Ask Liz Weston

Get smart with your money

Credit

Q&A: Is one credit card better than two?

By

Dear Liz: I have a long-standing credit card with a national bank. As I travel a lot, I just opened a travel rewards card with the same issuer. I would prefer to keep the new card and close the old one, rather than keep two cards active with the same issuer. I understand from reading your columns this might (temporarily?) lower my credit score. Any other downside?

Answer: It’s hard to predict how an account closure will affect credit scores or how long the impact will last. The effect is likely to be greatest for people with few credit accounts and short credit histories. You may be able to mitigate some of the damage by asking that the credit limit from the old card be transferred to the new one.

Before you do that, however, consider why you’re averse to having two cards with the same issuer. The old card may have benefits the new one lacks, and could be a helpful backup if your new card is lost or compromised. The case for keeping the old card is strengthened if the annual fee is low or nonexistent. Just remember to use the old card occasionally to minimize the chances the issuer will close it for you.

This week’s money news

By

This week’s top story: January mortgage rate forecast. In other news: 4 things that could impact your credit in 2024, the new 2024-25 FAFSA, and how to pay for promising medications like Ozempic.

January Mortgage Rate Forecast: Steady While Waiting for Spring
Mortgage rates might not change much in January, after going through a tumultuous spell toward the end of 2023.

4 Things That Could Impact Your Credit in 2024
Here are four things to look out for that could impact your credit in the new year.

The New 2024-25 FAFSA is Open. Intermittently.
The 2024-25 FAFSA has “soft-launched” after a three-month delay. Submit the simplified form as soon as possible to maximize your financial aid.

How to Pay for Promising Medications Like Ozempic
Ease the cost of prescription medications like Ozempic by understanding your insurance coverage, payment options and budget.

This week’s money news

By

This week’s top story: Smart Money podcast on investing in 2023. In other news: Small-business trends 2023, privacy hacks that may hurt your credit, and how to avoid hotel resort fees.

Smart Money Podcast: Your Money in 2023: Investing in the Stock Market
This week’s episode is all about investing in 2023.

Small-Business Trends: 6 Predictions for 2023
It’s difficult to predict what 2023 holds, but business owners can use innovative strategies to combat emerging challenges.

Privacy Hacks May Hurt Your Credit + You Won! Can You Hide?
Money News & Moves: Security fails routinely expose your personal financial info. And you can’t even buy privacy.

How to Avoid Hotel Resort Fees (and Which Brands Are the Worst)
NerdWallet analyzed the major hotel brands to find out which ones have the worst resort fees.

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

By

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; An auto dealer keeps checking my credit. Is that a problem?

By

Dear Liz: How do I remove inquiries from multiple auto lenders? One of the dealerships pulled my credit at least eight times over a two-day period. I thought this could only be done while the customer is physically at the car lot.

Answer: Dealerships aren’t supposed to check your credit without your permission, and they can’t check your credit if you don’t give them your personal information, including your Social Security number. Some dealers use deceptive methods to get your personal information, such as claiming they need your Social Security number for you to take a test drive. (They don’t.)

If you did give permission, though, there’s not a lot you can do about multiple inquiries. Dealerships can, and will, check with multiple lenders to see what rates and terms they’ll offer you. If your credit isn’t great, multiple inquiries may be necessary to find you a loan.

The good news is that multiple auto loan inquiries in a two-day span won’t hurt your credit that much or for that long. Most credit scoring formulas don’t count each auto loan inquiry separately, but instead aggregate such inquiries together and count them as one. The ding against your credit scores is typically small and lasts only a few months.

Ideally, though, you wouldn’t continue to do business with a dealership that wasn’t crystal clear about why it needed your personal information and how it was going to be used. Also, consider applying for a car loan from a local credit union before you step onto a car lot. Credit unions are member-owned and tend to have good rates and terms, without the runarounds and add-ons that are so prevalent at car dealerships.

Q&A: How young people can build their credit

By

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.