Advice! Credit Score

brobin01

For all you money saving, credit guru's out there. I need tips on getting my credit  together. It's not terrible, but I want it to be as close to GREAT as possible and I will take any advice I can get. Can anyone rec any companies that can help me organize this process better than I have been on my own?

thanks!
Brandi

boogerbearoriginal

IMO those companies typically cannot do anything for you that you can't do yourself.

Not sure what issues you have that are making your credit score drop, but unless you have something major like a collection going on all you can do is continue to pay bills on time, use what credit you have wisely (don't carry balances, pay on time, keep total charges low compared to available credit) and over time it will steadily improve.

Credit is one of those things that simply doesn't have a 'quick fix' solution.  It requires a history of on time payments as well as not utilizing all the credit available to you (meaning don't charge $800 on a card with a $1000 limit). Also if you have older 'problems' as those drop off you'll see an improvement but again - its just a waiting game.

When I was much younger I did a lot of stupid things, racked up credit card balances, paid late, etc. and it took about 5 years to get my credit where its at now. If you are already ok/good then improving to great shouldn't be as difficult.

HTH!

culbycheese

Do you have copies of your recent free credit reports?

I'd start with looking on there to see what the red flag items are and see about getting those resolved first.

If you don't have a recent copy, you can request it through http://www.annualcreditreport.com/

This is the ONLY authorized source for the free annual report per the FTC. Don't trust that guy in the comercials on TV.
http://www.ftc.gov/freereports

ETA: If you have a bunch of accounts open, don't close them- that's one of the new things they'll hold against you. This is a pretty good link with info on repairing credit- http://www.ftc.gov/bcp/menus/consumer/credit.shtm

Sue-n-Kevin

I've been lucky that I've usually been pretty good with my credit.

The above is good advice. Pay on time, never miss a payment, even if they say you don't have to pay and can carry over the balance. The interest they add to each bill creates an enormous hurdle to overcome.

NEVER do what my ex (one of the reasons he's an ex) used to do: He'd take a cash advance on one card to pay on another. Seriously.

I got myself into a situation 2-3 years ago where I'd charged near the max on my VISA which was through my credit union where I used to work. I kept paying and paying, and could never make a big enough dent. When I refinanced last year, that balance was still on my report, but because I'd pay every month, it didn't hurt. I took out a $5000 home improvement loan with my refinancing (interest rates were so low my monthly mortgage payment STILL went down), and paid off that credit card bill in it's entirety, and still had money left over to re-do my living room. I will NEVER use credit cards like that again. I buy everything online and in stores with my debit card now, and use it as a credit card so there are no usage fees.

I use my Macy's, JC Penney, and Lord & Taylor cards occasionally, around Xmas, to keep them active. But I rarely have more than $200 on each, and pay them off within a month or two. This also helps your credit score.

As for how to improve your current score, the advice above is great. No one can "bail you out" except yourself. Paying someone else to do it is a waste of money. If you are either behind, or missing payments, call the card provider and work out a payment plan you can stick to.

Another piece of advice: Keep your cards and Damien's cards separate. Don't get joint cards. Your credit history and his should not be mixed until everyone's situation is great.

Good luck.

Julz629

I am not sure what kind of debt you have, but there is "good debt" and "bad debt."  Good debt is student loans and mortgages because both of those are considered an investment.  Bad debt is credit cards, unsecured loans, and to some extent car loans (since cars lose value over time).  Stay current on all payments and make all payments on time, but work on getting rid of the bad debt first.

Also, NEVER EVER miss a mortgage payment.  If finances are tight and you can only afford to pay some bills, make sure you ALWAYS pay your mortgage.  Late and/or missing mortgage payments will drive your credit straight into the ground.

It's not terrible to have a balance on credit cards (it's not great, but it's not terrible) but try and keep the balance at or below 50% of the credit limit on that card.  Also, don't let the credit limits on your credit card skyrocket.  From a lending standpoint, someone will be less likely to lend you money, or lend you a smaller amount, if you have access to a lot of credit.  Credit companies generally continue to increase your credit limits if you are in good standing -- I have actually called my credit card companies and put a cap on my limits.

Don't let a ton of companies pull your credit.  Constantly pulling it will have an adverse effect.  You are able to check your credit once a year for free -- take advantage of that, but don't check it all the time.

It takes time to improve your credit, months...or even years....

Julz629

Also, this is probably not the case, but people sometimes associate no credit with good credit.  I did mortgages at some point and when I would ask someone how their credit was, they would say "great!  I don't even have a credit card." and sure enough, I would pull their credit score and the score was 0.

Lenders like to see that you have access to credit, know how to use it, and repay it.  Using cash on everything is not always a good idea...especially if you don't have any other credit (house or cars).  Some people are anti-credit cards, but in order to keep your credit score good, you need to continue to use credit.  I always advised these people to get a credit card, use it to pay things like gas or groceries, and immediately pay it off. 

cmkuno

If you haven't already, get a copy of your free credit report from all 3 of the companies that offer them and look it over very, very carefully for any errors.  If there's a problem, dispute it and try to get it taken off.  I did this with a couple of small things and it worked.  For example, when I was still a minor and on my mother's insurance, she apparently paid a medical bill late, but because I was the patient it showed up on my credit report.  I disputed it and they took it right off!

mink492

Do some lurking over on the Money Matters board on the Nest. Those ladies know their stuff & give a lot of good advice. It's overwhelming & inspiring to me at the same time b/c they are really dedicated to their goals.

brobin01

Oh Wow! You ladies have given me AWESOME advice! Thank you sooo much! I pretty much have small stuff to take care of from being dumb in college. I started paying some things off, but I need to go back and review my C report again and finish handeling business. I did find out that there are 2 things on there from when I was only 16! So thanks Carolyn - I am going to disoute those items!

Thanks Sue for the advice about not getting credit together, that's very important, as we both have some small balances to pay off. I am trying to get him to focus on getting our credit together vs. going on vacations!

Julie - I didn't know this....Don't let a ton of companies pull your credit.  Constantly pulling it will have an adverse effect. 

Wow - thanks everyone, this is really helpful. I am copying everything you guys said so that I can take the first steps to getting Damian's and I ish together- LOL. I recognize this is going to take A LOT of work and sacrifice.

Melissa - I am heading over there to check out that board.

Megan2oo2

GreenPath is a nonprofit that is pretty awesome: http://www.greenpath.com/

brobin01

thank you Meghan.

jamenyha

If you belong to a credit union, I would try and go there. They can go over everything in detail with you and have programs to help you build your credit.

boogerbearoriginal

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_michigan-detroit_advice-credit-score?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:88Discussion:c9c252da-4f57-41ee-9035-4272e50a3b11Post:0e8b85e6-c998-470a-a1f2-a8c23e23bfce">Re: Advice! Credit Score</a>:
[QUOTE]I am not sure what kind of debt you have, but there is "good debt" and "bad debt."  Good debt is student loans and mortgages because both of those are considered an investment.  Bad debt is credit cards, unsecured loans, and to some extent car loans (since cars lose value over time).  Stay current on all payments and make all payments on time, but work on getting rid of the bad debt first. Also, NEVER EVER miss a mortgage payment.  If finances are tight and you can only afford to pay some bills, make sure you ALWAYS pay your mortgage.  Late and/or missing mortgage payments will drive your credit straight into the ground. It's not terrible to have a balance on credit cards (it's not great, but it's not terrible) but try and keep the balance at or below 50% of the credit limit on that card.  Also, don't let the credit limits on your credit card skyrocket.  <strong>From a lending standpoint, someone will be less likely to lend you money, or lend you a smaller amount, if you have access to a lot of credit. </strong> Credit companies generally continue to increase your credit limits if you are in good standing -- I have actually called my credit card companies and put a cap on my limits. Don't let a ton of companies pull your credit.  Constantly pulling it will have an adverse effect.  You are able to check your credit once a year for free -- take advantage of that, but don't check it all the time. It takes time to improve your credit, months...or even years....
Posted by jholbel[/QUOTE]

Are you sure this is true? When we got our mortgage we had 0 balances on ALL of our credit cards which totalled to over 10K in available credit. Our lender said our debt to limit ratio had to meet a certain percentage (which obviously didn't matter in our case) but they didn't seem to care that we could go on a wild spending spree at a moment's notice.

Julz629

In Response to <a href="http://detroit.weddings.com/main.aspx/local-wedding-boards_michigan-detroit_advice-credit-score?plckFindPostKey=Cat:Local Wedding BoardsForum:88Discussion:c9c252da-4f57-41ee-9035-4272e50a3b11Post:bffdf052-a3f5-4c3f-ad6b-e63d34cd258e">Re: Advice! Credit Score</a>:
[QUOTE]In Response to Re: Advice! Credit Score : Are you sure this is true? When we got our mortgage we had 0 balances on ALL of our credit cards which totalled to over 10K in available credit. Our lender said our debt to limit ratio had to meet a certain percentage (which obviously didn't matter in our case) but they didn't seem to care that we could go on a wild spending spree at a moment's notice.
Posted by Booger+Bear[/QUOTE]

I worked in mortgages for a bit and it doesn't affect your ability to get a mortgage.  Because like you said, it doesn't matter that you could run out tomorrow and rack up a bill, it matters what your debt is according to that credit report.  However, my college roommate had difficulties with student loans due to the amount of credit limits she had.

boogerbearoriginal

Huh. that seems really odd to me too as I also am still getting student loans for my master's degree with no problem.

It just struck me as very unusual because I've never heard that before.

ETA - Also we just got approved for a sizable line of credit at Home Depot - all in all I guess I never experienced this to be a negative so it was surprising to me.

sinnedambition

truecredit.com    allows you to view your report and dispute items that you believe shouldn't affect your credit.

My fiance's mother has a Discover credit card that is almost to the max. Fiance is an AUTHORIZED user (not co-signer) yet it still showed up on his report. Fi didn't even know he was authorized to use the card. LOL

Fi's scores went from low-mid 500s to mid-600s in about 3 months using truecredit.

My score was 747 before buying our home and new car. Since Chrysler (in their infinite wisdom) submitted my credit application to EVERY BANK they dealt with...my score is now toast because of too many inquiries. In 6-12 months my score will be rockin' again after the house is paid down a bit.

Good luck with the credit score...it seems to be a tricky thing.

mordacious

You can pull your credit report all you want with no effect. I would use myfico.com. It's not free but your free annual credit report doesn't give you your scores. Myfico.com is the only place to get your actual FICO score (not your fako). Read here http://credit.about.com/od/creditreportscoring/qt/creditvsfico.htm

Unless you plan on getting a conventioal mortgage loan (need 20% down) don't kill yourself trying to up your score. I got an FHA loan with 3.5% down with a FICO score of 630 (it was 594 in 12/08 and I raised it to 620 by 2/09). You need at least a 620 for an FHA loan.

If you do want to up your score, keep you debt to available credit ratio low, do not close credit card accounts (it will increase your ratio by driving down your available credit AND lower your average account age which also effects your score),  and pay off your debt if possible. I've done most of this and my score is now like 690 or something now. It's a slow process!

If you plan on buying a house do not make any large purchases, or take out any loans, before or during underwriting. Keep your credit report (and FICO) pretty stable.

mordacious

Ohh and if you shop for a loan of any type, do it all within 2 weeks and it will only count as one pull on your report. They know when you buy a house or a car that you will shop arounnd for the best rates.

brobin01

thanks Mordacious and sindambition! all this is truly helpful. Thanks for sharing!