Listen weekdays from 1-3pm ET
(No audio? Try our help)
Recent shows | More media

Listen Live: Mon-Fri 1-3pm ET

Posted: 12:00 a.m. Friday, March 19, 2010

Tips and tricks for tweaking your credit score

  • comment(1)

The new credit card rules that went into effect last month have caused a lot of confusion.

Credit scores have taken on a new role in the recession. Employers are using them to eliminate candidates for jobs, as foolish and mindless as that is. And as always, maintaining and improving your score remains central to getting good rates on insurance, your mortgage and any future credit.

One problem that's vexed a lot of people has been getting hit with a huge new annual fee. In this event, "leapfrogging" can help you. Leapfrogging is when you open a new, annual fee-free account and give your existing card the boot.

Remember, paying down credit card debt is a different and separate issue from the value of having enough credit cards. It's very important for your score that you have between four and six cards.

Meanwhile, here's a thought on how to tweak your score if you have a card with no spending limit -- such as certain American Express and Diner's Club cards. How can they report available credit to a bureau if you have no limit? They simply take your highest balance over a period of time and report that as your limit.

So your goal should be to create an artificial ceiling by charging a ton one month and then paying it off immediately. That effectively becomes your new limit. Remember, this specific tip pertains only to cards with no spending limit -- such as select American Express and Diner's Club cards.

One final word of advice: When you pay off a credit card, don't close the account. Doing so will reduce your available credit and only drive your score down. Again, if you're facing a huge new annual fee on a card that has a zero balance, simply follow Clark's advice on leapfrogging.

These are all tips and trick to manage and manipulate your score. Manipulation is not a negative term here. In fact, a good credit score requires active management and manipulation on your part.
  • comment(1)