Ask Liz Weston

Get smart with your money

Credit & Debt

Q&A: A spouse’s debt, your credit score

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Dear Liz: My spouse and I have added each other as authorized users on our credit cards. My spouse has more debt than I do. Does this impact my credit scores?

Answer: Possibly. Credit scoring formulas look at how much available credit is being used on each account. If your spouse has higher balances than you but also higher credit limits, your credit scores may not be harmed much, if at all. If, on the other hand, your spouse is using most of their available credit, your scores could suffer.

Most services that provide credit scores (including possibly your bank and your credit cards) typically offer some explanations about why your scores aren’t higher. If the explanations include anything about excessive credit utilization, you may want to consider getting yourself removed as an authorized user from the problematic cards.

Q&A: If the credit card is paid off, will the credit score go up or not?

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Dear Liz: If I pay off my credit card and carry a zero balance, will my credit score go up quite a bit?

Answer: That depends, among other factors, on how much of your available credit you were using on that card. The closer you were to being maxed out — which means using most or all of your available credit — the more dramatic the improvement you might see.

But your credit scores also depend on a number of other factors, including how long you’ve had credit, how many open accounts you have, how much of the available credit you’re using on those accounts, when you last applied for credit and whether you have any negative marks, such as late payments, in your credit reports.

In general, credit scores respond favorably if you use only a small portion of your available credit. People trying to obtain top scores generally try to keep their credit usage below 10% of their credit limits.

Q&A: Dumping debt could make you ‘credit invisible.’ Why that’s a problem and how to fix it

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Dear Liz: I have a credit card issue that I’ve not been able to resolve and hope that you can provide some helpful suggestions. I am a debt-free senior. I owe nothing on my house or vehicles and I pay off my one credit card each month. I’ve no missing payments on utilities. My credit card reduced my credit limit last year saying that my credit scores were too low. In fact they’ve fallen from 800s to 600s over the last year. The bank that issues my business credit card says they use an algorithm that allows no human interaction for adjustments for people like me who are debt-free. Any suggestions?

Answer: Many people who once had good credit become “credit invisible” if they’ve paid off all their loans and stopped using credit cards.

But regularly using a credit card or two should be enough to stay visible to the credit score algorithms and to keep good scores. The problem may be the type of card you’re using. Business credit cards often don’t show up on personal credit reports, so your use of the card wouldn’t be included in credit score calculations. If that’s the case, consider applying for a personal card to start rebuilding your scores.

The other possibility is that you’ve become the victim of identity theft. Please check your credit reports at the three major credit bureaus. You can do so for free by typing AnnualCreditReport.com into your browser window or by calling (877) 322-8228.

Q&A: Credit freezes

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Dear Liz: You recently suggested a credit freeze. I agree that’s a good idea, and probably the only good way, to try to protect your credit.

But I’ve tried to periodically unfreeze my credit reports and that rarely goes well. The banks won’t tell you which credit bureau or bureaus they use to check your credit, so you have to temporarily thaw your reports at all three. This weekend, only one bureau worked well. At another, I was able to sign on but got a message the site was temporarily unable to access my information. The third didn’t recognize any of my possible usernames, so I tried my Social Security number and date of birth, which it also didn’t recognize. I’m SURE I don’t have those wrong, so I’d say part or all of their database is offline. More than likely I’ll be able to sort this out on a weekday when the bureaus staff their phones, but so far, I’ve worked on unfreezing my credit for two days and only one of the three services responded correctly.

Answer: Freezing and thawing your credit reports is certainly easier and faster than it used to be — plus, these services are now free by federal law. But as you’ve learned, you need to keep careful track of the credentials associated with your accounts at each credit bureau, including any login IDs, passwords and personal identification numbers.

You can write this information down and keep it in a secure location, but also consider using a password manager. These secure software programs allow you to create unique credentials for each site you visit. Given the prevalence of database breaches, it’s essential that you don’t reuse usernames and passwords. The programs also can help you change your passwords regularly, which is also important in keeping your information secure.

Q&A: How young people can build their credit

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Dear Liz: Our 23-year-old daughter has a low-limit credit card from her bank, primarily to build her credit history. For the same purpose, we also added her as an authorized user on one of our credit cards (yes, we can trust her). When she checked her credit reports recently at annualcreditreport.com, one of the agencies produced a report but another claimed they couldn’t find her. Is that normal for a relatively new credit user? Could it possibly be because she has a hyphenated middle name? Should we worry?

Answer: It can take 30 days or more for information to be updated at the credit bureaus, so she should try again and also check the third credit bureau. If two bureaus can’t find her after 30 days, then it’s possible that both credit cards report to only one bureau. In that case, she should consider getting a credit-builder loan from a credit union that reports to all three bureaus.

Otherwise, the problem is likely the credit bureau’s, and she should try ordering the missing credit report via the U.S. mail. The bureau that couldn’t find her will have instructions for requesting a report that way on its site.

Q&A: Lenders were supposed to tell you about pandemic debt relief. What if yours didn’t?

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Dear Liz: I had a problem last year and had no income so I couldn’t pay my bills for three months. I explained the situation to my creditors, but they still put the late payments on my credit reports. I called and sent letters, but it was no good: My credit score dropped to the mid-500s. How can I get the late payments taken off?

Answer: Last year, many lenders offered various kinds of hardship programs because of the pandemic. If you were approved for forbearance, the payments you missed should not have been reported as late. You could dispute the errors at the three credit bureaus (start at www.annualcreditreport.com) and ask the lenders to correct the record.

Unfortunately, lenders don’t always tell customers that forbearance or other hardship programs are available. If you weren’t given the option to enroll when you called to explain your problem, contact your lenders again, in writing, to point that out and request that the late payments be removed from your credit reports.

If a lender refuses to cooperate, consider making a complaint to the Consumer Financial Protection Bureau.