Hey, Mister, Can You Spare A Dime?

Is it ok if your spouse has all of the credit cards in their name? A reader, Jim, had this question:

I am married and I used to be the primary card holder on our accounts. Over the years, we have found it easier to have my wife be the primary card holder as she is the one who pays the bills, handles credit card issues, etc.

Am I hurting my credit by not having a card with me as the primary account holder? Should I open one card in my name? Thanks, Jim

Thanks for your question Jim.

Yes, you are hurting your credit score by only having accounts with her as the primary card holder. FICO has been flip-flopping back and forth on the issue of whether or not authorized users count where your credit score is concerned.

The best thing you can do if you want to raise your own credit score is to open up at least one, if not two revolving credit accounts. Charge a very small amount to them each month and pay it off.

The idea is basically just to get a couple of cards that report to all three credit bureaus, make very small purchases and pay the cards in full each month. This will raise your credit score over time, and you will avoid paying any interest as long as you pay the balance in full on time. It’s like raising your credit score for free as long as the card doesn’t have any annual fees.

You could always get a gas card that offers cash back, or gas rewards. Or a travel reward card that gives you airline miles. It is one more thing to manage, but it is always smart to make sure that your personal credit score is as high as it can be. If you aren’t the primary card holder, then your credit score will not go up.

Two or three credit lines (total) are the suggested guidelines for raising your credit score, but they do not all need to be credit cards. If you have your name on the mortgage and auto loan, then one credit account in your name is probably enough.

Once you get your credit card, wait a month or two and check your credit report. You will want to do this to make sure that your credit card is reporting to the credit bureaus as agreed. If the card isn’t reporting positive monthly payment, then it isn’t doing you any good.

You are entitled to one free copy of your credit reports each year. Do wait a couple of months before checking everything though, because it may take that long for the credit bureaus to update your credit records.

Also, make sure that you check all three credit reports, not just one of them. when you are ready you can do this by visiting AnnualCreditReport.com. That’s the only place to get truly free credit reports from all three credit bureaus.

Thanks for your question!

When is the best time to negotiate with your creditors?

Should you try to negotiate your debt with your credit card company, or wait until they sell it to a collection agency? A reader, Vicki, had this question:

I was reading this site and giving me good information regarding do it yourself credit settlement with credit card company regarding payment plan.

Do it need to wait for a collection agency or i can call them now to a collection department, sorry just into a financial crisis and its too over-whelming.

I will try to do it myself so i dont have to pay to much fee to other company which charge 15% fee of what i owe. I was just thinking that i might as well pay that fee to credit card as my payment. that i think make sense to me.

Thanks, Vicki

Thanks for your question Vicki!

You should go ahead and negotiate with your credit card company. Do not wait until they sell your debt to a collection agency.

If you wait until they sell your debt it will seriously damage your credit score. If you negotiate with your credit card company now, they can still help you reduce your interest rate or lower your payments, and it will not damage your credit as badly.

As long as you are talking to someone in the collections department of your credit card company, they can negotiate with you just like a collection agency can.

The only possible exception is if you want to do a debt settlement for a drastically reduced amount of your total debt. If that’s the case, then usually a collection agency, not your credit card company, is your best bet.

If you can afford to make any sort of payments, then deal with your credit card company first. That is always going to be the best thing to do.

Thanks for your question!

Have a question for us? Leave a comment below!

Thanks also to these carnivals for featuring our articles this week:

• The Eleventh Edition ~ Book Review Blog Carnival @ Linus’ Blanket.
• Carnival of debt reduction @ Green Panda Treehouse
• Carnival of Everything Money #2 @ The Penny Daily
• millionaire mind and making money online @ Millionaire Blog
• The Money Hacks Carnival at One Million Bucks
• Road to financial independence @ One Family’s Blog

Technorati Tags: Credit Card Debt, FICO score