Protecting one’s credit score and keeping it high is one of the major tenets of optimizing your miles and points strategy. In fact, when I tell people about the fact that I have over 40 cards (I’ve admitted it on national TV!), without fail their first question is “doesn’t that hurt your credit score?” Thankfully the answer to that is no, it does not.
(SEE ALSO: Reader question: “Is it bad to cancel a credit card?”)
What makes up your credit score?
As we’ve covered before (Part 1, Part 2), your FICO credit score is made up of 5 different parts
- Payment history: (35 percent) – this includes things like paying your bills on time
- Utilization percent: (30 percent) — How much you owe on your cards compared to what your limits are. This is one area where having a lot of cards can help you
- Length of credit history: (15 percent) – one good reason it’s good to keep your older cards
- Types of credit used: (10 percent)
- New credit: (10 percent) – This is a part where people in our world suffer but thankfully it’s the smallest part of your score
Now, your credit score might go up 30 points
CNBC is reporting that due to better standards for accessing public records, the major credit reporting agencies are now excluding all tax liens from credit scores. According to CNBC, LexisNexis predicts that about 11 percent of the population is affected by this, and that could cause their scores to go up by around 30 points.
Hopefully there aren’t too many of us that were in that situation, but if it’s you, be glad that your score is about to be heading northward.
How to check your credit score
There are a variety of free tools that give you your credit score. Personally, I use Credit Sesame, which monitors your credit score each month as well as your accounts. Some credit cards also give access to various credit scores, and if you have one of those, Award Wallet will also track the changes in your credit score as part of its service