05.05.09
By John Ulzheimer
It's understandable that in this time of legislative smack downs we, the consumers, might make the understandable mistake of taking our eyes off the "credit" ball. Within fourteen months we're likely to see a kinder and gentler credit card industry and that has given us a topic that we can’t seem to stop writing about. While we all count down to July 1, 2010, the date the Credit Card Bill of Rights will become the law of the land, let's not forget the following:
1. The credit card industry will still be able to adversely change the terms of your credit card accounts if you miss payments. And frankly, they should be able to do so. The major change when it comes to missing payments is that only the issuer where the payment was missed will be able to make an adverse change because of the
missed payment. So, be careful about your due dates. They aren’t suggestions, and they are likely to be even more important come July 2010. And you don’t have to be thirty days past your due date for a "30-day" late to show up on your credit report. You can be just one day late.
2. Opting out of receiving credit card offers in the mail does not improve your credit scores. This little gem of a myth seems to come from the credit repair industry, yet has no merit. Opting out is the process whereby you leverage your right to demand that the credit bureaus not sell your name to a credit card issuer who is mailing pre-approved credit card offers based on credit reputation. Opt out if you like; it’s free and cuts down on the junk mail. But it won’t
improve your credit. It also won’t hurt your credit. Opting out has a neutral effect on you and your credit scores.
3. Spreading balances out does not hide debt. I’m not sure where this one came from, but it’s a damaging myth. There are some people who honestly believe that they can improve their credit by spreading large balances across many cards so that no one card has too much of a balance. This myth assumes that credit-scoring models can’t do simple addition. The fact of the matter is that this can damage your scores even more because not only are you in the same aggregate amount of credit card debt, not only is your aggregate utilization the same, but now you’ve got many credit cards with a balance instead of just one.
So be careful with what advice you hear and heed – be careful whom you believe. Focus on the tried and true credit improvement strategies. Pay your bill on time, maintain respectable credit card debt, and only shop for credit when it’s necessary. If you can accomplish all of this, you don’t really need to worry about your credit scores because they will take care of themselves.
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