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Questions answered in this webinar:

How quickly does paying down a credit card affect my FICO score?

It often doesn't take that long for balance decreases to have a positive impact on your FICO score. However, before paying down a credit card can have an affect on your FICO score two things need to happen: 1) the credit card company needs to report the balance decrease to the credit bureau, and 2) the credit bureau needs to update your credit report with the balance decrease.

After these two things happen, you might expect to see a change in your FICO score. In general, this process takes around 1 month, but can take longer depending on how often your credit card company reports changes to the credit bureaus.

What are some tips for choosing a secured credit card?

Since getting a secure card is often a method for establishing or rebuilding credit, you want to be sure the secure card company reports to all three of the credit bureaus. Otherwise, using your secure credit card responsibly won't help your score. Also, some secure credit cards have the option to convert to a regular credit card, so you might also inquire about that feature.

After building up your credit, should you keep the secured credit card?

As with any credit card, as far as your FICO score is concerned, it's better to keep the card open. This has to do with your available credit to credit in use ratio. For more information about how closing credit cards affects your FICO score, read this article.

Can identical credit bureau data result in different FICO scores?

Yes. Each of the scoring models used to calculate your FICO score at the bureaus are slightly different. This can often account for small differences in your FICO score even if all of the same information appears on each of your credit reports.

If there is more than a 20 to 30 point difference between your scores across the bureaus, you may want to make sure each credit report is indeed reporting identical information. For more information about why scores differ across the bureaus, read this article.

Do mortgage lenders look at all three of my FICO scores?

Yes. Typically mortgage lenders look at all 3 of your FICO scores when evaluating you for a home loan. Each lender uses their own criteria for determining how your FICO score will be used, but often they check to see that your middle score is above a set amount or that your lowest score is above a certain amount.

How long do negative items stay on my credit report and affect my FICO score?

Most negative information will remain on your report for 7 years. Chapter 7 bankruptcies can remain for up to 10 years and unpaid tax liens can remain indefinitely. However, your FICO score considers when the negative item occurred; generally, the older the item the less of a negative impact it has on your FICO score.

Your score can recover quite well as soon as 2 years after the negative item occurred as long as the rest of your credit obligations have remained in good standing during that time.

Which hurts my FICO score more – a bankruptcy or a foreclosure?

Both are treated as significantly negative events by your FICO score. With foreclosures, if you can keep the foreclosure isolated to just that single account and keep current with the rest of your credit obligations, your FICO score can rebound fairly quickly. With bankruptcies, the odds are that there are several accounts included in that bankruptcy file and each account may be reported as a "not satisfied" credit obligation. Therefore, bankruptcies have the potential to have a more far reaching negative impact on your FICO score than an isolated foreclosure.

How does refinancing a mortgage affect my FICO score?

Usually refinancing doesn't affect your FICO score that much, if at all. One thing that can hurt your score is if you get a "new" account during the refinance process (as opposed to keeping the same account with different terms).

What's the best strategy for paying down my credit balances?

First, get any accounts that are past due current. Then a good practice is to pay down the cards that have the highest balance in relation to their credit limits. You should also factor in the APRs associated with each card so you can pay down the cards with the highest APRs – which will leave more money to pay down all of your cards.