Not the most *fun* topic but heck, it's keeping me from eating!
I'm still fairly young (ok very young, 23! hehe). But, my credit *sucks*. When I was 18 I did the typical dumb credit card thing and ran up like $800 in debt (I know, that's really nothing in reality). Then, I had signed up for some tanning salon when I was like 19 and never ended up going but didn't know until years later when I checked my credit for the first time that they charged me like $600! Then, my 'mother' (who I do not and never will have a relationship with) decided to *use* my credit and rung up another $500. In total, I apparently have about $1900 in debt, all of which is either charged off or closed now. I know that's nothing compared to some people that have $20k+ in CC debt, but my score is still 'Very Poor'. We use my DH's credit for everything and have been working on making his GREAT, which it is now... no debt, great accounts, etc. But, mine still sucks! However, some of the cards/accounts that we have together still reflect on MY credit, which I think is good(?). I didn't really think it was an issue until today when I wondered 'what if', as in 'what if' something happens and we are NOT together forever... what if he gets hit by a train, etc. Crazy thoughts! So, now my question... if anyone has ever had *poor* credit, how did you *fix* it? I can't pay things off (or I would!!) since everything is closed/charged off now... I had moved a lot and I never knew of any of this, so it's really a big awakening! But, how can I *make it better*? Since I can't obviously get approved for cards to make it better... what else CAN you do?
I've visited with a credit counsellor a couple times with my bf. Basically one option that you can do is get a secure credit card. All of the major credit cards offer them (Visa, MC). Basically, it's like a debit card. You can put an amount of money on the card, like say $250... and then you use it like a credit card, and then when the statement comes in, you "refill" the amount to the full $250. That might help you out. Other than that I'd definately recomment going to see a credit counsellor. The one that we went to see was amazing. No scolding was involved! Best of luck, I know the whole topic of credit stresses me out to no end!
We may as well have the same story... After being young and dumb, I had no idea how to get my score up. I had a few rejections first, but I was finally approved for a credit card. My limit was small ($200), but that was a good thing. I was never ever late (well, one time...) and I always pay more than the minimum. I would also recommend putting some of the bills in your name ( cable, electric, cell phones, whatever), because if you are always on time, that helps. My bf and I bought furniture together this weekend and while his credit is excellent, we applied for financing as co-applicants and were approved without a problem.
The only problem you may have with the utilities in your name is you may have to put a deposit down.
I suggest doing the secure credit card thing.... it really does help.
Getting utilities in your name might be a good thing in terms of having something show if you apply ofr something BUT those aren't reflected on your Credit score so on paper it doesn't really do anything.
For your sanity, do keep in mind that, while overwhelming, the amount IS, relatively speaking, small .... and manageable. If you are paying it off, keep at it in a very steady way. If and when you and your hubby decide to make a big purchase (furniture, car, etc) do try to get credit in BOTH your names. In fact, if you SAVE money in order to BUY something, I'd still vote for buying it with finanacing, and use that money you had intended to pay cash for it to pay it off in a couple of installments... you'll have a recor'd of it then. It's nice to say "but I'm being responsible and paying cash for everything" but paying cash does not a credit score raise
It takes time, and is hard to be patient, but it can be done. Whatever you do, don't fall for one of those "we'll consolidate your debt for you and talk to your creditors for you"---- that SCREAMS "don't give me credit" for the next 7 years.
Why can't you pay the debt? Being charged off is an accounting term, not an excuse from the debt. It just shows that they showed a loss from it - if you pay they will have to show that. Have you contacted the creditor? I would do some investigating and pay the debt. If you can make a settlement with them...like paying a lump sum of 70-80% of the debt, I would try for that also - get it in writing before you pay it though. BUT this debt is payable and should be paid. If they are excusing the debt then ask them for that in writing and have it fixed on your credit report. And no, I'm not a debt collector - I've just been there and I swore to myself that I never would be again and I haven't.
As far as the secured credit card thing - you can pay someone else interest for a credit card or you can have someone else pay you interest through a savings account or growth mutual fund. It all depends on what you have to invest. In the amount of time it will take for you to build up a decent credit score, you could get a great nest egg going plus the cash to buy what you want to finance - and if you already have one going you can make it that much larger.
If you do decide to go the credit route, just make sure you have a few months of expenses (all debts) saved up just in case something happens to you or your dh so you don't find yourself in the same boat.
Btw, putting some of the utilities in your name and paying on time was an excellent idea. That's simple prioritizing.
The ONLY way to get your score up faster is to pay some of those old accounts then to contact those companies to see if they will remove their item from your credit reports. Otherwise, it's going to be a slow process. Sounds like this happened quite a few years ago. If so, you're already headed towards a cleaner report. They can only remain on your credit 7 years from the date they were charged off/closed. After that, any new credit (like that you hold jointly with your husband) is going to be what shows up. If you don't have any new credit, it will be worse than having bad credit, as you will be considered a ghost and even harder to get credit.
You are still relatively young and your credit score can be rebuilt. I went thorugh the same thing when I hit college. Fortunately I was able to get into a good consumer credit counseling. They spoke with my creditors, got some forgiven, and others the interest was cancelled until I paid off the debt. It helped tremendously.
Once my dh and I got married, we made sure to get most of the utilties in my name, one credit card in my name only. Then the house and big things are in both our names. It was slow. You have to show a pattern of consistantly paying your bills on time after several years your credit will slowly improve.
Don't pay cash for things that you can get financing for-I know that sounds really bad and counter everything our parents taught us, but when you pay cash you don't leave a credit trail. Get a loan and pay it off rather quickly. Don't make the minimum payments on credit cards, you'll be paying them off for decades and be paying tons of interest if you do that. (of course the credit card people love those who pay the minimum)
You are in pretty good shape with such a small amount of debt, just be careful from now on. Hide your credit card from your Mom. Does she not realize how bad that was? Has she done anything like that since?
Hello!!! I'm new to the board and must say that there is some very interesting stuff out here.
Anyway, you should check creditboards.com I was in your situation and ran across this board and now my credit scores are in the high 600s. After 5 mos. of working on my own credit, I was able to get an AMEX card.
Check it out!!! I must forwarn you though, you have to READ, READ, & READ!!! Start reading the Newbies section.
As far as the secured credit card thing - you can pay someone else interest for a credit card or you can have someone else pay you interest through a savings account or growth mutual fund. It all depends on what you have to invest. In the amount of time it will take for you to build up a decent credit score, you could get a great nest egg going plus the cash to buy what you want to finance - and if you already have one going you can make it that much larger.
I completely agree with you. The best way to stay out of debt is to not get into debt.
If you get a secured credit card, pay it off EVERY MONTH. Who cares what the interest rate they charge you as long as you pay it off EVERY MONTH. That may mean putting limits to how much you spend.
One way to build a nest egg is to pay yourself first. You get your paycheck (or DH's check) and immediately put $20 into a savings account. If you never see the $20, you never miss it.
DH and I are firm believers that you should never finance a depreciating asset (anything besides schooling or housing). Of course we learned the hard way that we really don't like paying Bank XYZ money outside of the principal we owed.
We each have paid off vehicles. In a couple of years, we will trade in my vehicle for a used SUV for a family we hope to start but we will be paying cash.
We have been very fortunate that we have both been well-employed, we both have college degrees, and we don't have to live the 'high-life' to feel like we are living.
Sarah - I would have to disagree with you on the 'don't pay cash if you can finance it because of the paper trail'. That's what receipts are for. Now, some people can get the 0% financing for furniture and appliances and I think that's an 'ok' thing to do but paying cash for something and then knowing it's yours, not some financial institution's, is a great feeling.
The only debt we have is our home (and we plan on paying that off very soon. In the area we live and for the amount of $$ on our mortgage, the tax advantages are not that great when you write off the interest). And a lot of people think we are nuts for having only that debt and are trying to pay it off so soon (less than 2 years to go). We have taken alot of slack over this whole house thing but we both do activities we enjoy and both know our priorities (no new vehicles no matter how much i want one, we don't have cable or satellite TV, and no fancy vacations, etc...). In two years whe we are living in a paid-for house, we will be sitting pretty. But, not everyone can do that and I completely understand that.
What I'm saying mostly is that people can live debt-free if they choose to. It may mean you have to make lifestyle changes, etc...but everyone can do it.
Thank you all SOOO much four your input! I did not know that I could still pay off that debt... I am glad to hear that I can, so I will try to contact them! We only buy what we can pay for now and we pay everything off right away. We have bought some things with installment plans that we could have paid right out for, just to let them *sit* and DH's credit has gone WAY up that way.
I understand being the minority and the comments that come with it. I believe that my best tool to my future is my income, not my credit score and that's what I teach my children. Congrats on the mortgage pay off getting so close. You will love having a paid off mortgage - I know I do. DH and I are debt free and that's been nothing short of a blessing - it's our status symbol.
While true that income is most important, credit scores can effect more and more things from the amount you pay in auto insurance to getting your next job. Knowing about and doing something about your credit is very important whether you use it that much or not.
The issue of financing an item is not about which is better, but the question here was specifically how to rebuild your credit. Having a financed item go through your credit report and paying it promptly will help build your credit. Otherwise, it would probably be best not to finance it. Also, you may want to make sure that wherever you are financing does report, because not all companies do unless there is a delinquency.
One thing to note - those items will drop off of your credit report 7 years after the LAST activity. If you contact them now, you will reset the date to now and it will take that much longer to have them leave. They will say something like charge-off repaid, but they will most likely not disappear. You still may want to pay them off, but it won't necessarily help you that much credit wise. Also, you can make comments on your credit report that will be seen by people reviewing your credit if there was a case where someone else used your credit.
It may be different now, but I had similar issues when I was young and the way I built my credit back up was to get a gas card from BP/Amoco. It was only a few hundred dollar credit limit, but I made sure to use it every month and pay it off immediately. Be careful of beginner credit cards as they can have VERY high interest rates and in many cases no grace period (interest will start accruing from the moment you make the purchase).
One site I would recommend is Motley Fool - they tend to have good info and a fun attitude: http://www.fool.com/ccc/check/check.htm?source=LN. Like most places, they will try and sell you a credit report. If you haven't actually seen all three of yours (there are different agencies and they are not all the same) it may be worth the money. Of course if you have been turned down for credit then you can get a copy (usually from one company - whichever one was used to check your credit) for free.
... Like most places, they will try and sell you a credit report. If you haven't actually seen all three of yours (there are different agencies and they are not all the same) it may be worth the money. Of course if you have been turned down for credit then you can get a copy (usually from one company - whichever one was used to check your credit) for free.
Just wanted to let you know too - in many states, you are allowed to get a free credit report from The Big Three companies (Equifax, Experian, TransUnion) once a year.
As far as rebuilding your credit, I did it to mine by working with a non-profit debt counseling agency (Debt Counselors of America). It was a tough slog, but worth it.
When I was younger and dumber, I had about $15,000 (I think, could've been a couple thousand more... yikes!) in credit card debt when I realized I was in way over my head! I had to cut up ALL cards, close ALL accounts, and DCA negotiated with all my accounts, and I would mail DCA a combined monthly payment which they then dispersed. They also (for a small fee, I think it was $15) would go on the attack when a creditor "forgot" to apply a payment or whoops, "accidentally" raised my APR. I think they were a huge help to me... Edited to add: As far as black marks go, there are safe non-profit agencies and then there are scammers. Did DCA look great to credit agencies? Probably not super, but then, I was indeed paying off the debt, I was not declaring bankruptcy... and years later, my credit is good enough to get a very low-rate credit card (6% APR) with a $3,500 limit, which is the lone card I have.
I am still VERY wary of credit, at least as far as me having a big chunk available. I prefer to use "real money" but as needed, credit can be a valuable tool. Just be careful with it!
Last edited by BerkshireGrl; 03-28-2006 at 04:27 PM.
Well, I once had very bad credit...in college...unexpected pregnancy... I've been with my husband since 1998 and he started being the bill payer and now my credit is better than his. He's a much better bill payer than I am. He sits down every week and pays off everything on the desk. STart now paying everything on time and those 7 years go by faster than you think!
Also, I've heard that going to a debt consolidation agency is VERY bad for your credit. Like, you're breaking a contract to pay "X" amount of interest and fees...you signed it and they want to hold you to it (the credit card company) and then the agency calls them off and they don't like it and is shows up as a HUGE black mark on your report.
As year after year goes by and you have an excellent record of paying on time, the people that you contact for big things, like buying a house or car, will look into your poor credit score and assess why its poor and may still consider you . Probably at a higher interest rate, buy they'll consider you. Credit cards will get a number and say, "NO!" if they don't like the number without looking into it.
But, it is a glorious day when you get that A+ credit score after 7 years of angelic payment history. Good luck in whatever you do!!
Thank you all SO much! I have learned so much through this thread! I can't believe that such a small amount of money has totally ruined my credit. Yuck.
I hadn't looked into a secure credit card, but should I? If they will really help, I'd definitely love to try it.
We have no intentions of acquiring any debt, but we do plan to purchase a home soon and when it comes down to 'what if', it makes me want to 'fix things' just 'in case', kwim?
Credit *stuff*
When I was 18 I did the typical dumb credit card thing and ran up like $800 in debt (I know, that's really nothing in reality). Then, I had signed up for some tanning salon when I was like 19 and never ended up going but didn't know until years later when I checked my credit for the first time that they charged me like $600! Then, my 'mother' (who I do not and never will have a relationship with) decided to *use* my credit and rung up another $500. 
In total, I apparently have about $1900 in debt, all of which is either charged off or closed now. I know that's nothing compared to some people that have $20k+ in CC debt, but my score is still 'Very Poor'. We use my DH's credit for everything and have been working on making his GREAT, which it is now... no debt, great accounts, etc. But, mine still sucks! However, some of the cards/accounts that we have together still reflect on MY credit, which I think is good(?). I didn't really think it was an issue until today when I wondered 'what if', as in 'what if' something happens and we are NOT together forever... what if he gets hit by a train, etc. Crazy thoughts! So, now my question... if anyone has ever had *poor* credit, how did you *fix* it? I can't pay things off (or I would!!) since everything is closed/charged off now... I had moved a lot and I never knew of any of this, so it's really a big awakening! But, how can I *make it better*? Since I can't obviously get approved for cards to make it better... what else CAN you do?
Best of luck, I know the whole topic of credit stresses me out to no end!
I had to cut up ALL cards, close ALL accounts, and DCA negotiated with all my accounts, and I would mail DCA a combined monthly payment which they then dispersed. They also (for a small fee, I think it was $15) would go on the attack when a creditor "forgot" to apply a payment or whoops, "accidentally" raised my APR. I think they were a huge help to me... 
