Even if we're careful shoppers during the holidays, we can easily put a dent or two in our credit score. Opening too many new accounts, paying bills late ... lots of December damage can occur.

To get some perspective, we chatted last week with Shon Dellinger, vice president of MyFico.com, the consumer site for the Fair Isaac Corp., which created the well-known FICO credit scoring system in 1956. Here's an excerpt:

Question: During the holidays, falling behind on bills is more likely than usual for many people. How do late payments hurt your credit score?

Answer: Paying your bills on time represents 35 percent of your FICO score. It's a very significant portion. If it's a first offense (paying late), it's not necessarily terribly bad. But if you're a repeat offender ... (with) continual late payments across many cards, that's the worst-case scenario. A late payment will stay on your credit file for seven years.

Q: Holiday shoppers often get invited to open a store credit card, in exchange for an instant 15 percent to 20 percent off their purchase. Those offers can be pretty tempting. Good or bad idea?

A: Be careful to resist any short-term savings. Don't get more cards than you need. Be aware of what interest rates are carried and what time frame you'd have to pay off the new card. ... You can end up carrying higher (interest) charges than the discount you receive on a purchase.

Q: What's the ideal credit score these days? Has the economy dragged down consumers' credit scores?

A: Right now, anything over 750 is good. We have people who get anywhere from 300 to 850. There's not a significant percentage of people who have 850. ... There certainly has been some shift downward in scores due to the overall economic conditions.

Q: The financial landscape for consumers has undergone so much upheaval this year, from changing credit card laws to tightened loans from banks and lenders. What's ahead?

A: We hear the consumer frustration with lenders right now. There needs to be more transparency so consumers understand how lenders view them (credit-wise). If you know your FICO score, you can take steps to manage it and get access to the best rates that your lender offers. ... We're in conversations with (many) of the top 10 financial institutions ... to (have them) provide free credit scores to their online consumers. You could open up your online account, see your score and an explanation of what it is. We hope to announce this with several lenders by the end of the year.

Q: When it comes to credit scores, what kind of scams do you warn consumers about?

A: No. 1: Make sure you understand what you're buying. Sometimes those "free" offers are really a subscription to a (credit) monitoring product.

Q: So many frustrated consumers are angry with their credit card companies for upping rates and changing terms. Many are canceling their cards. Is that wise?

A: The danger is that you could be canceling part of your credit history, which could hurt your credit score. ... When you cancel a card, it reduces the amount of your available credit overall but doesn't change your outstanding balances on other cards. The result can be a higher "utilization rate" (the proportion of available credit you're using), which could hurt your score. Whatever cards you have, be responsible about keeping outstanding balances low and paying your bills on time.

Q: What's your message to struggling consumers saddled with a crummy credit score?

Don't be ashamed of it. Get back in credit shape. ... It'll save you money in the future. The Consumer Federation of America did a study a few years ago that found improving your credit score by only 30 points saves you $105 annually in credit card charges.

Q: Looking ahead, any bright spots from this recession?

A: Frugal has become cool. Being cost-conscious and budget-conscious is more acceptable. It'll be very interesting to see if those behaviors persist (in) the economic recovery.

Q: Any year-end advice for consumers?

A: Only use credit when you need it. Pay your bills on time. And resist those short-term (credit card) "savings" offers.

NOTE: By law, you're entitled to a free credit report annually from each of the three credit bureaus: Experian, Equifax and TransUnion. These reports show your bill-paying history as reported by your creditors. To request free credit reports, go to www.AnnualCreditReport.com or call toll-free: (877) 322-8228. For a copy of your actual credit score, you'll need to pay a fee, which is why it pays to shop around. For a comparison of various options, go to: www.credit.com and search for "Credit Report Comparison Chart." There's also information at www.MyFICO.com.

cbuck@sacbee.com or P.O. Box 15779 Sacramento, Calif. 95852.


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