9 credit score myths do more harm than good

In today's economy, a good credit score is more valuable than ever, and for many, improving your score has become a financial priority. Turn on the radio, flip on the TV or head to the company water cooler and you'll likely be bombarded with various credit-improving strategies. But not all advice is good advice. Here are nine credit score myths that could actually do more harm than good:

1. Closing out old, inactive accounts will help your score.
Your credit score is based, in part (30 percent) on your utilization rate -- your total balances versus the total amount of credit available to you. Canceling old accounts reduces the total amount of your available credit, changing that ratio. Any balance will utilize a higher percentage of your credit, which will hurt your score, according to Heather Battison, consumer education director for TransUnion.

2. Opening (but not using) accounts will help your score.
To improve their utilization rate and, theoretically, their credit scores, some people open as many accounts as they can. Rod Griffin, director of public education for the credit bureau Experian, says this strategy is more likely to raise eyebrows than your credit score. "Your score is affected by how well you manage the credit you do have over a period of time, not by how many credit cards you have or the available balances."

3. You should avoid using your credit cards at all.
Remember the advice that you should stick your credit cards in a bowl of water and freeze them, ausing them only for emergencies? If you're a financially responsible consumer, that approach could negatively impact your credit score. Bruce W. McClary with ClearPoint Credit Counseling Solutions explains that your score reflects the responsible use of credit. If you're not using your credit, you're not building credit history. He advises using your credit from time to time and then promptly paying off the balance.

4. Dispute letters can clean up your bad credit.
Errors on your credit report can and should be disputed, but don't expect to magically erase accurate but negative credit history. Disreputable credit repair firms will advise that if you send enough letters disputing legitimate but negative records on your credit report, eventually the lender will not be able to respond quickly enough and the credit bureau will have to remove the item permanently from your credit report. Griffin says that's not the case. Dispute letters may force the removal of negative items temporarily, but once the lender can prove the record's accuracy, it will reappear on your credit report.

5. Paying off old debts and judgments will help your score.
Have a judgment or an account that went to collections? Don't expect to make that negative "disappear" by paying it off. Negative records -- judgments, collections accounts, bankruptcies or late payments -- remain on your credit report for seven to 10 years, regardless of any remedies you've made.

6. Credit inquiries hurt your score.
Inquiries alone have little impact on your score. Coupled with a history of bad credit, a hard inquiry, such as an inquiry for credit, could factor negatively into your score, but again, the effect would be minimal. Another myth? Pulling your own credit report, a soft inquiry, lowers your score. In fact, checking your credit report on a regular basis allows you to catch errors that could affect your score and identify those areas that need improvement.

7. Using a credit counseling service lowers your score.
Credit counseling services no longer figure into the FICO scoring system, so although your report might indicate you are receiving credit counseling, using those services won't lower your score. It could actually help your score, according to Todd Christensen, director of education at Debt Reduction Services Inc. "You're making your payments on time and paying down your debt, the top two factors in credit scoring," he says.

8. There's a set formula for obtaining good credit.
Be suspicious of any blanket statement about what people should or shouldn't be doing to improve their credit scores. "Credit is a very individual thing," says Griffin. "Credit scoring looks at everything and takes it all into account. If you are keeping your balances low and paying your bills on time, you'll have good credit and a good credit score."

9. You can get a perfect score.
Don't go to Herculean efforts trying to obtain that elusive 850 -- getting a perfect credit score is nearly impossible. Your credit score is a reflection of your credit risk, and regardless of your credit history, there's always a risk. Doug Minor, author of "Anatomy of Credit Scores," recommends working toward a score of at least 740. "It's more realistic and attainable than 850," he says.

The truth about 7 common credit report myths

Most people have a credit report, but how many actually know what goes into them? If you listen to educators at the top three credit bureaus -- Experian, Equifax and TransUnion -- the answer is: not many. 

"People don't understand what is actually included in their credit report," says Demitra Wilson, director of media relations at Equifax. Consumers will stress over details that aren't even included and will get themselves into trouble over urban myths like the tale of the magically disappearing delinquency.

It's a problem, agree educators. Here are just seven of the most persistent myths that the top three credit bureaus say they hear all the time. 

1. Myth: Your credit report includes your credit score.  The truth: "Your credit report does not contain your credit score," says Wilson.

Consumers often think that when they pull a free copy of their report a tCreditchecktotal.com, they should also get a copy of their score, she says. However, if you want a copy of your FICO credit score (which is the most widely used score by lenders), you'll usually have to pay up to $19.95 (at myFICO.com) to get it. The exception is if you are denied a loan or given higher rates based on your credit score. In that case, a lender is required to send you a free copy of the score they used to make their decision.

You can also access a free credit score through a service such as Creditchecktotal.com. However, those scores aren't necessarily going to be the scores that lenders use. That's because "there are many different credit scores," says Rod Griffin, director of public education at Experian, and the score that gets used depends on the lender and the type of loan they are handing out.

The good news is that even though you can't control the formulas that lenders use to calculate your many different credit scores, you can influence the information that goes into them. "You as a consumer have the ability to control the information in your report," says Griffin.

2. Myth: Intimate details, such as race, income or medical history, are included on your credit report. 
The truth: "Your credit report only includes information that's debt-related," says Griffin. It doesn't include your race or ethnicity, your income, your investments and assets or your criminal record, he adds. (It does, however, include your address, your Social Security number, your date of birth and possibly your place of employment.)

Some consumers also worry that late payments to their doctor's office will appear on their reports. However, that's false, says Griffin. "There's a law called HIPAA, the Health Insurance Portability and Accountability Act. It prohibits or regulates the sharing of medical information," he says. So credit reporting agencies are legally barred from including any information about your recent doctor's visits, the kind of treatment you received or the name of the health care provider that you visited.

Seven years is a rule of thumb that applies to late payments. The confusion comes in when that seven years actually starts.

-- Rod Griffin  Experian

That said, if you miss a payment on a medical bill, your health care provider may send that uncollected debt to a medical collection company and the name of that company could appear on your personal credit report, says Griffin. Your lender, however, won't see the medical company's name when they pull your report. They'll just see you have a medical collection listed.

That's the confusing part, adds Griffin. Consumers often don't realize that what they see on their personal credit report isn't necessarily what a lender sees.

The same is true for soft inquiries, he says. A soft inquiry is listed when someone such as a credit card lender who's thinking about giving you a special deal or a potential employer asks to see your report. However, unlike hard inquiries (which occur when you apply for a new loan or credit and temporarily ding your credit score), soft inquiries aren't shared with lenders -- and don't affect your credit score -- because you haven't applied for any credit. "We don't share soft inquiries with anyone but you, the consumer," says Griffin. "It's there so you know who's looked at that report."

3. Myth: Checking credit reports too often will hurt your credit score. 
The truth: "Viewing your own credit report has no impact on your credit score," says Cliff O'Neal, senior director for corporate communications at TransUnion. "You could view your credit report every day and it will have no impact." 

However, if you give a lender permission to pull your credit report, that will affect your score, says Equifax's  Demitra Wilson. "Where people get confused is if you actually go into a creditor or merchant and you apply for a loan or apply for credit and you give them permission to access your credit report. That kind of inquiry is called a hard inquiry and that kind of inquiry can impact your credit score," says Wilson. 

Luckily, credit agencies will give you a break if you're shopping around at different dealers. "If you're shopping for a loan and are concerned that will hurt a score, know that we realize that you are shopping for a car or a mortgage or something of that nature," says O'Neal. If the credit agency sees that your report has been pulled multiple times within a 30-day period, they will group those inquiries together and count them as just one hard inquiry.

4. Myth: If you pay off a delinquent debt, the missed payment will be removed from your credit report. 
The truth: The only thing that clears a negative mark on your credit report is time.

"People think that if they pay off an account, it automatically falls off their credit report," says Equifax's Wilson. However, that's just magical thinking, she says.

Instead, it will take up to seven years for a missed payment to disappear from your report and up to 10 years for a Chapter 7 bankruptcy to disappear.

Meanwhile, don't think that you can just pay a credit repair company to clear those negative marks. Any credit repair company that says they can scrub your credit report clean of accurate but negative information isn't telling you the truth, say experts.

People think that if they get a divorce, that automatically severs joint accounts that are listed on a credit report, and it doesn't.

-- Demitra Wilson Equifax

They may be able to assist you with disputing negative information. However, the cost it takes to do that probably isn't worth it, says TransUnion's O'Neal. "Anything that a credit repair company promises, you can do yourself," he says. There are no quick fixes when it comes to repairing your credit. "Just as it took time to damage your credit, it's going to take time to improve your credit," he adds.   

The amount of time you'll have to wait for a black mark to disappear can also be a major source of confusion, adds Experian's Rod Griffin. "Seven years is a rule of thumb that applies to late payments. The confusion comes in when that seven years actually starts," he says.

The good news is if you only missed one payment, the math should work in your favor. For example, if you miss a credit card payment, the clock will start on your credit report as soon as the payment is listed as late. Credit reporting companies call that your "original delinquency date."

If you fail to pay that debt off and the account goes into collections, the clock will keep ticking and won't reset, says Griffin. "Federal law requires that collection agencies carry over the original delinquency date from the original account and report that" to a credit reporting company.

Where it gets murky is if you make payment arrangements to clear a debt on an overdue account and then later miss another payment. Then the clock will start over from that second missed payment instead of the first one, says Griffin. "It gets a little bit confusing because an account can actually have more than one original delinquency date," says Griffin. The first missed payment will be deleted seven years from the first time you were late. The second missed payment will then be treated as separate and will be deleted seven years after that one was reported as delinquent.

5. Myth: Your credit reports merge when you get married and split when you divorce. 
The truth: "Getting married does not cause your previous credit histories to be merged," says Griffin. "Everyone has their own credit report even after they are married." So if your spouse has a spotty credit history, it won't show up on your report.

That said, if you live in a community property state, loans that you accumulate while married may automatically be joined together and show up on both reports.

Any loans that you co-sign with your spouse will also appear, says TransUnion's O'Neal. "When you co-sign for a loan, activity on that joint account will be displayed on your credit report as well as the person you co-signed with," he says.

However, simply being married won't make you financially liable for a spouse's loans (but it will if you co-signed) -- unless you live in a community property state. States with community property laws hold both spouses liable for debts accumulated during the marriage. Arizona, California, Idaho, Louisiana, Nevada, Texas, Washington and Wisconsin are community property states; Alaska is an opt-in community property state. See "Compare states' community property laws" for more details.

Joint debts -- in which both of you sign a contract with a lender or credit card company -- do make you equally responsible for repayment. Meanwhile, if you split up, the jointly held debt that you acquired as a couple will stay put on both your reports, no matter what you agreed to in the divorce. "People think that if they get a divorce, that automatically severs joint accounts that are listed on a credit report, and it doesn't," says Equifax's Wilson. You'll both still be on the hook for that debt, unless your creditor agrees to take one of you off the account.  

6. Myth: Credit agencies are responsible for granting or denying credit.
The truth: "We don't do that," says Experian's Rod Griffin. "We don't approve or decline a person's credit application."

Instead, credit agencies gather your information in one place so that lenders don't have to do it themselves. "The role of the credit reporting company is to compile information about a person's debts and put them in a form that lenders can use," says Griffin. "We don't make any judgments about the information that is in the credit report."

7. Myth: If you pay all your bills on time, you don't need to check your credit report. The truth: "It's always important to look at your credit report from time to time and make sure it is up to date with the most current information that reflects your credit history," says TransUnion's Cliff O'Neal.

After all, you may be surprised at what's in there. "One of the main misconceptions is that people think that if they pay their bills on time, they don't need to check their credit," says Demitra Wilson. "Your credit report is changing all the time ... You want to make sure that the information that is being reported is accurate and correct. Even though you know that you're paying your bills on time, the data furnisher may not be reporting it correctly."

It also helps to know how you're doing with your money. "When you know what's in your credit file, you know your financial standing," says Wilson. "You know your financial health so you're able to take charge of your credit and know when is the best time to apply for a loan or seek preapproval for a mortgage."

Fair Credit Reporting Act: a guide to your rights

It's not always easy to correct errors on your credit reports. However, don't give up just yet: You have a decades-old law on your side that requires credit reporting agencies and data providers to correct their mistakes -- and recent changes make it easier.

The Fair Credit Reporting Act was enacted in October 1970, just as consumer credit was exploding -- and so was the power of the private companies that keep track of consumers' payment behavior. Credit reporting agencies, once small and local, were consolidating to create a national credit reporting system, and the law offered a consumer-friendly counterweight to keep the playing field even.

"As laws go, the Fair Credit Reporting Act is a pretty strong one," says Cary Flitter, a consumer lawyer and law professor in Philadelphia. Per the law, credit reporting companies -- as well as the data furnishers that give them the information they file -- are required to follow a strict set of guidelines, fix mistakes and are legally on the hook if they fail to do so.

That said, "there are little pitfalls the consumer has to navigate," says Flitter, so it's important to be your own best advocate. If you're not quite sure what your rights are when it comes to your credit information, here are six things you need to know about the Fair Credit Reporting Act (FCRA) -- and how you can use it to protect yourself.

1. You have the right to know what's in your credit reports. 
The act requires credit reporting agencies to give you free access to the information they have collected about you and your financial habits once every 12 months.

You can access a free copy of each of your generic credit reports -- which contain information about how you have handled credit in the past -- from the three biggest credit bureaus (Experian, Equifax and TransUnion) by writing to them or through the Web at AnnualCreditReport.com.

You are also entitled to a free annual copy of any reports that are compiled about you by , such as CoreLogic, LexisNexis and Certegy Check Services. These agencies keep records of financial data not tied to a loan -- such as your rental payments, insurance claims or check-writing history -- and sell them to landlords, banks, insurance representatives and others considering doing business with you. 

"You hear the terminology Fair Credit Reporting Act and you think that's an act that only applies to credit reports," says Paul Stephens, director of privacy and advocacy at Privacy Rights Clearinghouse. However, "there are these other types of agencies that exist that are essentially maintaining dossiers of consumers that go well beyond the traditional concept of credit."

Any credit reporting agency that collects financial information on you is required to honor your request for a free annual copy of your credit file. Getting your credit report from a smaller agency will take a little more work, says Stephens. "Those reports you must get directly from those companies. There is no central source to obtain [them]." 

To help consumers identify which companies may be collecting their information, the Consumer Financial Protection Bureau has compiled a list of specialty reporting companies that are actively collecting consumer information. However, the list doesn't include every consumer reporting company on the market, nor does it include explicit instructions for pulling your reports. You'll have to contact each company directly and request specific directions.Every company has a different policy for responding to requests. Some companies will require that you mail a request for the report, others will provide a toll-free number.

2. Access is limited to your credit report. If you're worried that your boss or potential sweetheart can access your credit information without your permission, don't sweat it. The act bars individuals from seeing your credit reports, unless they can prove that they have a legitimate need to see it.

"There's something that is known as the permissible purpose doctrine and that basically says that you can't just go to a credit reporting agency and say, 'I want to take a look at this person's file,'" says Stephens. "You have to have a reason to look at that file."

According to the FCRA, a person can access your credit report only if:

• A court has ordered that the credit information be shared.
• That person is a lender and you are applying for some form of credit. A creditor may also pull your report if you currently have an account open with them or if you have a balance that's past due.
• The person is working on behalf of an insurance company that's underwriting your insurance or a government agency that is considering giving you a license or other public benefit, such as social services.
• An individual has requested your report for employment purposes and has obtained your written authorization to view it.
• A person can prove a legitimate business need to view the report. For example, if a landlord is considering your rental application or a person is working on behalf of a retailer and has accepted a check as a form of payment, he or she can request a copy of your report.
• You have given clear instructions to the credit reporting agency to release your information to a particular person.

Authorized state officials or child support enforcement agents may also access your credit report if they need to verify your ability to make child support payments or determine how much you should pay.

You have the right to dispute information that is not accurate.

--    Paul Stephens       Privacy Rights Clearinghouse

Sometimes, however, credit reports do get into the wrong hands. Flitter recommends you periodically check the section of your report that lists who's pulled it. "The second-to-last page of your credit report will list everyone who has looked at your report in the last two years," he says. If someone pulls your report without proper authorization, speak up. There are serious penalties for people who break this section of the law, says Flitter. "It's actually a felony to obtain someone else's credit report under a false pretense," he adds.

3. If there is an error on your report, you can do something about it."You have the right to dispute information that is not accurate," says Stephens.  

The FCRA requires credit reporting agencies to "maintain reasonable procedures that ensure maximum possible accuracy," says Flitter, the consumer lawyer. Even so, errors can show up on your credit report, so it's important to review your files regularly.  

"Get the credit report and look at it," says Flitter. "Examine it for accuracy to the best of your knowledge."

If you spot an error, "you must notify the credit bureau and it must conduct an investigation," he says. If you find out about an error through other means, but don't have a fresh copy of your credit report to prove it, don't worry. As of September 2015, the credit bureaus can no longer ask for a credit report identification number when you submit a dispute.

The credit bureau has 30 days to look into your dispute, based on the information you provide to it. The credit reporting agency must also notify the furnisher of the information, such as a bank or credit card issuer, within five days of receiving your dispute and provide the furnisher with the same evidence that you gave when you flagged the error.  

The data furnisher must then investigate your dispute and verify whether the information it gave to the credit bureau is correct. "If it's not verified within 30 days, then the credit bureau has to remove [the disputed error] from the credit report," says Flitter.

Beginning in September 2016, the credit bureau must also provide you with an additional free report through Creditchecktotal.com if it corrects an error on your report. That way, you can check to make sure all the information is correct.

Starting in September 2018, credit bureaus will also be required to send you a detailed report after an investigation is complete outlining what the investigation found and what steps you can take if you're unhappy with its findings. The notices will also provide you with the contact information of the data furnishers supplying the misinformation so you can initiate an additional dispute.

Sometimes credit bureaus and data furnishers will mistakenly verify information that you know is inaccurate, forcing you to send a second dispute. However, recent changes to the credit report dispute process should make that less likely.

In March 2015, the credit bureaus agreed in a settlement with the New York State Attorney General to overhaul the bureaus' dispute resolution process and conduct more thorough investigations of mistakes resulting from identity theft or mixed up credit report files. The credit bureaus also agreed to change their reporting practices in order to lessen the number of inaccuracies that appear on consumers' reports and monitor data furnishers more aggressively. In June 2015, the credit bureaus also struck a deal with 31 states to bolster their dispute resolution and credit reporting procedures and end deceptive practices, such as trying to sell products to consumers who have called about an inaccuracy.

Consumer advocates who have previously criticized the credit reporting agencies for conducting perfunctory investigations say the new rules should make it easier for consumers to successfully dispute errors on their reports.  

"We're hopeful," says Chi Chi Wu, a staff attorney with the National Consumer Law Center. However, you should still take precautions when initiating your dispute, she says. "The disputes should be in writing. Don't make them over the telephone," she says. Include as much information as possible in your dispute and attach supporting evidence. As of September 2015, credit reporting companies must take a closer look at any documentation you provide if an initial investigation doesn't find a mistake.

Credit reporting companies allow you to upload supporting documentation online. But Wu recommends mailing your dispute by certified mail instead. That way, you have a clear paper trail showing that the credit bureau received your dispute and you have clear evidence of what it received, she says. It's also important to mail your dispute if a credit bureau inserts an arbitration clause in the online dispute agreement, barring you from taking the credit bureau to court. 

If, after sending multiple disputes, you feel like you're getting nowhere, consult a lawyer experienced in these cases, says Wu. You are entitled under the Fair Credit Reporting Act to seek legal action. You can also file a complaint with the Consumer Financial Protection Bureau after you've submitted an unsuccessful dispute. 

4. Negative information on your credit report is subject to a time limit.You can't dispute accurate negative information. However, you can make sure that the adverse information in your report is limited to the time frame set out by the Fair Credit Reporting Act. "The general rule is if there's something negative on your credit report, it's supposed to drop off after seven years," says Stephens. "One exception to that is bankruptcy. Bankruptcy can stay on your credit reports for 10 years."

Consumers never should send in their disputes online. Always in writing, [by] certified mail.

--    Chi Chi Wu     National Consumer Law Center

Occasionally, debt mistakenly gets re-aged, says Stephens, so make sure you watch out for debts that are older than 7 years or bankruptcy listings that are more than a decade old.

5. You have the right to know if you've been passed over because of information in your report.Creditors and employers are also required by the FCRA to notify you if they've rejected you or taken some other kind of adverse action (such as a higher interest rate) based on information in your report. That way, you can make sure that the information they're using to judge you is correct. "They don't want people being denied a job or a promotion based on a credit report and the credit report has false or misleading information," says Flitter.   

6. You have the right to place a red flag on your credit report if you think your information has been compromised. The Fair Credit Reporting Act also gives you the power to exert at least some control over your credit report if you think your personal information is in danger from fraud or identity theft. "One of the rights that a consumer has under the FCRA is the right to place a fraud alert on their credit report," says Stephens. The fraud alert won't lock down your credit report the way a credit freeze will. Anyone with a permissible purpose, such as a credit card lender, will be able to still see the credit report. However, it will let lenders know that they need to double-check your identity before they give you extend you credit. "It warns the creditors to take extra precautions," says Stephens.  

The free fraud alert will last for 90 days, but it can be renewed indefinitely, he adds.

Don't stop checking your reports
Finally, once you have determined that your credit information is safe and your reports are error-free, continue to periodically check them to make sure the information is still accurate and your data hasn't fallen into the wrong hands. A mistake can turn up at any time and sometimes errors that were corrected once will show up again. "Obtain a current credit report and get one at least once a year," says Flitter. "That's the first thing everyone can do for himself or herself."  

The good, bad and the ugly of credit card offers

Credit card offers are back from the dead, so  if you have a high credit score, you're in demand and are likely to have a mailbox stuffed full of offers. If you've got average or bad credit, however, the story's likely quite different. 

During and after the recession, credit card companies, stung by high default rates and wary of new rules, pulled back on offers. But now, with the economy slowly recovering and the new rules in place, offers are up significantly from this time last year, though many have changed.

But one fact does hold true: The better credit you have, the better terms you'll get. And issuers are heavily targeting consumers who spend more but pay it off each month, rather than consumers who carry high balances, says Jim Bramlett, a managing director with Novantas, a financial services consulting firm.

"Issuers have retrenched away from trying to aggressively go after people who have very high revolving credit," he says, "because that has obviously proven to be problematic" as banks have coped with high delinquency rates and charge-off rates in recent years.

The big picture
Overall, annual percentage rates (APRs) are up across the credit score spectrum, with APRs for new card offers averaging 14.14 percent, according to CreditCards.com's Weekly Rate Reporton September 22, 2010. That's mainly due to fallout from the Credit CARD Act and new Federal Reserve rules governing credit cards, says Richard Bialek, CEO of Bialek Group, a financial services consulting firm in Wheaton, Ill. Rates are going up for purchases and balance transfers and fees are going up across the board, says Gaurav Gupta, a director at Novantas. "APRs are higher than they were earlier, and fees for cash withdrawals and foreign currency transactions have also gone up," he says.

Bill Coleman, a small business owner in Denver, Colo., agrees, saying, "Rates are way up. I used to get offers of 0 percent for 12 months plus a 3 or 4 percent balance transferfee. Now offers are for 4 to 6 percent, plus a 5 percent or more transfer fee. Might as well get a loan from my credit union."

Here's an overview of the fallout in terms of what it means for you:

Good to excellent credit
If you've got good to very good credit, defined roughly as a credit score of 680 or higher, you can expect credit card offers with:

APR: 10.9 percent to 13.9 percent, variable rate
Annual fee: 0 to $175, depending on rewards

If you're lucky enough to be part of this group, expect to be bombarded with credit card offers for people with excellent credit, as issuers are focusing their attention on consumers with the highest credit scores, says Scott Crawford, CEO of Debtgoal.com. "If anything, there's more competition for the high-credit-score consumer, with offers slightly more generous than they were before if you've got a good score," he adds.

Gupta agrees, saying, "A lot of card issuers are focusing on the pristine, the prime and the superprime segments, and the need for better rewards and better product features, which is what works in that segment." He defines superprime as those with FICO scores over 720 or 750, though some reports have pushed that number even higher.

And don't surprised if issuers of your existing cards either try to induce you to spend more on their card or move up to a better card, Bialek says. This could include a so-called negative-option offer, in which a new card will be sent to you unless you opt out, he adds. "Issuers are doing more and more to identify favored customers based on creditworthiness and the amount of spending and to tailor offers specifically to them."

Average credit
If you have average credit, which is defined as a credit score of 600 to 680, you can expect credit card offers with:

APR: 13.9 percent to 19.8 percent, variable rate
Annual fee: 0 to $175, depending on rewards 

"If you've got a score of 600 or above, you can find some credit with a major issuer," says Lehrer. "That's always been the case and continues to be the case." But rates for those consumers have risen more on average as credit card companies are trying to cope with the fallout from the Credit CARD Act, which prevents them from raising rates on consumers without notice.

Indeed, the biggest impact of the Credit CARD Act has been "to eliminate risk-based pricing," says Bialek. "It used to be that card issuers could give consumers an offer and then, over time, change the pricing on that card if the risk changed. The card issuer was able to protect itself against late payments by being able to increase rates. Now, that's been limited to a large degree."

Poor creditIf you're saddled with bad credit -- a credit score of 600 or lower -- expect credit card offers with:

APR: 19.9 percent to 29.9 percent, variable rate
Annual fee: $35 to $120

Issuers continue to shun consumers with FICO scores below 600, says Gupta. Eli Lehrer, national director at the Center on Finance, Insurance and Real Estate at the Heartland Institute, agrees saying, "Consumers with poor credit will have few options, such as secured credit cards, but it's much harder these days to get a card if you are trying to rebuild your credit."

Bramlett sees some thawing in the market for consumers with poor credit, but there still aren't a lot of options for those consumers, beyond secured cards or cards with sky-high rates and high annual fees. "As the panic of the credit crunch subsides, it will be interesting to see how quickly the banks get back into this market," he says. "I've seen signs that they are sort of putting their toes back in the water with higher risk credit populations, but very cautiously in terms of who they make offers to and what the nature of those offers will be."

In order for that market to be viable again for card issuers, they need to figure out a new business model so that they can make money without taking on too much risk, says Gupta. "Until issuers figure out an alternative model to make sufficient returns on higher risk customers, there will be a lack of credit in that area," he adds. "The Credit CARD Act is one reason and what has happened in the economy is another reason."

These 6 Tips Will Help You Get The Most From A Credit Card

Most people agree that using a credit card to pay for day-to-day purchases is a smart idea.

After all, credit is safe, convenient, and rewarding.

Plus, if you're responsible, you'll also be building a solid credit score with every swipe.

But are you really making the most of your plastic experience?

Here are seven credit card tips everyone should know:

1. Balance alerts can help you keep your spending in check.

Keeping a watch on how much you're spending with your credit card is easier than ever before. Most issuers allow you to set up balance alerts so that you'll receive a text and/or an email whenever your total spending hits a certain threshold that you've set.

Sign up for this service so that you'll get a notice when your credit utilization ratio is approaching the 30% mark — this way, you'll know to make a payment before you jeopardize your credit score.

2. Spending analysis tools make sticking to your budget a cinch.

One of the most underrated online banking features offered by most credit card issuers these days is the spending analysis tool. This allows you to see a breakdown of how much you're spending with your card in different categories (restaurants, travel, general merchandise, etc.). You can usually choose to view this on a per-month basis or take a look at your spending patterns over time.

Be sure to look around for this tool the next time you log into your card's online banking platform. It can provide some helpful insights into where you're doing a good job sticking to your budget, and where you might need to cut back.

3. Mid-cycle payments could improve your credit score.

Every month, your credit card issuer sends a report about your account to the three major credit bureaus. Included on this report is your balance, which is used to calculate your credit utilization ratio.

However, this data isn't necessarily sent over after you've made your monthly payment — it could be reported at any point in your billing cycle. If you tend to charge a lot to your card each month, getting into the habit of making a payment mid-cycle will keep your credit utilization ratio low. This, in turn, will help 30% of your credit score determined by amounts owed.

If you do your shopping on your computer, see if your credit card offers a rewards mall.

4. Shopping through rewards malls will earn you stellar rewards.

If you're a big online shopper, you should definitely use your credit card's rewards mall every time you place an order. This is an easy and convenient way to earn tons of extra rewards on every dollar you spend. And don't assume that your particular issuer doesn't offer this benefit. Even if it's not widely advertised, look around a little the next time you visit your credit card's website. You'll probably find some type of rewards mall or portal that you never noticed before.

5. Moving your due date could help you avoid missing a payment.

Missing a credit card payment is bad news for your FICO credit score, since 35% of it is determined by your history with making on-time bill payments. If your credit card billing due date comes at an inconvenient time during the month, consider switching it. You can usually do this online or by placing a call to your issuer. This one simple move could go far toward preserving your good credit.

6. Strategic swiping is the best way to maximize rewards earning

Using just one high-rewards card for all your spending is a good way to rack up a lot of points. But getting a couple of cards that earn big in the merchant categories you spend the most in and then using them strategically is a great way to pump up the volume on the rewards you're accumulating.

For example, if you spend a lot on gas, dining, and travel, getting both the Chase Freedom® - $200 Bonus and the Chase Sapphire Preferred® Card is a smart idea. You can use the Chase Freedom® - $200 Bonus at gas stations when they're featured as a 5% category (which historically happens 2 out of 4 quarters per year) and the Chase Sapphire Preferred® Card when you travel and dine out.

Then, transfer all the points you racked up on gas spending with the Chase Freedom® $200 Bonus into your Chase Sapphire Preferred® Card account and bingo — you've got a boatload of points to use toward your next vacation.

7 signs you can't afford to buy a home

Making the leap from renting to buying is thrilling and liberating — for many, it signifies the realization of "the American Dream." 

Buying a home is also a long-term commitment, and one that requires strong financial standing. 

If any of these signs strike a chord, you may want to delay taking on a mortgage

You have a low credit score

Before considering home ownership, you'll want to check your credit score, which you can do through free sites like www.creditchecktotal.com

"The higher your score, the better the interest rate on your mortgage will be," writes personal finance expert Ramit Sethi in "I Will Teach You To Be Rich." Good credit can mean significantly lower monthly payments, so if your score is not great, consider delaying this big purchase until you've built up your credit. in the near future.

You have to direct more than 30% of your income towards monthly payments

Personal finance experts say a good rule of thumb is to make sure the total monthly payment doesn't consume more than 30% of your take-home pay.

"Any more than that, and your finances are going to be tight, leaving you financially vulnerable when something inevitably goes wrong," write Harold Pollack and Helaine Olen in their book, "The Index Card." "To be fair, this isn't always possible. In some places such as New York and San Francisco, it can be all but impossible."

While there are a few exceptions, aim to spend no more than one-third of your take-home pay on housing.

You don't have a fully funded emergency savings account

And no, your emergency fund is not your down payment.

As Pollack and Olen write,

We all receive unexpected financial setbacks. Someone gets sick. The insurance company denies a medical claim. A job is suddenly lost. However life intrudes, the bank still expects to receive our monthly mortgage payments ... Finance your emergency fund. Then think about purchasing a home. If you don't have an emergency fund and do own a house, chances are good you will someday find yourself in financial turmoil.

Certified financial planner Jonathan Meaney recommends having the equivalent of a few years' worth of living expenses set aside in case there is a job loss or other surprise. "Unlike a rental arrangement with a one or two year contract and known termination clauses, defaulting on a mortgage can do major damage to your credit report," he tells Business Insider. "In addition, a quick sale is not always possible or equitable for a seller."

You can't afford a 10% down payment

Technically, you don't always have to put any money down when financing a home today, but if you can't afford to put at least 10% down, you may want to reconsider buying, says Sethi.

Ideally, you'll be able to put 20% down — anything lower and you will have to pay for private mortgage insurance (PMI), which is a safety net for the bank in case you fail to make your payments. PMI can cost between 0.5% and 1.50% of mortgage, depending on the size of your down payment and your credit score — that's an additional $1,000 a year on a $200,000 home.

"The more money you can put down toward the initial purchase of a home, the lower your monthly mortgage payment," Pollack and Olen explain. "That's because you will need to borrow less money to finance the home. This can save you tens of thousands of dollars over the life of the loan."

To get an idea of the savings you'll have to put away, check out how much you need to save each day to put a down payment on a house in major US cities.

You plan on moving within the next five years

"Home ownership, like stock investing, works best as a long-term proposition," Pollack and Olen explain. "It takes at least five years to have a reasonable chance of breaking even on a housing purchase. For the first few years, your mortgage payments mostly pay off the interest and not the principal."

Sethi recommends staying put for at least 10 years. "The longer you stay in your house, the more you save," he writes. "If you sell through a traditional realtor, you pay that person a huge fee — usually 6% of the selling price. Divide that by just a few years, and it hits you a lot harder than if you had held the house for ten or twenty years."

Not to mention, moving costs can be insanely high.

You're deep in debt

"If your debt is high, home ownership is going to be a stretch," Pollack and Olen write.

When you apply for a mortgage, you'll be asked about everything you owe — from car and student loans to credit card debt. "If the combination of that debt with the amount you want to borrow exceeds 43% of your income, you will have a hard time getting a mortgage," they explain. "Your 'debt-to-income ratio' will be deemed too high, and mortgage issuers will consider you at high risk for a future default."

You've only considered the sticker price

You have to look at much more than just the sticker price of the home. There are a mountain of hidden costs — from closing fees to taxes — that can add up to more than $9,000 each year, real estate marketplace Zillow estimates. And that number will only jump if you live in a major US city.

You'll have to consider things such as property tax, insurance, utilities, moving costs, renovations, and perhaps the most overlooked expense: maintenance.

"The actual purchase price is not the most important cost," says Alison Bernstein, founder and president of Suburban Jungle Realty Group, an agency that assists suburb-bound movers. "What's important is how much it's going to cost to maintain that house," she tells Business Insider.

Read up on all of the hidden costs that come with buying a home before making the leap.

The 9 steps I took to Get My Finances Back on Track

1.Know your number
2.Get your credit score every year
3.Clean up your accounts
4.See that savings account? Use it
5.Use that dirty B-word  BUDGET
6.Adjust your expectations
7.Don't let terms like 401(k) scare you
8.Face it: Eventually you'll need to retire
9.Find a mentor