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Credit Q&A Answers to help make sense of your credit.

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Surviving a financial setback.

Dear myFICO,

I've always been mindful of my credit; I have a FICO score of 732. Unfortunately, I've been out of work for 7 months and I can't afford to pay most of my monthly bills. I know filing for bankruptcy will hurt my credit, but I don't see any other options right now. Can you tell me what I can expect to happen to my credit standing? I also want to know if there are things I need to be mindful of as I start to rebuild my credit.

Warren
Columbus, Ohio

Surviving a financial setback.

Dear myFICO,

My husband lost his job about 4 months ago and we're now living solely on my income until he finds a new job. At first we weren't too worried about making ends meet but now we realize that we really need two incomes. Recently, I've been skipping some of smaller bills to pay our larger obligations (mortgage and car payments). I see my FICO® score has plummeted lately – I assume because of these missed payments. Is this downward spiral inevitable for people in our situation?

Cassandra
Los Angeles, California

Not-so-obvious causes for a dropping FICO score.

Dear myFICO,

I've noticed that my FICO score has been steadily dropping over the last few months. In January my score was in the mid 700s and now it's in the low 700s. I don't have any late payments or any other negative marks on my credit report, so why is this happening to my score?

Allison
Birmingham, Alabama

Can my score be ruined by one item?

Dear myFICO®,

It's inevitable that I will have to let the bank foreclose on my home. I just can't afford the monthly payments and I can't refinance because my home is worth significantly less now than when I bought it. Will this foreclosure ruin my FICO® score forever? Are there alternatives to foreclosure that will save my credit? Is declaring bankruptcy better for my score?

Aaron
Tampa Bay, Florida

4 steps towards better credit.

Dear myFICO,

This year is all about improving my credit. I got my FICO scores last week and they are all in the mid-600s. My FICO score report says my length of credit history isn't great and neither is my payment history. So now what? How do I get rid of these negative factors? I'm dedicated to working on my credit standing, but not sure where to start.

Tom
Washington D.C.

Putting credit problems behind you – here's the gameplan.

Dear myFICO,

When I bought my car last year, I found out that my credit isn't as good as I thought it was. I couldn't believe it when the salesman told me that I didn't qualify for their best rates because my FICO score was in the low 600s. My goal for 2008 is to improve my credit over the course of this year so I can buy a home next year. Where should I start?

Lauren
Seattle, Washington

Preparing for next year now – here's what to focus on.

Dear myFICO,

Last December I vowed to really focus on managing my credit better. It turns out that this was one resolution I really faltered on. I just checked my FICO score and it's worse than last December. Can you help me figure out the best way to prevent falling into the same situation this coming year?

Nadia
Los Angeles, California

Holiday OVERspending – common pitfalls and solutions.

Dear myFICO,

During the holiday season last year, I really damaged my credit – I saw my FICO credit score drop almost 40 points from October to January! Can you give me some advice on how to avoid hurting my credit this holiday season and help me spot common pitfalls that could lower my FICO credit score?

Diane
Atlanta, Georgia

Suffocating from my mortgage – a few suggestions to help.

Dear myFICO,

My adjustable-rate loan will reset in a few months and I think I may have gotten in over my head with my mortgage. What options do I have to help me get control of this situation and what are their implications on my credit standing?

Anthony
Jacksonville, Florida

Buying a new home – your credit is even more important these days.

Dear myFICO,

I'm in the market for a house and have recently heard that lenders are getting much tighter with their lending practices, and that even people with good credit are going to find it harder to get a loan. I have a score of 756, should I be worried that I won't get a loan?

Samantha
San Jose, California

College kids and credit – what to expect and advice for your child.

Dear myFICO,

My daughter just started her second semester of college and is already being contacted by credit card companies wanting to issue her a credit card. I'm worried that if she takes these cards she will get into debt that she's not able to handle. What should my advice be to her? Will opening a credit card help or hurt her future credit?

Jill
Santa Fe, New Mexico

Authorized users – what it is and why it's not a great idea.

Dear myFICO,

I'm trying to build up my credit quickly so I can purchase a new home that I found and absolutely love. I was told the quickest way to raise my FICO score was to be added as an authorized user to someone's credit card who has a long history with on-time payments. Is that true? If so, how would I go about doing that?

Renata
Newark, New Jersey

Collections – how to manage them and what they do to your credit.

Dear myFICO,

I have a few collections on my credit report that are 2-3 years old. I'm not sure if it's better to pay them off or just let them fall off the report. Any advice?

Phil
Hartford, Connecticut

3 FICO Scores? Why there's more than one and which one counts.

Dear myFICO,

Why does TransUnion say my Equifax score is 733 when myFICO says my Equifax score is 689? I pulled both scores on the same day. Both credit reports contain the same information. Which score is right, and which one are lenders going to use?

Donna
Las Vegas, Nevada

Bankruptcy – how to revive your credit after hard times.

Dear myFICO,

A few years ago I fell on some hard times and missed a bunch of payments to my creditors before finally declaring for bankruptcy. Now I'm dedicated to getting my financial life back on track and have paid all my bills on time for almost three years now!

Can you tell me how long my bad history will remain on my credit report? Do different types of information remain longer than others? Is there anything I can do to remove these old items from my credit report any quicker?

Karen
Chicago, Illinois

Credit cards and credit scores; here's the relationship.

Dear myFICO,

I'm trying to get my finances under control and would like to consolidate the 6 credit cards I currently have into 1 or 2 cards that have zero-balance transfer options plus lower interest rates.

What should I do with the cards I no longer want to use? I've heard that closing them can affect my FICO score.

Eric
Chicago, Illinois

Marriage and credit – tying the knot in more ways that you might think!

Dear myFICO,

I'm recently married and am wondering how my wife's FICO score is now going to affect mine. Do we have a joint FICO score? If I have bad credit but my wife has excellent credit, how does that affect our ability to apply for loans or credit cards?

Ross
Purchase, New York

How to get Financially Fit

Dear myFICO,

My New Year's resolution is to get physically fit, but this year I'm also very committed to getting financially fit because I am planning on purchasing my first home. I understand managing my FICO score is an important step in this process, but I'm not sure what I need to do. Do you have any advice around how to manage my FICO score more effectively?

Monica
San Diego, California

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