Credit Questions? John Ulzheimer Is Here to Answer

I just settled with a credit card ($3,700 only have to pay $1,300). But, now I'm concerned. Will this affect my credit score at all? --Ada

PS: This is a Business Credit Card, does it matter?

Ada – Your PS is actually the key to this question. If this is a business credit card then it may not show up on your personal credit reports. But, if you are like most small businesses you probably had to sign a Personal Guarantee (or PG) when you opened the card. This allows the lender to hold you personally liable for the debt incurred on the card. Unfortunately it also allows the lender to report the settlement to the three consumer credit bureaus, Experian, TransUnion and Equifax.

Settlements are considered to be highly negative and will certainly damage your credit scores for up to seven years. The extent of the damage is going to be unique to you, meaning that the number of “points” that you’ll no longer earn will be determined by your other credit. If you have great credit and great credit scores then you’ll be damaged much more than if you already have poor credit and already low scores.

I wish we had spoken before you settled. $3,700 is such a low amount and there had to have been another way to deal with it. --John


I have about $15k in credit card debt and about $20k in student loans. I am considering going back to school to as well as my husband and I are thinking about starting a family. My biggest concern is that my husband is self-employed and doesnt know the extent of my credit card debt but knows the amount of my student loan. We dont share a bank account, but my issue is I am having problems with keeping up with the payments on the credit cards I have and trying to find a solution I Have contacted the NFCC and currently waiting on a rep to contact me but the person who took my information advised me that there is a fee for the service and asked for my social (she said that they would have to pull my credit). I am wondering if this is normal protocol with the credit check and the fee for service. I know that you are always advising to find a not for profit agency. Please, Please, Please help me! --Akina is the right place to go. They are non-profit but that doesn’t mean they’re “free.” And yes, they will pull your credit reports to identify all of your credit card accounts and to see exactly how much debt you have and how the lenders are reporting it. They have to have this info to do their job.

You should expect to pay about $50 per month for their services and it will take about 3-5 years of them auto-debiting your checking account to get the funds to pay your lenders. Their services aren’t fun and they aren’t painless. But they are the best of breed when it comes to credit counseling and debt management. Avoid anyone else. --John


Citi is raising the interest rate for nearly 20% of their credit card customers to make up for significant losses in their global card division. It is possible that up to 10 million customers could see their APR increase by 2-3%. What are some tips for consumers regarding this interest rate hike? --Bill

Yes, it’s possible and probable. Add to that the announcement that American Express recently made and 10,000,000 now looks to be on the low end. Incidentally, Citi announced this rate increase at the same time it announced a workforce reduction of 50,000. Add that to the 23,000 that have already been laid off and that’s 73,000 new additions to the Citi Alumni Club.

This credit expert predicted massive layoffs at Citi during an interview on another network several months ago. The anchor looked at me like I was crazy. The domain, www.citigroupalumni.comwas snapped up in the middle of last year. Looks like someone had the foresight earlier than I did.

An interesting use of an old term has popped up in the credit-card world. It’s called “opting out.” Normally this means having your name removed from the mailing lists that the credit bureaus sell to credit card issuers ( However it now has dual meaning. Now it means to give the customer the option to not accept the new, disadvantaged terms. In English, this use of the phrase means you can close the account. I imagine my expert witness services for credit lawsuits are going to be in high demand in 2009. What these issuers are doing is in their own best interest and will shatter the credit scores of tens of millions of their own customers. The damages will be swift and significant.

At the end of the day this move only matters if you revolve a balance month over month. If you don’t revolve balances then you probably don’t care so much about your rates. I’d highly suggest getting to that position. --John

John Ulzheimer is a nationally recognized credit expert, president of Consumer Education for and contributor to On The Money. Learn more about him here.