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Credit score questions

Discussion in 'Off-Topic Discussion' started by fisherman951, Oct 25, 2018.

  1. Oct 25, 2018 at 10:33 PM
    #31
    ab1653

    ab1653 Ew member

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    Easy read and pretty good advice with the whole income to debt ratio. Basically get rid of it and keep your money for investments. Interest rate on credit cards are horrible. I paid everything off and my score went up.

    6237A11D-B01B-4AC4-BDC3-D407B2A7C618.jpg
     
  2. Oct 26, 2018 at 3:33 AM
    #32
    Festerw

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    Dave Ramsey's system works and it's great for paying down debt but I also don't think it's terrible to have credit available.

    Friend of mine just went through this. She's 28, lives with her parents, drives an 04 Taurus, has a decent paying job, no debt, no credit cards, looking at a $70k house with a 30k down payment available, and couldn't get any banks to finance a mortgage.
     
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  3. Oct 26, 2018 at 4:28 AM
    #33
    atomsplitter

    atomsplitter New Member

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    Someting I just found out:
    Even if you pay you cards off every month, the statement balance is still looked at. I started paying off my cards before the statement dates so the statement balance would be 0 and my score went up 20-25 points (depending on the agency).
    I travel alot so I use rewards cards for everything. I am buying a house and when I talked to the mortgage guy he mentioned my Amex being at 2K, which I paid off when my expenses came in. For the next two months I paid it off before the statement date so the balance was 0 and my score went up.
     
  4. Oct 26, 2018 at 5:27 AM
    #34
    Cfincke

    Cfincke Mall Crawler but capable

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    Like others, I use my credit card to pay for everything and then pay it off once the statement comes in. I have done this for the last 17+ years and I have excellent credit. My score is lower than normal right now due to inquires this year with buying a travel trailer and just getting my wife a newer vehicle, still it is very high. With a credit card there is some protection against fraudulent charges and you can dispute a charge and not be out the money for a while. I have a 2 reward cards and an emergency card with a high limit that I use once a year to keep it active. I normally earn $60-80 a month in points, about $800 a year of free money for me since I never pay interest. Don't close cards once paid off, they help you in multiple ways - raises your available credit, lowers your total utilization and increases you length of credit history.
    When I got my Amazon rewards card a few years ago, that hurt my score the most because it lowered my CC account history average from 11+ years to under 7 years. Try to avoid opening new credit accounts as it takes a long time to build back up your account history average.
     
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  5. Oct 26, 2018 at 5:47 PM
    #35
    TheFreshMouse

    TheFreshMouse learning as i go...

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    i hear what you're saying and for the very few ultra disciplined i would agree that its not bad to have available credit. the reality is in our society today we are not disciplined and more and more people are falling into the mindset of i "want this/that now" rather than 'wait and save'. I wasn't (like a lot of people i talk to) taught how to budget, or use money correctly.

    what i was getting at with the dave ramsey program is he recommends you save $1000 as an "emergency fund" the rest of your money goes toward debt until you've paid it off. the emergency fund allows you to deal with emergencies without using debt again.

    Back on topic and to answer the OP @fisherman951 - yes my credit score went up 40-50 points when i paid down my debt but it didnt jump as much when i finished paying it off down to zero. getting your debt to available credit ratio into the right range is what the credit bureaus algorithms are looking for. If that is your main goal, you can look up what the ratio is. For me though, the way to use money as you stated an 'adult' was to be better about how i use money and how i view debt. I too had the mindset to "not worry about it for now".

    Last i'll leave you with a quote from dave ramsey that i think about almost every day-
    “If you will live like no one else, later you can live like no one else.”
     
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  6. Oct 26, 2018 at 6:47 PM
    #36
    aRabidLunatic

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    $1k seems low. Isn't the rule of thumb 3 months of expenses? If you were to lose your job $1k wouldnt cover house/car/utilities.
     
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  7. Oct 26, 2018 at 6:54 PM
    #37
    TheFreshMouse

    TheFreshMouse learning as i go...

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    That comes later (in this model- others may differ). here are the steps...


    Screen Shot 2018-10-26 at 6.50.47 PM.jpg
     
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  8. Oct 26, 2018 at 7:08 PM
    #38
    trdprobped17

    trdprobped17 New Member

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    https://creditcards.usnews.com/articles/credit-score-ranges-guide-to-the-good-bad-and-ugly


    For FICO, the key areas that impact your score include:

    • Payment history (35 percent): This looks at your on-time, late or missed payments.
    • Amount owed (30 percent): This compares your balances with your available credit.
    • Length of credit history (15 percent): The longer you have managed credit, the lower of a risk you are to lenders.
    • Credit mix (10 percent): A mix of credit types such as an installment loan and revolving credit (a credit card) is best.
    • New credit (10 percent): Too many inquiries or opening several new accounts can hurt your score.
     
  9. Jan 16, 2019 at 9:25 PM
    #39
    fisherman951

    fisherman951 [OP] MT dreams

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    Sorry to bring up this old thread but does any 1 do the whole free anual credit report? If so what website? I’m hesitant to try one out as I’m scared it might be a scam
     
  10. Jan 16, 2019 at 10:31 PM
    #40
    Sunnier

    Sunnier Pity the warrior that slays all his foes

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    Here's a good go-by, Tony:
    https://www.google.com/amp/s/www.fo...blog/how-to-pull-a-free-annual-credit-report/

    I'm all for you requesting all 3 at once the first time, then staggering... i.e. after you get this year's reports, note on your calendar when you are eligible again, then next year, do one with, say, equifax, wait 4 months, do another with, say, experion, then 4 months after that, do transunuon. This way you'd get at least the rough credit score at intervals.

    BETTER is, if you utilize a card or two, suddenly all are posting updated credit score each month.
     
    Last edited: Jan 17, 2019
    fisherman951[OP] likes this.
  11. Jan 17, 2019 at 3:11 AM
    #41
    xtyfighterx

    xtyfighterx New Member

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    I just paid $25000 in credit card debt off in one lump sum and mine went up just over 100 points.

    I only use one card now it has a $2500 limit but I don’t let it get past $500 and I pay most of it off leave like 30-50$ on it and it seems like my score is going up 2-3 points every month or two.

    And one month I just made the minimum payment of $30 and left $400 on the card and I dropped about 5 points.
     
    fisherman951[OP] likes this.
  12. Jan 17, 2019 at 4:44 AM
    #42
    Greybeard

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    Debt to income ratio is key as is available line of credit. Credit cards used and paid off each month don't hurt you as much as having several cards with zero balance. What the banks look at is what's available and how much you owe. Try to pay off as much as possible and get to the point you can pay your credit card bill in full each month. I actually use my CC for almost everything including utilities at the house. It's so much easier to make one payment each month plus the card I use has points based on the dollar amount spent monthly. I go on vacation every year with just my cash back.
     
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  13. Jan 17, 2019 at 7:17 AM
    #43
    fisherman951

    fisherman951 [OP] MT dreams

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    Thank you. I’ll definitely check it out. It’s been a couple months now that I did my “adult responsibilities” so I’m hoping to see A nice increase.
     
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  14. Jan 17, 2019 at 7:27 AM
    #44
    mtntop

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    Lots of great input here, when I was younger (20's) I had at least 5 credit cards with no debt on them, I thought I was being smart by having all of this 'money' available to me. When I went to apply for a real loan, I was denied because of the 'available' debt. You hit it on the head in your post, your debt to income ratio is HUGE when it comes to credit scoring, followed by secured vs unsecured debt, minimize your unsecured debt first and then work on the secured debt. Stability is critical as others have described.
     
  15. Jan 17, 2019 at 9:08 AM
    #45
    fisherman951

    fisherman951 [OP] MT dreams

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    So I tried the annual credit report but I woul like to know the actual credit score also. How can I do that? Has any one used credit karma? They show they can get credit score for free but Is it true or a scam?
     
  16. Jan 17, 2019 at 9:52 AM
    #46
    derkks

    derkks New Member

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    Credit Karma is great. It is free and you can get an updated score every week. It's accurate within a few points too .
     
  17. Jan 17, 2019 at 10:19 AM
    #47
    jeremyd

    jeremyd 2014 Crewmax SR5

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    Trying to learn here.. Assuming you already have your home and cars, What do we need credit for ?
     
  18. Jan 17, 2019 at 10:33 AM
    #48
    dekeray

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    A few things I know that dramatically effect your credit score. Debt to income ratio, outstanding balances, payment history, and available credit amounts versus income, and balances in cash accounts (checking, savings and retirement). I paid off all my credit cards except those that I use for expensing work travel and 1 emergency card. Pay those off monthly when used. I carry a mortgage and a car payment that I put on auto-payment mode as I travel so much I was afraid I'd be somewhere with no internet access to make payments. I had 5 or 6 credit lines (cards plus department stores) and got rid of all but the afore mention two. Took about 24 months but went from having average credit to a FICO that varies between perfect and 8 points less monthly. I noticed the variability on the months where I used my travel charge card a lot regardless that I pay it off every month. As soon as you drop 10-20K on a card you take a hit. Goes right back up next mon though after the pay off.
     
  19. Jan 17, 2019 at 10:44 AM
    #49
    Trooper2

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    I do not obsess over mine; never check score. Home owner, one leased vehicle, credit card paid off monthly. I pay my bills, never late. This has enabled me to purchase/lease a new vehicle when needed and by a new house a few years ago. Many employers look look at credit scores when hiring as well.

    I have been fortunate to have good credit. I have also worked hard so that it stays good. I would not want to try dealing with making it better form making bad choices.
     
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  20. Jan 17, 2019 at 11:06 AM
    #50
    Geezer

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    It has been a few years since I researched this, but from my experience your credit score can affect other things besides debt. I know my insurance company looked at my credit score before quoting me a price. I assume other financial companies do the same.
     
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  21. Jan 17, 2019 at 11:12 AM
    #51
    dekeray

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  22. Jan 17, 2019 at 11:50 AM
    #52
    ColoradoTJ

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    Good thread.

    I'm not a huge Dave Ramsey fan, but has some really good philosophies to live by, that's for sure.. The whole "no debt, no need for credit" theory is just not realistic for a lot of scenario's, especially in your 20-40's. If you can pay cash for your house, that's awesome....and you best have it in a Irrevocable Trust Fund. I'm sure he has good points, an minimizing debt, but it's pretty embarrassing having to have your kid co-sign for a CC in your 50's (my parents always paid cash).

    Maintaining a 700+ credit score should not be a tough or even thought out process.
     
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  23. Jan 17, 2019 at 11:56 AM
    #53
    Sunnier

    Sunnier Pity the warrior that slays all his foes

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    Tony, I scanned back over this thread to see what you posted was your motivation for focusing on improving your credit score; I saw you want to refinance your home, get a 15-year mortgage.

    Something to consider: if you refi soon, that could be a great move, if it drops the loan % rate. But it will raise your monthly payment (if you have more than 15 years remaining on your current loan).

    But consider... while you're working through improving your credit score, the Fed is tweaking the prime rate; if you cannot get a better % rate with a 15 year refi than what you have on your current loan, there's no point in doing it.

    Instead, consider paying extra each month toward the principal on your home loan... you can do so monthly, or each time you come into a little extra money or, if you already have an "impound" account set up (you pay one bill each month that includes your home loan, interest, and property taxes), you can arrange to pay a higher amount each month (like you will if you refi to a 15 year loan). Paying, essentially, one "extra monthly payment" each year will cut years off your current mortgage (and saves your thou$ands in interest costs).
     
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  24. Jan 17, 2019 at 11:59 AM
    #54
    jeremyd

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    Can you give me an example of why a Son or Daughter would be co signing for a credit card for there parents in there 50's ?
     
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  25. Jan 17, 2019 at 12:05 PM
    #55
    Sunnier

    Sunnier Pity the warrior that slays all his foes

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    Credit Karma will tell you your actual score, which will be "close to" the score a prospective lender would get if they run a "hard inquiry" on you.

    The reason they're be a difference is, the 3 big credit scorers (experion, equifax, and transunion) all use slightly different criterion. AND, every lender will have tweaked their credit requests to assess how well you are projected to do with the type of loan you're applying for.

    As I understand it, if you've had several years of mortgage and cards payment history and never been late on all types of credit, you'll do better getting a refi home loan rate (secured loan) than you would another credit card (revolving loan), and a credit check by each type of lender is designed to weigh the difference.
     
  26. Jan 17, 2019 at 12:06 PM
    #56
    Outbound

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    Because the parents followed Ramsay's advice and have zero credit.

    His debt repayment advice is good. His investment and credit use advice is dubious at best and outright wrong at worst.
     
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  27. Jan 17, 2019 at 12:07 PM
    #57
    jeremyd

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    ok, I don't know anything about this Ramsey Dude.
     
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  28. Jan 17, 2019 at 12:08 PM
    #58
    Sunnier

    Sunnier Pity the warrior that slays all his foes

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    Because, if you make it to 50 without credit and want a credit, you will have the same 'no credit history' as an 18 year old just starting out. You might get a low limit, high % rate store credit card without a co-signer, but any "real" credit, not likely.

    My mom was the same. Only ever bought real estate, no credit cards. I got hurt and the hospital posted me on a gurney in a hallway at ER wanting someone other than my mom to ensure payment.
     
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  29. Jan 17, 2019 at 12:10 PM
    #59
    Thattundradude

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    Mine went down after buying a macbook but went back up after paying 80% off before the month ended
     
  30. Jan 17, 2019 at 12:11 PM
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    ColoradoTJ

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    Sure can Jeremy.

    My parents had no credit history. They paid everything cash or not at all.

    When they started wanting to travel, rent cars, buy plane tickets, etc.....they needed a credit card. My Dad still hates CC's with a passion. They applied with Discover and a few other major CC companies and they were declined. I co-signed on a card for them when I was in my 30's.
     
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