Spring often brings a sense of fresh starts, and for some families, that includes moving forward with a separation or divorce. If you're navigating that transition, it's easy to focus on the big decisions like housing, custody and dividing assets.

But there's one area that tends to quietly cause long-term financial damage if ignored: Your credit cards. Shared accounts, lingering balances and unclear responsibility can follow you long after the paperwork is finalized. And the reality is, your credit card issuer doesn't care what your divorce decree says; they care whose name is on the account.

Here's how to protect yourself before credit card debt becomes an expensive aftershock of your split.

Joint liability doesn't disappear with a separation

One of the most common and costly misconceptions is assuming that divorce automatically separates debt. It does not.

If you share a joint credit card, both of you remain legally responsible for the balance, regardless of who made the charges or what your agreement says. Even if a court assigns that debt to one person, creditors can still pursue either party for payment.

That means if your ex stops paying, missed payments can appear on your credit report and damage your score. Understanding exactly where you are liable, and where you are not, is the first step in protecting your credit.

Understand who is actually responsible for the debt

Not all credit card accounts are treated the same, and the distinction matters.

Joint accounts vs. authorized users:

• Joint account holders are equally responsible for the debt.
• Authorized users can make purchases, but aren't legally required to repay the balance.

If you're only an authorized user, removing yourself from the account can help protect your credit. But if you're a joint account holder, the responsibility sticks until the balance is paid off and the account is closed or refinanced.

State laws also play a role. In community property states, most debt incurred during marriage is considered shared. In equitable distribution states, debt is divided based on fairness, not necessarily a 50/50 split.

Still, creditors ultimately rely on the account agreement (not state-level divorce rulings) when collecting payments.

Sorting out your finances is hard enough. A divorce can make it even more complicated. Use the tool below, powered by Bankrate, and answer a few quick questions to see personalized offers.

Why your name matters more than the court ruling

If your name is on the credit card account, you are still responsible for making the payment. That is why relying on a court order that says "your ex will pay it" can backfire.

If they miss a payment, it can lower your credit score and increase your credit utilization. It can also trigger late fees and penalty APRs.

In other words, your financial future can be affected by someone else's actions unless you take steps to separate things cleanly.

Take these steps immediately to protect your credit

When a separation becomes real, whether you have filed paperwork or are just starting to live apart, your financial lives can shift faster than you expect. Expenses may overlap, communication can break down and spending habits may change in ways you cannot control. This is one of the most vulnerable times for your credit.

Even a single missed payment or a sudden increase in a joint balance can lower your score and follow you for years. Because credit card accounts update frequently, the impact can happen quickly.

Taking a few proactive steps right away can help you limit new debt, prevent surprises and create a clearer financial boundary between you and your spouse while everything else is being sorted out.

1. Stop using joint credit cards

Continuing to charge expenses on shared accounts can increase balances and complicate negotiations.

2. Freeze or close accounts where possible

Contact your issuer to freeze the account to new purchases or close it entirely. Keep in mind that accounts with balances typically need to be paid down before closure.

3. Remove authorized users (or yourself)

If you’re an authorized user, request removal immediately. If your spouse is an authorized user on your account, consider removing them to limit further charges.

How to separate your finances cleanly

The more organized and intentional you are during this phase, the easier it will be to avoid confusion, missed payments and lingering ties that can cause problems later.

Start by opening accounts in your own name if you do not already have them. This includes a checking account for everyday spending, a savings account for short term goals or emergencies and at least one credit card to help you build or maintain your individual credit history. If most of your financial life was previously shared, this step is essential for establishing independence.

Next, redirect all automatic payments and deposits. Go through your bank and credit card statements line by line to identify recurring charges. Do not forget about things like streaming services, utilities, insurance premiums and subscriptions. Update each one so it is tied to the appropriate individual account. This is also a good time to separate mobile phone plans, cloud storage and any other shared services that could continue billing both parties.

You will also want to create a clear system for handling any remaining shared expenses during the transition. For example, if you are temporarily splitting household bills, decide who is responsible for paying each bill and how reimbursement will work. Putting this in writing, even informally, can help prevent missed payments and misunderstandings.

Separating your finances may feel tedious, but it is one of the most important steps you can take to move forward with clarity and control.

Watch for these common (and costly) mistakes

Even with the best intentions, it’s easy to overlook key details during a separation, especially when emotions and logistics are both running high. Here are some costly mistakes to avoid.

• Assuming your ex will pay: Even if it’s written into your divorce decree, creditors can still hold you responsible if your name is on the account. Whenever possible, aim to remove your name from the debt entirely or ensure the balance is transferred into one person’s sole account.
• Ignoring joint accounts: It’s surprisingly common for people to "set aside" joint accounts during a separation, especially if they’re focused on larger issues. But leaving accounts open and unmanaged can lead to new charges, growing balances or missed payments. Make it a priority to address every shared account, even ones with small balances or no recent activity.
• Missing payments during the transition: Between moving, legal expenses and changes in income, it’s easy for due dates to slip through the cracks. Setting up automatic payments can help protect your credit while you sort everything out.
• Overlooking authorized user accounts: If you’re an authorized user on your spouse’s card, their spending behavior can still affect your credit utilization and payment history. Removing yourself from these accounts can help limit your exposure.
• Closing accounts without a plan: Closing accounts can reduce your available credit, which may increase your utilization ratio and lower your score. Make sure you have a strategy for paying off or transferring balances first.

Being aware of these common pitfalls can help you stay one step ahead, and protect your credit while you navigate a major life transition.

How divorce can affect your credit score

The act of divorcing itself won’t hurt your credit score. But the financial ripple effects can. Your score may drop if payments are missed, balances increase (raising your credit utilization), or even if accounts are closed, which reduces available credit.

On the flip side, taking control early by paying down balances, separating accounts and maintaining on-time payments can help stabilize your credit over time.

Divorce doesn't automatically divide your debt. Instead, you’ll have to take a proactive approach to do that with the partner you're separating from.

Taking clear, early action on credit cards can prevent long-term financial damage and give you a cleaner slate as you move forward.

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Until recently, lenders that sell mortgages to Fannie Mae and Freddie Mac, the government-sponsored enterprises that guarantee about half of U.S. mortgage debt, could review credit scores only from FICO to help determine whether an applicant qualifies for a loan. But now those lenders also have the option of using VantageScore, a competing score owned by the three major credit-reporting companies (Equifax, Experian and TransUnion).

FICO and VantageScore evaluate many of the same criteria to create scores, including an applicant’s record of on-time loan and credit card payments, but their formulas differ.

The version of VantageScore that mortgage lenders may now review, known as VantageScore 4.0, also factors in such alternative data as an applicant’s history of rent payments.

FICO’s newer models, including FICO 10T, integrate more of this nontraditional data, too. (Currently, however, many landlords don’t provide rental-payment info to the credit-reporting companies). Mortgage lenders that extend loans backed by Freddie and Fannie are using older FICO models now, but they will later be able to adopt FICO 10T.

Credit scores that include alternative data could present a more complete picture of an applicant’s credit history and expand the pool of those who get loan approvals, says Keith Gumbinger, vice president of mortgage information website HSH.com.

Curious about today's mortgage interest rates? Explore and compare some of today's top offers with the tool below, powered by Bankrate:

Regardless of which credit score a mortgage lender uses, you can boost your odds of being approved for a loan and capturing a desirable interest rate by following the basic rules to raise your score.

Make all your bill payments on time, and keep the balances on your credit cards low as a percentage of their limits. That’s especially important if you’re getting ready to apply for a mortgage; aim for a credit-utilization ratio in the single digits.

Get your free credit reports from annualcreditreport.com and correct any errors you find that could hurt your score.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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When Stephanie Rogers needs to make a big purchase for Christmas or an upcoming trip, she turns to a convenient tool handily located at the checkout of nearly all online retailers these days: buy now, pay later plans.

Offered by companies such as Affirm, Afterpay, Klarna and PayPal, these financing services split the cost of purchases into equal installments over a few weeks, usually with no interest charges.

“It seemed like a no-brainer to try it,” says Rogers, 51, a medical retail worker in Troy, Mo. “I like to spread out my payments for cash flow purposes.”

Buy now, pay later plans have been popular among younger generations — Millennials and Gen Zers — for a while, but lately BNPL has been taking off among the over-50 crowd, too.

Afterpay says the number of orders it receives from older shoppers has been rising recently, and 13% of Baby Boomers and 28% of Gen Xers have used one of these plans, according to a 2025 survey from financial services company Motley Fool.

Higher earners have been adopting this payment option as well, with nearly one-third of those earning $100,000-plus now using BNPL, a recent Bankrate study found.

“The conventional wisdom was that young people without much money and without much credit were using BNPL,” says Ted Rossman, a senior industry analyst at Bankrate. “There’s still some of that, but BNPL has also moved upmarket.”

Buy now, pay later plans can be a useful way to get extra time to pay off purchases, especially expensive ones, without incurring interest.

Those are the top reasons consumers, especially older shoppers, cite for using the services, Bankrate found. Younger shoppers were more likely to also appreciate the easy credit-approval process.

But research shows that because the plans make the price of a purchase seem less painful, they lead many people to overspend — a big reason, along with late fees, that nearly 40% of users ultimately regret opting for the service, Motley Fool found.

With credit-scoring company FICO announcing this year it is creating models that will take BNPL payments into account and more BNPL services sending data to the credit-reporting companies, it’s especially important now to know exactly what you’re getting into before you click on this payment option.

How BNPL works

Think of a buy now, pay later service like an old-fashioned layaway plan in reverse. Instead of making payments and then taking the item home, you get your purchase right away, then pay off what you owe over time, with the total typically split into four equal interest-free installments.

You make the first payment when you check out, then a subsequent one every two weeks until the balance is paid off at the end of six weeks.

Many BNPL providers also offer the option of longer-term plans, often ranging from three to 24 months, for larger purchases.

Instead of weekly, payments are due monthly, typically with interest that can range from 0% to as high as 36%, depending on your credit and income, factored into the bill.

To apply, you select the BNPL option at the retailer’s online checkout, answer a few basic questions about yourself, and supply a debit or credit card number.

Within seconds, most people are approved; the industry rejected only 22% of applications in 2022, the Consumer Financial Protection Bureau found. Some BNPL companies may conduct soft credit checks, which do not impact your credit score.

Until this year, using a buy now, pay later plan didn’t affect your credit score either, as long as you didn’t miss a payment or end up with your debt sent to collections. But the industry is starting to change that, with both Klarna and Affirm now sending more BNPL loan data to credit-reporting companies such as Experian and TransUnion.

Meanwhile, FICO is incorporating BNPL data into two of its new scoring models this fall.

The impact is likely to be minor, though. According to a yearlong FICO study, the change to most consumers’ credit scores was within 10 points, higher or lower, after adding BNPL data, similar to the impact of opening a new credit-card account.

Even with the new changes, it will likely be a while before BNPL usage affects your credit in a meaningful way, in part because it takes a while for lenders to adopt the newest scoring models, says Adam Rust, director of financial services at the Consumer Federation of America.

And when it does have an effect, he says, you’ll need to use the service a lot, not just for an occasional purchase, for your activity to really have an impact.

How to use BNPL wisely

Tempted to try out a buy now, pay later plan? Experts suggest these steps to take advantage of the service without it taking advantage of you.

Know your billing schedule

Each BNPL loan has a unique repayment schedule that begins on the day you make the purchase.

With most services, you must set up automatic payments — and regardless of whether it’s required, it’s a good idea to do that and sign up for bill reminders to ensure you don’t miss a due date.

Nearly one in three users has lost track of payments, Motley Fool reports. That can be a costly error, because many BNPL providers charge late fees, commonly around $10.

Fight the urge to splurge

When stores add a BNPL option, it not only makes us more likely to buy but also raises the average checkout total by 10%, according to research published in the Journal of Marketing.

By splitting the payment up into smaller chunks, BNPL makes you “perceive costs as more trivial,” the research found. The plans also spur more impulse purchases, so Rossman advises waiting a day or two before buying so you can reevaluate with fresh eyes.

Set ground rules

Some BNPL shoppers use the plans to finance food delivery, groceries, concert tickets, clothing and other discretionary items with a short shelf life. Don’t be one of them.

Instead, Rossman suggests, restrict your BNPL purchases to higher-ticket items you really need so “you can spread payments out and isolate them from the rest of your finances” — say, if your refrigerator breaks and you need a replacement or you want to manage the cost of pricey dental work.

Limit your purchases to items you’re sure you’ll keep, because 14% of buyers have had problems returning items and getting a full refund, Bankrate found.

The CFPB issued a rule last year requiring BNPL lenders to follow the same dispute-resolution standards as credit cards, but the bureau has pulled back from enforcing that rule. If you’re unsure, pay by credit card instead. “Credit cards have far better protections than BNPL,” says Rust.

Stick to one purchase at a time

Three in five BNPL users have taken out multiple loans simultaneously, with nearly one-fourth holding three or more at once, LendingTree found. That makes keeping on top of payments and avoiding late fees more difficult.

“BNPL is already clunky, requiring you to track several small, constant payments,” says Rust. “If you have multiple BNPL loans from different providers, you just amp that up.”

Consider alternatives

Many credit card issuers also offer their cardholders BNPL services, such as Plan it from American Express and Citi’s Flex Pay. These plans allow you to separate some larger purchases from your balance to be repaid through fixed installments for a fee — often equal to 7% to 10% interest, far less than you’d pay on a typical credit card revolving balance.

Or, if your credit score is 670 or better, you might apply for a credit card with a 0% introductory offer on purchases. Those offers typically last 12 to 24 months, such as ones recently from the Wells Fargo Reflect and U.S. Bank Shield cards.

“Credit cards can be like power tools — really useful or really dangerous, depending on how you use them,” says Rossman. “The same analogy applies to BNPL.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Nearly one in four Americans don’t have an emergency fund, according to Bankrate. If you’re among those without enough cash on hand to cover an unexpected expense, you may be tempted to use a credit card cash advance as a quick solution. But you’ll pay for the convenience in high interest and fees.

A cash advance is a short-term loan from your card issuer, allowing you to borrow against your card’s credit limit, with no collateral required. You can typically get the cash at an ATM or a local bank branch. How much you can withdraw depends on your card issuer’s rules. Cash advances may be capped at a few hundred dollars or about 30% of your card’s credit limit.

You’ll pay an up-front fee, usually 
the greater of about $10 or 3% to 6% of the transaction amount. Interest accrues immediately; there’s no interest-free grace period, which most credit cards offer on standard purchases. And the cash-advance interest rate — often in the range of 25% to 30% — is usually higher than the rate that applies to purchases, says credit expert Gerri Detweiler.

Alternatives to a credit card cash advance

Not only do cash advances hit your wallet, they can also hurt your credit score. When you take out a cash advance, the unpaid balance counts toward your credit-utilization ratio — the percentage of available credit that you’re using on your credit card. If your utilization ratio rises because of the cash advance, your credit score may drop.

As an alternative to a cash advance, try asking your bank or credit union for a low-cost loan to help cover emergency costs, Detweiler suggests.

Another option: Open a credit card with a 0% introductory rate on purchases. The Wells Fargo Reflect card, for example, charges no interest for 21 months.

But if you take this route, be sure to pay off the balance before the 0% window closes. After that, you’ll likely owe double-digit interest on any remaining balance.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Whether you’re planning to consolidate credit card debt, renovate your home or embark on a dream vacation, personal loans can be a powerful tool to help you achieve your financial aspirations.

However, not all loans — or lenders — are created equal. Carefully choosing the right loan can help set you up for success. It requires asking the right questions to ensure your loan fits your needs, aligns with your goals and comes from a trustworthy provider.

To help you make confident and informed choices, here are seven essential questions that Americans should ask when evaluating personal loan options.

1. How will it affect my credit rating?

When you apply for a loan, your credit will typically be checked through either a "soft pull" or a "hard pull." A soft pull, often used during the initial application process by some lenders, doesn’t affect your credit score or appear on your credit history.

However, once you accept a loan, a hard pull is usually conducted, which may temporarily impact your credit score and will appear on your credit report. It’s important to verify that a lender’s initial application process involves only a soft pull to avoid any unnecessary impacts to your credit score during the evaluation stage.

Be diligent in understanding how each step of the process may affect your credit.

Additionally, personal loans, classified as installment credit, can complement revolving credit like credit cards and help diversify your credit profile.

Using a personal loan to pay off credit card debt, for example, may lead to an improvement in your credit score when managed responsibly.

2. What should I know before taking out a loan?

A personal loan is not free money — it’s a financial commitment. Take the time to understand interest rates and loan terms, and how factors like credit history and debt-to-income ratio can impact your loan eligibility.

Educating yourself about these elements helps ensure you’re choosing a loan that fits your situation and goals.

3. How quickly do I need the money?

Timing matters. Online lending platforms often offer faster application and approval processes than traditional brick-and-mortar banks.

Some of these platforms will facilitate loan funding in as little as one business day after final approval, depending on your bank’s transaction processing speed.

4. Is this lender trustworthy?

Research is key to finding a reliable lender. Consumers can visit the local or regional Better Business Bureau (BBB) website or call to find customer feedback and complaints about lenders or lending platforms based in their communities or home states.

Similarly, they can explore the Consumer Financial Protection Bureau (CFPB) website and search its Consumer Complaint Database for customer complaints filed with that organization about specific lenders.

A quick online search on sites like Trustpilot can also reveal customer experiences and help you avoid untrustworthy providers.

5. Can I afford the monthly payments?

Borrowing beyond your means can make your financial situation considerably worse. If you accept a loan with a monthly payment that is more than you can manage, you can quickly rack up penalties and late fees and increase your risk of default.

Review all loan costs, including fees like origination fees, and ensure the monthly payments fit comfortably within your budget.

6. What are the repayment terms?

Depending on the size of the loan, it may take months or several years to repay it. The length of your loan term affects both your monthly payments and total interest.

Shorter-term loans have higher monthly payments, but the total interest paid will be lower when compared to longer-term loans.

Carefully review a loan’s terms, including length, payment schedule, the total interest or finance charge and any penalties, during your evaluation process. Choose terms that align with your budget and financial goals.

Also, check to see if the lending platform offers any hardship programs if your circumstances should change during loan repayment.

7. Is this the right financial option for me?

Personal loans are versatile but may not always be an ideal choice for your situation and financial goals.

For example, if you’re a homeowner, a home equity loan or line of credit could offer better terms than a personal loan. Take the time to shop around and figure out what solution best aligns with your financial circumstances, needs and other factors.

While personal loans can help you achieve financial milestones — whether it’s paying off and consolidating debt, covering emergency expenses, or making home renovations — they are just one piece of a larger financial puzzle.

The path to improving your financial well-being requires an ongoing commitment to manage your spending and saving habits. Remember to ask the right questions and choose a loan that supports — not hinders — your journey to financial success.

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Why would a bank take $15,000 out of a client’s account with no explanation or any chance for the client to stop the action?

That’s the question my friend asked herself after receiving a distressed call from her son, an accomplished entrepreneur. What happened next highlights the danger of relying too heavily on credit.

A cautionary tale

My friend’s son has started several successful businesses and worked in various fields, but as an entrepreneur, his income can be cyclical, sporadic and, at times, volatile. He’d called in a rare panic, blurting out information he usually wouldn’t share so freely and confessing that $15,000 had been stolen from one of his accounts.

My friend is nothing else if not a very protective mother bear; she doesn’t necessarily become involved in her son’s escapades, but because he seldom shared this type of information with her, she became concerned. She wanted to know what was going on, and eventually, he shared the story in painstaking detail.

As it turned out, even though he had maxed out all his credit cards while in between business ventures, he’d put together a plan to go to Europe and said he kept an account with $15,000 that was now gone.

When my friend asked how this money had been stolen, he told her it had been taken directly from his account without any warning or explanation.

She asked if the bank was applying it to his credit card debt.

He said that wasn’t possible because the credit card debt had been through a different bank.

She wondered if there was a paper trail proving the bank took the money without his authorization. If so, he could request it be returned to his account.

She kept asking questions until he specified which account and bank the money had disappeared from. The answer took her by surprise because she didn’t even know he had accounts with that bank.

She dug deeper and soon discovered that no, in fact, he did not have a checking or savings account with that bank.

But he did have a credit card. And that card had $15,000 of available credit — the money he’d been “saving” for his trip.

What had happened was not that the bank had stolen his money. When all his other cards were maxed out, his credit score had gone down, so the bank lowered his credit limit. That wasn’t his money, and it hadn’t been stolen; it had never been his to begin with.

No, he insisted. That was his money. He was saving that credit as his only source of income.

But what is income?

Credit doesn't provide an opportunity to save

Income is generally defined by its function: providing consumption and saving opportunities.

I’ve always maintained that credit cards are not an alternative source of income.

While having credit available on a credit card does offer a way to provide ourselves with consumption, it does not offer us a saving opportunity. Much the opposite, in fact, most of the time.

Under certain conditions, credit can offer us a way to leverage our money. If we use our credit cards to make purchases, we will have a clean and easy paper trail of what we’ve purchased and when. Credit cards also offer many perks as incentives compared to other payment methods.

How to use credit cards to your advantage

That said, there are only two ways to use credit cards to your advantage:

• If you pay your card off in full before the end of the billing cycle each month, you will receive your rewards and incentives. It can be easier to pay one monthly bill than to account for each expense.
• Often, credit cards provide promotional offers of no interest or fees on purchases within a specific time if you pay the monthly minimum payments.

Both options are available, but you must understand the specific terms and conditions precisely. Once you exceed these parameters, the interest, fees and penalties are costly because interest is calculated continuously and compounded. Paying the total amount doesn’t eliminate the average daily balance calculations, so it can take several months, with no additional charges, to clear your account.

Credit is not income

Thinking that having credit available means you have another source of income, as my friend’s son had done, is misguided. Income is earned a) in exchange for labor or services, b) from selling goods or property or c) as profit from investing.

Credit is not income.

Just because you have the credit available doesn’t mean you have the income to pay the debt, and the bank lowering your limit doesn’t mean they are stealing from you.

Credit cards are not an alternative source of income.

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If you’ve ever set up a credit card, you’ve likely heard the term “credit score.” This number helps creditors determine how likely you are to pay bills or pay back loans should you borrow money. This number can affect many aspects of your life, including your ability to rent an apartment, purchase the house you want, take out a loan or even buy a car. Having a low credit score can hold you back from reaching your full financial potential and accomplishing your goals. And while raising your score may seem like a huge hill to climb, there are a number of simple strategies you can use to help yourself get to the top faster.

As financial leaders, the members of Kiplinger Advisor Collective know how frustrating it can be to have a number dictate your future. Here, they share easy tips anyone can use to improve their credit score, build better financial habits and take back control of their money.

Keep your credit utilization ratio low
“An effective way to improve your credit score is to keep your credit utilization ratio low, which accounts for about 30% of your FICO score. There are a few ways to accomplish this. Use no more than 30% of your available credit and request credit limit increases on existing accounts, which can lower your utilization ratio if your spending remains constant.” — Hari Prasad Josyula, DowJones

Pay your bills (and your balance)
“A lot of your credit score is determined by ‘payment history.’ That just means, ‘Do you pay your bills on time?’ It represents 35% of your score. The second-biggest factor is how much you owe. If you carry hefty credit card balances, your score drops. That’s another 30%. Add them up, and it’s nearly two-thirds of your score. Focus on those two things, and you’ll be just fine.” — Howard Dvorkin, Debt.com

Take the 'piggyback' approach
“The single best way to boost your credit score quickly and easily is to ‘piggyback’ off someone else with great credit. Piggybacking is a strategy where you get added as an authorized user on another person's credit card. By doing so, you ‘inherit’ the other party's payment history. So, if you have a poor credit score, a so-so score or no score at all, piggybacking can help tremendously.” — Lynnette Khalfani-Cox, TheMoneyCoach.net LLC

Create a budget to stay on track
“Avoid overleveraging yourself by doing a monthly budget. Everyone knows this, yet no one does it. Do not buy things you cannot afford.” — Justin Brock, Bobby Brock Insurance

Find lucrative ways to pay off your debts
“Paying down debt will improve your debt-to-credit ratio — an important factor used to determine your credit score. Take steps to make bigger payments to your credit card by cutting discretionary purchases, lowering monthly bills or finding a side hustle. Virtual tutoring or even pet sitting can be lucrative and easy through sites like Rover.com, which says you can make up to $1,000 a month.” — Andrea Woroch, Woroch Media Inc. / Andrea Woroch

Leverage the notes on your credit report
“Your credit score is calculated based on several factors that are not equally weighted. When you run a credit report through any major reporting agency, there are notes that usually indicate which areas you need to improve to raise your score. Read the notes and follow up. That is one way to raise your credit score quickly. But, remember: Credit is not an alternative source of income.” — Deborah W. Ellis, Ellis Wealth Planning

Avoid making purchases you cannot afford to make
“My advice is the old-fashioned ‘do not spend beyond your means’ advice. The convenience of credit cards can be tempting for people to just buy things left and right, even those things they do not really need just because they can put them on layaway. If you do not need it and cannot afford to buy it with cash, do not buy it. Your credit score will fix itself.” — Zain Jaffer, Zain Ventures

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

In our journey through life, making mistakes is often an invaluable learning experience. We stumble, we fall, and through these missteps, we gain wisdom and resilience. However, when it comes to credit and personal finance, the stakes are significantly higher, and the consequences of mistakes can be more severe and long-lasting.  

Experian research shows three in five adults attribute financial mistakes to their limited understanding of credit and personal finance, with these mistakes costing $1,000 or more for 60% of this group. This trend is particularly apparent among younger groups with over two-thirds of Gen Zers and Millennials claiming their inadequate knowledge of credit and personal finance has come at a price. In fact, 29% of Gen Zers and 38% of Millennials report these financial mistakes have cost $5,000 or more.  

Unlike everyday mishaps, errors in managing your credit can impact your financial stability, limit your opportunities and even affect your future goals. Avoiding financial pitfalls is crucial because, while we can learn from our mistakes, there’s no need to experiment with our financial health, or funds, when there are tools and educational resources available to help prevent costly errors.  

Here are five common credit mistakes people make and practical advice on how to steer clear of them: 

They don’t check their credit report

It’s a common misconception that checking your own credit report can negatively impact your credit score. This is not true. You can and should check your credit report regularly. Doing so is one of the best ways to see where you stand from a credit perspective, detect potentially fraudulent activity and identify ways to strengthen your credit history. You can also get a free weekly credit report from each of the three credit reporting agencies at AnnualCreditReport.com.  

They miss payments

Nothing will sink your credit scores quicker or more significantly than missing payments. In fact, a single missed payment will stay on your credit report for seven years and will impact your credit scores the entire time it’s there.

Setting up autopay can be a helpful tool to ensure bills are paid on time. If you think you may miss a payment, contact your lender before it happens. They may be willing to work with you or set up payment accommodations to help prevent the negative impact on your credit score.  

They carry a balance on their credit card

Many people think they need to carry a balance from month to month to build credit, but this is not true. Credit can be a financial tool; it’s debt that can be a financial problem. While it’s important to show regular activity on your credit cards in order for them to be factored into your credit scores, this does not mean you need to carry a balance. All carrying a balance will do is cost you money in the form of interest you’ll have to pay on the balance.

It’s best to pay off the balances on credit cards in full right away if you can. This is because your utilization rate, or your balance-to-limit ratio, is one of the most important factors in determining your credit score. People with the highest credit scores tend to have utilization rates of less than 10% and more often pay their balances in full each month than those with lower scores.

You never want your balances to exceed 30% of your available credit limit. Keep in mind 30% is not a goal or a target. The closer you are to 30%, the more rapidly your scores will decrease. 

They think their credit history only impacts their ability to secure credit

The truth is, credit is a financial tool that can unlock many of the things we want in life — not just access to credit cards, auto loans or things of that nature. Your credit history can impact your ability to get the latest cellphone, qualify for an apartment, lower your insurance rates, utility deposits and more. It’s important to take care of your credit history, so it’s there to work for you when you need it.  

They don’t use the financial tools available to them

Today, you can get credit for the bills you already pay with tools that allow you to self-report your payments for qualifying rent or other alternative data, such as cellphone, utility, etc., for the opportunity to increase your credit score. 

Mistakes are an often inevitable fact of life, but knowledge truly is power when it comes to financial wellness. By staying informed and proactive, you can avoid these pitfalls and build a strong credit foundation.  

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

There have been enough high-profile data breaches so far this year to make anyone nervous. We've seen some of the biggest cyberattacks in history, including a data breach at Change Healthcare and a data breach at National Public Data. Alongside these breaches have been calls to keep yourself safe by freezing your credit. 

But should you freeze your credit when information about data breaches comes out, and how exactly does freezing your credit protect yourself? In cases like the Change Healthcare and National Public Data breaches, what's the point of freezing your credit? 

Let me start by getting one thing out of the way: Kiplinger recommends freezing your  credit. Now, let's walk through why we recommend it, and why this year is a reminder of the importance of this protection measure.

What is a credit freeze and how does it protect you during data breaches?

A credit freeze, sometimes called a security freeze, blocks creditors from being able to review your credit reports. Why is that important in the wake of a data breach?

Well, consider the Change Healthcare breach. In that incident, hackers got access to people's data including names, birth dates, phone numbers, addresses, Social Security numbers and banking information. Assume I'm a scammer: If I have that information, I can theoretically apply for a credit card in your name.

If you don't have a credit freeze up, the bank may go ahead and run a credit report for that credit card. Assuming your credit is good, that card could get approved. Then I, as a scammer, could use that credit card opened in your name to buy things for myself and run frauds posing as you. That could ruin your credit and make you — and maybe even your family members — lose money in a scam. 

"While credit freezing doesn’t prevent all types of identity theft, it significantly reduces your risk by making it much harder for hackers to exploit your credit. Hackers are always looking for the lowest-hanging fruit," R.J. Weiss, CFP, CEO of The Ways to Wealth, tells Kiplinger.

It sounds scary because it is scary. Scams like the example above are a real threat of data breaches, when nefarious actors have access to your information. 

A credit freeze does not pause changes in your credit score, and you are able to unfreeze your credit very easily. It's also free to do. (Note that there is an option known as a "credit lock," which is different from a credit freeze. A freeze is free, and a lock is a paid option with some extra features.)

"With a freeze in place, you will still be able to access your own credit report. A credit freeze does not impact your credit score," said Margaret Poe, head of consumer credit education for TransUnion, one of the three credit reporting agencies.

Could you just always have a credit freeze up?

Theoretically, yes. You really only need to unfreeze your report when you're applying for credit, like for a credit card or loan. 

"With the increasing likelihood of data breaches, especially with [recent] news, it's becoming more sensible for most people to keep their credit frozen by default," Weiss says. 

Lisa Gerstner, the editor of Kiplinger Personal Finance, calls freezes "one of the strongest tools available to consumers to prevent identity theft" and has written about how to freeze your credit. 

"My own reports have been frozen for years, and anytime I’ve applied for credit, it’s been simple to temporarily lift the freeze for a period that I specify. After the period ends, the freeze automatically goes back into place," Gerstner says. 

Considering that it's free to freeze your credit and easy to unfreeze it when you need creditors to access your report, this is a simple way to protect your finances. 

"It takes a little time to set up a freeze initially with each credit-reporting company, but once it’s done, it’s well worth the peace of mind that a criminal is unlikely to open credit accounts in your name," Gerstner says.

You'll need to go through Equifax, Experian and TransUnion to freeze your credit. Stay safe out there!

What information came out of the data breaches?

The Change Healthcare breach was a cyberattack where hackers took information. Change Healthcare is a health payment processing group owned by UnitedHealth that touches billing and insurance. So even if you don't think you've worked with them, it's possible you've gone to a hospital or doctor's office who does billing through Change Healthcare, for example. 

While there's not an exact number known, many people were impacted by this cyberattack. Change Healthcare started sending out notification letters to those they know were in the data breach, but it's possible you were part of it even if you didn't get a letter as the company doesn't have everyone's updated mailing addresses. 

The data taken in that breach included people's names, dates of birth, addresses, health insurance and Medicare information, health information, billing and payment information, including financial and banking information, Social Security numbers, driver's licenses, state IDs and passport numbers. 

As for National Public Data, that's another one where even if you never worked with them directly, they may still have had your information. National Public Data is a background check company owned by Jerico Pictures Inc. That breach was also a cyberattack. It took place in April, and word came out about it recently as Bloomberg Law reported a complaint was filed claiming the breach impacted 2.9 billion people. 

That sounds like a big number, but it's important to note it's somewhat speculative and various people have been trying to assess how many people are seriously implicated by the cyberattack. For what it's worth, some Kiplinger staffers looked to see if they were part of the hack and found either that they were not or that the information linked to them was very outdated. 

In any case, information taken in that breach includes names, email addresses, phone numbers, Social Security numbers and dates of birth. 

Related Content

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Apple recently announced that loans made through its buy now, pay later program will be reported to Experian, a major credit reporting company. If more lenders follow Apple’s lead, the change could help consumers who use these loans build a credit history — but it could hurt their credit scores, too. 

BNPL services allow consumers to spread payments on their purchases over a few weeks or months, typically without interest if payments are made on time. Unlike layaway plans of the past, which required buyers to wait to claim a purchase until they had paid it off, BNPL provides instant gratification, which has made the loans popular with consumers. More than 40% of U.S. adults have used at least one BNPL service, according to a survey by Bankrate. 

However, the simplicity of BNPL plans can obscure potential pitfalls. Fees for late payments can be steep, and consumer advocates worry that the easy availability of the loans encourages consumers to purchase things they can’t afford. Nearly 30% of consumers who have used BNPL said they have spent more than they should, according to the Bankrate survey. 

Because BNPL payments usually aren’t reported to the three major credit reporting companies — Equifax, Experian and Trans-Union —  consumers have less incentive to curb spending and pay on time (although if you fail to pay for an extended period, the BNPL provider may turn your debt over to a debt collector, which can heavily damage your credit). At the same time, with most BNPL providers, using your loan responsibly doesn’t help you build a good credit history. 

So far, most other BNPL providers, including Klarna and Afterpay, haven’t announced plans to report their loans to the credit reporting companies. Affirm says it reports some longer-term loans to Experian, but it doesn’t report its plans that offer four interest-free payments, a common BNPL structure.

In addition, most credit scoring models haven’t adapted to incorporate the way BNPL payments are made. For example, unlike credit card payments, which are typically made once a month and are reported to the credit reporting companies, many BNPL borrowers make small, biweekly payments. 

While Apple BNPL payments will appear on Experian credit reports, the information won’t be factored into borrowers’ credit scores, Experian says — and a credit score is a key measure that lenders use to judge a potential borrower’s creditworthiness for a credit card, mortgage or other loan. Experian says that BNPL loan information may factor into credit scores in the future “as new credit scoring models are developed.” 

For now, while BNPL services provide a convenient way to spread out payments, consumers shouldn’t rely on them to develop a positive credit history. The most effective way to build credit is to apply for a credit card, pay your bills on time and keep the balance to less than 20% to 30% of the card’s limit.

BNPL pitfalls

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Your credit score and credit report can help you make sense of your overall credit history and get a better understanding of your creditworthiness. Both can illustrate what kind of borrower you are, which is why they're used by lenders to determine whether or not to extend you a line of credit, like a credit card.

However, the two aren't the same. Here's what you need to know about the differences between your credit score and credit report.

Credit score vs credit report: the takeaway

• A credit score is a three-digit number that provides a quick impression of your overall creditworthiness. A credit report documents your loans, credit cards, mortgages and other accounts, as well as payment history.
• Your credit score and credit report are important for your financial security and freedom. Having a clean report and a high credit score will make getting a mortgage or other loan easier and usually, significantly cheaper.
• Check both your credit score and credit report regularly. Look for errors in your report. Try to boost your credit score by paying attention to the factors that make up your score, like paying your bills on time.

A credit report is a document that summarizes your overall credit history, provided by each of the three credit bureaus: Experian, TransUnion and Equifax. These bureaus base their reports on information from lenders with whom you have done business.

Your credit report includes personal information, open and closed lines of credit  — mortgages, credit cards, personal loans, etc. — payment history, delinquent payments, accounts in collections, public records like liens or foreclosures and the number of times you’ve applied for a line of credit. It’s what lenders see when determining whether or not to loan money to you, as well as what interest rates you receive. And it’s also used to determine your credit score.

Because of this, it’s important to be proactive and regularly check for errors on your credit report. You may be surprised at how common it is to find a mistake. According to a survey by Consumer Reports, 44% of those who successfully checked their credit report said they found at least one mistake in their credit reports. And these errors can have significant impacts on your financial health. It could be the difference between being approved or denied for a line of credit, like a mortgage or car loan, and could result in unnecessarily high interest rates or APRs on loans you are approved for.

Therefore, it’s important to perform regular “credit checkups” to ensure that the information on your credit report is accurate. And it’s easy to do. You can get a free weekly credit report from Equifax, Experian and TransUnion on AnnualCreditReport.com.

If you do discover an error, such as the presence of a credit card or loan you never opened, file a dispute with the credit reporting company. Explain in writing what is incorrect and provide documents to support your claim. The Consumer Financial Protection Bureau (CFPB) even has a template letter you can use as a guide. 

Credit score

Your credit score is a three-digit number indicating your overall creditworthiness. It’s a snapshot of your overall credit health and is calculated using the information in your credit report. A credit score is an easy way for lenders to determine whether or not you’re a risky borrower and how likely you are to pay back your loans on time. 

Two main companies provide credit scores — FICO and VantageScore. Since 90% of lenders use FICO Scores to make lending decisions, however, this score usually gets more attention, although lenders can use both scores to make decisions. Both scores range between 300 and 850, with a lower score indicating poor credit and a higher score indicating excellent credit.  

FICO Score: 

• Poor: 300-579
• Fair: 580-669
• Good: 670-739
• Very Good: 740-799
• Exceptional: 800-850

VantageScore:

• Very Poor: 300-499
• Poor: 500 - 600
• Fair: 601-660
• Good: 661-780
• Exceptional: 781-850

How is my credit score calculated?

Five main factors go into determining your credit score. 

Payment history: Payment history is the largest factor affecting your credit score, accounting for 35% of your total score. For this reason, having a history of consistent on-time payments is crucial. Just one missed payment can significantly decrease your score.

Credit utilization:  Credit utilization is the ratio between any debt you have compared to your total credit limit, and it makes up 30% of your overall credit score. The lower your credit utilization ratio, the better, but a good rule of thumb is to keep your credit utilization below 30%. 

Length of credit: A longer credit history shows you’ve had a consistent track record of paying back debt.

Credit Mix: By having both installment and revolving loans, you show lenders you can manage different kinds of payments.

New credit: Having several “hard pulls” on your credit report from opening new credit accounts around the same time can lower your score.

Not only are you more likely to be approved for loans and credit cards with a good credit score, but you’ll be able to score the best rates possible, which can save you thousands of dollars over the life of a loan. For example, raising your credit score can lower your mortgage rate, resulting in savings of over $130,000. 

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Rates and fees checked as of March 20, 2024.

The BILT credit card is unlike any other rewards credit card. It lets you pay your rent without fees so you can pocket serious travel rewards and polish your credit score. If you are renting in retirement, the card could help finance a free vacation. And if you are renting to save money for your own home, the BILT card may help you improve your credit score and qualify for a mortgage when the time comes. The card has no annual fee.

The BILT credit card: no fees for paying rent

If you enable BiltProtect, your rent payments are drawn directly from your linked bank account, and you earn points on the payments without using your available credit. While a few other credit cards will allow rent payments, they charge a hefty fee, typically around 2.5% to 3.5%. 

"Many landlords charge service fees for using a credit card to pay rent, and those costs add up," explains Alexandra Svokos, senior digital editor at Kiplinger. "For example, if you pay $2,000 in monthly rent, a 2.99% service fee adds up to an extra $720 spent annually. That $720 doesn't really come back to you in the form of a credit score or rewards points. As a renter, that's why I avoided paying with a credit card. To me, the elimination of that service fee is the most significant part of the BILT card, because now you're not paying the extra $720 and you get the benefits of credit and rewards points."

• Top rewards rate: Three points per dollar on dining.
• Other rewards: Get two points on travel, one point per dollar on rent payments (up to 100,000 points each year), and one point on other purchases.
• Required spending: You must make at least five transactions using your card in one month to receive rewards.
• Redemption: Transfer points that you earn with it on a one-to-one basis to 16 different transfer partner programs, including those of American Airlines, Marriot Bonvoy, United Airlines and World of Hyatt. Or you can redeem your rewards toward a down payment on a property, in which case points are worth 1.5 cents each.
• Rent Day bonus: On the first of each month, or "Rent Day," the card will double your rewards, in addition to the one point you receive for paying rent. So, instead of getting three points on dining purchases, you get six points for every dollar you spend on that day, and so on. The card also offers a surprise benefit each Rent Day, such as transfer bonuses to airlines or extra points for purchasing sporting event tickets.
• Bonus for linking loyalty programs: Link your BILT rewards account (via the app) to one of your travel partner loyalty plans and get 100 BILT points for each program.
• Trip cancellation, interruption and delay insurance. Get up to a maximum of $1,800 for a trip delay. Get up to $5,000 for non-refundable fares booked with your card.
• Cellphone protection: Get up to $800 to repair or replace a damaged or stolen phone. You may file up to two claims per year.
• Sign-up bonus: None
• Annual fee: None.
• Foreign transaction fee: None.
• Interest rates: 21.49%, 24.49%, or 29.49% variable APR.

BILT is really a travel rewards card

Bilt cardholders can transfer their Bilt Points 1:1 to select travel partners, where one Bilt Point equals one mile or point at the following loyalty programs:

Airlines

• Alaska Airlines
• American Airlines AAdvantage
• Avianca Lifemiles 
• United MileagePlus®
• Air France/KLM Flying Blue®
• Virgin Red®
• Emirates Skywards®
• British Airways Executive Club
• Cathay Pacific
• Hawaiian Airlines HawaiianMiles
• Turkish Airlines Miles&Smiles
• Aer Lingus AerClub
• Iberia Plus
• Air Canada Aeroplan®

Hotels

• Marriott Bonvoy™
• World of Hyatt®
• IHG® One Rewards

Could the BILT card increase my credit score?

One of the most valuable features for would-be homeowners? The chance to boost your credit score with the BILT credit card or loyalty program. That's because your landlord does not typically report on-time rent payments to the three credit bureaus that generate your credit reports. This disadvantages renters; they cannot demonstrate responsible financial practices with one of their biggest monthly expenditures — their rent. 

Keeping your credit line clear of rent payments can help lower your credit-utilization ratio (the amount of available credit that you use), and that’s also good for your credit score.

When you get your BILT credit card, download the BILT Rewards app to pay your rent. If you pay your total BILT card monthly statement balance (the total amount due, not the minimum payment) and ensure your payments are on time, you may gradually increase your credit score. When it comes time to buy a property, a higher credit score can snag you a lower mortgage rate, potentially saving you hundreds of dollars each month on your mortgage payment. 

The real estate technology firm Zillow recently launched a similar program. Tenants renting through Zillow can ask the company to report their rental payments to credit bureaus. Zillow will not report late payments.

Will BILT rewards get me a down payment on a house?

You can redeem BILT points for cash when used toward a down payment.  In this case, points are redeemed at a rate of 1.5 cents per point, and you can work with any lender you want. Could that be enough to help you buy an apartment or house?

Say your monthly rent payment is $3,000, or $36,000 a year. If you bank these as BILT points, you can redeem them at 1.5 cents each, or $540 annually towards a down payment. Assume you rent at the same rate for ten years, then your total BILT down payment rewards would total $5,400. That's a tidy sum, but if you hope to put 20% down to avoid mortgage insurance, you can only afford a property priced at $27,000. Good luck finding a property worth that amount!

"The idea of points towards a down payment is clever, but I wouldn't rely on it to make the jump from renter to buyer, given the weak exchange rate," said Svokos. "Instead, I'd use this card to let my rent rack up points for travel. Given that housing is usually people's biggest expense, that's a lot of points."

You can earn rewards without the BILT card

There are three ways that you can get BILT rewards on rent: through the BILT credit card, by renting an apartment in one of the BILT-affiliated properties called the BILT Alliance, or by joining the BILT Rewards program as a loyalty member.

Kick the tires

Although BILT partnered with Wells Fargo to issue its credit card, BILT is not a bank but a financial technology company. The startup studio Kairos HQ launched BILT in 2021. That raises an important question: is BILT financially sound? You don't want the company arranging your rent payments to go out of business or cut services due to financial troubles. 

Although the company is young, it appears to be thriving. BILT has benefitted from three venture capital (VC) funding rounds. In January 2024, the latest round gave BILT an additional $200 million and increased its valuation to $3.1 billion. According to TechCrunch, the company is profitable and growing and has plans to expand to student and multifamily housing. 

Pros and cons of the BILT card

Pros:

• No annual fee
• The only credit card to pay for rent without fees
• Excellent transfer partners and travel benefits
• High redemption rate with transfer partners
• Rent day bonus
• The option to report rent payments to credit bureaus
• The Bilt Rewards app gets excellent ratings on the Apple Store (4.9 out of 5 stars) and Google Play (4.6 of 5 stars).

Cons:

• No welcome bonus
• The rewards rate is low compared to some of the best travel cards
• You must make at least five transactions with the card every month to earn points
• BILT is a financial technology company that relies in part on venture capital funding

Rewards cards dos and don'ts

As with any rewards credit card, make sure you understand how to use the card effectively. While reward credit cards are great if you use them wisely, always pay them off in full and on time each month to avoid interest, which can dwarf any rewards you earn. Don't change your spending habits to earn extra points. That's a slippery slope that can lead to overspending.

If this is your first foray into credit cards, or you just want a refresher, make sure you know how to choose a credit card. And ensure you are familiar with what counts as a good credit score. 

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As an independent publication dedicated to helping you make the most of your money, the article above is our view and is not the opinion of any entity mentioned such as a card issuer, hotel, airline, etc. Similarly, the content has not been reviewed or endorsed by any of those entities. 

A new dating app called “SCORE” promises to help you find true love through financial compatibility. The brainchild of lifestyle financial platform Neon Money Club, the app requires prospective daters to have a credit score of at least 675. That’s essentially the basement of a good credit score, but it may help weed out grifters or posers.

"When I first heard about SCORE, I thought 'This is very interesting — and it's valid too,'" said dating coach Andrea McGinty, founder of It's Just Lunch and 33000Dates.com. When a prospective date has a good credit score, it shows that "someone is financially responsible," and to a lesser extent, is stable and trustworthy, she explained. 

There is research to back up this link. People with higher credit scores are more likely to form a relationship and stay together, according to a large study by the Federal Reserve in 2015. 

SCORE dating app overview

You can only sign up for the SCORE app on Neon Money Club's website; you won't find it in the Apple Store or Google Play. But you'll need to hurry. SCORE is only accepting new clients until 90 days after its Valentine's Day, 2024 launch. The app and website access are free. 

The app does not reveal member credit scores; it just verifies that they have scores of at least 675.

"SCORE aims to elevate the discussion around financial health, which has remained stagnant for decades," said Neon CEO Luke Bailey in a recent press release. SCORE is just one project among several designed to drive traffic to its website and create community. For example, Neon recently collaborated with American Express to launch The Cream Card™️  a credit card that allows cardholders to double their cash back by investing in the stock market.

The SCORE app even has its own Spotify playlist, so you can listen to the Fugees as you swipe right.

Is the SCORE app for you?

The SCORE app is well-designed and has good privacy controls, according to McGinty. Yet it is unlikely to draw a critical mass from the lovelorn outside of major U.S. cities like New York, Boston or Chicago. That's an important consideration for those in rural areas or smaller cities.

The app appears to target wealthy Millennials. As McGinty explained, having a partner with a good credit score isn't as important to younger people just starting their careers. But for people in their thirties and up (including Gen X and Baby Boomer cohorts) dating someone with healthy finances is much more important. After striving for financial success, you want to avoid someone with poor financial habits who could drag you down. And you certainly want to steer clear of any gold-diggers or scammers.

There are limits to what a good or excellent credit score can convey. As McGinty pointed out, young entrepreneurs may rack up debt in the early stages of launching their own company, hurting their credit scores. Those same people may have excellent financial management skills but won't meet the SCORE threshold. Others may have excellent credit scores, only because a partner or spouse has bailed them out of debt.

Still, having at least some idea of your potential partner's financial habits is important, in part because hiding or cheating on finances is common; almost half of adults confessed to financial infidelity in a recent survey.

Do dating apps really work?

The short answer? Yes!  

"If you stick to online dating and you give it three months, three hours a week and you're on the right site" with a well-crafted profile and photos, "you can meet quality people," said McGinty.  

According to McGinty, there are over 1,400 dating sites and apps, with the bulk of users opting for the top 20 or 30. The best dating apps tend to cast a wide net, have good privacy controls and have an array of filters to help you weed out people that are unlikely to interest you. While bespoke apps like those targeting farmers or Christians may seem appealing, the math just works out better on a very large site.

Once you've found a potential match, you should be on the lookout for financial red flags in the relationship, like a lack of transparency or relying on relatives for loans. If you're already dating or married to someone with troublesome financial habits, you may wish to try financial therapy as a way to a healthier relationship.

Bottom line

The SCORE app is free, so there's no harm in signing up and giving it a try. That said, you will likely have more success on a large app, like Match, Bumble or Hinge.

Read More on Romance and Finances

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The journey toward achieving financial stability and reaching long-term goals can often seem overwhelming. However, I advocate for an approach centered on small, manageable steps. This method is not about overnight transformations; it's about cultivating consistency, patience and setting achievable short-term objectives that cumulatively lead to significant long-term results.

Embarking on your financial journey

For those defining their financial journey in 2024, the initial step is crucial — designating a family chief financial officer (CFO). This role entails a comprehensive assessment and ongoing monitoring of the family's financial status, including income, expenses, debts and savings. 

It’s essential to set clear, realistic goals, whether it's saving a specific amount, reducing debt or making wise investments. The family CFO should also develop a simple, realistic budget that aligns with these goals, ensuring the family's financial aspirations are grounded in their current financial reality.

Setting financial goals at the beginning of a new year can be a game-changer. The key is to make these goals specific and measurable. Some potential goals include:

• Build and maintain an emergency fund. Commit to setting aside a fixed amount from each paycheck to build an emergency fund, or utilize direct deposit to systematically save for unexpected expenses that pop up throughout the year. Putting aside $75 to $100 each paycheck can end up making a difference when you least expect it. If that feels like too much, designating any amount toward savings will always set you ahead.
• Reduce credit card debt. This requires a strategic approach. Calculate your total debt and plan monthly payments, aiming to significantly reduce, if not entirely clear, the debt by year-end. Be sure to account for limited use of your credit cards through the next 12 months. If eliminating all of your debt seems out of reach, consider paying down 50% or 75%.
• Keep close tabs on your financial standing. Monitoring your credit score and continually educating yourself about personal finance are also vital components of this process. Regularly review and adjust your financial goals, be it monthly or quarterly, to ensure you maintain focus and keep yourself accountable. The family CFO can be responsible for sharing key information with the family, as well.

Budgeting: A cornerstone of financial planning

Effective budgeting is a cornerstone of financial planning and aligns perfectly with the philosophy of taking small steps. A practical approach is the 50/30/20 rule, where 50% of income is allocated to necessities, 30% to wants and 20% to savings or debt repayment. 

This strategy, however, is not set in stone; it requires regular adjustments to adapt to life's ever-changing circumstances. Small, monthly budget tweaks are far more effective and manageable than overhauling your budget sporadically or insisting your budget remain the same, despite changes to bills or your lifestyle.

Tools to help: Professionals, technology and education

Financial institutions, particularly credit unions, play a pivotal role in supporting members on their financial journey. Many credit unions offer personalized advice, educational workshops and a range of resources tailored to individual needs. Engaging with financial experts at your institution can provide insights and direct you to relevant tools and information, enhancing your financial literacy and decision-making skills.

Financial education is fundamental in understanding the importance of small steps in your financial journey. It empowers you to make informed choices, fostering a sense of long-term financial responsibility. Understanding financial concepts, tools and strategies not only helps in setting realistic goals but also in identifying potential shortcuts and avoiding pitfalls.

In today's digital age, technology is a valuable ally in tracking financial progress. Budget-tracking apps and financial tools can provide a clear picture of where you stand in relation to your goals, allowing for timely adjustments.

Overcoming obstacles and celebrating successes

One common challenge in financial planning is the tendency to set overly ambitious goals. Break down your goals into smaller, more manageable milestones to maintain motivation and momentum. You can manage both by setting clear, meaningful goals and celebrating small victories along the way.

My team at Affinity Federal Credit Union has witnessed numerous success stories where individuals and families have achieved significant financial milestones by focusing on small steps. One inspiring example is a family who treated financial planning as a collective activity. They held monthly family meetings to discuss progress and challenges, involving everyone in the decision-making process. This not only kept them on track toward their financial goals but also instilled positive financial habits in the younger family members, preparing them for future financial success.

The path to financial stability and achieving your goals doesn't have to be daunting. By embracing small, manageable steps and leveraging the support and resources available, you can confidently navigate this journey. Remember, it's the cumulative effect of these small steps that leads to significant achievements in your financial life.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Are you one of the nearly half a million people offered a pre-approved credit card from Credit Karma but were then denied after applying?

If so, you may be due money as part of the company's $3 million settlement with the government — but you need to act fast as the deadline to file a claim is March 4.

As Kiplinger previously reported, nearly half a million people who were offered a pre-approved credit card from Credit Karma only to be denied after applying could be entitled to a portion of the company’s settlement with the government, according to the Federal Trade Commission (FTC).  The agency charges that Credit Karma's alleged actions caused people to waste time on applying and, in some cases, even caused them to wind up with a lowered credit score once they were denied. 

The FTC sent letters and email with Claim IDs to people eligible to apply. However, if you did not receive one and believe you should have, you can call the claims administrator at 1-866-848-0871.

The action comes as the overall banking and financial services sectors face government scrutiny over concerns including making false or misleading claims, and as the country's credit card debt hit a record $1 trillion.

Credit Karma fundamentally disagrees with the allegations that relate “solely to statements we ceased making years ago,” a company spokesperson told Kiplinger in an emailed statement.

“Any implication that Credit Karma rejected consumers applying for credit cards is simply incorrect, as Credit Karma is not a lender and does not make lending decisions,” the spokesperson said, adding that the company helps its more than 130 million members understand their finances including the likelihood of financial product approvals.

"We have a track record of positive outcomes, and members shopping for credit cards on Credit Karma have a significantly higher approval rate than the national average," the company spokesperson said. "We reached this agreement to put the matter behind us so we can maintain our focus on helping our members find the financial products that are right for them.”

Offers to those who did not qualify

The settlement stems from a September 2022 FTC investigation into Credit Karma's alleged use of claims that people were pre-approved and had "90% odds" of approval. The claims were made in an effort to entice people to apply for offers that in many cases they did not qualify for, the FTC said.

To use Credit Karma's services such as credit score monitoring, people must provide personal information, including credit and income information, which the company used to send targeted ads and recommendations for financial products such as credit cards, the FTC said.

The agency alleges that, from February 2018 to April 2021, the company deceived consumers about whether they were approved and that nearly one-third of those who applied were denied credit offers. When consumers applied for these offers, third-party companies made a “hard inquiry” on their credit reports, which in many instances lowered consumers’ credit scores and harmed their ability to secure other financial products in the future, the FTC said.

Where to apply for a payment

If you receive an email or letter with a claim number, you can apply for a payment online. If you have questions or are seeking assistance, write to info@creditkarmasettlement.com or call 866-848-0871. 

The amount of the payment will be determined by a number of factors, including how many people choose to file, the agency said. The FTC has not yet set a date for mailing payments but said it will update this page when more information is available.

The deadline for filing a claim is March 4, 2024.

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The federal government has fined TransUnion a total of $23 million — including some $14 million to be paid to consumers — over illegal rental background checks and security locks and freezes on consumer credit reports.

TransUnion, a consumer credit reporting agency, said in an October 10 statement that it has agreed to two settlements with the government for the entire sum.

The move comes as the government, through agencies including the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC), has cracked down on specific practices at credit reporting agencies.

In the rental background checks case, the CFPB and FTC jointly filed a complaint in federal court charging that TransUnion and its TransUnion Rental Screening Solutions (TURSS) subsidiary violated the Fair Credit Reporting Act. They charge that TransUnion and TURSS failed to take steps to ensure the accuracy of background checks used by landlords to decide who gets housing and to disclose to renters the names of the third parties that were given the inaccurate information.

“Consumers struggling to find housing shouldn’t be shut out by tenant screening reports that are ridden with errors and based on data from secret sources,” said Samuel Levine, FTC Bureau of Consumer Protection director, in a statement. “Protecting consumers looking for housing is critical to a fair economy, and we are proud to partner with the CFPB in obtaining this record-breaking order.”

TransUnion agreed to pay $15 million to settle the charges, with $11 million of this to be used to compensate consumers and $4 million to go into the CFPB’s civil penalty fund, CFPB said.

TransUnion said that it has worked with the agencies during the last year to enhance its rental screening reporting practices, including making certain changes to how eviction records are reported.

TransUnion says it's made changes

“We believe these changes will soon become industry standard,” the company said. “This settlement reflects the agencies’ evolving regulatory objectives and our openness to join them in reasonable initiatives that are beneficial to consumers and support safe, affordable housing.”

Separately, the CFPB fined TransUnion $8 million for “lying to consumers” since at least 2003 about timely placing or removing security freezes and locks on the credit reports of tens of thousands of consumers. TransUnion told consumers that their requests were completed when they were actually placed into a “years-long backlog,” CFPB said.

The agency also charged TransUnion for failure to keep active-duty members of the military from prescreened solicitation lists.

For those violations, TransUnion agreed to pay an $8 million fine, about $3 million of which would go to consumers and $5 million paid into the CFPB victim’s relief fund. TransUnion would also need to agree to “clean up its business practices,” including addressing the problems with freeze and lock requests, the CFPB said.

In response, TransUnion said it is committed to helping consumers manage their credit information and that it has made changes to ensure timely placement and removal of security freezes and locks.

“We corrected associated system issues in 2020 and have processes in place to monitor and address any issues going forward,” TransUnion said. It added that it has not admitted to any wrongdoing with either settlement.

“TransUnion agreed to these settlements to resolve these matters and proceed with our work providing important services and helping consumers reach their goals,“ TransUnion said.

How to check background reports for errors

The CFPB offers a number of consumer services including a checklist of how to check your rental background reports for errors.

You can also read more about consumer complaints — which total nearly a half million — against the credit reporting agencies in the CFPB’s annual report.

“TransUnion, Equifax, and Experian routinely top the list of complaints submitted by consumers,” CFPB Director Rohit Chopra said in a January 3 statement on the report. “We will be exploring new rules to ensure that they are following the law, rather than cutting corners to fuel their profit model.”

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A pandemic-era program allowing consumers to access free weekly credit reports is now permanent thanks to a decision by the three major credit reporting agencies to boost the credit health of US consumers. 

Knowing what’s on your credit report is essential to your credit health and overall financial well-being. During the economic uncertainty caused by the COVID-19 pandemic, annualcreditreport.com began offering free weekly credit reports for consumers with the help of the three major credit bureaus. 

On September 18, the three National Credit Reporting Agencies (NCRAs) announced a permanent extension of the free weekly credit reports initiative which was set to expire after December 2023. Experian, Equifax, and Transunion displayed their commitment to empowering consumers through free and accessible credit reporting which enables consumers to take control over their credit health. 

Prior to this development, consumers could only get a free credit report once per year. However, your credit report is updated monthly with new data from creditors. This has led some experts to suggest checking your credit reports at least once per quarter. 

Without this change, some consumers reported being charged by credit bureaus to access their credit reports and being signed up for paid services without their knowledge, according to a study by Consumer Reports. 

In a joint statement, the CEOs of Experian, Transunion, and Equifax shared this about the extension: “The ongoing availability of free weekly credit reports is another way that our industry is supporting consumers as they make financial decisions. We recognize the important role that credit reports play in people's financial lives and encourage consumers to regularly check their credit history – an important way of understanding their current credit position and preparing for important future financial milestones.”

What a credit report is used for

The information on your credit report isn’t just used to create a credit score. It impacts multiple areas of your daily life including:

• Determining how much the security deposit is on a new apartment
• Passing the background check for a new job
• Qualifying for utility services
• Getting approved for homeowners and car insurance
• Determining the cost of borrowing money for a new car, home, or other loan.

As such, reviewing your credit report regularly may help you catch potential errors that could bring down your score. According to a 2021 study from Consumer Reports, 34% of consumers found at least one mistake in their credit report. 

Although credit report mistakes are inconvenient, they’re also relatively simple to correct. The Federal Trade Commission offers a comprehensive guide to disputing credit report mistakes on your own if you identify one during your free weekly credit report review. 

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Retirement may represent a fresh episode of your life, but a surprising twist might be a drop in your credit score. Even if borrowing isn’t on your agenda, your credit score could affect other aspects of your life, ranging from how much you pay for auto insurance to whether you’ll be admitted to an assisted-living facility.

Average credit scores tend to increase as consumers get older, peaking in their seventies. To understand why your own credit score might drop after you retire, it’s important to know how credit scores are computed. While your history of paying on time is the largest element of your score, other factors include the amount you owe on your credit cards as a proportion of your card limits (known as your credit-utilization ratio) and the length of your credit history, says Ted Rossman, senior industry analyst at Bankrate.com. In addition, if you don’t use a credit card, the issuer may close it because of inactivity. “Retirees’ credit scores often go down because they’re not using credit as actively as when they were younger,” he says. 

Polish your credit

To keep your score in good shape, use a credit card to make small, regular purchases. This approach will ensure that your credit card remains active and contributes positively to your credit score, Rossman says. Diligently pay the bills on time because that’s the most powerful weapon in your credit score arsenal. On-time payments demonstrate financial responsibility and reliability, which are highly regarded by credit scoring models.

Think twice before closing old or unused credit card accounts. While this may seem like a tidy financial move, it can lead to reduced available credit and an unfavorable credit-utilization ratio, which can have a negative impact on your credit score. You should also think twice about cosigning a loan for a friend or family member. Even if you aren’t the main financier, any late or missed payments can be tied to you as a cosigner, which could tarnish your otherwise stellar credit score.

Finally, make sure your score isn’t damaged unjustly by errors or identity theft. Keep an eye out for any discrepancies or suspicious activities — say, a credit card account in your name that you never opened — that may have crept into your credit history and hurt your score.

Review your credit score

Through 2023, you can review your credit reports from the three major credit bureaus — Equifax, Experian and Trans-Union — once a week for free by going to AnnualCreditReport.com. If you find an error on your reports, file a dispute with the credit-reporting companies. The Consumer Financial Protection Bureau provides instructions and a template letter you can use: How Do I Dispute An Error On My Credit Report?

AnnualCreditReport.com doesn’t provide credit scores, but there are several ways to get a free score. Visit MyFICO.com/free to check and monitor your score, based on data drawn from Equifax, for free. Plus, your bank or credit card issuer may provide you with regular score updates.

Alternatively, you can use a service such as Credit Karma, which offers VantageScore credit scores from your Equifax and TransUnion reports, or Experian’s FreeCreditScore.com, which provides a FICO score based on Experian report data. 

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Earnest, a low-interest student loan provider, and Nova Credit, a cross-border consumer credit bureau, have partnered to launch International Private Student Loans for students moving to the U.S. to pursue higher education.

International students at select U.S. schools are eligible for the loan program, which can pay for tuition, housing, living expenses and other education-related costs, Earnest said in a statement.

The loans are available for eligible international students from India, Mexico, Canada and South Korea who are pursuing a juris doctorate or masters degrees in business administration, law or science in engineering at select schools.

Under the program, Earnest will use Nova Credit’s Credit Passport technology that allows borrowers to share their home-country credit information to generate an equivalent score and access Earnest’s loans without the need for a co-signer.

Demand for private student loans has grown

According to market research organization OpenDoors, there were nearly 950,000 foreign-borne students enrolled at U.S. colleges and universities for the 2021-2022 school year, representing about 4.7% of the total U.S. student population.

While about half of those students fund their education through personal savings, family funds or methods such as work-study programs, demand has grown for private student loans but access to these loans has been limited, Earnest said.

Last month, Nova Credit inked a deal with American Express to expand credit access to consumers who have moved to the U.S. from Brazil, Dominican Republic, Kenya and Nigeria. The credit bureau’s other activity includes a partnership with HSBC that provides the bank with global access to its cross-border credit data.

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A recent report from U.S. PIRG Education Fund, a consumer advocacy group, found that complaints filed with the Consumer Financial Protection Bureau about credit-report companies nearly doubled between 2021 and 2022. In fact, complaints about problems with credit bureaus totaled 69% of all consumer grievances in the CFPB’s consumer complaint database, U.S. PIRG found.

The Consumer Data Industry Association, a trade group that represents the credit bureaus, attributes the rise in complaints to the rise in credit-repair companies that falsely claim they can remove negative but accurate information from credit reports. 

However, in a report released earlier this year, the CFPB said that while consumers continue to report problems with errors on their credit reports, there was a significant increase in resolved complaints in 2022. That suggests many of those disputes were legitimate, says Mike Litt, consumer campaign director for U.S. PIRG. 

Be Proactive 

The consequences of negative information on your credit report can be far-reaching. You could end up paying higher interest for a mortgage or car loan. You could also have difficulty renting an apartment or, in some cases, getting a job.

Your best defense against inaccurate information on your credit reports is to be proactive. Reviewing your credit reports regularly will enable you to catch errors early. You can review your credit reports from the three major credit bureaus once a week for free by going to www.annualcreditreport.com after a pandemic-era program was made permanent. Make sure you go through this website; other websites that may show up in an online search use the promise of “free” credit reports to charge you for services or, worse, steal personal information.

If you find an error on one of your reports, file a dispute with the credit-reporting company. The CFPB provides instructions and a template letter you can use. You can mail the letter or use the credit bureau’s online form. Explain why you believe the information is incorrect and provide supporting documents if you have them.

Once a credit bureau receives your dispute, it’s required to conduct an investigation and contact the lender. After the lender responds, the credit bureau is required to tell you the results of its investigation. If the lender corrects the error, that should resolve the dispute. 

If you’re unable to get a satisfactory response from a credit bureau, file a complaint with the CFPB. “We’ve seen people get relief when they complain to the CFPB when they’re unable to get a resolution on their own,” Litt says.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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It now takes just a minute to sign up for a free credit score service from FICO®. There is no negative impact on your credit score for checking, and you might save hundreds or even thousands of dollars in interest by monitoring and boosting your score.  

The new service was announced Tuesday by FICO in honor of Financial Literacy Month.

How To Sign Up For A Free Credit Score 

Signing up is easy. Visit myFICO.com/free and enter your information to check and monitor your FICO Score for free. You will receive a credit score between 300 and 850, where a higher score is better. The score is based on data drawn from Equifax, one of three credit bureaus that monitor your payment and credit history. 

Two Other Ways To Get Free FICO Scores 

Credit bureau companies Experian and TransUnion also calculate FICO scores that lenders may use to consider your creditworthiness. All three credit bureaus have a slightly different way of calculating a FICO score, so it is unlikely that a customer will have a big difference between scores. 

For this reason, most people don’t need to know the FICO score from all three providers, but if you are interested, there are ways to find the other two for free.  

• Many financial institutions, like Bank of America, have partnered with TransUnion and provide FICO scores free to their customers. 
• You can also check your FICO Score through FICO’s partnership with Experian. To get your FICO Score for free from Experian, visit:  https://www.experian.com/consumer-products/credit-score.html 

What Is A Good Credit Score?

Once you have checked your FICO score, you need to understand if it qualifies as a good credit score. FICO scores over 670 are considered good, but if you can bump your score up to 740, you’ll be in the “very good” tier and eligible for better credit cards or mortgage rates. “Excellent” credit is set at 800 to 850.  

Why Bother Checking Your Credit Score?

You may already be aware of how important your FICO score is, especially if you want to qualify for one of the better rewards credit cards available to those with great credit. But did you know that your FICO score can also affect everything from the rate you get on car insurance to your mortgage? It's worth taking just a minute to check your score. 

If you're not happy with it, be sure to understand how to repair your credit: pay your bills on time, pay all of your credit card balance every month, have a good mix of types of credit, and keep the amount of credit you use below 30% of your available credit. Check your FICO score each month and you should see gradual improvement.

Becoming a homeowner has become increasingly more challenging, with the median monthly mortgage payment reaching an all-time high of $2,661 (at a 7.19% mortgage rate), according to Redfin.com. They also found the median sale price of a home to be $374,975. And sky-high mortgage rates have left both homebuyers and owners feeling increasingly pessimistic about the housing market outlook. 

So, if you're in the market for a mortgage or a refinance, it’s more important now than ever to ensure you can secure the lowest mortgage rate possible. One way you can find the best 30-Year mortgage rates is by prioritizing a good credit score.  

Credit score impact on mortgage rates 

Lenders take into account a variety of factors when determining the interest rate on your mortgage, including your down payment, desired loan term and the price of the property. However, the biggest factor determining your mortgage rate is your credit score. Most lenders will take into account your FICO score, which can range from 300 to 850, or from poor to exceptional credit. 

• 800 or higher: Exceptional
• 740-799: Very good
• 670-739: Good
• 580-669: Fair
• 579 or lower: Poor

To qualify for a mortgage loan, you’ll likely need a credit score of at least 620. However, having an even higher credit score can ease the financial burden of a mortgage, as it can help you score lower rates. And the knock-on benefits continue — securing a low mortgage rate can help lower your monthly payments substantially, as shown in this data from MyFICO. 

The chart shows how much you’d pay on current rates as of November 30, 2023, based on a 30-year fixed mortgage of $350,000.  

How much you can save

Based on data from the chart above, if you start with a credit score of 620-639, here’s how much you’d save over the course of your mortgage by boosting your credit score. 

• If your score changes to 640-659, you could save an extra $48,076
• If your score changes to 660-679, you could save an extra $85,292
• If your score changes to 680-699, you could save an extra $103,590
• If your score changes to 700-759, you could save an extra $118,608
• If your score changes to 760-850, you could save an extra $137,293

Use our tool to find a mortgage deal that's right for you.

How to improve your credit score

Your credit score matters to lenders as it shows them how likely you’ll be able to repay your loan. If you have a higher credit score, lenders won’t see you as a risky borrower. And while you can still get approved for a mortgage with a bad credit score, you won’t be able to secure the lowest rates possible. If you’re looking to save on your mortgage rates, try following these steps to boost your overall credit score before applying.  

Check your credit report: Before applying for a mortgage, get a copy of your credit report. You’ll be able to see a complete rundown of your credit history, helping you identify areas of your credit that are hurting your score, while also checking for any inaccuracies in the report. Having errors on your credit report is more common than you may think, so it’s important to get those fixed, by filing a dispute if any are found.

Make on-time payments: Payment history is the largest factor affecting your credit score, accounting for 35% of your total score. Because of this, it’s vital to always make payments on time, as missing payments can significantly decrease your score.

Pay off credit card balances: Credit utilization is the ratio between any debt you have compared to your total credit limit, and it makes up 30% of your overall credit score. Therefore, keeping your credit utilization ratio as low as possible can help you up your overall credit score. A good rule of thumb is to keep your credit utilization below 30%.   

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A credit score is a number, usually from 300 to 850, that provides a snapshot of a consumer’s creditworthiness. Lenders use these scores to decide whether a potential borrower is qualified for a loan and, in many cases, to set the interest rate and other terms.

By tracking and keeping a score in the good range or better, consumers might qualify for one of the best rewards credit cards or for other types of loans.

One of the best ways to track your credit score is by using a monitoring service such as myFico. It'll alert you if there are any changes to your credit report so you can address them promptly.

What is a good credit score?

Two companies control the market for credit scores: FICO and VantageScore. FICO considers a score of 670 to 739 as good, while VantageScore rates a score of 661 to 780 as good.

FICO boasts that 90% of top lenders rely on their scores, and consumers generally need to focus on their FICO score first. Credit card companies, however, often consider both FICO and VantageScores.

How do you measure up to other borrowers?

The average FICO score in the U.S. was 705 as of January 2026. Want to see how you measure up? Here's a table of average credit scores by age:

The latest versions of the VantageScore also use a 300 to 850 scale, with about 61% of Americans having a Good VantageScore or better.

How to check your credit score?

There are three ways to see your FICO credit score for free.

• Many banks and credit card issuers offer customers free FICO scores every month, so look at your account online or your credit card statement.
• Equifax, one of the three credit bureaus, offers free scores at myFICO.com/free.
• Experian also provides a free score and credit report at www.freecreditscore.com.
• To check your VantageScore, sign up for Chase Bank’s free credit-monitoring service, Credit Journey, or see other programs offered by VantageScore partners.

Checking your credit score using FICO or Vantage, called a “soft pull,” won't harm your credit score. But when you apply for a credit card or loan, the lender will conduct a “hard pull,” running a report that will temporarily lower your credit score.

That is why knowing your credit score is so important before applying for a loan or card. If you've applied for a few credit cards and been rejected, your credit score will be lower, and it will be even harder to qualify for a new card until some time has passed, and your credit score has recovered.

Why do I have more than one credit score?

There are myriad factors that determine your credit score. FICO and VantageScore base their algorithms on the same underlying data but assign a different weight to the same criteria.

FICO and VantageScore get these data, in turn, from three credit bureaus that track your credit activity: Equifax, Experian and TransUnion. As a result, you might see slightly different scores based on whether data was pulled from all three bureaus or just one.

Credit bureau and scoring algorithms also have different versions; sometimes a lender will use a score drawn from the latest version or rely on an older, even years-old version of the algorithm.

What affects my credit score?

Across all the credit reporting and scoring services, these are the most important factors that go into your credit score.

Payment history is based on your record of paying bills on time and is the most important criterion for determining your score. Late or missed payments can significantly lower your credit score, which is why it's important to add credit card payments to your budget. Use a budgeting app such as Quicken's Simplifi, which can project future cash flow to ensure you have money on hand for payments.

Credit utilization reflects the amount of credit you're using relative to your credit limit. Using more than about 30% of your available credit will likely lower your score.

Length of credit history refers to the amount of time you've had your accounts. A long credit history demonstrates that you've had plenty of practice managing debt payments.

Credit mix refers to the types of credit you rely on. Having both installment (mortgages and car loans) and revolving (credit cards) loans will increase your score since it shows you can handle different types of payments and terms. If you're thinking of taking on a Buy Now Pay Later loan, see below for details on how they might affect your score.

New credit accounts or applications can lower your credit score by generating a “hard pull” and by lowering your average length of credit history.

Retiring might reduce your income and use of credit cards and loans that bolster your score. Be sure you understand how retirement could hurt your credit score (but can be avoided).

Tips for increasing/protecting your credit score

Here are tried-and-true strategies to boost your credit score.

Pay your bills on time and if you can, pay the total amount due each month.

Keep your credit utilization low, ideally below 30% of your credit limit. Paying off your statement balance is ideal because it allows you to maximize credit card rewards without incurring interest.

Don’t close old credit card accounts. If you're thinking of closing a credit card that you’ve had for many years to avoid an annual fee, consider asking the card issuer to roll the account onto a similar card with no fee. You'll maintain your long credit history even if you never use the card.

Check your credit report and credit score periodically. You can now get free credit reports for free from all three credit bureaus at annualcreditreport.com, every week. Look for incorrect information or fraudulent activity, and know how to fix your credit report if you find errors.

Not sure what a credit report is? Check out our article showing the difference between credit scores and credit reports.

Once you get a good or even excellent credit score, don’t rest on your laurels. Good credit hygiene, such as keeping up with all of your credit card or loan payments, can help you qualify for choice loans in the future.

What credit score do I need to buy a house?

Conventional loans. When you buy a home, you will most likely take out a conventional loan. The minimum credit score you'll need is 620 to 660, depending on the lender. A higher score usually means you will get a better deal on your mortgage interest rate.

Jumbo loans are generally defined as loans over $832,750. You will typically need at least a 700 credit score, though the average score is 740, according to Bankrate.

Other types of loans. Lenders typically require a credit score of 620 for VA loans, 500 for FHA loans and 580 for USDA loans.

What credit score do I need to buy a car?

If you're shopping for a car, you should ensure your credit score is 661 or higher. According to the Experian State of the Automotive Finance Market report (PDF), as of the fourth quarter of 2024, more than 68% of borrowers met or exceeded that threshold.

Less than one-fifth of borrowers had scores of 600 or less.

Credit score myths

No, not everyone 18 or older in the U.S. has a credit score, even though 42% of Americans think it is true. That's one of the many misconceptions consumers have about how to monitor and build good credit. According to a study by Capital One Insights Center, there are a host of myths surrounding credit scores; here are some of the biggest doozies.

My spouse's credit will affect my credit score - False. If your spouse has a low credit score and you apply for a joint loan, that low score might impact your ability to get a loan with good terms, but the score itself will not drag down your own score.

A hard credit check (or credit "pull") will not affect my score - False. There are two kinds of credit card inquiries: hard and soft. Hard inquiries will lower your score temporarily, and too many hard pulls in quick succession could really damage your score. Lenders perform a hard pull when you apply for new credit, like a credit card, a car loan or a mortgage. Hard inquiries stay on your credit report for two years, so it's important to think strategically when you want to trigger one. Soft credit checks that will not affect your score include instances when your bank updates your free FICO score, or your employer checks your credit after you're offered a job.

Carrying a balance (not paying the total amount due) on your credit card each month is a good way to increase your credit score - False. Most older consumers knew this statement was false on the Capital One survey, but almost half of millennials polled, and 53% of Gen-Z respondents, thought this statement was true. By not paying your balance in full each month, you risk paying high interest rates and increasing your credit utilization rate, which can lower your credit score.

Buy Now Pay Later (BNPL) and your credit score

Some consumers are turning to Buy Now Pay Later (BNPL) to make large purchases over time, usually in four payments with no interest due. These loans, sometimes called "point-of-sale installment loans" or "pay-in-4" have grown rapidly.

There is no cookie-cutter version of BNPL. The lending agency might be your own credit company, a bank or an app-based service such as Affirm or Afterpay. This lender diversity means that terms might vary, so it's crucial to do your research before signing up for BNPL.

Anyone considering a BNPL should be wary. Hidden fees and weak regulation have led BNPL plans to come under scrutiny and criticism from a host of government agencies and consumer watchdog organizations such as Consumer Reports.

Ways BNPL services can improve your credit score.

• For consumers who have poor or even no credit history, a small BNPL loan might help make ends meet for an important purchase. Since most BNPL services don't conduct a hard credit pull, consumers can get access to credit without lowering their credit score.
• Some BNPL lenders provide services to help you improve your credit score. For example, customers of Sezzle can elect to have their payments reported to all three credit bureaus in a program called Sezzle Up. If you can make on-time payments, your credit score might improve. However, if you miss a payment or are late, that will also be reported, so only use this service if you have enough cash flow to pay fully and on time.

How BNPL services may harm your credit score

• If you don't understand the terms of a BNPL loan, you might pay expensive fees that could unnecessarily stress your financial health. For example, some BNPL lenders charge an installment fee, essentially acting as interest on the loan. Late fees might also make paying back your loan more difficult.
• A high number of BNPL customers rack up overdraft fees from their banks. A recent survey from the Consumer Federation of America and the Center for Responsible Lending found that 37% of these borrowers were charged an overdraft fee in the last six months.
• If you fail to make a payment, some BNPL lenders (such as Zip, might turn over your account to a collections agency, harming your credit score.
• If you return an item or an item is damaged, the BNPL lender might not be able to credit your account quickly. In that case, you might still have to make payments to avoid late fees. If you've already paid the full BNPL loan but the item is unusable, you might not get a refund. If you can't make those payments, your credit score could be harmed.
• If you elect to pay BNPL installments with a credit card, you might be charged interest by that card if you're unable to make your monthly payment. Late or incomplete credit card payments will damage your credit score.

On-time rent payments can boost your score

Your landlord doesn't typically report on-time rent payments to the three credit bureaus that generate your credit reports. This is a disadvantage for renters; they can't demonstrate responsible financial practices with one of their biggest monthly expenditures — rent.

You might think that charging rent payments to a rewards credit card would help solve this problem and maybe earn you some cash back or miles.

But credit cards charge a fee to pay your rent that might cancel out or even exceed the rewards you earn. There is one exception to this: The BILT credit card allows you to pay rent on the card without those fees, and you earn travel rewards. BILT reports your on-time payments to credit bureaus, helping you increase your credit score.

The real estate technology firm Zillow launched a similar program. Tenants renting through Zillow can ask the company to report their rental payments to credit bureaus. Zillow won't report late payments.

Hiow a good credit score affects your personal finances

Your credit score touches many areas of your financial life: From the interest rates you'll pay on loans to insurance premiums, your credit score can determine whether you pay more or less for the things you need.

Knowing the factors that influence credit scores can help adjust behaviors to ensure you're earning the highest score possible. That way, you don't pay more than you have to on loans, insurance and credit cards.

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Equifax just can’t stay out of the news. On August 2, the company put out a statement saying that a coding error led to consumers getting wrong credit scores. The algorithm issue took place between March 17 through April 6, with roughly 300,000 consumers having their score boosted by 25 points–or worse–declining by 25 points. And consumers are rightly concerned.

And this is coming off the heels on the 2017 data breach that affected roughly 147 million consumers. To compensate for the breach, Equifax offered credit monitoring services to victims.

Were You 1 of 300,000?

The most pressuring question on most consumers’ minds is figuring out if they were affected. And unfortunately the answer is not as cut and dry as one may think.

“There is absolutely no way a consumer would know if their scores were higher or lower during this 3-week period because of the programming issue,” says credit expert John Ulzheimer, author of The Smart Consumer’s Guide to Good Credit. You would have to have a Good Will Hunting knowledge of scoring models and know exactly how Equifax mis-programmed your credit report, he adds.

However, there is a backdoor way to try and figure it out. And it starts with asking yourself: Did you apply for credit? Credit here means did you apply for a new rewards credit card, a mortgage or home refinancing or auto loan during that three-week period. If your answer is yes, the next thing you need to ask yourself is: Was your application denied or approved at higher interest rates than what you were expecting? Lastly, you need either your “Adverse Action Notice” or your “Risk Based Pricing Notice,” which details the terms and conditions that you were approved at. Both should indicate which report was pulled by the lender to determine your loan eligibility.

If you answered yes to applying for credit and the lender pulled your Equifax report, contact the lender and ask if your application was affected by the coding issue.

What About My Equifax (and other) Credit Reports?

If you’re concerned about your actual credit report, there is a silver lining. The information that was in your Equifax–as well as your Experian and TransUnion–was not impacted and should be accurate. Remember, this is a programming issue, says Ulzheimer. This has no connection to the accuracy of your Equifax report or the credit scoring model used, he adds.

However, this doesn’t mean that you should not give your credit reports a quick review and fix errors. From now until December 31, 2022, you are allowed to download your credit reports from Experian, Equifax and TransUnion on a weekly basis from annualcreditreport.com. You want to check each report for misinformation and dispute any issues using the credit bureaus’ online dispute form.

What if the Lender Used a Different Report?

If either of your “Adverse Action Notice” or “Risk Based Pricing Notice” states that your application was determined using your Experian or TransUnion report, the lender may legitimately view you as a risk.

If that is the case, you need to boost your credit score through healthy credit habits. This includes paying your credit card and other loans on time, as well as keeping your credit utilization ratio under 30%.

The days of paying $20 for a peek at your credit score or waiting a year to order a new batch of credit reports through AnnualCreditReport.com are over. Now you can visit a number of websites to get your FICO or VantageScore credit score free. And you can get at least one of your credit reports from the three major bureaus, updated on a weekly or monthly basis, whenever you want. On top of that, some of these sites will monitor your reports for suspicious activity and ping you via e-mail as soon as changes appear.

To join an online service that grants access to your scores and reports, you’ll have to enter a few personal details, including the last four digits of your Social Security number, and answer questions to verify your identity. Because you’re handing over personal information, stick to reputable, well-known sites (we trust the sites listed below). Be sure to enter the URL exactly, to avoid ending up on a “copycat” website that lures you into paying for these products. One dead giveaway that you’re at the wrong website: It asks for a credit card number in order to see basic credit information. The site is probably trying to sell you information that you can find free elsewhere.

In exchange for these freebies, some services will send you occasional e-mails promoting credit card, insurance and mortgage offers tailored to your profile. If you apply for a product, the website will earn a commission from the lender. But you can opt out of marketing e-mails and still enjoy the complimentary credit services.

Here are our picks for the best places to access your credit score and credit reports for free.

FREE CREDIT SCORES

Several banks and credit unions, including Bank of America, Citi and Pentagon Federal, allow some or all cardholders to view free FICO scores. Or you can sign up for Credit Scorecard from Discover for a look, even if you don’t have a Discover card. The site uses information gathered from Experian. Experian offers similar information at www.freecreditscore.com, plus a free credit report. Most other services show you your VantageScore, based on information in your TransUnion report, though Credit Karma displays scores from both Equifax and TransUnion.

Many of these services graph the history of your score, grade you on elements that make up your score, and offer personalized suggestions on how to improve your credit. On top of that, CreditWise from Capital One, Credit Journey from Chase and NerdWallet provide “simulators” that calculate how your score could change if you pay off debt, increase your credit limit, open a new card, let one account slip into delinquency and more. NerdWallet has the most robust list of situations in its simulator. WalletHub shows how your score stacks up against national and state averages, and Discover’s Credit Scorecard shows where you fall compared with various age groups.

Most online services supply either a VantageScore or a FICO score. FICO is still dominant among lenders, but your VantageScore can be just as valuable to you. (Both your VantageScore and FICO score can vary based on the scoring model and which bureau’s report the data comes from.) Both take payment history, utilization and length of credit history into account, among other things. “Pepsi and Coke are both soft drinks,” says credit expert John Ulzheimer, who finds different credit scores tend to differ by a maximum of 20 points. “Filing a bankruptcy is still really bad for all scores,” he says.

Eric Rosenberg, author of PersonalProfitability.com, a finance blog, says it’s more important to understand the top and bottom of your score’s range and to benchmark yourself over time. Rather than tracking multiple scores for yourself, choose one or two sites with educational tools you like. Log in once a month or so, or before applying for new credit, to stay on top of your score.

FREE CREDIT REPORTS

The only place to get a free, complete report from all three major credit bureaus each year is through www.annualcreditreport.com. But the dense text and multitude of detail can be off-putting.

You can keep tabs on a more regular basis with the gussied-up, more user-friendly versions of your credit report available through several websites. They highlight key information and provide analysis in plain language. Be aware of the difference between full reports and summaries, though. Credit.com and Credit Sesame offer “snapshots” of your report, with the most pertinent information only, which are fine for a quick checkup. For a deeper dive, stick with a site that shows you the same content as your full report, minus “soft” or promotional inquiries and some of the oldest or month-by-month details. “I’ve found mistakes on my reports by looking at these sites,” says Rosenberg.

Credit Karma is the most comprehensive, serving up both your Equifax and TransUnion reports on a weekly basis (most other sites only offer TransUnion reports). Bankrate lets you line up two reports side-by-side to pinpoint differences. If you do spot an error, you can (and should) take steps to correct it with the lenders and bureau (See Take Charge of Your Credit for more). But for some extra help, CreditWise from Capital One will lay out which steps to follow for a dispute, tailored to the type of error, and Credit Karma will help you submit a dispute directly from the site. If you suspect your error is a result of identity theft, contact the Identity Theft Resource Center for assistance.

FREE CREDIT MONITORING

Several services, including Credit Journey, CreditWise, Credit Karma and WalletHub, send e-mail alerts if new information pops up in your report, whether it’s an account, a public record, an inquiry or even an address change. Credit Sesame goes a step further by offering $50,000 worth of identity theft insurance (reimbursing certain expenses and legal costs in the event of fraud or theft of financial data) and live support at no cost to members.

How useful is credit monitoring? Most of these services track one report only, which is “like locking one of three doors to your house,” says Ulzheimer. And while such alerts can help you tackle mistakes – or worse, identity theft – quicker, they won’t prevent it from happening in the first place. If you’re worried about fraud, pay the fee (typically $10) to freeze your credit reports instead.

Want to improve your credit score? Take a page from the best. People with excellent scores know that following a few basic rules is the key to success. Adopting their habits could boost your score into the stratosphere, opening the door to the best interest rates and terms on loans. And capturing the lowest loan rates can save you a bundle of money in the long run.

The two big consumer credit scoring companies are FICO, whose scores are most commonly used in lending decisions, and VantageScore, a company created by the three major credit bureaus (Equifax, Experian and TransUnion) whose scores have been gaining ground among lenders. The latest models of both scores operate on a scale of 300 to 850. Generally, a score of 750 or higher is considered excellent.

Once you know your score, you can start taking steps to raise it by following these seven habits of people with excellent credit scores.

• The most influential factor in your credit score is your payment history, so staying on top of bills is crucial. Just one late payment (overdue by 30 days or more) can damage your score. FICO recently reviewed the profiles of consumers it calls high achievers (those with scores higher than 795) and found that 96% of them had no late payments on their credit reports.

To ensure that you pay bills on time, consider signing up for automatic payments from your bank account or credit card. Or set up reminders of upcoming due dates on your smartphone (or mark your paper calendar), suggests Heather Battison, vice president of TransUnion. Budgeting site Mint.com can also alert you when bills are coming due for accounts you link to its tool.

TAKE OUR QUIZ: Will It Sink Your Credit Score?

The amount you owe on your credit cards as a proportion of your card limits—known as your credit utilization ratio—is another important score component. FICO high achievers with scores higher than 795 use an average 7% of the credit available to them. There are no hard-and-fast rules to pinpoint the optimum ratio, says Can Arkali, principal scientist at FICO. But in general, the lower your utilization, the better. As a guideline, experts often recommend using no more than 30% of the credit available to you to show lenders that you can manage credit responsibly. But if raising your credit score is a priority, keep utilization under 10% on each credit card you have, says Beverly Harzog, consumer credit expert and author of The Debt Escape Plan.

• Paying down your credit card balances multiple times per month can help keep your utilization down, says Jeanine Skowronski, managing editor at Credit.com. Your card issuer may allow you to set up e-mail or text message notifications when your balance reaches a level that you specify. Another tactic: Ask your card issuer to raise your credit limit. If you've been using the card for several months and paying your bills on time, the issuer may grant your request. But be sure that you have the discipline not to increase your spending, too, cautions Harzog.

Even if you stop using a credit card, it's often smart to keep it open so your score benefits from the available credit. However, if the card tempts you to overspend or carries an annual fee, closing it may be better.

People with FICO scores higher than 795 owe less than $4,000 on their credit cards, compared with average balances higher than $6,000 for those with scores lower than 635.

The takeaway? Maintain firm control over your spending, charging only what you can afford to pay in full each month on your credit cards. That way, you'll also avoid incurring interest, which can quickly pile up.

Having several years of credit usage under your belt also elevates your score. The average age of revolving credit accounts among FICO high achievers is about 12 years, and the average high achiever's oldest account was opened 27 years ago. That may give older folks a leg up, but "it's important to note that you can still have a good score even if you're not a longtime user of credit," says Skowronski. Length of credit history accounts for 15% of your FICO score, compared with 35% for payment history and 30% for amounts owed (including credit utilization). If you are just starting to establish a credit history, set yourself up for success by using a credit card to make small, manageable purchases, such as gas and groceries, says Battison. She also suggests that renters ask their landlords to report rent payments to the credit bureaus to help start a credit history.

Opening new credit accounts may shorten the average age of your credit history, but closing accounts won't affect account age right away. Accounts that were closed in good standing may remain on your credit report for up to 10 years. Still, it's not a bad idea to keep your oldest credit cards open to help maintain your credit history.

Applying for several credit cards in a short period sends a signal that you may be a risky credit prospect. Each time a potential lender checks your credit, the action shows up on your report as an "inquiry" -- and the appearance of several inquiries at once can ding your credit score. (If you're shopping for a mortgage, auto loan or student loan, however, FICO ignores all inquiries that such lenders have made within the past 30 days. VantageScore counts auto loan and mortgage inquiries made within two weeks of one another as a single inquiry.)

Having a mix of account types helps increase your score. If you do open new credit cards regularly, Harzog recommends waiting at least six months between applications.

TAKE OUR QUIZ: The Truth About Credit and Debt

• Look for cards that reward your spending patterns. If you buy a lot of gas, for example, a card that pays 5% cash back on fuel purchases will serve you well. Cash-back cards often let you use the rewards you've accumulated as a statement credit toward purchases, lowering your bill. A card that carries an annual fee may be worthwhile, but first do the math to decide whether the rewards you earn will outweigh the fee. Some cards waive the annual fee for the first year, giving you time to determine whether the card works for you.

If you are just getting started with credit (or bouncing back from a bankruptcy or other serious delinquency), a secured card, which requires you to make a deposit as collateral, can help you build a credit history and score. Retailers may offer you enticing discounts if you sign up for their store credit cards, and retail cards are often easier to obtain than other cards. But keep in mind that both cards often come with low credit limits—meaning that your credit utilization could easily push past the recommended 30% mark when you use the card to make purchases.

• By keeping an eye on your credit report and score, you will be aware of any negative changes that pop up and can act quickly to correct them. According to a survey from credit card issuer Discover, 76% of those who had checked their credit score at least seven times in the past year saw their score improve, compared with 38% of those who had checked their score once in the previous year.

At AnnualCreditReport.com, you're entitled to a free yearly credit report from each of the three major credit agencies: Equifax, Experian and TransUnion. Scan each report, looking for possible errors or signs of fraudulent activity, such as an incorrect credit limit on a card or an account that you never opened. (If you spot a problem, you can take steps to dispute and correct it. If you suspect fraud, you should also take measures, such as enacting a fraud alert.)

A host of other websites also offer free credit scores to help you gauge where you stand. One of our favorites: CreditKarma.com, where you can view information from both your Equifax and TransUnion credit reports as well as your VantageScore from each bureau. Credit Karma also lets you sign up for alerts of changes in your TransUnion credit report. Discover Credit Scorecard offers a free FICO score (based on data from your Experian credit report) to everyone, not just Discover card customers. Your bank or credit card issuer may provide customers with free credit score updates, too.

TAKE OUR QUIZ: How to Get Out of Debt

Without even knowing it you might be doing things that are damaging your credit score, which affects your ability to get credit and the interest rate you pay when you do get credit. A 2014 survey by Credit.com found that consumers sometimes don’t understand which actions will and will not help them improve their credit scores.

To take the right steps to boost your score, you need to start by understanding the basics of credit scores. The FICO credit score is the most widely used score in lending decisions and ranges from 300 to 850. A FICO score of 750 to 850 is considered excellent, and those with a score in that range have access to the lowest rates and best loan terms, according to myFICO.com, the consumer division of FICO. A score of 700 to 749 is good, and those with a score in this range will likely be approved for loans but might pay a slightly higher interest rate. A score of 650 to 699 is considered fair, and those with a score in this range will pay higher rates and could even be declined for loans and credit, according to myFico.com.

The three credit bureaus – Equifax, Experian and TransUnion – also have created the VantageScore, which ranges from 501 to 990, and the VantageScore 3.0, which ranges from 300 to 850 (to mimic the FICO range). The VantageScore is growing in popularity among lenders but still isn’t as widely used as the FICO score. No matter the name, scores can vary by credit bureau depending on when the score was calculated and what specific method was used to make the calculation. Each credit bureau has its own formula.

You can get a free VantageScore 3.0 and a credit score from Experian through Credit.com. Credit Karma provides a free VantageScore and a TransUnion credit score with its credit report card. And Quizzle offers a free VantageScore 3.0 from Equifax. Or you could pay $19.95 per FICO score from each of the three bureaus at myFICO.com.

Once you know your score, you can start taking the right steps to improve it. To do so, follow these six habits of people with excellent credit scores.

1. Pay on time. Payment history is the top factor in most credit scoring models, says Gerri Detweiler, director of consumer education at Credit.com. So payments that are 30 days or more late can quickly drag down your credit score. And one late payment is enough to hurt your score, she says. According to myFICO.com, 96% of consumers with a credit score of 800 pay credit accounts on time; 68% of those with a score of 650 have accounts past due.

Even if you can only afford to pay the minimum, always pay on time because that will have a bigger impact on your score than the amount you pay, Detweiler says. Set up automatic bill pay through your credit account or bank account so you don’t miss a payment.

2. Minimize use of available credit. Usually the second most important factor in your credit score is how much debt you have compared with the amount of available credit you have, Detweiler says. Those with a credit score of 800 use only 7% of their available credit, on average, according to myFiCO.com. But most consumers with a score of 650 have maxed out their available credit.

You can see a significant increase in your credit score shortly after you pay down highly utilized credit accounts, Detweiler says. If your credit cards are maxed out and you can’t pay them off quickly, she recommends consolidating your balances with a personal loan from a bank because the so-called credit utilization ratio (total credit balance divided by total credit limit) for those loans isn’t calculated in the same way and doesn’t weigh heavily on your score.

3. Maintain low or no balances. People with excellent credit almost always keep low balances on their credit cards, and often don’t pay interest because they pay their balances in full every month, says Jason Steele, a credit card expert for CompareCards.com. In other words, they only use cards for things they can afford to pay off with cash, he says. To become disciplined with credit and avoid racking up balances, Steele recommends logging into your credit account online after making a purchase to pay it off. If you’re already carrying a balance, see How to Pay Off Your Credit-Card Debt in a Year for steps to pay off what you owe.

4. Have a lengthy credit history. Those with a credit score of 800 have an average account history of 11 years (with oldest account opened 25 years ago) versus an average account history of seven years (with the oldest account opened 11 years ago) for those with a score of 650, according to myFICO.com. So opening several new accounts at once can shorten the average age of your credit history, Detweiler says. And closing old, inactive accounts also can hurt. This move can increase your credit utilization ratio since closing an account means you no longer have access to that available credit.

5. Only apply for credit when necessary. It’s important to have a healthy mix of lines of credit, including credit cards, auto loans, mortgages and even personal loans, Steele says. This shows that lenders are willing to trust you with their loans. And the more available credit you have, the lower your credit utilization ratio will be, he says.

But that doesn’t mean you should apply for every line of credit you’re offered. Multiple inquiries from lenders for your credit reports in a short period can trim your score, especially if you don't have many credit accounts or you have a short credit history. Be especially careful when car shopping because Detweiler has heard lots of complaints from consumers whose scores dropped when they had several dealers pulling their reports for financing options. Rather than let a dealer shop your credit, choose a lender you like beforehand and get pre-approved for a loan.

6. Choose credit cards carefully. People with excellent credit usually get the best credit card offers. But they’re smart about the cards they choose. For example, even though retailers often offer discounts on purchases when you sign up for their credit cards, these cards often have low credit limits, which can hurt your credit utilization ratio if you carry a balance on those cards.

Cards with annual fees also should be avoided, Steele says, unless they’re packed with benefits -- such as cash-back rewards and miles that can be redeemed for travel – that outweigh the fee. Those who are smart with credit look for cards that waive that fee for the first year then re-evaluate the card in the second year to see if the benefits outweigh the fee, Steele says. It’s also smart to look for cards that offer a 0% interest rate for the first year, he says.

My wife and I have kept our finances separate since we married two years ago. Now that we have applied jointly for a mortgage, I have discovered that her credit score is about 100 points lower than mine. How do lenders assess a couple’s creditworthiness when they have disparate credit scores? Will it affect our interest rate?

It could make a big difference in your rate. Lenders collect credit scores for both spouses from the three credit bureaus, then focus on the median score for each spouse. The lower of those two scores determines the rate and terms of the loan, says Brad Sherman, a loan officer with Nationwide Mortgage Services, in Rockville, Md.

If your wife’s FICO credit score falls below 620, for example, then you’ll have a tough time qualifying for a mortgage at all -- even if your score is much higher, says Sherman. To qualify for the best interest rate, both of your median scores should be 740 or higher. The lower the score, the higher the interest rate you will pay and the bigger down payment you will need.

If you put 20% down and the lower of the two median FICO scores is 660, Fannie Mae, which guarantees mortgages, would require a one-time pricing hit of 2.5 points, says Randy Johnson, of Credit.com. That’s $7,500 on a $300,000 loan. Depending on your wife’s credit score, making a larger down payment could help you qualify for a lower rate.

If your wife’s score sends you below a key cut-off point, it may be better to try to qualify for the loan based solely on your income (joint assets can still count when applying for the loan in your own name, as long as both of you will be on the title). “If their scores are too far apart, then it doesn’t make sense to apply jointly,” says John Ulzheimer, of Credit.com.

If you decide to take out the loan together, don’t worry about a joint mortgage dragging down your credit score -- as long as you make your payments on time. “There is no crossover of bad credit history from one individual to another,” says Maxine Sweet, of credit bureau Experian. “Each person has his or her own credit report.”

Q: I have a credit score of more than 800. My new wife has a much lower score. I'd like to add her as a co-borrower on some of my credit cards. Would that negatively affect my credit?

Don't worry. Your credit score reflects only your credit history, so your score will not include your wife's accounts. But her score will go up when she becomes a joint owner because her credit report will include your accounts' history.

To convert your individual accounts to joint accounts, you will have to fill out an application for each account you want to modify. The card issuer will scrutinize your wife's credit report (and perhaps yours), and you may be offered a higher interest rate or a lower credit limit depending on your combined histories.

Previously, adding a spouse or a child as an authorized user to your account was a quick way to raise that person's credit score. Such "piggybacking" on someone else's credit will not be possible when a new version of the FICO score is implemented next year. (Read: No More Borrowing Credit History)

Fair Isaac, the company that created the FICO score, does not recognize authorized users in its new FICO formula. It's still possible to add an authorized user before the three major credit bureaus -- Equifax, Experian and TransUnion -- adopt the new formula. Craig Watts, a spokesman for Fair Isaac, says scores calculated using the formula will not be available from all three until the summer and not all lenders will adopt them immediately.

Watts predicts that the long-term impact of the new scoring system will be a slight rise in credit scores.

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