Credit card Q&A: “Are credit cards bad for your credit score?”

In short, no, opening a credit card won’t hurt your credit score, at least not in the long run.

Sure, you may see your credit score get dinged a few points when you apply for a credit card, but this is standard practice when you apply for any type of loan.

Be it a credit card, auto loan, mortgage, or any other type of loan. Essentially, anytime you make a request for new credit, you heighten your credit risk. Don’t confuse this with checking your own credit score, as that doesn’t involve new credit and will not hurt your credit score.

The general thinking is that those in need of credit, whether for good reasons or bad, are less financially healthy than those who don’t need new credit.

It’s a harsh rule, but obviously it’d be pretty darn complicated to make the whole process subjective. And like anythi

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Credit score Q&A: “How to get your credit score for free.”

If you don’t already know your credit score, you’ll probably want to see where you stand on the credit score range, especially if you plan to apply for a credit card or another type of loan.

But how can you get your credit score for free?

Well, you won’t be able to get a free credit score from the government.

AnnualCreditReport.com, which was created by the three major credit reporting bureaus in accordance with the Fair and Accurate Credit Transactions Act , only provides free credit reports once annually.

These credit reports DO NOT contain credit scores of any kind, free or otherwise.

When you pull a credit report from their site, you’ll be given the option to pay for your credit score afterwords.

This is clearly not the way to go, given the fact that there are a number of services that allow you to get your credit score for free.

Free Credit Scores with Trial

Keep in mind that you will need to pony up your credit card if you want to obtain your credit score free of charge.

Free credit score providers only tend to offer up your credit scores for free if you agree to enroll in a trial credit score monitoring program.

This means you’ll be charged on a monthly basis if you fail to cancel before the trial period ends.

Some users may want to pay for this service if they’re tracking changes to their credit scores while carrying out disputes and taking other measures to raise their credit score.

Or if they’re monitoring their credit history in order to detect any suspicious activity.

Get All 3 Credit Scores

Just be sure to go with a company that provides all 3 credit scores, not just one. It’s important to

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The average VantageScore credit score fell to 748 in August (latest month available), as measured by credit bureau Experian.

However, it has only dipped eight points since 2007, just before the housing boom turned to housing bust.

The average credit score was 755 in August 2008 and 750 in August 2009.

Despite all the recent turmoil in the credit markets, which you think would have lowered credit scores even more, consumers have taken an active role in reducing debt, resulting in an improvement in their credit scores.

This has countered some of the negative effects related to foreclosures, short sales, and other derogatory events of late.

Meanwhile, the latest data from Fico (October 2008), the creator of the Fico score, revealed that the average Fico score is 713.

Unfortunately, this data isn’t very up-to-date, so it’s hard to say what impact the financial crisis has had on Fico scores.

Either way, you would have to assume that both the VantageScore and Fico score algorithms will be updated as a result of the latest crisis.

Though the updates are unknown, I would guess that because of all the foreclosures and related negative actions in recent years, credit scores for those who avoided all the problems will rise, while those who made missteps won’t be punished as badly as they may have been in the past.

Credit score Q&A: “What credit score do you start with?”

Questions related to credit scores are always difficult to answer because companies like Fico don’t reveal all their scoring algorithms.

Credit scores also happen to be very unique from consumer to consumer.

It’s worth noting that you won’t even have a credit score unless you’ve got enough information on your credit report.

By enough information, I mean at least one credit account that has been open for six months or longer.

And that account must have been reported to the credit bureaus within the past six months.

Without that, you probably won’t even have a credit score.

So assuming you do have the bare minimum, your credit score will be determined by the open account(s).

If your one account is in good standing, meaning you’ve made payments regularly and kept the balance low (credit utilization), you should have a good credit score.

After all, without any negative information, there’s no reason you should have a bad credit score.

However, it’s hard to say whether it’ll be above 800 or just above 700 – that will depend on a number of different factors, some that Fico and the other credit score creators don’t really make clear.

Credit Scores Means Little without Credit History

Keep in mind that without much credit history, a credit score means very little.

In other words, that three-digit score needs to prove itself before credit card issuers and lenders give you any, ahem, credit.

For example, mortgage lenders typically require three open credit lines with two years of history on each.

Without them, even your excellent credit score may be useless.

In conclusion, don’t concern yourself with the credit score you start with – focus on it long term, and make sure you take the right measures to keep it high, like making on-time payments, keeping balances low, and applying for credit sparingly.

Tip: How to raise your credit score.

All this credit stuff can get pretty complicated.

But two things you should have a handle on are credit reports and credit scores. Each are important in their own right, and both are necessary to assess your overall standing as a consumer.

While the pair certainly overlap, they are two entirely different things.

Credit Reports

A credit report contains a wealth of information about you, including basics like your name, address, social security number, and employment history.

Additionally, your credit report will list your credit history, with information on the types of accounts you’ve got open, how long they’ve been established, what their associated balances are, and if they’re current or derogatory (collections, charge-offs).

Any recent credit inquiries will also show up on a credit report so creditors can determine if you’ve been shopping around for new credit.

While all this information can be very helpful to both consumers and creditors, both parties seem to be most interested in credit scores.

Credit Scores

A credit score is simply a three-digit number between 300-850 (credit score range) for Fico scores, and slightly higher for VantageScore.

Generally, a credit report will contain three credit scores, one for each of the main credit bureaus. These c

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