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Credit Score Questions and Answers

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Mark Cappel
UpdatedOct 26, 2010
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    12 min read
Key Takeaways:
  • Review basic questions and answers about credit.
  • Understand how to improve your credit score.
  • See when you are entitled to a free credit report and where to obtain one.

Some general questions and answers about credit, credit scores and credit history

Below are some frequently asked credit questions and answers that will help you make smarter decisions about your credit. If you have additional credit questions, feel free to Ask Bill.

What are the Different Types of Credit?

Generally, credit is organized into three major buckets: Revolving credit: where a consumer borrows money from a lender and pays it back at the end or makes partial monthly payments, as in a Visa or MasterCard charge card. Charge credit: where the lender provides the consumer with a loan under the presumption that it is going to be paid in full at the end of the month, like on most American Express credit cards . Installment credit: when the consumer agrees to finance a debt with monthly payments over a predetermined period of time, such as in a home mortgage or a car payment.

How Do You Begin to Establish Credit?

Credit can be established in a number of ways. Perhaps the most common is the opening of a credit card account. It can be difficult to open your first credit card, because you have no history for the creditor to view. If no one will grant you credit, a secured card (a card that requires you to pay money into an account the creditor controls before you receive a card) may be the best way to establish credit initially. You can also use low balance store cards or gas cards that let you prove that you can pay your monthly payments back, before qualifying for a larger balance credit card. These cards usually come with a high interest rate, so work hard to pay the debt in full each month, avoiding the high finance charges.

Having someone co-sign for you is another way to establish credit. Co-signing is very risky for the co-signer, as he or she is taking full responsibility for paying the debt if you default. That means that someone who co-signs on a loan to help you qualify for a loan or improve your credit risks harming his or her own credit. Because of the effects of co-signing for a loan, it is usually hard to find someone willing to co-sign on a loan for you.

What Happens if Your request for Credit is Denied?

There are a variety of reasons dictating why credit may not have been extended to you. Reasons range from insufficient income, short-time at a job or address, and/or poor credit history. You should evaluate your situation. Know that you are entitled to receive a free credit report after being denied credit along with an explanation of why you were denied. You should also know that the credit bureau is obligated to investigate and correct whatever legitimate errors you find.

What Type of Bad Credit Loans Can I Get?

A short term loan, such as a payday loan or a cash advance are common types of loans available to people with bad credit. This type of loan requires no credit check or co-signer. However, you do need collateral to qualify for a short term loan and a checking account for the funds to be transferred to. Also, these loans come with very high interest rates. Make sure that you pay back the loan in the required time frame or you will face massive interest charges. Payday loans can have annual interest rates that exceed 1,000%! Consider this kind of financing only as an option of last resort.

Why do Unsecured Credit Cards for Bad Credit Have Higher Interest Rates?

When creditors provide unsecured credit to those individuals with bad credit, the credit issuers face higher financial risks. So, to protect themselves, creditors set higher interest rates and fees for those with bad credit.

Why Should I Pay a Company to Repair My Bad Credit if Everything is Going to Reappear after a Few Months?

If you use a reliable credit repair service, everything WILL NOT reappear after a few months. For instance, if you have been the victim of identity theft, all of the wrong information should be removed. Most reputable credit repair services correct your entire credit file and stick with it until all issues are resolved and cleared. Your bad credit might have a long and deep trail, so it could take time to completely clear your credit file of all issues.

When do I Need Debt Counseling?

There is no established debt amount or situation that dictates the need for credit counseling. Whenever you feel overwhelmed by debt, regardless of the amount, and need assistance with your credit debt, credit counseling can help you steer clear of huge financial troubles.

How do I know if a Credit Counseling Service is Legit?

When selecting a credit counseling service, make sure the credit counselor you work with is certified. Many credit counselors are required to have and maintain a Consumer Credit Counselor certification. The certification process involves specialized and comprehensive credit counseling training as well as the passage of the certification exam. Also, check with the Better Business Bureau.

How will Credit Counseling Affect my Credit Rating?

The existing condition of your credit report will influence how credit counseling will affect your credit; however, there is no hard and fast rule regarding credit counseling and your credit. Most creditors will report your usage of a credit counselor while other may not; and there is no predicting how future creditors will interpret it. Many lenders perceive credit counseling unfavorably during the time you are enrolled in the program. They view it as akin to a Chapter 13 bankruptcy, because you needed the services of a third party to restructure your debt. Credit counseling will NOT impact your FICO score.

Is Credit Repair Illegal?

Credit repair is LEGAL. You may have heard some mention that credit repair is actually illegal; but the fact of the matter is there is nothing illegal about credit repair and disputing inaccurate information about your credit file. The Fair Credit Reporting Act (FCRA) actually encourages people to dispute inaccurate information.

What Can be Taken Off My Credit Report?

Any inaccurate information can be removed. Also unverifiable accounts can be removed, as well as other information that cannot be verified, such as old addresses, additional names on the report (you must have at least one name on your report), unpaid collections, charge-offs, repossessions, bankruptcies, medical bills, credit card debt, and divorce debts.

What Can Not be Taken Off My Credit Report?

There are certain things that just cannot be removed from your your credit report, such as federal and state tax liens, child support, new student loans, and any bankruptcies reported by the bankruptcy court.

What is a Good Score?

The higher your credit score, the better; however, there is no real industry standard. FICO credit scores range from 350-850. Each creditor/lender judges your credit score differently, assigning greater or lesser weight to various factors when determining your eligibility and/or risk. In the past, anything above 690 was considered a great score. Today, you may need a score of over 720 in order to qualify for the best rates available.A credit score below a 620 is frequently referred to as "sub-prime."

How Often do Credit Scores Change?

Your credit score is fluid; it changes as your credit information changes. Anytime new information is added to your credit report, your credit score can change. The credit reporting agencies (Transunion, Equifax, Experian) usually update their credit data every 90 days.

I have a Number of Credit Cards. Will that Affect my Credit Score?

Your overall credit history will determine how your credit is affected by having numerous credit cards. However, having an overabundance of credit cards with high balances or high credit utilization will negatively impact your credit score.

How do you begin to establish credit?

Consumers desirous of establishing a good credit record should start off by applying for a credit card. The companies that monitor credit history compile information based on your payments and responsible consumers build up a good credit report by promptly paying off what they owe. A second consideration, especially if the consumer did not qualify for a conventional credit card, is to apply for secured credit. This method lessens the lender's risk by having access to some kind of guaranty from the borrower in case of default. An alternative way is to have a person with a proven history of good credit co-sign a loan. A co-signer guarantees the payment on the debt, in case you default, so co-signing is risky for the co-signer.

Is There a Rule of Thumb Regarding the Number of Credit Cards to Have?

There is no hard and fast rule on the number of cards that you can have. In general, you credit score is more related to how you use and pay your cards than the number of cards that you have open. Work to keep your credit utilization below 30% of the maximum credit limit on each card. For this reason, it is better to have a few credit cards with high credit limits than a large number of cards with limited credit limits. Having credit cards with high credit limits demonstrates that you are responsible enough to carry a high credit limit on multiple cards and prevents you from harming your score through high credit utilization.

Is it a Good Idea to Transfer my High Credit Card Balance to a New Card with a Rock-bottom Rate?

If you want to transfer your credit card debt to a different card, you need to make sure that there are no catches with the introductory rate of the new card. For example, sometimes the low introductory interest rate on a card is only for a very limited time and then it skyrockets to an exuberant amount. You also need to consider the fee that is charged for making the transfer and to ask if there are annual fees, late charges, or any other stipulations that might make transferring your credit card debt to a new card counter-productive.

What is Credit Monitoring?

Credit monitoring is the automated process of keeping an eye on your credit. Credit monitoring helps protect you against identity theft and monitors any changes and/or inquiries made to your credit file by alerting you within approximately 24 hours of any major changes made to your credit file.

Will Credit Monitoring Hurt My Credit Score?

No. Credit monitoring has no affect to your credit score. It is simply a service that keeps your credit in check. The only time it affects your credit is when you ask a creditor to inquire about your credit.

Does Credit Monitoring Monitor my Credit with all Three Bureaus?

The specific credit monitoring service you use will determine which credit bureau is referenced in monitoring your credit. Each credit monitoring service uses only one of the three bureaus to monitor your credit; however, since the activity you are looking out for affects your credit across the board, it does not matter which bureau your credit monitoring service uses. They will still be able to identify unexpected changes or discrepancies in your credit report.

How do I get a Hold of My Credit Report?

Three major consumer credit reporting agencies, also called credit bureaus, offer credit reports:

To get a hold of your credit report, contact one of these three bureaus. Each bureau interprets your credit information differently, so you might want to get a report from all three.

Can I get a Copy of My Credit Report at Any Time?

By law, you can access one free report every twelve months from each of the three credit bureaus at If you stagger your requests at the site, then you can access one of the bureaus every four months. You can also request a free copy of your credit report if you are denied credit; however, you can only request a copy from the specific credit bureau that supplied the credit report to the creditor who denied you.

What Information do Credit Bureaus Collect about Me?

Credit bureaus collect your identification information, employment history, credit inquiries, and any additional public records and data.

Will Requesting a Credit Report Affect My Credit?

No. Requesting a credit report will NOT affect your credit. You have the right to look at your credit report without it affecting your credit or score. When you request your credit report it's called a "consumer pull" and has no affect on your credit. The only time when requesting a credit report can affect your credit is when you ask a possible creditor to inquire about your credit. This is because it implies that you are possibly opening a new line of credit.

Should I Consolidate my Credit Card Debt?

If you have multiple credit cards, each with their own increasing debt, credit card debt consolidation might be just the thing you need. Consolidating your credit debt will allow you to make just one payment to a consolidator, instead of numerous smaller payments to multiple credit card companies. Frequently, you can also obtain a lower monthly payment.

Can I Get Arrested for Not Paying my Debt?

As long as fraud and theft are not involved, you can not be arrested and jailed for failing to pay your debt. However, creditors can go after you monetarily to reclaim the amount owed to them.

Do Joint Credit Cards Help Build Good Credit?

Joint credit cards can work both ways. Since the credit card account is placed on both holders' credit accounts, the activity on the card as a whole affects both parties equally. So, if the card is maintained properly, it can help improve credit. However, if one of the card holders abuses the card and racks up thousands of dollars in debt, it can adversely affect the other holder's credit rating.

Get rid of your debt faster with debt relief

Get rid of your debt faster with debt relief

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Choose your debt amount

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Or speak to a debt consultant  844-731-0836


ZZhayne, May, 2021

A payment is due let's say on the first and I continually pay it on the 10th, will this hurt my credit score and show on my credit as a late payment?

JJosh, Aug, 2021

Hello Zhayne,

Thank you for reaching out. According to the article, your credit score is fluid: it changes as your credit information changes. Generally, if you miss a payment the creditor would report this missing payment and it could potentially decrease your credit score. However, you should review the terms and conditions of that particular account to determine how they define a missing payment and when they would post details to the credit bureau. You may find that this inquiry would not impact you negatively. 

Regards, Josh 

PPaul, Dec, 2020

I just paid off a 10+ yr mortgage loan with EXCELLENT payment history. The bank closed the account after my final payment and my credit score dropped 55 points! I thought it would certainly increase! Help

JJosh, Aug, 2021

Hello Paul.

Thank you for reaching out. I wanted to share an article that I think could be a great start to achieving your goals.
Please review the article and let us know how it helped.

Regards, Josh

HHoward E McCahill, Nov, 2020

My credit score dropped 120 points in one week. I have the scores from all 3 agencies. (487 to 530) How can I find out WHO & WHAT the problem is? Thanks for any assistance, HEM.

DDaniel Cohen, Nov, 2020

Howard, you need to view the data on the reports to see why your score is droppng. If you are not missing payments, havnig a car repossessed,  collection accounts appearing, losing a home to foreclosure it is hard to see what would cause such a huge drop. Maxing out all your credit lines can harm your score, but isn't the likely suspect for a sudden big drop. It is always possible that erroneous information appeared.

I suggest you start by looking at one credit bureau. Go to and get a free report. Take a look at it and see if you find anything that doesn't belong to you or is reported inaccurately. If you would like, I can speak with you about it once you have a report in hand. You may email me at