Need some advice(about credit)

[Beamer]

I know this is an LS forum but everyone(or almost) seems to give good advice on some matters and I could use some regarding Credit. After looking and going through many credit checks to get my LS and than many other checks I seemed to have wounded(not killed) my credit and/or Beacon. Just wondering what are good ways to get it up besides not having my credit checked unless absolutely needing too.

I've heard alot of suggestions but want more input. I know having loans is a good thing(in some cases) and I do have that sort of thing. I have the loan through GMAC for my LS, I have a Bank Of America credit card, I have a best buy card w/ about $1100 on it(no interest til' '08) cause I got a Lap Top and than there are things like insurance and what not that may or may not do anything.

My credit is pretty good, but one thing I am worried about is my Bank Of America card. I had a limit of $2000 and put almost that much on it and because of the interest rate it put me over the limit and I was "penalized" for them doing it basically. I have gotten it back under the limit but wooo my interest rate got up to 36%, last payment said it was down to 31% so its slowly going back down. When the bill comes I usually give them like $10-20 more than the minimum, is that good or should I be tossing abit more at it?

I've been told that paying off the card is a bad thing and that I should always have a balance on it. Anyone know about this? I sure as heck want to get it down alot more but if I should keep some type of balance on it than fine.

Any advice is appreciated, I really want to start building up my credit again so any suggestions is awesome.

 

[Midas78]

- Avoid carrying a credit balance greater than 30% of your limit.
- Open new accounts and pay them off instead of adding more debt to an existing card

Be patient, the people with their Fico scores in the 700s are in their 40's.

This site has more info:

http://www.equifax.com/

 

[00ls5spd]

Also be careful about opening and closing to many accounts. What most creditors look at is the amount of credit you are using and how long you have had the account. So if you open three accounts in a year and close them the same year, even though you paid them off, the length of history will end up hurting you. I would suggest trying to get that BofA card down to around the 30% area like stated above. Most ppl don't know it but everytime someone checks your credit you lose about 5pts. Having a credit card and then paying it off every month does'nt help your credit either. Most ppl think it does. The reason it doesn't help you is because techniaclly you aren't using the credit system. You need to to mantain some sort of balance on the card to keep in good faith with creditors.

A cell phone is a good way to build credit as well and it's a pretty easy process, as long as you don't have a revolving balance, Cable bills help too, they are both long term credit relationships that will raise your score. I would also strongly recommend looking into a better credit card with a better interest rate. Usually even if you credit score is low you will be able to get a better rate with a different card company just by transfering the balance. But only do this once. if you keep transfering cards and balances this will kill your score too.

 

[02LSE96LSC91SE84TC]

I'm 33 and the last time I got my score was when I bought my LSE 8 months ago. It was 780. I have tons of unused credit, thats supposed to be bad, but apparently not always true if you make alot more than the credit limits added up. I asked my banker if I should cancel some of my cards and she said it wasn't much of a issue for me with my score. I used to use many different cards and hold small balances, usually for the teaser rate, this left me with way more cards than I need but certainly proved to raise a score. Always payed as much as you can off every month. I always take advantage of 0% interest type offers. I don't carry balances anymore, haven't for a few years now, and my score only goes up every car loan I've got. A lender that we work with at work said the best thing you can do is buy alot on credit and pay it off all but a little each month. They get you only for the little interest then, but they still get some. This is kinda what I did for years not so much on purpose. Debt to income has alot to do with it to. If you make $100,000 a year and only have a 18,000 car loan as debt, you'll score alot higher than making 30,000 and having a 18,000 car loan. One missed payment or two in a certain period of time is the worst for your credit score. ALWAYS make the minimum every month no less only more, and pay down as fast as you can. Skipping one month than paying completely off the next is worse than making consistant payments. Don't apply for new cards or loans. Slowly your score will rise.

 

[itsnotmydaddys]

I agree. im in the same boat. i had 3k on one card a 500 on 2 seperate ones. my car loan and some other stuff. i got my tax returns and killed the one with the biggest APR (24) then took the rest and knocked some of the others down. My best advice is dont freak out. It may look bad now and you may be flipping out about it. but your still real young. im 22 and my score is terrible, but in 3 months or so when all this stuff clears and some faulty stuff goes away my score will raise up. Just dont miss payments whatever u do. Most cards will lower your interest rate after 6 months if youve been good on the account. If u can pay more a month then pay more, but if moneys tight, just pay the minimum. Also call a mortage company. and ask them some questions, theyll always help.

 

[JaredLS]

just wanted to add two tidbits on the discussion.
1) checking your own credit report does not decrease your score.
2) lowering your credit C. limit day before going to get a mortgage will help get you a lower intrest rate. you can raise it the day after again.

 

[PM80]

Cell phines don't affect your credit rating unless you don't pay. You don't get positve credit from a cell phone. You need to try to pay as much as possbile on your credit cards and the more the better. NEVER miss a payment. Also look for new credit cards in the mail that you can transfer your high intrest rate to for uually a much lower rate. But don't close that acct. the longer you have the card the better your credit looks.

 

[theunclesam]

I think about the best advice you can get is to lower your debt-to-income ratio. Like 02LSE96LSC91SE84TC said. Take a look at your debt. Then take a look at your income. Are you living paycheck to paycheck? If so, you need to find a way to reduce your debt. This will in turn make you look good to creditors, cause they all want a piece of your money pie.

 

[Beamer]

Thanks for the advice and keep it coming if you'd like. I'm not really flippin out, just alittle concerned. I do very well on paying my bills, have never missed any type of payment. I plan to get my credit card down and than I'm going to start attacking so to speak my car payment or I may not have to worry about that if it gets sold which is always good than I can save like a mofo and eventually get something decent again, actually thinking about an '06 LS in a few years but I want to get my life pointed in the right direction and worry about a decent/classy car way later.

 

[02LSE96LSC91SE84TC]

You have to take bigger chucks out of that high rate card if you want to better your position any time soon. Throw ALL extra money at it. Make the minimums on that Best Buy card without fail because it will become a high rate card too if you mess up, but other wise just make sure you pay it of before the promotion expires. If that means figuring it out to a monthly payment to make sure it happens do it. That 0% doesn't mean squat if it isn't payed of by the deadline, they'll hit you with interest from day one if you didn't already know that. As far as the car, best thing you can probably do is drive it, selling it will have you lookin for a new loan, thats not helping. The only loan or credit card you should consider is one that'll bail out that 30% card your hung with. But honestly, if you think you credit is sketchy right now, resist applying for one that has a teaser rate for balance transfers, if you apply and don't get it, you just took another step back. Just do what your suppose to for a good 6 months or better a year, you'll start to get more credit card applications, wait till they start looking to good to be true, this may be a indication your credit statis is looking up. Apply for one only if you have been absolutely perfect on payments for a good 6 months or better a year. If you get it you can rid yourself of that crazy rate, don't go back. If you don't get it don't try again for another 6 months to a year. This is of coarse assumming you don't apply for anything else. I takes a while to build good credit, impatience is usually how you get in over your head. Your young, some people never get it together, you recognize you don't want that, thats good.

 

[2001LS8Sport]

-
Be patient, the people with their Fico scores in the 700s are in their 40's.

This site has more info:

http://www.equifax.com/

Actually, my son and his wife are in their mid 20's and both have middle scores in the 780's. It's all in how you manage your credit and more importantly, it's the kind of debt you owe. The only revolving debt my wife and I have is an American Express card that has to be paid off every 30 days. I just pulled her credit and her middle was 842. It's the highest I have ever seen. I have an extra car payment she doesn't, so mine was about 20 points lower...but still outstanding.

I am an officer for a very large bank and I see credit reports all day long. I also counsel young potential home owners on how to manage their credit and put themselves in position to buy a home. I know EXACTLY what can affect credit scores and how to bring your scores up. I have been doing this for many years. Please pm or email me and I'll be glad to assist you...it would be improper and way too much to do in this thread.

 

[2001LS8Sport]

By the way, there has been some advice in this thread that isn't entirely accurate and some that has been dead on the money. Extremely good!

 

[02LSE96LSC91SE84TC]

By the way, there has been some advice in this thread that isn't entirely accurate and some that has been dead on the money. Extremely good!

I would never claim to know more than someone like yourself who does it for living, just sharing what I think would help get him on the right track and mind set to get where he wants.

 

[bill5]

I've been told that paying off the card is a bad thing and that I should always have a balance on it. Anyone know about this? I sure as heck want to get it down alot more but if I should keep some type of balance on it than fine.

This is total propaganda, probably put out there by credit card companies. I've NEVER run a balance on any credit card. In any "borrowing" scenario, the two things they'll look at is how timely you are in terms of making payments to your creditors and, most importantly, your income-to-debt ratio. Charging on a card and paying off that card monthly is much more favorable than charging on a card, paying a portion thereof and leaving a balance. In the second case, all you're doing is paying interest on the remaining balance, with absolutley NO benefit to anyone but the credit card company. Many folks consolidate their credit card debt to one lower interest card or account. This provides marginal benefit, but unless you're willing to make drastic changes in your spending habits, it's a waste of time. In other words, you can't "borrow your way out of debt". Making the necessary lifestyle changes, buckling down and paying off the cards, without incurring additional debt is my suggestion. Some say that you should pay your smaller card balances off first, because it feels better to knock them out and because the total interest amount paid on several small cards may exceed that of one larger one. The key is developing a realistic, but aggressive plan to curtail spending and pay off credit card debt and then stick to it. I'm not minimizing the pain in doing so. (I'm always amazed, particularly with mortgage companies, how MUCH they'll actually loan you. On my last house, I couldn't have slept at night, if I'd actually borrowed as much as they'd allowed me to.)

 

[ignorant prodigy]

My score's roughly around 720.. I'm 24

Things to make your score better.

1. pay more than the minimum payment. even if it's a dollar they recognize it as making the extra effort.
2. don't have a revolving balance over 50% of your limit.. anything over 50% hurts your score. It was said above to have a 30% limit.. that's a good bench mark. I say revolving because you can make a purchase during the month that puts you over the 50% mark.. but if you pay it down soon enough it helps your score.
3. income to debt ratio is very important .. you obviously don't want to have more debt than money you can make.
4. Healthy mix is very important.. you want loans and credit cards and try to balance them out. Like said before cell phones don't do anything positive for your credit. Those are a monthly fee.. not a balance you pay off over time.. think about it...you can never pay off your cell phone
5. work with your credit cards.. trust me.. they want your money any way they can get it.. most will lower your intrest rate a considerable amount if you threaten to cancel your account.. I've called them and said I want to cancel my account just to lower my intrest rate. btw you can cancel your account with a balance.. it just prevents you from adding on to it..
6. lastly is, while the idea of keeping a balance on your card will help your score is false.. what is true is you dont want to buy something and pay it of the very next day.. they don't track it that closely.. they're looking for an average each month.. not daily. If you have no balance it can not hurt you.. thats ridiculous.

 

[lloydrage]

I am over 700 for my credit rating and I am only 24.

WHat I did was open up credit cards put about 200 on it and pay it off then close the account. I have also purchased 5 cars, had student loans in my name, and never missed a payment.

Basically keep paying off the credit cards and try to pay them off every month. I put all of my expenses on my discover card and pay it off at the end of every month now. It gives me cash back and it makes my credit go way up.

 

[bill5]

I charge virtually everything on a Chase Southwest Airlines Rapid Rewards Visa card, including property taxes, utilities, groceries, gas, meals, etc. and pay the balance in full each month. About every third month, I get a roundtrip airline ticket and the very much appreciated complementary drink coupon booklet A credit is earned for every 1000 miles flown or $1000 charged. A roundtrip ticket is issued for every 16 credits earned. Since Nashville is a Southwest Airlines city, it's convenient and I basically fly free as often as I like.