Hi, Scott.

First off, I want to thank you for your great book, "Talk Your Way Out Of Credit Card Debt." I ordered it along with your two free books ($25.65 total) specifically because my credit card company had just charged me a $40 annual fee, and I didn't want to pay it. With a single phone call, they removed the annual fee PERMANENTLY. In one day you saved me $14.35, counting the cost of the book. (So I got the book for free and $14.35 in change!) If I keep this credit card for ANOTHER seven years, you will have saved me an additional $280, and that's assuming they don't raise the fee over that time. So, great job! Thanks for saving me my money. I told my wife about my success, and she's eager to replicate it. She has a card with a FIFTY-dollar annual fee!

Now for my question: FICO scores seem like the king of the credit world, and the scoring system is so secret and counterintuitive that it's frightening to me to make ANY changes with my credit card "portfolio." I'm eager to pursue more of your advice but am terrified of damaging my credit score (which is in the low-mid 700's). I know it hurts your score to close a long-standing account. Does it hurt your FICO score to increase the credit limits on your cards? Does it hurt your score to open new credit card accounts? Any proven, tested advice you can give on managing my FICO score would be much appreciated. Perhaps you have a special report on it? Also, what do you think of the idea of borrowing money from a 0% APR card, investing it for a return, and paying back the loan with no interest so you pocket the difference?

Thanks again! Love your stuff. I especially love your story about buying a car with 0% APR credit cards. What a gem!

Judd

Judd,

Thanks for writing to tell me about your success with my book! It's a great feeling to make the banks waive these ridiculous fees. They have to keep in mind that there is fierce competition out there for their services and that good customers, like us, will go somewhere else if we're not treated like gold!

It's true that the formula for the FICO score is a secret. Fair Isaac shares general information about how the score is determined. The result is that it's difficult to determine exactly what will make one's score go down (get "hurt").

Certainly, closing long-standing accounts will hurt your score, but increasing your credit limits may not. That's because part of your score is based on your debt ratio. This calculation is the percentage of debt as compared to your available credit--how maxed-out you are. So, if you have $8,000 in debt and $10,000 in available credit, then you're using 80% of your credit lines. If that credit limit is increased to $16,000, then you have decreased this debt ratio to 50%. Of course, your credit limit being raised could affect the score negatively if it goes too high because some lenders may see this as the ability to get in over your head.

I manage my FICO score and credit reports at MyFico.com. By getting all my reports, I'm able to check the score plus review all activity in the reports to ensure the information is accurate.

As far as using 0% offers to make money goes, it certainly can be done! I have done this very strategy that you are proposing and have written about it previously in an article titled, How I Made an Easy $1,800 Profit with My Credit Cards. Check it out--it will answer your questions about that topic.

Talk to you later.

Regards,
Scott