'll be fine. If 1997 is the oldest Amex account you have, they'll all be dated to 1997.

You will be just fine.

Your effort should be commended.

Nice work.

Anonymous said...

**New Update***
In addition to finding the AMEX 1997 account on my CR, I had a Nordstrom Visa account from 1998. I called Nordstrom and they said they can re open the account with the same original date, just need to do an EQ fax pull. That's pretty cool, I wonder if SAKs and Nieman will be as accomdating...?? I will look to see if the dates are in the same time period or earlier, I do not need all three, so if one date is more beneficial that's the one I would re activate. said...

Anon, I am not surprised about Nordstrom. I wrote about that very thing today in my 10 Questions and Answers story.

From today's story: Q: Reopening a closed credit card from issuer?

A: I like your thinking. Some card companies are better than others about reopening accounts. Nordstrom, for example, has been known to reopen accounts -- even years after they were closed. There is no hard and fast rule on this, so you'll have to contact your card company to see what its policy is.

As you can see from my answer today, I believe that you should just call all of the creditors that you'd like consideration from.

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