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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
^^^ early repayments are viewed differently depending on the type of 'loan'. The Care Credit card you mention is 'unsecured' revolving credit, thus shouldn't have any adverse effects from early pay-down. But an auto loan is 'secured' credit with a fixed term length, thus early repayment may reflect negatively ( as well as sometimes triggering an actual penalty charge ).
In regard to your 'other' credit card, if it carries a minimum monthly payment requirement, and if you were 2 seconds late making that required monthly payment, then it can reflect negatively.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
But not so negatively that a few months of paying on time or early would negate any downward trend in the credit rating, right?
I plan on reading the paperwork on a car loan VERY carefully to make sure there's not some clause that says I owe them the interest for the full term of the loan if I pay it off early. But still, it sucks that this is even an issue-- tricky bastards.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
^^^ again, on loans with known 'term' lengths, early repayments are never a positive and may in fact be a reason for negative credit reporting. From the standpoint of the lender, they are counting on their X dollars of loan principal generating Y amount of interest income over Z period of time. Early repayment 'shortchanges' the lender of anticipated interest earnings ... and can create even larger problems for lenders if those lenders have 'resold' multiple loans packaged under the heading of a 'bond' to a third party investor, who will now also be 'shortchanged'. Obviously, this is the justification used by some lenders for imposing 'early repayment' penalties.
A rough analogy to this would be you having purchased a 5% interest rate CD from a bank a few years back. You still have a few years worth of 5% interest payments coming to you before the 'term' of your CD matures. But, out of the blue, the bank decides to simply hand you back your original CD purchase money, thus terminating the CD and the associated future 5% interest payments you were expecting to be paid. You are then faced with the task of doing something else with your original CD purchase money, in an economic environment where safe 5% returns are unheard of.
In regard to positive effect on credit rating, on-time payments don't specifically improve credit rating in and of themselves. They do, however, avoid additional negative reports which can lower credit ratings even further. And over a long period of time, a string of on-time payments allows previous late payment reports to eventually 'fall off' the credit report ... at which point credit rating will improve.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
^ I paid off car loans early twice by a few years and it never affected my credit.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Wanted to add. My rating was around 750 most my life until recently for other reasons. I haven't had a car loan in 3 years.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
so it didn't even help your credit score? Even having a car loan that you were paying on?
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
^ I never checked my score. Only new what it was when I got my mortgages. Like I said I've always had excellent credit until the last 2 years....
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
I just know paying off the loans early didn't negatively affect it.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
BANHammerGoddess
I have some questions:
1. If I get and use a Care Credit card and pay it off in a few months (looking at dental work that may go as high as 4500-- I would like to pay it off in 3-4 months) would that reflect well on my credit score/history, or do they not report unless you don't pay on time?
Every time you make an on time payment or pay off the balance (usually labeled paid in full on credit reports) it looks good generally speaking.
Quote:
Originally Posted by
BANHammerGoddess
I have some questions:
2. Same thing with buying a car. I have bad credit so would have to put down a large down payment. Still not sure if I want to do this or not since I love my very old car, but it may be getting close to that time. However, once again I'm hoping to pay it off way early. Would it help my credit score having a car note so long as I'm being smart about it?
If you have negative items (collections, late payments, etc) on your credit report those need to be removed before any major impact by positive changes can be seen. There are different ways for them to be removed ie paying, dispute, falling off the report after seven years.
Think of credit reports like a scale, with positive credit on one side and negative credit on the other. If you have alot of positive credit and one negative item, the scale is out weighed by the positive. But if you no items with a positive payment history on the report and one negative item ...the negative will drag the score down. Things like judgements, bankruptcy and tax liens kill the scale completely because everything has a different weight.
Quote:
Originally Posted by
BANHammerGoddess
3. Never been late so far with my credit card payments and paying it off in full, most of the time I pay it off early. This last time, I was one day late (or rather 10 hours past the midnight of the day it was "due.") Obviously, I need to talk to the company, but I was wondering-- what happens in this case? Do I get charged interest? Sorry, I know that's a really naive question but I've only had a credit card since November.
Every credit card is different. I would suggest calling the credit card company to see if your interest rate has changed or anything else because of the late payment.
The ONLY time a payment can be reported late to your credit report is when it is more then 30 days late. If any payment is reported late on a credit report for less time you can easily dispute it to get it removed.
Tip: Always keep you oldest credit card open, even if you dont use it. Long standing credit history can have a bigger impact on a score then paying off a loan that has a time frame, like a car loan.
I would strongly suggest going to this site http://www.myfico.com/CreditEducation/articles/
It will explain in more detail and explain ALL the variables that go into your scores.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
BANHammerGoddess
But not so negatively that a few months of paying on time or early would negate any downward trend in the credit rating, right?
I plan on reading the paperwork on a car loan VERY carefully to make sure there's not some clause that says I owe them the interest for the full term of the loan if I pay it off early. But still, it sucks that this is even an issue-- tricky bastards.
Honestly... its good to have credit cards and loans on your account, even if paid off or closed with positive payment history. Because they'll still sit on your credit report for 7 years from when you paid them off. You want to maintain like 5-7 accounts including loans and credit cards, so don't pay off/close too many of them, but if you pay them off or close them and they are in good standing (never late), I don't see what could possibly be bad about it.
Even if there are collections on your account, I say still go for the loan. Because honestly, and from my own experience with medical bills, they often end up deleting the collections once you pay them in full (especially if you use a "pay for delete" letter and send it certified mail return receipt requested) and challenge the item on your credit report. They literally don't respond most of the time, because why would they take the time out to do that when you already paid the item?
Quote:
Originally Posted by
michele11
I just know paying off the loans early didn't negatively affect it.
Yeah if you already have solid positive credit history, paying things off early doesn't really do much. If you don't have many loans, and especially no mortgages (large loans), then it probably would affect your credit (but not in a bad way IMO).
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
michele11
Glam, would lowering my credit lines help or hurt? I always have lived by the motto ( if you can't pay cash you don't need it. My rating has always been in the high 700's but due to my tenants not paying on time for years and then destroying my property I had to get more lines of credit and raised 2 of my existing cards. When I had 500 credit limits my credit was great now its about 100 points down. I want to get all 4 cards back to a 500 credit line. I know creditors will lower you limit when you pay late or your credit drops, so I was wondering if this would look bad on my report? Thanks!
Keep your credit lines as high as possible! If you don't carry balances though, it doesn't really matter.
Quote:
Originally Posted by
Pearl_Sugar
Is there a way I can 'pay to remove' late history on a card? Like, submit documentation of hardship and state that if they remove the late pings on your report you'll pay the card down? I currently have a CreditOne Card with a low limit, Care Credit, USAA CC, Victoria's Secret, and my canceled David's Bridal card. So I have ways to BUILD credit, I'm just worried about these late ones. I want to buy a house eventually and every little thing like this just bothers me. As if having to save up a down payment and being a sex worker wasn't a problem, enough. lol
Yes its called a "goodwill letter." First, call and explain the situation over the phone. Then, if that doesn't work, ask for a supervisor. Then, if that doesn't work, send a goodwill letter certified mail with return receipt requested and also include any documentation. They may remove it. I've done it before and it worked. My friend tried to do it though, and it didn't work. I think it depends on the company and the documentation you can provide (sometimes they won't even ask for documentation).
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
My head is really out of it so the information might be easily searched but please just humor me:
I have all the addresses for the credit unions including innovis. Going to mail them tomorrow (certified with receipt.)
I have a credit report monitoring system membership so I already have access to the main three.
Should I dispute ALL charges as not mine the first time through for all the bureaus? Or just choose a couple for each? and then next time choose a different reason?
Also, when should I ask for them to delete all addresses besides my current one? Should I send it in the same letter or wait until I hear back from them?
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
BANHammerGoddess
My head is really out of it so the information might be easily searched but please just humor me:
I have all the addresses for the credit unions including innovis. Going to mail them tomorrow (certified with receipt.)
I have a credit report monitoring system membership so I already have access to the main three.
Should I dispute ALL charges as not mine the first time through for all the bureaus? Or just choose a couple for each? and then next time choose a different reason?
Also, when should I ask for them to delete all addresses besides my current one? Should I send it in the same letter or wait until I hear back from them?
I mean it depends on what your report looks like. It depends how many negative things you have. It depends what name and address are tied to those items. You can only dispute 3 items per letter or they won't do it.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Okay to UPDATE: Well this is more RE: identity theft, but...
I contacted one of my credit bureaus, the one that is usually the least responsive, and found out that since I added my 7-year-fraud-freeze thing, that my report can only be accessed when they transfer me to the fraud dept. Well they transferred me and I got an AWESOME representative that actually knew what she was talking about. She told me to get a numinate (sp?) form from the SSA, and then mail it along with a letter to my credit bureaus (also included police reports). Did that, and was waiting...
Well I just heard back, and since the guy using my SSN had opened to many accounts (albeit not on my own report), they deleted everything negative off my own report, attributing it to him, and now my score has skyrocketed even more than I thought humanly possible. Not that there was a lot, only a couple things, but OMG I am so happy. I knew my hard work would pay off!!
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
GlamourRouge
Okay to UPDATE: Well this is more RE: identity theft, but...
I contacted one of my credit bureaus, the one that is usually the least responsive, and found out that since I added my 7-year-fraud-freeze thing, that my report can only be accessed when they transfer me to the fraud dept. Well they transferred me and I got an AWESOME representative that actually knew what she was talking about. She told me to get a numinate (sp?) form from the SSA, and then mail it along with a letter to my credit bureaus (also included police reports). Did that, and was waiting...
Well I just heard back, and since the guy using my SSN had opened to many accounts (albeit not on my own report), they deleted everything negative off my own report, attributing it to him, and now my score has skyrocketed even more than I thought humanly possible. Not that there was a lot, only a couple things, but OMG I am so happy. I knew my hard work would pay off!!
Awesome, Glam! Thank you for the update!
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Idk if this has already been covered on this this thread but what if you don't have any credit at all? I don't have any and I don't know where to start to build it up. I've never owned a credit card or anything like that. :/
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
SkyeSabrina
Idk if this has already been covered on this this thread but what if you don't have any credit at all? I don't have any and I don't know where to start to build it up. I've never owned a credit card or anything like that. :/
You apply for a secured credit card and then give a small deposit ($49-$200, or more if you want to do more), like Capital One for example. Secured cards don't report as secured, they look like a normal credit card. (*Side note: Close this card after about 1 year of positive credit history, unless you gave a huge deposit because the credit limit will never raise and will likely prevent you from getting higher credit limits in the future since some credit card companies give you the average of all your credit limits as your credit limit for future cards.)
Then you wait a few months for your first credit card (above) to report good payment history, make sure the balance is reporting super low or close to 0, and apply for some of the easiest cards to get which are typically store cards aka NON-visa/mastercard/amex/discover (like Target, Macys, Victorias Secret, Care Credit, etc). Care Credit gives huge limits, Target does not. But pick a card that will be useful to you TBH. No sense in having cards you won't use.
Then after the second card (the store card) has reported about 6 months of positive credit history, apply for a second (and this time unsecured, normal credit card, which will be your third card) credit card through the company you got your original secured card through and you'll be approved for a large credit limit because you have already 1.) demonstrated positive credit history to them using your credit report, and 2.) demonstrated great payment history especially with them because your original card is through their company.
Wait for your third credit card to report at least 6 months of positive credit history, preferably a year, and then apply for a rewards credit card. Cash back or miles or something really worth it. I like Barclays because its easy to get, but there's also Discover, Citi, and Chase that are supposedly great with rewards cards, but they are harder to get (I have a bankruptcy so I didn't try). I'd close your secured credit card before applying (and make sure you wait for it to report as closed), or they might give you a lower limit than you could get. Closing credit cards with low limits they won't raise (and they don't raise secured card limits) is not a bad thing like they tell you, its actually a good thing.
That was my method at least, and I know its fool-proof. I'm sure the credit boards like MyFico forum offer other methods. That is where I learned this one though. Sometimes you don't even need a secured credit card to start.
**More Side Notes:
- Make sure your balances are reporting low when applying for new credit (they report typically the day after your payment due date, and it takes about a week to update with your credit bureaus
- Check which credit bureau potential new credit card companies will pull using WhoGaveMeCredit.com. It varies by company, and by state, but companies typically only pull 1 bureau (and Capital One pulls all 3)
- You might want to throw a mix of credit into your history over time such as a car loan (I like Capital One auto its so easy and low interest rates, student loan(s), and/or a mortgage) because it will help your score just by having diversity
- They say 3-6 lines of credit cards are ideal. Some people like a lot (more than 5), some people like just a few. I think 5 is a good number of credit cards, with 2-3 of those 5 being store cards
- Research your potential new credit card & company on credit forums before you apply. MyFico is a good forum, there are others too. Different companies are looking for different things. Some don't like any new inquiries in the last 6 months, etc etc, and many others could care less
- Call and ask for credit line increases often. Sometimes right after you get approved, you'll have to check the credit boards to see if your potential credit card company will do it. Its worth it
- Look for "backdoor" phone numbers to the credit card company (use google) if you get denied and call and beg them to give you the card. They will most likely do it
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Long standing credit is a factor in your fico score. Keeping your oldest credit card open will help keep your score higher. Go to www.myfico.Com education section to learn everything that goes into your fico score.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
Originally Posted by
Vamp
Long standing credit is a factor in your fico score. Keeping your oldest credit card open will help keep your score higher. Go to education section to learn everything that goes into your fico score.
A closed credit card still stays on your credit history for 7 years from the date of last activity (in this case, 7 years from the date it was closed). Considering step #2 in my plan was to open a second card like just 3-4 months after you open your first credit card, in 7 years when the closed credit card falls off your credit report, 3-4 months difference in age won't really mean anything and that card will remain open and hopefully report forever. So card #2 ends up becoming the oldest card when card #1 falls off in 7 years.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Your FICO Score takes into account:
how long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts
http://www.myfico.com/CreditEducatio...YourScore.aspx
How long the accounts are open with positive payment history is important.
In addition to your fico score, opening and closing cards will make lenders think twice. Underwriters who approve loans have told me, when reviewing a client's loan, opening and closing accounts in a short amount of time looks like you have financial problems that you are trying to hide. When it comes to credit reports lenders prefer accounts open more then a year in good standing. For mortgage approvals they do not want to see any more then three credit cards open.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Quote:
How long the accounts are open with positive payment history is important.
In addition to your fico score, opening and closing cards will make lenders think twice. Underwriters who approve loans have told me, when reviewing a client's loan, opening and closing accounts in a short amount of time looks like you have financial problems that you are trying to hide. When it comes to credit reports lenders prefer accounts open more then a year in good standing. For mortgage approvals they do not want to see any more then three credit cards open.
I can corroborate this point. Mortgage lenders' second consideration ( after ability to repay ) is financial 'stability'. As such, they do not like to see a bunch of 'turnover' in regard to credit card accounts. My acquaintances in the business tell me that people who do frequent credit card 'hopping' are also likely to do frequent mortgage re-fi's ... which ultimately isn't a good thing for the original mortgage lender.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
Why are refis bad? More credit for the lender. I get things in the mail from wells all the time for their free 3 step refi. I've done it 3 times to lower my rate. Didn't cost me a thing. If it were a bad thing for them I don't know why they openly advertise it.
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
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Re: GR's Guide To Changing Bad Credit Into Amazing Credit In Less Than 6 Months
When you refinance to a lower interest rate it lowers the profits the bank generates from the interest.
The bank would rather keep you as a customer.
Just because the bank approves the loan or credit card doesn't mean it is good for your long term credit.
If you might be applying for a new mortgage in a one to two years how your credit report looks and scores is more important to you than if you never plan to move again.