Friday, October 17, 2008

20 Credit Questions and Answers at (October 17, 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. These Q&As will be published whenever I have received 20 questions (through Google, Yahoo, and AOL searches). I could conceivably do a Q&A every day -- though that's unlikely. But you never know. My Google traffic has been picking up lately.

Q: Do you have to give American Express form 4506-T [during the financial review process]?

A: You don't have to do anything. However, if American Express is requesting form 4506-T, that means they want to do a full-blown financial review. If you fail to comply with American Express's request, your cards will be canceled. If your cards are canceled, and you have membership rewards points, you will forfeit them (read the fine print of your agreement). Therefore, if you do decide that you will not comply with a financial review request, be sure that you redeem those points before allowing the account to get closed.

Q: Does closure of credit card for non-use affect credit score?

A: Utilization will be your most immediate concern, since closing an account (either at the card company's discretion or yours) takes the credit limit out of the FICO equation (assuming there is no balance on the card when it's closed). Longer term, the closed account will ultimately fall from your credit history, which could impact the average age and length of your credit history (FICO takes both into account).

So, short-term, your immediate concern will be what impact the closure has on your utilization ratio. Longer term, the closed account will affect your average age and length of history. I have written a story about closed cards and what impact they have on your FICO score (link here).

Q: Is an 800 FICO score any better than a 760 score?

A: By and large, a 760 will do anything that an 800 score can do. But given this credit climate, I'd rather have my scores closer to 800 than 760 -- just to be safe. Still, historically a 760 score would qualify you for the best rates that lenders offer. That said, there's nothing to stop you from working that FICO score (link here).

Q: Can retailers ask customers to see their ID when they use a credit card?

A: Merchants, per their agreement with Visa, MasterCard, American Express, and Discover, are not allowed, when a customer presents a valid credit card at the register, to make identification a condition of the sale. Visa and MasterCard don't even want retailers to ask for ID. American Express and Discover, meanwhile, don't forbid the practice but encourage retailers to refrain from asking for identification. All four of the payment-network companies prefer that retailers compare the signature on the back of the card to the signature on the transaction slip.

Q: What to do when retailer requires ID for credit cards?

A: If a retailer does ask for your ID during a transaction, and won't complete the sale without you showing your ID, you can complain about it. MasterCard complaints can be made here (link here). Visa prefers that you email them at

Q: Effect on credit score for not paying full credit card bill one month?

A: You should expect to see your credit score get hammered. The more recent a late payment, the more FICO points you lose. FICO is most sensitive to recent late payments. Assuming that you are never late again, the impact of the late payment will be muted over time. But, as a general rule, you should expect to see a large hit whenever you miss a payment.

Q: Will American Express grant, by customer request, a reduction in the interest rate and what is the best way to ask the company?

A: American Express, like most card companies, are amenable to customer requests for lower interest rates. If you are interested in getting a lower rate on your card, you should call customer service and request one. The worst that can happen is the card company will say no. Normally, a credit inquiry is not generated for the request. However, you should always double check to make sure that your credit card company doesn't have a policy of pulling your credit report when entertaining APR-reduction requests. When you get the customer-service agent on the phone -- ask. American Express can be reached at 800-528-4800.

Q: Can you obtain an American Express card after bankruptcy?

A: American Express is not bankruptcy friendly. As a general rule, I would not expect American Express to approve you if you have a bankruptcy on your report -- though I am sure that people with bankruptcies do get approved from time to time. What's more, if you have ever included American Express in a bankruptcy as a creditor, you can forget about an approval. American Express has the memory of an elephant. You can apply for an American Express account after your bankruptcy has fallen off your report, though. Just make sure that bankruptcy didn't include American Express.

Q: Pre-screen opt-in and opt-out -- is it safe?

A: Yes. I have written about the process in a story before (link here). The site is administered by Equifax, Experian, Innovis, and TransUnion. It is safe to use -- both for opting back in or opting out.

Q: Authorized credit card users losing history?

A: I'm thinking that this particular person was wondering about Fair Isaac's on-again, off-again proposal to exclude authorized users from the FICO scoring process. In August I wrote about Fair Isaac's reversal -- and decision to include authorized users in its scoring model.

Q: Should I use my line of credit so that I don't lose it?

A: I would admonish people to use any of their credit accounts. If you don't use them, there is a good chance that you'll lose them (link here). Credit card companies are just looking for a reason to cancel accounts. By not using the account, you're giving them a good reason to cancel you. Thus, I would use all of your accounts periodically. You don't have buy purchase high-dollar items. You simply want to keep the card active with a purchase, regardless of the amount.

Q: Will Citibank waive balance transfer fee?

A: While they would prefer to not waive the fee, it never hurts to ask. However, always ask for a waiver of fees BEFORE you actually do the balance transfer. Once you've done the transfer, the bank has no incentive. If you ask for a waiver before, you're in a much better position. That's because a card company might be worried that you'll walk if they don't waive the fee. That said, some card companies don't care if you do walk. They want their fees. My advice? Give the lender a call. You won't know unless you ask. Just make sure you ask before you do the balance transfer. And if the company will give you a waiver, be sure to do the balance transfer at that moment, while you have the customer-service representative on the line.

Q: Does Citibank pull your credit report when converting cards?

A: No. Citibank does not pull your credit report when converting cards. However, some credit unions do. But, as a general rule, Citibank and the other major banks do not pull a credit report when doing card conversions.

Q: Nordstrom Visa increase credit line.

A: Nordstrom is very good about granting credit-line increases. But the want to see some usage on the credit card first. After several months of using the card, and demonstrating a good payment history, Nordstrom is excellent with credit-line increases. Simply call in at month seven and ask for a limit increase (without a credit pull). Anything over a limit of $15,000 will require a credit pull. Anything over $30,000 will require that you provide financials (usually a couple pay stubs).

Q: Are additional cardholders liable to pay credit card at American Express?

A: The American Express agreement indicates that an authorized user will be liable for charges made on the additional card if the primary cardholder refuses to pay. American Express "may, at our discretion, pursue additional cardmembers for payment of charges they incur or authorize," the agreement says. That's the contract that I agreed to when I was approved for the American Express gold card. You'll have to read your card agreement to see how American Express handles your particular card.

Q: How to get a 800 Fico score?

A: You can achieve that goal by learning everything you can about the FICO scoring system (link here). You'll want to see what other FICO High Achievers do (link here). I recently reached 800 on my PFICO score, so I do have some idea of what it takes to get an 800 score (link here). That being the case, you've come to the right place. If you read all of the articles at you'll know everything I know. And if you know everything I know, you'll have a good chance of reaching your FICO goals.

Q: Is it bad to close too many cards?

A: Yes, it is. This is often one of the biggest regrets that people have. They were encouraged to close accounts. Then they find a site like and beat themselves up for listening to the moron who told them to close the accounts in the first place. If one card closure can hurt your score (see the earlier question up above that addresses the issue), imagine what would happen if you closed several cards at the same time. It could be ugly. My best is advice is to leave your accounts open -- unless there is an annual fee that can't be waived. If you rarely use the card, be sure to put a small purchase on it every three months or so. You don't want to have your account closed for inactivity.

Q: What happens when your credit card is inactive for 2 years?

A: Two things can happen. One, your credit card company could close the account for non use. And second, FICO will ignore the account for scoring purposes (as it relates to utilization). If you don't know what I am referring to here, you should read the article I wrote back in August. In it, I discussed the ramifications of allowing credit cards to go inactive (link here).

Q: What makes up Fico score?

A: Payment History - 35%; Amounts Owed (utilization) - 30%; Length of Credit History - 15%; New Credit - 10%; and Account Mix - 10%. You can read all about it here.

Q: Seasoned tradelines -- how can I get approved for Amex gold card?

A: I think I see what this person is up to. He or she wants an American Express gold card. It seems as though they're trying to make their credit look as good as possible before applying. To look good, this person might be considering a seasoned tradeline. Seasoned tradelines have mostly run their course now, but they were all the rage last year. Quick to make a buck, credit-repair companies popped up all over the place, peddling "seasoned" tradelines that could be "rented" by people looking for a score bump. The practice made people look more creditworthy than they actually were. By June of last year, Fair Isaac, the creator of the FICO score, had seen enough. Intent on rooting out the abusive practice of so-called "piggybacking," Fair Isaac said that authorized-user information (of all kinds) would not be included in its new FICO 08 scoring model. FICO has since changed course -- and will now allow authorized users to be included in the scoring system -- but they say that they've found a way to make sure that people who rent "seasoned tradelines" do not benefit.

As a rule, I would stay away from seasoned tradelines. People charge lots of money for the privilege of renting one of these accounts, and there is no guarantee that you'll get what you bargained for. Additionally, Fair Isaac is doing all it can to make sure no one benefits from these so-called seasoned tradelines.

Finally, some would argue that the American Express card ain't worth the trouble anyhow.

Save your money and be smart. Stay away from seasoned tradelines.

READER ALERT: For more credit questions and answers, the entire 10 Credit Questions & Answers index can be found here (link).


TheVibeRAIDER said...


TheVibeRAIDER said...

Thanks for posting the "Merchant/Retailer Violation" link.

I ate at my local Fuddruckers today, and they still ask for an I.D.

I plan to write them up.

Far Left Texas said...

Oh no - the ID vs. no ID debate. I'm firmly on the side of "What's the big deal?"

I've learned to hold my driver's license so my finger covers my name and address. Exactly one person has asked to see my last name.

The funny ones are the clerks who ask for ID when I swipe the card myself - they've never seen the credit card, so what are they going to verify by looking at my license?

And just for grins - last week at a store where I know they check ID, I asked my daughter in law to use my MasterCard and show her ID. The clerk had my CC and her DL in his hands at the same time, and he glanced at the license and handed both items back, satisfied with his ID check and verification.

Anonymous said...

Seasoned tradelines-perfect tool for 'brainy' people,and some of them show up on credit reports as primary accounts,not AU.Google is your friend! said...

Anon, to each their own. Just not for me. No disrespect to those who do it, though. Whatever works for them. If the system allows for it, then so be it.

Just working the system. said...

FLT, which is precisely why there is no need to even show ID. It's obviously that the clerks are clueless. So, if they are clueless, what's the point of even pulling out the ID to begin with?

Personally, I use my student ID. There is hardly any information on it.

Works for me. said...

Virgil, that I could be of assistance regarding the MC violation link.

TheVibeRAIDER said...


Oh, I just realized I don't have a MasterCard. Good thing you added "" for Visa violations!

:-) said...

Vibe, I have you covered, pal.

TheVibeRAIDER said...

Thank you, sir! said...

You are welcome, sir.

By the way, how is everyone liking these 20-question segments?

Thumbs up? Thumbs down?

Anonymous said...

PM,could you please post something about bankruptcy proceedings,how?,when?...etc.Thanks said...

Anon, I am not a lawyer. However, I do have a reader who is a bankruptcy attorney.

What are you looking for exactly?

Far Left Texas said...

Thumbs up to the 20 questions format. But 20 might be too many at once. said...

FLT, really? Hmm. So you think that 10 questions would be better? We'd have a 10-questions format almost every day! LOL.

You don't think that would clutter up the site?

Anonymous said...

I'm looking for a good bankruptcy attorney in IL.Any suggestions? said...

Anon, sorry, pal. Don't know one.

Anonymous said...

You mention about attorney,who reads this blog.Maybe she/he knows? said...

Maybe. If that person comes along, perhaps he or she will comment. Otherwise, you might want to check the Illinois Bar site.

azntg said...


You've done it again! First, with indispensable articles covering the key essentials of credit maintenance. Now, you're giving straightforward answers for some nagging questions!

I love the concept of 20 questions, but I also agree with FLT that it can be too much in one shot.

Perhaps you can do a 10-question format, with each Q/A session focusing on a specific theme (as opposed to a somewhat hodgepodge format as it is seen here).

After you've done enough of those, you can link to them as a roundup or something like that.

Just an idea *shrug* said...

Jim, the theme is something that I will think about. But I think just doing 10 questions at a time might be the better solution.

I'm thinking that 20 questions is just too much to digest at once.

I believe that 10 questions at a time might be just what the doctor ordered.

Glad you like it, though.

Elusive D. said...

I really like the Q&A format, but also think 10 sounds like a better amount. Possible to have all 10 on the same theme? That'd make it easier to reference if the need later arises.

But (despite my quibbles) I think this format is a v. good idea! said...

I certainly appreciate the need for a theme. I really do. But I would like to get these questions out in a timely manner. What's more, a lot of times they don't always fit into a nice box.

I've trimmed them down to 10 questions, though (see today's 10-questions story).

If you ever need to find one, I would recommend doing a search on the site.

Thanks for bearing with me, guys/gals.

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