View Full Version : Watch your debt it can kill your credit
I work in a business where I look at credit all day. People do not realize how bad credit can really kill future dreams. Can you get a car with bad credit? Can you buy a house with bad credit? It depends on how bad your credit is and remember the worse the credit the higher the interest rate. What people look for when they pull your credit is that you have paid your bills on time, that you do not hold high balances on your credit cards, and that you are financially responsible. Think about it. Why would someone lend you money for anything if your record shows that you don't pay it back. That , lending money to someone who cannot pay their bills, is bad business. We live in a consumer culture. The more you have the more appealing you look to the outside world, but just because people have a lot of fancy things does not mean they can actually afford them. Ever heard the phrase $30,000 dollar millionaire. Yes Americans live beyond the means. The best thing you can do for yourself is to pay off your debt. Keep your credit in the mid 600s (if you don't know what this mean- you should). A piece of advice. If you receive a raise continue to live as you have been on less money and put your "extra" earnings in savings, money market, or pursue moderately risky investments.
wordsmith
11-07-2006, 02:36 PM
This isn't very helpful to people who may already be struggling, or already be in the hole credit-wise. If anything, it may look to some, like, "Okay, I'm already screwed, now what?" particularly if the reason they are in bad shape is because they're not making enough in the first place to reasonably cover their expenses, and have never had the means to get things paid off.
Some advice about what people in that position should do would be helpful. Your post is good cautionary advice for people not yet in that situation, but for the many people who already are, it's pretty much only gloom and doom. And it's also true that people don't only get into debt by buying things they shouldn't, although of course many do.
cache
11-07-2006, 02:41 PM
You say to keep your credit in the mid-600's. Did you mean at least in the mid-600's?
LaFille
11-07-2006, 02:43 PM
stupid question of the day: what exactly is your credit score based on? is it based on total accrued debt? late bill payments? all of the above? are my student loans included in my debt score? what about things like electricity or gas bill payments?
BlueEyedFunOne
11-07-2006, 02:48 PM
You say to keep your credit in the mid-600's. Did you mean at least in the mid-600's?
I think he means the FICO score. It's basically a number (calculated on a number of different things) that give a broad picture of your creditworthiness to lenders, landlords, etc.
BlueEyedFunOne
11-07-2006, 02:49 PM
stupid question of the day: what exactly is your credit score based on? is it based on total accrued debt? late bill payments? all of the above? are my student loans included in my debt score? what about things like electricity or gas bill payments?
It all is. Have you ever taken a look at your credit report? I try to look at mine every 6 months. There are LOTS of things on there, and lots of things that impact your score.
Edit-
This link talks a bit more about it:
http://www.mtg-net.com/sfaq/faq/fico.htm
cache
11-07-2006, 02:54 PM
I think he means the FICO score. It's basically a number (calculated on a number of different things) that give a broad picture of your creditworthiness to lenders, landlords, etc.
Yeah, but he just said "keep it in the mid-600's" Was that an incidental oversight, or is there some reason why 800 might be less than desirable?
NewMrs.
11-07-2006, 02:54 PM
I work in a business where I look at credit all day. People do not realize how bad credit can really kill future dreams. Can you get a car with bad credit? Can you buy a house with bad credit? It depends on how bad your credit is and remember the worse the credit the higher the interest rate. What people look for when they pull your credit is that you have paid your bills on time, that you do not hold high balances on your credit cards, and that you are financially responsible. Think about it. Why would someone lend you money for anything if your record shows that you don't pay it back. That , lending money to someone who cannot pay their bills, is bad business. We live in a consumer culture. The more you have the more appealing you look to the outside world, but just because people have a lot of fancy things does not mean they can actually afford them. Ever heard the phrase $30,000 dollar millionaire. Yes Americans live beyond the means. The best thing you can do for yourself is to pay off your debt. Keep your credit in the mid 600s (if you don't know what this mean- you should). A piece of advice. If you receive a raise continue to live as you have been on less money and put your "extra" earnings in savings, money market, or pursue moderately risky investments.
I also want to add that it is a very good idea to pay attention to the credit history of anybody you plan to marry.
I love my husband dearly, but his past history with credit cards and his credit score has made me unhappy on more than one occassion. I knew about his credit card debt going into our marriage, but I still get upset about it sometimes. If you are planning marriage with somebody, make sure that you discuss this completely before the wedding. Make sure that the two of you agree on a plan to pay off any existing debt.
LaFille
11-07-2006, 02:59 PM
It all is. Have you ever taken a look at your credit report? I try to look at mine every 6 months. There are LOTS of things on there, and lots of things that impact your score.
Edit-
This link talks a bit more about it:
http://www.mtg-net.com/sfaq/faq/fico.htm
no, i am very bad! i haven't 'needed' to yet because i've never bought a car or needed a loan (besides student loans.)
LaFille
11-07-2006, 03:01 PM
blueeyed--i read over that information. how do i get my score? ask at my bank>
cache
11-07-2006, 03:05 PM
no, i am very bad! i haven't 'needed' to yet because i've never bought a car or needed a loan (besides student loans.)
You get a free credit report every year, I usually check it just to make sure there is nothing that should be of concern on my credit, so when I do need it, nothing comes back on me. that's all you want is to go buy a house, and find out about an old bill from several years ago that you had no idea you even owed.
Be careful of the organizations that try to get you to enroll in a credit monitoring service to get your free credit report. you are entitled to one every year from each of the big three agencies.
BlueEyedFunOne
11-07-2006, 03:10 PM
blueeyed--i read over that information. how do i get my score? ask at my bank>
Try www.freecreditreport.com. I just used it last week. Plug in all your info and it'll spit out your credit report. It's free, very easy and packed with info but read all the instructions carefully. If you want your credit score, you pay a bit extra ($14.95).
I enourage everyone to periodically look at their credit report, just to stay informed.
LaFille
11-07-2006, 03:10 PM
... the only think that comes to mind is when in college, i moved out of my apartment for 2 months and put my roomate in charge of paying electric, which was in my name. of course i told her to make sure payments were on time, and of course she was late anyway. is this going to make me look bad?
other than that i think i have made all payments on time, thanks to automatic bill payments.
BlueEyedFunOne
11-07-2006, 03:12 PM
Be careful of the organizations that try to get you to enroll in a credit monitoring service to get your free credit report.
Yep - good advice. Get your credit report and cancel the monitoring service ASAP, else they'll start charging you for it. Nothing's "free", ya know :)
Pulling your credit every six months may help you keep track of your credit, but it can actually hurt you. Every time you pull your credit your score goes down a certain number of points, plus it doesn't look good if you are constantly having your credit looked at- it implies that you are applying for things such as credit cards, loans, etc.
In response to "already being in the hole": Make it a point to eliminate all things uneeded. Of course there are necessities, but have you ever thought about creating a budget. I keep track of my finances and every month I go into an excel spread sheet and note how much I spend on certain things. That way you can see where your money is going. See where you can decrease spending. If there are any remaining funds available you should try paying down credit cards- the interest rate on them is out of this world.
... the only think that comes to mind is when in college, i moved out of my apartment for 2 months and put my roomate in charge of paying electric, which was in my name. of course i told her to make sure payments were on time, and of course she was late anyway. is this going to make me look bad?
other than that i think i have made all payments on time, thanks to automatic bill payments.
Late payments do effect your credit and it is even worse if you let an outstanding balance go into a collection. If the late payment has already been made- there is nothing you an do- simply re-build your credit by making ALL of your payments on time. If you do make a late payment, because there is no way around it you should make sure that you make the payment before 30days after it is due. On credit reports there are 30- day lates; 60- day lates; and 90-day lates. The longer you wait the worse your credit gets- so make the payment as soon as you can.
embrassezla
11-07-2006, 05:40 PM
Pulling your credit every six months may help you keep track of your credit, but it can actually hurt you. Every time you pull your credit your score goes down a certain number of points, plus it doesn't look good if you are constantly having your credit looked at- it implies that you are applying for things such as credit cards, loans, etc.
Pulling your OWN credit report DOES NOT lower your FICO score.
Having your credit pulled by someone else, does.
workaholic?
11-07-2006, 05:40 PM
Pulling your credit every six months may help you keep track of your credit, but it can actually hurt you. Every time you pull your credit your score goes down a certain number of points, plus it doesn't look good if you are constantly having your credit looked at- it implies that you are applying for things such as credit cards, loans, etc.
This is actually not true...when you pull your own credit through a credit reporting agency, it shows up as a "soft pull." Soft pulls DO NOT go against your credit. This is the same case for when you get "pre-selected" for some stupid credit card offer or the like that you never applied for. When a creditor pulls your credit because you've APPLIED for credit, it is a hard-pull, and it DOES go against your credit.
LaFille
11-07-2006, 05:40 PM
Late payments do effect your credit and it is even worse if you let an outstanding balance go into a collection. If the late payment has already been made- there is nothing you an do- simply re-build your credit by making ALL of your payments on time. If you do make a late payment, because there is no way around it you should make sure that you make the payment before 30days after it is due. On credit reports there are 30- day lates; 60- day lates; and 90-day lates. The longer you wait the worse your credit gets- so make the payment as soon as you can.
i don't think it will be too bad. i was rather annoyed when this happened, but it didn't seem worth it to transfer the bill out of my name for a measly 2 months. you'd think a roomate would be able to handle this responsibility. oh well, it was like 3 years ago and i think i have been on time for all other payments i have had to make. live and learn.
Yeah, but he just said "keep it in the mid-600's" Was that an incidental oversight, or is there some reason why 800 might be less than desirable?
It was an oversight.
The higher the credit score (FICO) the better. The average american has around a 600 credit score. The other thing to remember is that your credit score is determined differently for different types of loans. For instance your credit when you purchase a car may be different from your credit when you buy a house. Even if you have your credit pulled on the same day. The different components of the credit report are weighted differently according to the organization.
This is actually not true...when you pull your own credit through a credit reporting agency, it shows up as a "soft pull." Soft pulls DO NOT go against your credit. This is the same case for when you get "pre-selected" for some stupid credit card offer or the like that you never applied for. When a creditor pulls your credit because you've APPLIED for credit, it is a hard-pull, and it DOES go against your credit.
I have to redeem myself by saying that I work in the mortgage industry and thus do not work for a credit bureau- all I can say is that on credit reports it will often read that the credit has been effected by "TOO MANY INQUIRIES". The information you all have received in regards to soft pull and hard pull is not familiar to me. My company obviously pulls credit which effects the score.
Yep - good advice. Get your credit report and cancel the monitoring service ASAP, else they'll start charging you for it. Nothing's "free", ya know :)
There may be credit services where what I am about to say may not hold true. Credit counseling effects your credit. It can even be compared to a bankruptcy when applying for a mortgage. Avoid them at all costs.
wordsmith
11-07-2006, 06:11 PM
So, again, there is not much on here for things you can do to get out of it, particularly if you're not making enough to make significant payments on anything and still live on your income. Which is really not helpful to people deeply in debt, especially if they've already cut out any extraneous spending. If credit counseling gets you further in the hole, what exactly does that leave?
So, again, there is not much on here for things you can do to get out of it, particularly if you're not making enough to make significant payments on anything and still live on your income. Which is really not helpful to people deeply in debt, especially if they've already cut out any extraneous spending. If credit counseling gets you further in the hole, what exactly does that leave?
Hang in there. Make more then the minimum payment on credit cards- even if it is only $5 more then the minimum you are making progress. Possibly even trasfer balances onto credit cards at 0% interest. At least then you are not adding to your debt through the added interest. If you cannot transfer the balance- cut up your card (s) and pay down the blanaces. As for things such a student loan...can you defer them?
wordsmith
11-07-2006, 06:26 PM
Don't worry, I'm not just talking about me, though I do have debt to pay down. I just know that a lot of people are overwhelmed with debt, and it's very discouraging to read things about how not to get into it in the first place once it's kinda late for that for you.
Speaking for mysef, I don't personally have any balances to be tranferred, it's just a matter of paying off one thing when it comes to credit cards (and I cut up the card ages ago). But it's very hard for anybody in that situation to make progress, because fees eat up anything you can pay over the min.
I don't intend to defer my student loan, which is a reasonable monthly payment that is automatically budgeted in and deducted.
In any case, my only point was that it would be nice if threads about debt were geared toward offering viable solutions for getting out, rather than just "debt will ruin your life," because everyone who's in debt already knows that.
grneyedmustang
11-07-2006, 09:11 PM
I know people with jacked up credit that were still able to buy houses, cars, etc. Their interest rates might be high, but it's still possible...
Not that I'm advocating bad credit...but you'd be surprised what people can do/obtain even when their credit's in the crapper.
On the flip side, though, I have seen people denied jobs because of bad credit.
pisces2473
11-07-2006, 09:34 PM
On the flip side, though, I have seen people denied jobs because of bad credit.
Oh really? Do you want to elaborate on this? I'm interested...
NewMrs.
11-07-2006, 10:36 PM
Oh really? Do you want to elaborate on this? I'm interested...
The mother of one of my really good friends was denied a federal job a few years ago after they ran her credit report. (The credit report had been the last step in the application process.)
However, based on the stories my friend has told me about her mother, her history of poor credit was decades long. It was to the point where her own children and siblings and her own best friend wouldn't lend her money anymore, and she still owed back rent to several former landlords. So this might be a really extreme example.
Honestly, I know several people with poor credit who just got new jobs this year (and these were good jobs). So somebody with poor credit right now can still have success in the job hunt.
Fashionista
11-08-2006, 03:39 AM
Hang in there. Make more then the minimum payment on credit cards- even if it is only $5 more then the minimum you are making progress. Possibly even trasfer balances onto credit cards at 0% interest. At least then you are not adding to your debt through the added interest. If you cannot transfer the balance- cut up your card (s) and pay down the blanaces. As for things such a student loan...can you defer them?
Although I am paying on my debt I feel kinda have a defeatest attitude toward the situation even though I am paying because it takes so long to clear up the problems and if your sources are limited it makes it even worse. I think cleaning up credit is probably one of the hardest things I am doing now. I just looked at my credit score 2 weeks ago and my heart sank because even with me paying these bills (including paying the balance on 1 card within 30days every time I use it) it seems like it is doing my score no good at all.
Musicvixen24
11-08-2006, 11:25 AM
My credit is good, at 750. but it is soon about to go down since I am broke as a joke. It's so odd that it could be so high when I am in serious debt. I guess it's cuz I've always paid my bills on time. Since I moved my debt has just gone up and up and up. I can't wait till i make enough money where I can pay more than the minimum
Although I am paying on my debt I feel kinda have a defeatest attitude toward the situation even though I am paying because it takes so long to clear up the problems and if your sources are limited it makes it even worse. I think cleaning up credit is probably one of the hardest things I am doing now. I just looked at my credit score 2 weeks ago and my heart sank because even with me paying these bills (including paying the balance on 1 card within 30days every time I use it) it seems like it is doing my score no good at all.
Credit Bureaus are not known for being quick to update negative credit or errors. If you have had late payments and things of that nature in the past just remember it takes time to regain a positive payment history. It's not a lost cause. If you have any error or complaints about items on your credit report- first contact the agency reporting it (credit card agency, etc) and then once you get it cleared up make sure to fax any documentation from the agency to the three credit bureaus and you may have to do this more then once.
EFX EQUIFAX CREDIT INFORMATION SERVICES, INC. (800) 685-1111
P.O. BOX 740241 (ORDER A REPORT)
P.O. BOX 740256 (DISPUTE AN ITEM)
ATLANTA, GA 30374
Web site: www.equifax.com
XPN EXPERIAN - NATIONAL CONSUMER ASSISTANCE CENTER (888) 397-3742
P.O. BOX 2104 (ORDER A REPORT)
P.O. BOX 9701 (DISPUTE AN ITEM)
ALLEN, TX 75013-3742
Web site: www.experian.com
TUC TRANSUNION CONSUMER SOLUTIONS (800) 888-4213
P.O. BOX 1000 (ORDER A REPORT)
P.O. BOX 2000 (DISPUTE AN ITEM)
CHESTER, PA 19022
Web site: www.transunion.com
My credit is good, at 750. but it is soon about to go down since I am broke as a joke. It's so odd that it could be so high when I am in serious debt. I guess it's cuz I've always paid my bills on time. Since I moved my debt has just gone up and up and up. I can't wait till i make enough money where I can pay more than the minimum
Try to remember that although debt can hurt for many things it does not make anything hopeless. Carrying high balances on credit card negatively effects your credit, but carrying lower balances does not. It's very strange. Of course I am not encouraging opening new accounts, but generally what the credit company is looking at is that you make your payments on time and do not carry a huge balance from month to month...not to mention that the interest rates on credit cards can keep your balances going up and up if you don't pay them off every month. If you can't pay them off- just pay as much as you can. When I complain of the financial struggle my mom always tells me to buy peanut butter, jelly, bread and pay your bills. Eliminate the luxuries (whatever they may be ie going out, etc) until you have decreased your debt. It sucks but once you look back on it, you will be happy you did it.
cache
11-08-2006, 02:10 PM
Whenever I read this thread title, I think of Groundhog Day where jls is the insurance guy saying "watch that step, its a doozy" or something like that. :huge:
Fashionista
11-08-2006, 10:57 PM
Credit Bureaus are not known for being quick to update negative credit or errors. If you have had late payments and things of that nature in the past just remember it takes time to regain a positive payment history. It's not a lost cause. If you have any error or complaints about items on your credit report- first contact the agency reporting it (credit card agency, etc) and then once you get it cleared up make sure to fax any documentation from the agency to the three credit bureaus and you may have to do this more then once.
EFX EQUIFAX CREDIT INFORMATION SERVICES, INC. (800) 685-1111
P.O. BOX 740241 (ORDER A REPORT)
P.O. BOX 740256 (DISPUTE AN ITEM)
ATLANTA, GA 30374
Web site: www.equifax.com
XPN EXPERIAN - NATIONAL CONSUMER ASSISTANCE CENTER (888) 397-3742
P.O. BOX 2104 (ORDER A REPORT)
P.O. BOX 9701 (DISPUTE AN ITEM)
ALLEN, TX 75013-3742
Web site: www.experian.com
TUC TRANSUNION CONSUMER SOLUTIONS (800) 888-4213
P.O. BOX 1000 (ORDER A REPORT)
P.O. BOX 2000 (DISPUTE AN ITEM)
CHESTER, PA 19022
Web site: www.transunion.com
thanks for the info, i'll save it in case i need it but there isn't anything untrue on the report, its just that even with me paying everything, even if its the minimum my credit scores sucks because of the fact that i was without an income for nearly 3 years
05girl
11-15-2006, 07:55 PM
I'm 23 and have a pretty low credit score. Although I do have credit card debt, my biggest debt now is my student loan - but I do know that that is not looked at as "bad debt." My other debt are various accounts - medical bills, utility bills - that are in collection. Oh yeah, and me & my sister's car loans (we both cosigned each other's cars since we were desperate for transportation). I definitely have some 60-day late payments on my record...
I could never pay the minimum on my credit card in college; eventually I just gave up. It went into collections and now has been charged off. When I got a "real" job this year I set up automatic payments that have been getting bigger every 4 months. I only owed about $2300 (the worst part is them majority of that is definitely interest and fees.. I think I only charged about $800 on the card).
I got a few credit card apps back in the summer. I applied to one but got rejected. As I am an adult now (boo), I really feel like I should have a CC for emergencies and to try to build back up my credit, since it looks bad when you don't have any credit lines. I've looked at www.creditcards.com to compare, and they list some cards for people with bad credit. Any advice? Should I apply to one of these cards, or should I try to get the prepaid debit cards?
ANd honestly, I feel the same way as some of you other people out there - it almost feels like it's not worth rebuilding the credit cause it takes so long to do it! And even when it does happen, will I have any money to enjoy it?
AshleyJordan
11-16-2006, 01:50 PM
I'd wait before applying for another credit card, personally. See if you can get a secured card instead.
starryedd
11-18-2006, 06:07 PM
So basically if you generate your free credit report through annualcreditreport.com then you will avoid getting suckered in to having to get a free month trial of crediting counseling? I just got a report through experian and went through the above website. I just want to make sure Im not missing something and it did indeed sign me up for credit managing.
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