Paying bills on time is no longer enough to keep your FICO credit scores high. Now you need to take other steps. One of the hardest for many is this: control your temper.
If your credit card issuer has raised your interest or lowered your available credit, your first impulse might be to tell them to take their credit card and… well, you know. But that’s a mistake, especially if you’ve had the card for a long time.
One of the factors that affects your score is longevity of credit – so if you’ve had that card for twenty years, hang on to it even while you grit your teeth. But, don’t just accept the changes. Call them.
Explain that you’ve been a steady and reliable customer for X number of years, have always paid your bill on time, and intend to keep doing so in the future. Tell them that if they insist on raising your interest rate, you’ll need to take your business elsewhere.
In addition, point out that you have not abused your credit limit, and would like it returned to its former value. Your credit score is important to you, and the high limit helps you maintain it.
If you’ve connected with an agent who says “Sorry, can’t help you,” call back again. If you get that answer again, ask to speak to a supervisor.
Be sure to use a phone with a speaker feature, so you can set it down and read a book or do household chores while you wait, because it could be a while. They’re hoping you’ll get tired and hang up, and the supervisors are always busy, so there may be 6 calls ahead of you in line.
If you can’t get anywhere with the supervisor either, then do transfer as much of your balance as possible to a lower interest card, but keep this account open. It’s for your benefit, not theirs. Use it just often enough to keep it open, but not enough to cost you money in interest. In fact, pay it off each month if possible.
When you transfer balances, be sure to spread them around with the intention of keeping every credit card under 30% of the available credit. Consolidating all balances on to one card offering a low rate will help you get the balances paid off sooner, but it will hurt your credit score.
This practice doesn’t make sense, since $10,000 of debt against $100,000 of available credit is $10,000 of debt no matter where it’s placed. But the formula will lower your score if that entire debt is on one card with a $10,000 limit – or even on 2 cards each with a $10,000 limit. Stay under 10% per account for the best scores, and always strive to stay under 30%.
The word is that FICO is making changes to the credit scoring formula this year. Maybe they’ll start to look at overall debt compared to overall credit limits – but maybe not.
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