Commonly Asked Credit Questions

How many credit cards should I carry?

If you want to establish a good credit rating, the folks at Crosspointe Motors (Winchester, VA) recommend two major credit cards. We recommend one be a low-rate card for carrying a balance, and the other a card with a grace period that you pay off monthly. On both cards, no annual fee is ideal but you may want to use a card with an annual fee if they have a good rebate program either in flights or actual cash.

Can credit card companies raise my interest rate any time they want?

It used to be that credit card issuers could raise your rate, even on existing balances, at any time. Thanks to the Credit Card Act of 2009, though, they can no longer do this. They can, however, raise your rate if you are more than 60 days late with a payment and they can increase the interest rate on new purchases.

How long do defaults stay on my credit report?

Debts that become collection items may only be reported for up to 7 1/2 years from the date you fell behind with the original lender, regardless of whether they are paid or not. Be careful, though, if a debt collector calls you about your delinquent balance. The mere act of discussing options to pay off the debt can cause the 7 ½ year clock to start at zero again.

A debt collector has contacted me about an old debt. Do I have to pay it?

Maybe. Every state has a statute of limitations which dictates how long a creditor has to take you to court. If the statute of limitations has expired, there is nothing that they can do concerning the debt. This means that they don’t have much leverage in terms of forcing you to pay. And that gives you much more leverage if you want to negotiate a settlement.

If my spouse passes away, am I libel for their debt?

In most cases, you are not responsible for another person’s debt when they die, unless you are a co-signer on the account. If, however, that person was your spouse and you live in a community property state, debts are considered community property and you are likely responsible for them.

Will checking my credit report hurt my credit score?

No. When you check your credit report through a service that sells credit reports directly to consumers, such as www.creditkarma.com, you create what is called a “soft inquiry.” These inquiries are not shown to creditors and do not affect your score. You can see what the ratings are from three main credit agencies (Equifax, Experian, TransUnion) By the way, it’s a good idea to review your credit report on a regular basis to make sure no errors appear.