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The Clark Howard Podcast
02.05.25 Credit Score Perfectionism / When Travel Goes Awry…
00:37:11
Credit Score Perfectionism / When Travel Goes Awry…
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- [00:01]
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- [00:31]
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- [00:58]
Listener
Foreign.
- [01:05]
Clark Howard
It'S great to have you here on the Clark Howard Show. You know our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. In this episode, I want to talk about being a perfectionist. That's not something I am. I want to talk about my obsession with credit scores, but when it is too much of an obsession and want to talk about the opposite. When you're traveling somewhere and it's far from perfect, in fact, things kind of get all messed up. You have got to be your own advocate and we're going to talk about that. So there are people who we hear from from time to time, and you'll hear me address questions on the podcast from people who are focused on getting a perfect credit score, which is an 850 on the most respected scale. I don't have an 850. I've never had an 850 that I know of. And I track my score. And that's what's important, is to track your score and know what it is. But being perfect isn't necessary for most lending purposes. To be a top top top, what is sometimes referred to as a golden borrower, you need a credit score from the real scoring system, FICO, of 760 or 780. But 760, even from somebody who considers 780 to be or above to be golden. 760 is fine too. Now my credit score on the Vantage system, which doesn't seem to me as stable as the FICO system, goes up and down like a yo yo, but within a range, like right now, it's lower than I normally see it and I Set up a Credit Karma dashboard, which is free. And I can see my faco, my vantage score from two of the three credit bureaus right there on the Credit Karma dashboard. And right now, one of my scores has dropped 44 points, the other has dropped 11 points. But my scores are still fine and acceptable range. And it's funny because people ask, well, why does. Why is the score so much lower with one than the other? A lot has to do with what is being reported to each bureau because it's up to lenders who they report to. So that's how there could be this big gap between one of the scores I've got on Credit Karma and the other. I haven't really dug in to try to figure out why one is so much lower than the other right now, but I just know it's because some lenders reporting a higher balance, a high balance on me that doesn't even report to the other bureau. That's almost certainly what happens. But what you're looking for with tracking your score, either Credit Karma or if you have a credit card that gives you your score whenever you want on their app or by signing into their website, what you're looking for is you're looking to see your trend. And if your score is in the upper seven hundreds, you're good. Be happy. Everything's great. What you don't know can hurt you, though. You want to know what's going on with your score, but there is no need, unless it's just fun to try to get to an 850. And to get to 850 is a giant mystery. From what I've heard, you need to use somewhere around, believe it or not, 1% of your available credit to get to an 850. So if you have a credit card limit, let's just say of a hundred dollars on a card, you can't have charged on it more than a dollar. I mean, come on. So if you're over 800, really, if you're above 760 on the real scoring method, which again is FICO, and a lot of the credit cards, they give you a score, you'll be seeing their FICO score on you. You're good, you're fine, and be happy. On the other hand, if your score is way below that, you got work to do. And that's where having a Credit Karma account is really helpful because they'll guide you through steps that you need to do to get that score up. The changes you need to make about how you handle money and credit that will get your score higher. So don't want you obsessed like I am. But I do want you aware and continually aware of what your score is and what the direction of your score has been.
- [06:11]
Listener
Krista, I have some related questions for you.
- [06:14]
Clark Howard
No. Do you?
- [06:15]
Listener
I do. This one came in from Gary in Wisconsin. How long does it take for your credit to recover if you miss a payment? Apparently I had auto renewal set up for AAA and it went to a credit card that I didn't have a balance on. I never received a statement. I only Learned I was 30 days past due after it reported to Credit Karma. My score dropped 70 points, even though that was my only late payment over 10 years. Is there anything I can do? It went from 740 to 670. I paid it off as soon as I was made aware. That seems like a big drop.
- [06:50]
Clark Howard
Okay. Gosh, we got a lot to unpack here. First things first. The problems with mail delivery are not getting better, they're getting worse. And if you're depending on a bill to come to you from a credit card company in the mail, that's not going to work. And the problems with the mail have been so bad for us, where we live, that Lane and I check our credit cards, all of them, on the 10th and 20th of each month to see what balances there are and all that. We no longer depend on statements coming from a credit card company. And the postal service thing. I don't see any ray of light on the horizon. I don't see sunrise coming on, solving the problems.
- [07:43]
Listener
Didn't you say you had to send a paper check in to a company and it still hasn't arrived? Like how much long? How late?
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Clark Howard
How so? As of last night.
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Listener
Yeah.
- [07:52]
Clark Howard
Spend 19 days.
- [07:54]
Listener
Wow.
- [07:54]
Clark Howard
That. It was a weird situation. The only way I could pay him was by paper check. I sent it through the bill pay service and it's lost in space so far for 19 days. I'll report next time we talk about this, if that check has just never shown up or is just permanently lost in space. So that's why I want you to pay electronically. I want you to pay bills at the company's website, something I used to strongly recommend against because lack of consumer protections, but now is the smart thing to do. Now, Gary, let me go to the heart of your question. So for a number of reasons, this small payment was missed. So this happened to me two years ago, and I found that my credit from one late payment really had healed substantially in six months. The item can stay there for years to come. But the harm from a single late payment that is so severe when it first appears does cure quicker than it might seem, but slower than it feels as it happens. So just make sure you make every payment on time possible. Why is there such a huge drop from a single missed payment? Could be once. In your case once in 10 years, somebody else could be once in 30 years they'll have the same kind of drop you did. Because the credit scoring model is based on the fact that somebody's first missed payment could be clerical or could be the canary in the coal mine that their finances are starting to fall apart. And that's why that initial missed payment has such a large impact. But just make every payment on time forward and it will heal soon enough.
- [09:51]
Listener
This is from Patrick in South Carolina. I'm turning 40 this year and have never had a credit card. I'm married and we're both schoolteachers. We have no student loans or credit card debt and we own both of our cars. Our only debt is a mortgage. I'm looking to improve my credit score from 727 to 800 plus I will probably buy a used car in the next 6 months. Our combined income is 120k. Would getting a credit card help? My wife has 3 but only uses one. I'm just looking for the best way to improve my credit to as close to perfect as possible.
- [10:25]
Clark Howard
Okay, so Patrick, you just gave me a three dimensional puzzle. So first the good news. You're carrying no debt other than your mortgage. Fantastic.
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Listener
Two school teachers. So impressive.
- [10:38]
Clark Howard
Serving our children. How great is that? Okay, so if you apply for a credit card right now, that's going to have an initial impact. Lowering your credit score. Just for the hard inquiry, applying for a card, but over time having that credit card and using it sparingly, you know, a small amount of the available balance will give a booster shot to your credit score. Will be another type of credit. It'll give the lenders other ways to the credit scoring models, other ways to evaluate you and it will raise your score over time. Here's the dilemma though. You said in another six months you're going to buy a used car. I'm gathering you're going to take out a loan for that. You didn't say that. But if you are going to take out a loan for that, then that will be impacted. The rate you'll qualify for may be impacted because remember at first when you get that credit card, it's going to pinch your credit score. Lower it a little bit and then that will recover and then Your score will get higher. So six months is kind of in a gray area for doing this. I think it'll be a wash to go ahead and get a card and half a year later apply for a car loan. But if you were talking about buying a vehicle 8, 9, 10 months a year later, then getting that credit card is a slam dunk on helping you with your credit score and credit standing.
- [12:11]
Listener
Joseph in Wisconsin says, my credit had been a struggle for many years. I'm 43. Two years ago I had a 470 credit score. I quit smoking and drinking alcohol. I now have a credit score of 744.
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Clark Howard
Okay, so that's wild. So simply quitting smoking and drinking, your credit score went up?
- [12:36]
Listener
Well, I'm 174. I'm guessing that that affected all areas of Joseph's life.
- [12:41]
Clark Howard
Just making light of it. Congratulations to you. Yeah, that's amazing on developing new habits in your life. And you're showing how disruptive personal habits can be to your overall financial stability and personal stability. And obviously being able to raise your score in two years from 470 to 744, you should be extremely proud of that.
- [13:07]
Listener
Yep. So Joseph says, I actively have four credit cards, three of which have a 0 balance. One card has $199.17 balance from a purchase I made last week. My question is, is it better to pay my credit balance on or just before the monthly due date, or does it not matter if I use the card and pay it off immediately, as that's what I've been doing for the past two years?
- [13:29]
Clark Howard
Well, what you're seeing is the power of keeping credit cards active and at the same time keeping the balances lower at zero. So remember I said my wife and I check our cards and pay them on the 10th and 20th of each month. So we report a zero or near zero balance. Typically when a statement closes on a credit card, which is why our credit scores normally are through the roof. So when you keep your utilization really, really low, you keep cards active being reported the bureau, but show that the balances are extremely low. That's a booster shot for your credit standing. Best possible thing you can do. Keep doing what you've been doing. It's obviously working beautifully. And you're going to continue to see that your credit score is going to be outstanding and maybe even will go higher from this 744 over time. And I'm really proud of you. Your improvement in score in two years, I think is the largest increase we've ever heard.
- [14:38]
Listener
Totally inspiring.
- [14:40]
Clark Howard
It really is great. So straight ahead, we're going to talk about something not so great. You're stranded somewhere in the country or the world. An airline or somebody else has messed up and let you down. What do you need to do? We're going to talk about that.
- [14:57]
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- [16:30]
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- [17:00]
Clark Howard
I love to travel, and I travel all the time. I'm traveling so much that I have misadventures. Flights cancel, hotels overbook. Car rental companies have no cars. When I get there, so many things can happen and it's how you handle them that matters for you in the situation and your wallet. There are a couple of things I want to bring up here that's very important. One no. 1 strategy works to solve a problem with travel. It becomes so ad hoc because in the United States, we alone in the developed world have no clear consumer protections with travel. So for the most part, you and I are subject to the law of the jungle when something goes wrong. So I want to talk about effective complaining. Let's deal with a particular situation. Flight cancels on you could be bad weather. They could have a mechanical, or the airline has what they don't like to admit, but happens more often than you think. An economic cancellation. And I'll tell you how that works. They can have a problem with the plane, and they're going to have to cancel a flight on a lucrative route. And then they'll take a plane that was from a vacation route. Think a lot of times, flights to and from Florida or Las Vegas, they'll take the plane that was for one of those routes and use it for that lucrative business flight to Chicago or New York or Dallas or Atlanta or something like that. And suddenly you're sitting there, no plane, with your vacation suddenly in jeopardy. Going to Florida or going to Vegas or going to the Caribbean or whatever. What you don't want to do is go stand in the longest line possible at an airport. What you instead want to do is get on your phone right away and start at Google Flights and see what other flights there are that are available that day to where you're going. It'll show you the airline you're flying and other airlines as well. Then you go the website of the airline itself. See if you can rebook yourself. Because when a flight cancels, you have a lot more flexibility at rebooking on your own, on your phone. If you don't have the app for the airline that has now left you stranded, download it. Because the people standing in line are in competition with you for the seats that are available. Second, if an airline cancels, you have the right to your money back, cash money. But airlines will try to con you into taking a credit. You don't want a credit. Credit is not as good as cash. You want cash. Let's say you show up at a hotel and they walk you. Hotels routinely overbook. And you show up at a hotel and say, yeah, we got no rooms. All right, so I'm going to tell you a trick for hotels and cars. This is happening even more often with car rentals than with hotels. Even if you've never stayed at a hotel chain, you've never rented from a car rental company. Join their frequent stay program or their frequent renter program. They all have them, they're all free. You join it. You put that in your reservation, and with Car rentals, you can pre check yourself in with most any company at most any medium or large airport, and they assign you a car before you may have even taken off from where you're flying from. So you show up at the car rental company and they don't have enough cars unless they then swipe the car that you were supposed to have you walk by all the people sitting on their luggage, you go straight to your car you booked and you drive away in it. I went through that Hunger Games thing two years ago during a snowstorm. We were able to go straight to our car, which we felt guilty about a little bit because we were also happy a lot that we had the car and we were able to go hotels, same thing, a lot of hotels. Now, if you're a member of their hotel program and you've stored how you're going to pay for the room and all that, you can check in ahead of time. Many times early in the morning of the day, you're staying there. And what I find is they assign me a room number at that time or minutes later, I'll get an email or a text telling me, you're now checked in, your room number is going to be so and so. So if you show up at the hotel and they're overbooked, you already have your room, you're already checked in, and it would be a rare, rare, rare circumstance that you would lose that hotel room that you've already checked in. More often, the car rental will vanish on you, even following these procedures I've talked about. But more often you'll be okay. Let's say the worst happens and you get that hotel and they say, yeah, we got nothing for you. Depending on the chain's policy, when the hotel walks you, they may need to buy you a room at another hotel. Your job is to never lose your temper. Talk about that in a second and see if there are other hotels nearby that show availability. And you start asking, well, could you send me here? Could you send me there? And you're not supposed to be out of pocket. You're not supposed to be out of pocket $0.01 for them having to walk you somewhere else. The most important thing, though, when you're dealing with somebody with an airline, hotel, car rental company, cruise line, whoever it is, do not lose your temper with that individual. I know sometimes they seem like robots. They're all human beings like you and me. They got feelings like you and me. If you start hollering at them and it's not their fault the plane didn't Fly or the hotel overbooked or the car rental company didn't have any cars, they're the person who can potentially be of help to you. And you want kindness, but you also want clarity. Gosh, I hate this is happening. I know this is horrible for you too. I found blah, blah, blah, could I do that instead? The more you are polite, persistent and solution oriented, the more likely you're going to be okay. There's a whole nother area about getting your money back when things go wrong. And that's a tough one because talking to an airline bureaucracy now, many times with the big airlines will be dealing with AI, not a human. And that's where the Department of Transportation enters the picture. If an airline owes you money and isn't giving it to you, file a complaint@dot.gov and it's not a magic pill, but it does help people get to an actual human in an airline instead of a computer. There's much more here, but it's all about you being flexible, polite, persistent and your own advocate.
- [24:57]
Listener
All right, Michael in Indiana says, I value your wisdom and experience. I'm planning a mission trip to Cape Town, South Africa at the end of July for domestic flights. I know it's best to book 55 to 60 days in advance, but how far in advance should I book a flight to Saturday, South Africa? And we get these a lot about booking flights to foreign countries.
- [25:16]
Clark Howard
Yeah, it's because there is no magic formula for international. And you're right with domestic. There's been some data recently that finds that about six weeks out more often than not gets you the lowest price domestic. But there could be a sale that pops up. Southwest had a sale last week that offered great fares into I think to early June. And you just don't know randomized how these things are going to pop up. But as a general rule, you get inside six weeks and domestic tickets get more and more expensive. And especially inside three weeks, international tickets are all over the board. For Europe, there are certain patterns. And in most years you're going to see spring fall airfare sales to Europe in early March. That tends to be the pattern, but it's just a general pattern when you start looking at the rest of the world. Oh, and I forgot Caribbean. Caribbean. Also for off season, the deals tend to pop up in March, Caribbean and fun in the sun destinations for travel in the off season, which is generally late April through mid December, carving out Thanksgiving for places like Asia. For South Africa, South America, it's much more haphazard. And what I recommend is that you set up travel alerts. My favorite place to do it is google.com flights but you might do it at Hopper, which is another airfare search engine that people really like or do it at both and pick more than one airport. You're in Indiana, you're going to find your best deals usually to Cape Town are going to be from New York, Washington or Atlanta. So you can buy a cheap domestic ticket from where you are in Indiana to get to one of those three for a trip to South Africa. If in fact the fares are much lower out of one of those three than they are from where you are in Indiana.
- [27:33]
Listener
What about joining going?
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Clark Howard
You could join going if. If Michael doesn't travel a lot, getting going's premium that gives you all the international fares gets pretty pricey. South Africa is an expensive trip so maybe for one year that's really good advice to join going their premium where they alert you when there's an oddball sale. And remember with something like Cape Town, set up alerts from what your home airport, maybe it's Indianapolis and also the airports I mentioned on the east coast to see if you can find the best deal. And I've been to Cape Town, it is wonderful.
- [28:18]
Listener
My favorite place I've ever been.
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Clark Howard
Is it really?
- [28:20]
Listener
Absolutely. Chuck in Idaho says here's a tip about a situation I was not aware of. If you book a stay at an IHG hotel using points in cash and need to cancel, you will be refunded in points only. Even if you use the bare minimum of points, it makes what you believe to be a free cancellation a potentially costly one, especially on an extended stay. Thanks for what you do to save us money and aggravation.
- [28:43]
Clark Howard
Chuck. Thank you for this. You know we had the thing before where people were complaining about Marriott Bonvoy that if you pay for a room with points and then you cancel within penalty, they give you your points back but then they charge your credit card. Have you ever had this happen to you?
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Listener
No, I haven't.
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Clark Howard
Yeah, we've had the question people before and it's true. They charge your credit card for the non stay and give you your points back because the points are generally not nearly as valuable to a hotel as the money. So that's why they kept your money at IHG and gave you back points. And so the points thing is tough. I'm not really into hotel points as Krista has heard me say endlessly because the hotel like Marriott just devalued Bonvoys again. So that crazy amount of points it took in 24 to book hotel through Bonvoy now is even much, much more expensive. So the value of the points now is down to I think half a penny. Is that right? Half a penny for Bonvoy. So the hotel point thing, don't chase that because it's generally a trail of tears with hotel points.
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Listener
And Ramonda in Georgia says, I'm planning a trip to Normandy, France in May. It will be my husband's first international trip. I see options for. For Norse Airways from New York City, but I've never seen that airline. Has Clark flown the airline and would it be recommended as. As good as the Air France or Delta options?
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Clark Howard
So Norse is a whole different animal. There was an airline called Norwegian that went bust, I guess during COVID and this successor company, Norris bought their planes. They didn't even change the interiors. And Norse flies a few times a day from New York. I'm trying to remember if they're flying from anywhere else. Norwegian flew from a bunch of places in the United States. My brother had. My oldest brother had to take a trip on very short notice to England to see an old friend who was ailing. He called me and he was shocked because the fares were thousands of dollars one way and coach. And we got him a ticket on Norse for $269 at the last minute and he flew it. It worked. Everything worked fine. He's like, this is the greatest thing ever. The problem with an airline that has very few airplanes is if they have a mechanical or whatever, you may not be going for days from when it was booked. That's the Achilles heel. But I used to get a lot of complaints from listeners about Norwegian. I don't recall we've ever had a complaint about Norse, even though it's the same exact airplane.
- [31:44]
Listener
And what about French B? Didn't you and Lane fly?
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Clark Howard
I did not fly French.
- [31:47]
Listener
Which was the one that you.
- [31:48]
Clark Howard
We flew LA company, which is a. It's an all business class airline from front of the plane to the back. And it's much cheaper than flying Air France or British Airways or that's an option. Delta, American, United. But it's all business class.
- [32:03]
Listener
I know, but they have deals. Didn't say I know, but they have deals.
- [32:07]
Clark Howard
They do. If this year's the same as other years, either this week or next week, they'll have a Valentine's Day special where you buy a ticket, get one free, or they have very heavily discounted tickets for couples and they fly to Italy, to Milan, to the south of France and to Paris and last year when we went it was 1599 round trip with a lie flat bed to Europe which is really good from Newark Airport in the New York metro area. So there are these alternatives. French B is a real, real, real spartan product that flies from New York to Paris dirt dirt cheap. Norse is kind of a little bit more upscale discounter than French B. But there are these trade offs. What happens if the flight gets canceled on these small airlines? You're sitting there and your trip days are clicking away. That's the hard part. So would I fly LA company again? You bet I will. Place like that for a lie flat bed and it's a really good lie flat bed. I find it much more comfortable than typical on an airplane. Anyway, I hope that you have an absolutely great rest of your day and know that this is all about you being empowered with knowledge where you take control in your own life. That you learn ways from us to save more, spend less and avoid getting ripped off. And for your daily vitamin of savings, remember clarkdeals.com and clark.com.