Tips for keeping your credit score high

Credit scores are important in the financial lives of your clients, so I'd like to share a few tips I picked up at "Understanding Credit and Credit Risk Scores," a presentation by Todd Overstreet, director of field sales and service at Rels Credit, the credit reporting agency for Wells Fargo, at the Women's Business Network in Wellesley, Mass. on Jan. 8.

Overstreet gave many tips about how to minimize damage to your credit rating. The following particularly piqued my interest:

• Use less than 50% of your credit line. If you use more, creditors will start to worry about your ability to repay.
• Make all of your loan applications within a 14-day period if you're shopping for loans. Each credit inquiry by a lender typically lower your credit score by three to five points. However, "If a consumer shops with five different mortgage lenders within a 1- day period, those five inquiries are grouped together and will only affect a consumer’s score 3-5 points total," said Overstreet in an email to me.
  
• If you must close a credit card account, start with your newest card. Creditors like to see a long credit history.

Useful resources

• AnnualCreditReport.com will give you one free credit report annually from each of the three major credit reporting bureaus--Experian, Equifax, and TransUnion.
• OptoutPrescreen.com will take your name off the credit bureaus' prospect lists, so you should stop getting credit card offers in the mail.
• MyFICO.com is a source for getting your FICO score. It charges a fee.
• CreditKarma.com is a free service for getting a credit score along with advice on how to improve your score. Maureen Conway of the accounting firm of Paresky Flitt & Company told me about this website.
• Understanding Credit and Credit Risk Scores is a 20+-page publication available as a .PDF file.
  

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Susan B. Weiner, CFA
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Copyright 2010 by Susan B. Weiner All rights reserved