To view this Flash animation, please be sure that you have Adobe Flash Player version 6 or greater installed as well as JavaScript enabled in your web browser.

Protecting your credit during the holidays

Ever wonder if your holiday spending is hurting your credit standing? Want to know the ways you can avoid "credit blunders" this holiday season? This webinar discusses the top ways to ding your credit during the holidays, and more importantly how to avoid them. You'll also gain some valuable insight about how your FICO® score considers some of the typical actions you take during the holidays. After the 15 minute presentation, we took another 15 minutes to answer questions – some of the questions we gathered during the webinar are listed below.

Conducted on:

November 13, 2007

Number of attendees:

417

Duration:

34 minutes

Average attendee rating:

Want to know about future myFICO Webinars – just sign up for our free emails now!

Other questions submitted during the webinar:

Since a HELOC is a revolving debt, will maxing one out hurt my FICO score?

While HELOCs are typically shown as "revolving" accounts on your credit report, the FICO scoring formula considers such debt in the same way as it looks at mortgage (installment) debt – meaning that being maxed out on a HELOC should not hurt your score by much, if at all.

Will increasing the credit limit on my credit card affect my score in terms of debt to credit limit ratio?

There's good news and not-so-good news here. It's true that you can help your score by reducing your ratio of credit card debt to credit limit, depending on the amount of this reduction. The lowering of this ratio can be achieved either by paying down the debt, or increasing the credit limit, or both. So, yes, if you're able to get your bank to raise your limit, this is one way to reduce this ratio. The potential downside, however, is that your bank may want to look at your credit report and/or FICO score before deciding whether not to grant this limit increase, which would add a inquiry to your credit report. This inquiry could then negatively impact your score, whether or not your limit increase is granted.

How quickly do improved credit habits begin to affect a low FICO score? Are there any shortcuts?

How quickly a FICO score rises as you begin to re-establish your credit depends largely on the reasons that made it low, as well as what specifically you're now doing "right". For example, a low score due to a history of late payments can take longer to recover from than a low score due to high credit card utilization if those balances are brought down within a relatively short period of time. So, while making timely minimum payments on credit card accounts is a good way to re-establish your credit, paying more than the minimum each month will often have even more of a positive impact on your score.

What should be done if only 2 out of the 3 credit bureaus agree to fix a credit error? Can you leverage the results of the two bureaus against the third?

While the credit bureaus typically investigate possible errors independently of each other, it couldn't hurt to provide that third agency with documentation received from the other two, in addition to any documentation you can obtain from the lender whose information is being reported in error.

If I'm considering a home or car purchase, how far in advance of the purchase should I refrain from opening a new credit card?

There is no rule for this, however, since opening any new account can negatively affect your score, you may want to allow as much time as possible between the opening any new account and applying for credit so your score can have as much time to "recover".

Will my FICO score be affected differently if I choose to payoff a maxed out credit card all-at-once versus paying it off over several months?

The FICO scoring formula simply looks at credit card balances as of the time the score is being calculated and not at the history of your balances; therefore, paying as much of the balance as quickly as possible will have the most positive impact to your score in the shortest amount of time.