Welcome to today's live chat! Joining us today is Janet Bodnar, editor of Kiplinger’s Personal Finance Magazine, and in-house credit experts Joan Goldwasser and Lisa Gerstner. For the next hour, they’ll be offering advice and taking your questions about how to manage credit and debt. And, as an added bonus, we’ll be giving away free copies of our best-selling 100 Top Money-Saving Tips to several lucky viewers.
Thanks for joining us Janet, Joan and Lisa!
It's my pleasure to be here.
Thank you! Happy to be here.
To get us started, can you talk a little bit about what factors have the most impact on your credit score?
Definitely paying your bills on time.
Paying bills on time accounts for 35% of the score, so that's #1.
Also, holding down your balances to less than 30% of your credit limit--and preferably even less.
And you want to apply for credit cards sparingly. Taking on a bunch of cards at once can drag down your score.
So, two factors account for a large majority of your credit score. Definitely something to keep in mind.
Now, let's get started with reader questions!
Also don't close a number of accounts at the same time
The first one is from a young reader wondering how she can improve her credit score.
Question: Is there some reason why you want to improve your score if it's already decent?
If you keep your balances low relative to your credit limit and pay on time every month, your score will gradually increase
Right. Just keep doing what you're doing.
Sounds like you're on the right track--make sure you're keeping an eye on those store accounts. Interest rates on those can be very high.
Yes, Susie, paying off your cards will help your credit score. It's best to focus on high-rate cards first.
Calculate how much interest you will pay if you borrow the money and compare that to what you'll pay if you continue with your current plan. There are a number of calculators on-line that will help with those calculations. Then you can make an informed decision.