Frequently Asked Questions

How does a potential credit issuer use a credit score?

Many lenders — and others — use your credit score to help determine whether or not to give you a line of credit. Your credit score can also affect your ability to get a job, rent an apartment, get a cell phone, and even find affordable car insurance.

What goes into creating a credit score?

The most commonly used score, called the FICO score, generally measures five key criteria:

  • Length of credit history
  • Types of credit lines
  • Payment history on those credit lines
  • Amounts owed on those credit lines
  • New credit lines — how many and over what period of time

In addition to looking at a credit score, what do creditors look for on a credit report?

They look at several things, which ultimately come together to build a financial profile of you. This can include:

  • Your monthly and annual income.
  • Your monthly payment obligations…including rent, student loans, medical bills, car payments, utilities, telephone/cell/cable bills, etc.
  • Are your financial obligations in line with your total income?
  • Are your monthly payments in line with your monthly income?
  • Do you pay your bills on time?
  • Do you have outstanding traffic or parking tickets or other government-issued citations?
  • Do you have any kind of credit history?
  • How many credit cards have you applied for in the last few months?

How do I know if what's on my credit report is accurate? And what do I do if I find out there's a mistake on it?

A federal law allows you to request a FREE COPY of your credit report from EACH of the three major credit bureaus once every 12 months. The only free resource to get a copy of it is at

If you find mistakes on your credit report, you should contact each of the three credit reporting agencies to report the error/s, and start the process to correct them.

I like having several credit cards to choose from — especially retail store cards. Is there anything I should be aware of with that?

Yes — two things to be aware of:

  1. The number of credit applications you submit — even for retail store cards — may show up on your credit report and can be a “red flag” to potential creditors. Any red flag may cause them to deny your application or charge you a higher interest rate on your credit line.
  2. Opening several lines of credit may also lower your credit score, because it will reduce the “average age” of your accounts — a key criteria in determining your credit score.

What can I do if I have trouble qualifying for a credit card?

There are two possible things you can do:

  1. Contact your bank and ask what you can do to get a credit card. One possible option the bank might suggest is to issue you a card with a low credit limit that you can gradually increase as you show that you can pay your bills on time.
  2. Another possible option the bank might suggest it to apply for a Secured Card. This product requires you to deposit a certain amount of money into a savings account before you can use the credit card. Most banks who offer secured cards will then match your credit limit with the amount of money you've deposited into the account. As you build a strong track record with your bank over time, you can request an application for a general purpose credit card.

What can trigger the bank to increase my APR?

There are a number of things that can trigger an increase in the APR, but the most important one that you should guard against is missing a payment deadline.

What is a “Teaser” rate on a credit card?

A Teaser rate is the same thing as an “Introductory” rate, which is a lower APR designed to attract credit applicants. Teaser rates last for a set period of time (all must be honored for a minimum of six months), and then the rate will increase. Read the rules closely so you understand the agreement you are making with the credit issuer.

How can I protect myself from fraudsters attempting to trick me into divulging my bank or credit account information?

Your bank will never call or email you for the purpose of “verifing” your account information. They already have it.

Also…ignore any threats or expression of urgency you receive by phone or email, indicating that your account will be de-activated if you do not respond immediately and “verify” your information.

I'm behind on my payments, and I'm uncertain if I can catch up on my own. What do you suggest?

First, call your lender(s) directly, by calling the issuing bank's customer service line. Ask to speak to someone who can explore some repayment options with you. When you get the right kind of banking representative on the line:

  • Focus on what you can do. Be prepared to share some ideas. Sometimes a small change can make a big difference, such as asking to shift your due date to a better time of the month if you're frequently struggling to make your payments just before your payday.
  • If your issuing bank tries to contact you — respond, and have this type of conversation. Don't be afraid to talk with the bank, which may be able to make some changes that could make it easier to pay off the debt.
  • Make an appointment with a reputable credit counseling agency, if your attempts to negotiate with your lenders have not been successful. There's additional advice on this step in the next Q&A, immediately below.

How do I find and work with a reputable credit counseling agency?

Interview several agencies.

If you know someone who has used such an agency in the past, ask them for a recommendation. Or, ask friends or relatives who they would consider if they needed budgeting advice. You can also find credit counselors in the Yellow Pages, by contacting the National Foundation for Credit Counseling ( or the Association of Independent Consumer Credit Counseling Agencies ( for a list of members or by using an Internet search engine.

Further, The CARD Act mandates that issuers provide three licensed and Government approved credit counseling agencies or a toll-free phone number that provides that information on each statement.

What are some good signs of a reputable credit counseling agency?

Here's a list of seven (7) criteria to look for/ask about:

  1. Recognized as a non-profit by the IRS.
  2. Required to maintain all proper licenses.
  3. Provides review of customers' income and debts, along with a written plan for reducing and eliminating debt.
  4. Disperses the proper payments to creditors at the proper times — typically twice a month.
  5. Provides clients with written statements at certain intervals.
  6. Offers various educational programs and other ways to help consumers overcome debt.
  7. Audits accounts.