Once a month, industry expert John Ulzheimer answers your credit questions, curiosities, and conundrums.
Q: Instead of opening a new account, which would lower the average age of my credit accounts, should I increase my credit limit on a secured card? Currently it is at $800. I could deposit another $200-$300 to raise my limit.
A: Without knowing anything about the age of your accounts, $200 to $300 isn’t a very meaningful credit limit increase in the grand scheme of things. If your goal is to use a credit limit increase to lower your credit utilization ratio, $200 to $300 probably won’t have a huge impact. On the other hand, opening a new credit card account could potentially add thousands of dollars to your aggregate credit limit amount, which is much more meaningful.
Remember, although your credit scores will be affected by both the average age of your accounts and your utilization ratio, there’s a considerable difference in the value of those two metrics. Utilization is much more influential over your scores than the age of your credit history.
The “age of credit” category is worth only 15% of your credit score points. The “debt” category, on the other hand, which is largely influenced by your credit utilization ratio, is worth double that amount: 30% of your score points.
Q: What is SageStream? I just got denied for a used auto loan because my score with Sage Stream was under 500. Never heard of them! Aarrgghh! Any info?
A: Although Equifax, TransUnion, and Experian (a.k.a. the “Big 3”) are the best-known credit reporting agencies in the United States, they’re not the only companies that collect and sell your credit data. SageStream is another credit reporting agency — though, like you, most people have probably never heard of them before.
According to SageStream, its services are used by a variety of companies, such as credit card issuers, mobile phone providers, and – as you’ve already learned – auto lenders.
The credit scores generated by SageStream are used by lenders to predict risk, just like the FICO and VantageScore credit scores with which you’re probably more familiar. SageStream scores range from 001-999, while FICO and VantageScore credit scores, by comparison, typically range from 300-850.
SageStream is also bound by the rules set forth in the Fair Credit Reporting Act, just like the Big 3. This means that you have the same rights to see and correct the data SageStream has collected, just as you have with Equifax, TransUnion, and Experian. You can request a copy of your report and score from SageStream via mail, fax, or phone.
Q: A past credit card account was sent to collections because I had stopped making payments when I was in college. Years have passed and I recently began making payments to the credit card company in an attempt to pay down my outstanding balance. This account was recently dropped from my TransUnion and [Equifax] credit reports. It no longer is part of my credit history to see. Should I continue to pay it off or forget it all together?
A: You mention that the unpaid debt has been removed from your TransUnion and Equifax credit reports. Remember, there are three major credit reporting agencies, not two. If you haven’t checked your Experian credit report lately, you should.
I’m not the morality police, and what you decide to do is ultimately up to you. But, if I were in your shoes, I would pay back every dollar I owed. It’s the right thing to do. And if you stop making payments, there could be other consequences, like a lawsuit attempting to collect the remaining debt. Paying it back in full, however, has no negative consequences.
Got a credit question for John Ulzheimer? Email us at creditFAQ@thesimpledollar.com.
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John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.
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