About 5 months into my first credit card experience, I decided that it was time for a credit line increase. No, I wasn’t racking up debt and no, I didn’t have any large expenses that made the credit increase necessary. I wanted an increase because when you have $1,000 each month, it’s easy to have over a $2,000 balance right before the bill is due. With a credit limit of $5,000, that equals a 40% utilization rate, something I’d definitely prefer to stay below. Add in the fact that Bank of America mysteriously skipped a bill cycle and that rate jumps to around 60%.

Sure, it’s not always that high and only if my accounts are checked on those days would it be marked that high, but I’d like to avoid the worry altogether and assure myself that my credit rating is as good as can be. It’s not imperative now, but it’s always good to keep a good credit score.

We know that hard inquiries negatively affect your credit score, so I decided that while I wanted to increase my credit line, I wouldn’t do it if it meant a hard inquiry.

Also, I have great news. Bank of America has one redeeming quality: it makes increasing your credit line very easy.

After logging into my account, I clicked on the “Request a credit line increase” button, filled out the form, and requested another $2,500 in credit.

The next day, I received a call to verify my job, income, and reason for requesting an increase (I have heard that saying that you’ll be making some large purchases works well).

I was approved immediately with only a soft inquiry and suddenly my utilization rate dropped. That same 40% utilization rate suddenly turned into less than 27% on the worst days, something I can definitely accept.

It’s only a small part of my credit score, but every bit helps and good habits now will help when we need it.

Originally posted 2010-03-02 06:00:17.

This is the second part of my Credit Series, where I explain the most important aspects of credit, credit reports, and credit scores. Each installment focuses on one factor influencing credit, tools to monitor and improve credit, or an explanation of a specific credit concept.

The most significant factor in your credit score is your payment history, which accounts for 35% of your score. This information can be found on your credit report and includes each of your credit accounts and details about how you have paid.

The payment history section of your credit report contains the following information:

• The name of the institution reporting the information. This is often a bank or credit card company.

• The date opened as well as the date of reporting.

• The type of account (revolving account, educational loan, auto loan, mortgage loan, etc.)

• The credit limit or loan amount and the highest amount ever charged on the credit account.

• The balance as of reporting and the amount past due (if any).

• The account status (current, past due, charge-off, etc.) and the monthly status for previous months.

• The terms of repayment (for loans) or “revolving” (for credit accounts)

• The Account number, which may be shortened or scrambled.

• The Adverse public records (bankruptcy, judgement, suits, liens, etc.), collection accounts, and delinquency accounts.

While FICO keeps secret how they score exactly, we do have some information about factors on the payment history section that affect your credit score. The more recent your transgression, the more your score will suffer. Negative information can stay on your report for up to 7 years and could have a serious negative impact on your credit score.

In order to earn the maximum number of points in this category, you must make all payments on time and avoid collections or public information from appearing on your account.

Originally posted 2009-12-08 09:00:18.

Did you know that some banks pull your credit score when you apply for a checking account? And did you know that some banks require a minimum credit score in order to accept you?

Many banks simply use ChexSystems, which is a network comprised of financial institutions that regularly contribute information on mishandled checking and savings accounts to a central location. ChexSystems shares this information among the member institutions to help them asses the risk of opening new accounts.

Many of the nation’s most popular banks use ChexSystems to determine whether or not to accept an application. I contacted many of the largest and most popular banks and asked about their policies. The responses I got were quite interesting

For example, Bank of America, Chase Bank, Citi Bank, and TD Bank all use ChexSystems as their only check before issuing a checking account.

Wells Fargo goes half a step further by using ChexSystems first, and if anything looks suspicious, they do a soft pull.

Everbank does soft credit inquiries and does not use ChexSystems.

Want to know which ones do hard credit inquiries on checking accounts?

ING does a hard credit inquiry on new checking accounts, although long-time customers with a different type of account are likely eligible without an inquiry.

Ally Bank also does a hard credit inquiry on new checking accounts, and went even further to tell me that in order to qualify, a credit score of 600 or better is needed.

Want to know if what your ChexSystems report looks like? Tomorrow I’ll detail what it takes to get a free report and what is included.

Readers, does knowing this make you less likely to open an account with ING or Ally? Is the hard credit inquiry worth it?