Your Credit & Credit Card Questions Answered

Every month Joan Goldwasser answers your questions on credit scores, credit history, credit card rates and debt management.

You can follow her columns below. Have a question about credit or debt? E-mail Joan Goldwasser and your question may appear in an upcoming column, featured monthly in Kiplinger's Personal Finance magazine. Note: We do our best to answer reader questions that do not appear in the magazine.

YOUR CREDIT QUESTIONS ANSWERED

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Q: If I Negotiate a Payoff, Will It Hurt My Credit?

I'd like to cancel out my looming credit-card debt but keep my credit score intact. Is it possible to negotiate a cash settlement with a card issuer without ruining my credit score? (May, 2009)

Q: What Happens to My Card if Chrysler Fails?

I have a Chrysler rewards card issued by Bank of America. What happens to my points if Chrysler liquidates? (April, 2009)

Q: Will a 401(k) Loan Default Hurt My Credit?

I took out a loan against my 401(k) retirement account. Now I've been laid off. If I default on the loan, will it affect my credit score? I know that I will pay a 10% penalty and will have to declare the loan as income on my tax return. (March, 2009)

Q: Why Is My Credit Score Dropping?

I have been paying down debt and I haven't charged any new items, except on my American Express business account, which I pay off every two months. Yet my score has declined about ten points every month for the past five months. Shouldn't my score be going up? (Feb., 2009)

Q: Could Mortgage Preapproval Hurt Our Credit?

If we get preapproved for a home loan and do not find the perfect house right away -- or decide not to buy -- what happens to our credit score? (Jan., 2009)

Q: I'm Debt-Free. Why Don't I Have Perfect Credit?

The FICO credit-scoring system tracks a mix of payments, including auto loans and mortgages. That means those of us who have paid-off cars and mortgages lose points and pay higher insurance premiums. If we're debt-free, shouldn't we get the best rates? (Dec., 2008)

Q: Should I Cancel a 0% Card Before the Rate Expires?

To finance my fiancée's engagement ring, I got a credit card that has a 0% rate for six months. I plan to pay off the balance before the six-month intro period expires and then cancel the card. Is that a good plan? Will canceling the card negatively affect my credit score?(Nov., 2008)

Q: Is Paying Off the Mortgage Good for Our Credit?

Given the stock market's volatility, low interest rates and little mortgage interest to itemize on our tax return, we were thinking that paying off our loan might be a good investment. But how would it affect our credit score?(Oct., 2008)

Q: What Happens If the Bank Yanks My Credit Card?

I received a notice from Capital One that it is closing my credit-card account because of inactivity. If the company closes the account, will it hurt my credit score?(Sept., 2009)

Q: Must I Pay My Son's Credit-Card Debt?

I signed for an MBNA credit card with a $500 limit for my college-bound son. After he graduated, I paid the balance and forgot about the card. Three years later, I was shocked to get a call asking when I was going to pay an $8,000 balance. Can MBNA change the terms of the contract without contacting me? How do I remove this balance from my credit report?(Aug., 2008)

Q: Can I Rent a Car If I Freeze My Credit?

If I freeze my credit report to prevent identity theft, will I be able to rent a car? I know that some companies check your credit report as well as your credit card. (July, 2008)

Q: Do I Need to Freeze My Credit?

My wife and I rarely apply for credit -- we have a Discover card for casual use and a Home Depot card for home-maintenance needs. Should we freeze our credit? And if we do, should we also pay for ID-theft protection on each card? (June, 2008)

Q: Should I Split Up My Credit Card Balance?

I know that my FICO credit score depends in part on the total amount of my credit-card debt vis-á-vis the credit limits on my cards. I have five accounts, each with a $10,000 limit, and I owe a total of $20,000. Does it matter if the debt is concentrated on one or two cards, or spread across all five? That is, am I better off carrying a balance of $4,000 on each card or dividing the debt between two cards ($10,000 on each) with zero balances on the other three? (May, 2008)

Q: Do Reissued Credit Cards Hurt Credit Scores?

Three of my four credit cards have been reissued in the past six months. One was re-issued with a new number because of possible fraud; another was reissued because Citi had upgraded it. Finally, one card was reissued with a new number because I had used it at TJ Maxx. My fourth card is less than a year old. Will the reissued cards hurt my credit score? (April, 2008)

Q: Should I Activate New Credit Cards?

I have a balance of about $10,800 on an American Express card that has a limit of $11,500. I also have three other accounts that I haven't used in a while, with a total credit limit of $6,800. When those cards expire and the issuers send me new ones, should I activate them or allow the accounts to expire? (March, 2008)

Q: How Do I Cancel My Parents'Cards?

Both of my parents have passed away. I ran a credit report on them and several credit cards came up. I haven't found the actual cards, and I don't know the account numbers. How can I cancel these cards? (Feb., 2008)