Unusual Investments

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How to Improve Your Credit Score If You Have 2 Credit Cards From the Same Bank

Here’s a credit hack to improve your credit score if you have multiple credit cards with the same bank or issuer.  This is not an uncommon scenario, as it seems like the same issuers (Wells Fargo, Capital One, Chase, Citi, etc.) tend to issue the most credit cards, including many popular ones (Chase Sapphire Reserve, Chase Southwest Rapid Rewards, Costco Anywhere Visa by Citi, etc.).

Depending on your individual circumstances, you might see an improved score of 5 points to 40 or more points with this trick.

Remember that credit scores range from 300 to 850 and are based on several factors: payment history, credit usage, derogatory marks, credit age, total accounts, and the amount of recent hard inquiries.  The purpose of this tactic is to increase your credit age while maintaining roughly the same percentage of credit use.

Here is an actual real life scenario:  the consumer recently refinanced his mortgage so his real estate loan went from being several years old to just 2 months old on his credit report.  This caused a drop of over 25 points due to replacing an aged account with a brand new account and thus having the average age of all credit accounts drop by 2 years.

The consumer looked at his open accounts which were mostly credit cards.  Two were issued by Wells Fargo: a Wells Fargo Visa Signature card that had been opened for almost 10 years, but with a low account limit of just $2500 or so.

The other was a Wells Fargo Propel American Express card that had a high limit of around $20,000, but was opened for less than 2 years.  In this case, the consumer wasn’t really using either one as he had started using a Chase Sapphire Reserve card for almost all of his spending.

The initial thought was to close both accounts, but that would not be the best decision from a credit score standpoint.  The card with 10 years aging helped the consumer’s overall credit age while the newer card helped the credit usage as it added about $20,000 of unused credit the overall credit usage.

This smart tactic is called credit shifting.  The consumer called Wells Fargo to find out what his options were and the representative proposed shifting the entire credit limit minus a $1500 minimum amount from the Propel American Express card to the Visa Signature card.

Since both cards were in good standing with no late payments ever, they could do this based on asking a couple questions about income, but not having to run a credit check (this is key because another hard inquiry would negatively impact one’s credit score while remaining on one’s record for 2 years).

Once the credit was shifted, the consumer called back a day or two later and closed the Propel American Express card permanently.  It took about 30 days for everything to play out on the credit report, but the resulting effect was that the consumer’s credit score jumped 20 points.

Keep in mind, the Visa Signature card was not that great of a card.  The only thing going for it was that it had been on the consumer’s credit report for a long time.  Neither card had an annual fee and the Propel American Express card offered more cash back.  In fact, other than 1 or 2 small charges, neither card had been used in the past 2 years.

The key was the Visa Signature card had about 10 years of aging to it and the consumer needed to increase the overall aging of his credit accounts.  Even after implementing the credit shift, the consumer continued to not use the Visa Signature card at all.

For other techniques like challenging inaccurate credit data, click here for a free consultation.

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