Bob Twomey Answers Your Credit Questions from Facebook

Wed, 25 Jan 2012

WJAR NBC10 asked their Facebook fansThis is a third party link. Please review the third party content guidelines by clicking here for more details. to ask any questions they had about credit scores so Bob Twomey, of Webster Bank, could answer them live on air. He was able to answer a few on today's Sunrise Business segment. For the questions he wasn't able to answer on air, we've answered them on our blog for you. If we haven't answered your question and you'd like to meet with someone to talk about your personal situation, please let us know.


Question: If I have bad credit now and am working on fixing long should it take for it to get better so I can look into buying a home?

Answer: First of all, I commend you for working on fixing your credit. As for how long it will take, that depends on what is specifically in your credit history. Things like bankruptcies and judgments will appear on your credit report for seven years. Other than that, it depends largely on how much you owe and how long and well you have been working to pay off your overdue debts. If your present credit situation is keeping you from getting a credit card, you might want to look into getting a secured credit card. That’s a card that is backed up by a cash deposit of, say $500. You use it just as you would a traditional credit card and your good behavior is reported to the credit bureaus, ultimately helping you add some points to your score.


Question: Is it better to close a credit card that hasn't had a balance on it for a couple of years & does it make your credit score go down?

Answer: No. It’s usually a GOOD thing to maintain credit card accounts with limits and zero balances.  Remember that the score will take your ‘utilization ratio’ into account, and having zero balance credit cards will usually help.  


Question: What would cause someone to have no credit score and what can be done to fix that if no one will lend to you for that reason?

Answer: This is a terrific question.  One way to build credit is through a secured credit card.  This type of account presents essentially no risk to lenders, and is a great way for individuals with no history to obtain a credit card and build a history.


Question: Why, if you pay all your bills on time and more than the minimum, would your credit score go down?

Answer: Credit scoring involves a lot of factors, and while paying your bills on time is the most important factor, it is not the only one. Without knowing your specific credit history it is hard to say. But, it could be something as simple as having accepted too many pre-approved credit card offers in a short period of time. Or, if you are carrying high balances on your credit cards – 50% or more of your credit limit will take points off your score even if you are paying your bills on time every month. It would help you to see what exactly is written in your credit report. You can obtain a free one by visiting a government-sponsored website, This site will not give you your credit score, but it will give you a free copy of your credit report annually from each of the three major credit bureaus, Equifax, Trans-Union and Experian. Reviewing these reports often will help you see what your creditors are saying about you, and also help you determine if there is any fraudulent or incorrect information that need to be addressed.


Question: I have had my mortgage for 6 yrs and went to refinance, no extra money needed, my finances have not changed, they tell me I don't make enough money to pay $200.00 less, but I make enough to pay $200.00 more. They didn't care how good my credit scores were. Is that fair?

Answer: While your credit score is one key factor in a company’s decision to lend, it isn’t the only one. If your home has lost value since you took out your mortgage six years ago and is now considered “under water” – in other words, it now has a market value that is less than you currently owe --  that may be the reason why your application to refinance was not approved. Unfortunately, a lot of people who took out mortgages shortly before the real estate collapse began are in this same situation. If your credit score is good, it might be worth your while to apply to several different lenders and see if you get a better result. If you apply to multiple mortgage lenders within a two-week timeframe, the credit bureaus understand that you are rate shopping and they treat all of these credit inquiries as one, so it shouldn’t have a negative impact on your score.


Question: Hi Frank and Mr. Twomey. I am a 27 year old legally incorporated business owner who owns my home, auto, and also have a decent portfolio. I messed up credit when I was young and since then have been bringing it back slowly ( 525fico @ 18 yrs old now a 683) I pay everything on time and in full there are no outstanding debts in my name. My dti is below 45 % how can I build it faster? A new home purchase is in my future as well as a company upgrade I want lower rates and am sick of paying for with 50 % or more with my hard earned cash. Thank You as always Frank, Bob, and CH 10

Answer: Sounds like you are doing a great job of rebuilding your credit and you are very close to your goal.  Since you are paying everything on time and in full, and you have no outstanding debts in your name, you might look at your credit report and see if you have any bankruptcies or judgments that are still appearing. These stay on your credit report for seven years. If you notice one of these on your report, and seven or more years have passed, it is a good idea to get in touch with that creditor and ask them to remove it from your report.  


Question: Why does checking your credit score lower it and how can I get my score over 700?

Answer: Be assured that checking your own credit score will not lower it. It’s a good thing to have a handle on your own score and know what’s in your credit report. Having this knowledge in hand will help you determine what you need to do to improve it. That being said, if you apply for numerous credit cards or other unsecured credit (i.e. “pay over time” offers from merchants that sell big-ticket items such as furniture, electronics and appliances), these inquiries are likely to shave points off your score. As to how to get your score over 700, that depends on your unique credit history and what’s in it. A bankruptcy or judgment will stay on your report for seven years, and the only way to take care of that is time. Other than that, consistently paying your bills on time and keeping your credit card balances below 50% of the limit are key to improving your score. If don’t have a credit card because you don’t have enough credit history or your score is too low, consider getting a secured credit card to help build your history and your points.


Question: How can student loans affect your credit score?

Answer: That’s a great question, and there are several answers for it. On the plus side, student loans can really help young adults build a positive credit history as long as they are consistently making their payments on time. And that, in turn, will help you get approved for other types of credit, such as auto loans, credit cards and even a mortgage. On the flip side, defaulting on student loans or getting behind on your payments will negatively impact your credit score, and that will likely prevent you from getting other forms of credit until it is cleared up. One thing to note – when you are applying for student loans, the credit bureaus will look at a focused period of time, usually 30 days, and treat all of the applications you make in that time frame as one inquiry. That way, the multiple credit inquiries will not shave points off your score.


Question: How does a home equity line of credit work?

Answer: Check out this blog post for home information. 


If there's any other questions you have, please ask in the comments. We will do our best to get back to each person. Thanks for participating!