Q: I have been paying down debt and I haven't charged any new items, except on my American Express business account, which I pay off every two months. Yet my score has declined about ten points every month for the past five months. Shouldn't my score be going up?
Your American Express card may say it's a "business account," but if it appears on your credit report, the credit bureau considers it a personal card -- and transactions on it are factored into your credit score. So paying off your balance every two months is hurting you. Paying a revolving debt more than 30 days late is one of the red flags that can hurt your score, explains Steven Katz, a spokesman for credit bureau TransUnion.
"The computer model that generates your credit score is looking for a long record of credit accounts that you have paid on a timely basis." Katz recommends that if you cannot afford to pay off the balance each month, you should at least make the minimum payment.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Andy Jolls, of credit-education Web site VideoCreditScore.com (opens in new tab), goes even further. He recommends making two payments each month so that your balance will be low when data is sent to the credit-reporting agencies. (The date of transmission may not be the closing date for your account.) That will improve your credit-utilization ratio -- that is, your current balance in relation to your credit limit.
| Credit & Money Management (opens in new tab) |
| Compare Credit Card Offers (opens in new tab) |
| More Credit Card Q&As (opens in new tab) |
-
-
In Retirement Planning, What’s Your Retirement Personality?
There are many ways to think about retirement planning, and your personality can influence yours. If your personality and plan match, you have a greater chance of retirement success.
-
Inflation’s Toll: Cuts to Retirement Savings and Health Care
Many consumers struggling to make ends meet amid inflation are reducing retirement planning and health care, both of which can have disastrous results later in life. A professional could help.
-
Best Cash Back Credit Cards of January 2023
Smart Buying Looking for the credit card that pays the most cash back? These lenders may pay hundreds of dollars, with minimum hassle.
-
I-Bond Rate Is 6.89% for Next Six Months
Investing for Income If you missed out on the opportunity to buy I-bonds at their recent high, don’t despair. The new rate is still good, and even has a little sweetener built in.
-
What Are I-Bonds?
savings bonds Inflation has made Series I savings bonds enormously popular with risk-averse investors. How do they work?
-
Your Guide to Open Enrollment 2023
Employee Benefits Health care costs continue to climb, but subsidies will make some plans more affordable.
-
Watch Out for Flood-Damaged Cars from Hurricane Ian
Buying & Leasing a Car In the wake of Hurricane Ian, more flood-damaged cars may hit the market. Car prices may rise further because of increased demand as well.
-
What You Need to Know About Life Insurance Settlements
life insurance If your life insurance payments don’t seem worth it anymore, consider these options for keeping the value.
-
Best Travel Rewards Credit Cards of January 2023
credit cards Business road warriors and leisure travelers alike can use a travel reward card to turn miles logged into other things – including more travel.
-
What Is APR?
credit & debt Even for those who pay off their credit card balances every month, knowing your APR is part of keeping good credit habits.
