Raven

What does a foreclosure do?

And, is a foreclosure worse or better or doesn't matter than, let's say, a bankruptcy?

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MikeB

If you are not using a card it is not a bad idea to keep it. The more cards you have at a 1/3 or less of the credit used, the more points you get on your FICO. The only cases where I would cancel cards like this is when the annual fees are not worth the extra point or two on the FICO score.

Mike B

Lane

i've got capital one card with a 19.8% apr and $2000 limit.. is it good or bad? i dunno, i always pay for my shit and never use credit

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Amputate Your Head

19.8 sucks ass bro

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Lane

i just never use them cc's, so i didnt care..

what % should i consider if i apply in the future? or is my apr gonna drop at all?

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Rictor

Use your credit cards and pay them off. Never be late with a payment. Call them up and ask them to give you a higher spending limit.

Get small loans and pay them off. Don't be late with a payment.

MissEve

I signed up for Equifax credit watch and its awesome, it notifies you withine 24 hours of any credit inquiry.

One thing to remember is that even if you pay off your CC every month it will still report the end balance on your statement to the credit bureaus.

psyko514

Nope. I work for a credit card company. When I'm making my decisions, I have to take into consideration that those cards can be maxed out at moment's notice. They may even be maxed out when I'm doing the review.

So when someone is doing a credit decision for you, they consider those cards as maxed out, even if they got a $0 balance.

Credit decisions aren't based solely on your credit score. When you're applying for a mortgage, a human makes a decision, and he/she takes everything into consideration, not just your credit score.

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psyko514

Your salary/income doesn't affect your credit score. The credit bureau knows where you work and how long you've been there, but they don't know how much you make.

When you apply for credit, they ask you that information and use it in conjunction with your credit bureau information in order to make a decision.

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ThunderBalls

Thats exactly correct especially with mortgage companies. The most important factor when it comes to getting a mortgage is collateral. I've seen people that had credit scores in the 500's get a mortgage with 20-30% down, although the mortgage company will make you pay off any chargeoffs and you'll get a higher interest rate.

psyko514

Yep
They'll also make you close all your credit cards or at the very least, pay down and lower the limits on them.

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PersianKitty

If you're going to order a credit report through one of the agencies I'd suggest grabbing Equifax's 3 in 1 with FICO. It will give you all three major reporting agencies along with their FICO scoring. You can get this through other places too, but what's nice on Equifax's is that you get a list of the addresses for all of your creditors and inquirors from your report. Makes it nice if you need to contact any of them.

Another reason for checking all 3, is that you'd be amazed at the differences between them. Some tend to hang on to weird things forever. Also some potential creditors may use one agency over another. If you're only checking on one and there's mess on the one they use, it doesn't you no good.

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beemk

they have to run a credit check every time u want a higher limit, credit check = bump you down a few points.

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Rose Crans

If you are going to apply for credit from different companies, try to group them together in the same span of time so it only shows up on your credit report once and doesn't hurt your FICO score so much.

Also, remember the Fair Credit Reporting Act which requires credit bureaus to remove any information on your credit report unless they can prove it's accurate within 30 days. If you or your attorney write letters about negative notes on your credit report, a lot of times they won't be able to prove something in that span of time just because of laziness and bureaucracy. If they can't prove it, they must remove the information.

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psyko514

that's not necessarily true.
most places work with a matrix determined by 2-4 items, including your current limit, your credit score, your internal bank score and your income.

for example, "He has a current limit of $3k, a score of 680 and $45k a year. He qualifies for up to $6k" etc.

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psyko514

The time span in between inquiries doesn't affect your score. The inquiries themselves do.
And when a creditor looks at your report and sees multiple requests within a short time span, you get labelled a credit seeker. "This guy is so desperate for credit, he's trying to get it everywhere".

Not only is that illegal if the information is accurate, it also defeats the whole purpose of credit history.

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Buffed Body

I don't know about the U.S., but here in Canada racking up a credit card and paying it off the same month (avoiding interest charges) does not affect credit rating at all. You have to maintain a balance and do payments to be rated.

My father found this out when he tried to lease a vehicle for the first time in his life. He didn't think he'd have any trouble since he used his credit cards for his business expenses, which averaged about $10,000 a month for years.

He had a zero credit rating because he never held a balance and his house had been paid off for over 10 years.

The dealership gave him the lease anyway because they looked up his business in the yellow pages in a 15 year old phone book.
lol

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Rose Crans

I'm sorry but you are wrong. Here's the text of the law.
Fair Credit Reporting Act

Maybe by illegal you mean unethical. Yes it's probably unethical but it's not illegal.

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hyper

secured or collateral loans do not go on your credit report
so dont waste your time

i suggest getting a decent credit counselor who knows their shit rather than getting steered in the wrong direction.

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AllisonWonderland

You will need more than a decent credit score to get a mortgage. If you can't provide proof of sufficient self-employment income to satisfy your lender's requirements, you can check into a "no documentation" loan. The rates are higher, but much less proof of income is needed. Also, if you changed jobs often, lenders like to see that you stayed in the same line of business.

hyper

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iroc409

it sucks, but for car loans and stuff you can actually have *too good* of credit. mid-700's is probably about the best situation to try and stay in.

and, oddly enough, the beacon score does not mean everything. you'd think it would, but it only serves as a pretty good guide. so, when watching your beacon, pay attention to the other stuff. you actually can pull a 750 or better, and not qualify for financing. conversely, you can pull lower numbers and still have good credit.

it sucks that it is possible that sometimes for a car loan a person that pulls a 400 can get financed easier than someone with a 750.

something to remember about cars though. it's a lot easier usually to get financed than some people think, especially at larger dealerships and stuff.

if you do have crappy credit, and want to get financed, i'll give you some tips. you're going to have to get something (as of now) 99 or newer, most likely. a new car is easier to finance than a used car (from a risk standpoint.. they want to get their money back if you bail). so, generally go for a cheaper new car. you're gonna get stuck with a nasty interest rate, period. here the cap is 18%, so expect somewhere in low to mid teens. although, in states that do not have caps, it might be even higher than that. of course, downpayment makes a difference. around here i know if you put say $6-7k down on an eclipse, they'll automatically bump you to tier a financing, their terms for perfect credit. that's nice of them, because with that you can get the good rates.

if you are buying a used car, and can provide good utility statements and check stubs (or tax forms), some of the more off-beat financing companies will buy your deal, although sometimes you have to give them an extra $1k just to do the deal.

if you're trying to buy a car or something though and have *no* credit, you're just about as good as fucked. nobody in the car financing world generally wants anything to do with something like that, except maybe a buy-here-pay-here. bad credit is better than no credit.

just thought i'd add my

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nevermind

I know something about this so maybe this information will be helpful:

There are THREE things lenders consider when granting a home loan. Credit is only ONE of them, but it is not the end all be all of getting a mortage.

Lenders generally consider the following:

1) Credit
2) Employment
3) Cash


If you meet the criteria for at least two out of the three items listed above --- you're generally in pretty good shape. If you only meet one of the criteria, you still can get a mortgage. But all of the circumstances change depending upon your situation.

Let's start with a typical conventional loan.

1) Credit --- The lenders generally want a credit score of at least 620, and no late payments or collections for the past two years. Even if you've had a bankruptcy or foreclosure, as long as you've been clean in the last two years and have that 620 score or better -- you're credit is generally considered ok.

2) Employment --- They usually look for two years steady employment with W-2's to prove your income. If you're self employed, tax returns will do the same.

3) Money --- Let's say your credit is screwed up, but you still have a good job with steady income. Or, you're credit is great, but you just lost your job and have no steady income. If you have the cash to make a 20 percent down payment --- which substantially reduces the bank's risk --- you can still get a conventional mortgage.

BUT --- If you also have a lot of existing debt, that can screw up your application --- especially if you're out of a job. And, even if you do have a steady job, you have to make sure that your debt payments aren't so high that your NET income isn't enough to cover living expenses and, of course, the mortgage and property taxes.

Now, assuming the you don't have any major existing debt payments ... but you've got other problems and only meet ONE of the criteria mentioned above ...

You can still get a decent mortgage, but usually with a government guaranteed loan program -- typically FHA. However, you still would have to cough up some cash --- usually a three percent down payment plus closing costs which, give or take on the home price, fees, etc., could add another $5,000 to the bill. (The costs are much less if you served in the military and qualify for VA no money down loan, but that's another story.)

Then, if all else fails, you can do what is called an 80/20 loan for high risk borrowers. Basically 80 percent of the loan is financed at low conventional mortgage rates, but another lender puts up the 20 percent at high interest rates -- typically 11 percent. A lot of people do this to rebuild their credit and refinance the 20 percent after two years. But if you try to refinance before the two years has passed, there's usually substantial penalties running into the thousands.

There are also lots of other goverment programs which will help you buy a house. For example, one program involves the government buying the house, you "renting" the house by making the mortgage payments, etc. for two years and, after you build your credit back up --- you buy the house from the government in two years. But you have to qualify as a low income borrower.

As you can see, there are lots of ways to qualify for a mortgage.

Mr.Fiction

Interesting post.

nevermind

I forgot to mention that you probably still need a steady job and decent income for a government or high risk borrower loan ...

But if you have that, you can still qualify with lousy credit ... as long as you have some cash to close ... depending on what the loan requires. But in many cases, the cash requirements aren't that bad.

And, I do know people who have lost their jobs and gotten mortgages ... mostly because they had the cash to put down 20 percent and they had really great credit.

nevermind

Foreclosure is generally considered worse than a bankruptcy but, depending upon the situation, you still can get a mortgage.

A lot of it depends upon how much time has passed since the foreclosure. Most lenders require two years, but a tougher lenders will require three years. If you want to get an FHA loan, for example, I believe the rule is three years.

BUT, you also have to figure out how the lender is going to count that time period.

Some will require that the 2-3 year period start the day the bank seized the property. Others will require that the 2-3 year period start the day the bank resells the property to someone else.

A lot of it can also depend upon when the foreclosed lender stops reporting the debt as an open, deliquent account on your credit report.

But, once you clear that time period, AND --- you've rebuilt your credit score to 620 or higher --- then you're pretty much in the clear.

You'll still have to write a letter of explanation, etc., but --- assuming you don't have any other major problems --- you'll be ok.

nevermind

There's actually a lot of debate about this point. And you'll hear different opinions from different credit experts.

But I can tell you that one expert whom I really trust says it's best to try to keep a maximum of FIVE credit accounts open at any given time --- no more than that.

Not five credit cards, but five accounts total. Meaning, if you have a car payment, and a mortgage payment --- then you probably should have only three open credit card accounts --- just as an example.

You may think it looks good to have a bunch of credit cards with open credit lines that you're not using ....

But if you're applying for a mortgage, the bank will worry that you might use those accounts and run up huge balances in the future.

As far as your credit score, the ONLY thing that really boosts your score is making payments. LOTS of them --- on time.

And keeping your debt to a minimum ...

Sly_RJ

Another question...

Discover sends me a report (quarterly I believe) listing some of my credit information, open credit lines is one of them. I was looking over my report today and found two "open" lines of credit that I no longer hold. One was NextCard (now defunct), and the other was an old bank account. How do I get these closed and off my report?

Also, do "store" credit cards affect your credit score in any negative way? I have 3 standard credit cards and I just received a Best Buy credit card, should I drop my Best Buy card ASAP? Or is it fine to have?

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nevermind

First, you want to check your credit reports with the three credit bureaus: Experian, Equifax and TransUnion. You can sign up for all of them and access their reports online for a minimal fee.

If they're inaccurately reporting those "open" accounts, you can ask them to remove them. It usually takes about 30 days.

And most of them offer what's called a 3-in-1 credit report --- where you can access all three bureau's data in one report.

That's really great and convenient BUT .... let's say you bought the 3-in-1 credit report from Equifax for $30, but the report is showing that TransUnion --- NOT Equifax --- is reporting the inaccurate information. Even though you paid Equifax the fee, Equifax can't correct it. Only TransUnion can ....

So ... You're still going to have to sign up with TransUnion's website to correct the information --- and pay them the $10 fee or whatever they charge for their individual credit report (this is not necessarily true in all states , but it is true in California where I live).

Therefore, I would recommend signing up with all three sites and paying the $10 (or whatever) each so you can dispute any information easily with all three bureaus. I know ... it's a pain in the ass ... but that's what they require. And ultimately it's alot faster because you can dispute the info online or by calling them.

To answer your second question: Keep in mind that the recommendation to keep only five open accounts mostly applies to when you are applying for a mortgage. And, even then, you can probably get away with six or seven open accounts --- as long as you don't have other major credit issues or other problems.

BTW ... I'm not saying that you won't get a mortgage if you have a lot of open accounts. It all depends upon the individual's circumstances. But you look a hellava lot better when you don't have a lot of open credit.

However, if you're not applying for any major credit like a mortgage --- Or, only applying for easier credit like a car loan or something like that --- more than five open accounts isn't a big deal. But you really don't want those open accounts to pile up in a major way because you never know if you'll need to refinance, take out a second on the house ... whatever.

Sometimes a store credit card can be great ... especially if you're paying off those balances every month. That DOES help your credit score because it's the PAYMENTS that matter --- especially when you pay them off. It's particularly helpful if, let's say, you've just declared bankruptcy (just as an example) and you need to establish some good credit really fast.

But if it's just sitting there as an open account that you probably won't use very much --- and you've got other cards to pay Best Buy --- I'd close it.

goBigtime

I'm sure there's a reason there is a Fair Credit Reporting Act.

Could it be perhaps that in the past, that credit reporting agencies have been unfair? Dare I say.....unethical even??

nevermind

Not exactly. If the balances are very small, as you described, that's probably true.

But if the balances are very large, that debt is going to count against you when you apply for a mortgage.

So paying 30 percent on a large balance is going to help somewhat but --- the balance itself is still going to hurt you.

RhondaG

After reading this thread I decided to do some investigating into checking my credit and cleaning it up if necessary, as I want to build a house next summer and I want the biggest house I can get lol. I don't want to pay high interest rates etc.

What I found is that there are FAKO scores (the scores that you get on your credit reports from anywhere else but http://www.myfico.com) and REAL FICO scores.

You need to know your real FICO score which can be bought here http://www.myfico.com they are $12.95/each but it's the most accurate reflection of what a credit card or mortgage company will see when you apply.

Sometimes the FAKO is the same or lower but I found with my reports they were much higher, leading me to believe I had a much better score than I did.

Some boards to help you learn laws, the process on cleaning up your credit etc can be found here

http://www.faircreditmovement.com
http://www.creditboards.com

You'll also find what cards are best to apply for when you have a certain score etc. You can even find out what company pulls what Credit agency report when you apply for their credit cards, etc. Arm yourself with the tools to make sure when you need or want credit in the future you get it!


There are laws that the Original Creditors, Collection Agencies and Credit Reporting Agencies MUST follow and if they don't better for you!

It's not illegal nor immoral to dispute a tradeline that is not 100% accurate and proven that you owe it in the first place. I won't get into specifics here but even if 100% of your report is accurate in your mind, you can get rid of most or all of it Read the boards!

You'd be surprised at the mistakes I found on my husbands and my reports and I'm talking legimate innacurracies like him having a $200,000 loan when he's never had a loan in his life!

After reading up on this I found that there was some, not so 100% accurate, information posted here by some well meaning individuals and I just want to give you all the resources to learn what is accurate. There is a formula to everything you just need to do alot of reading to get it right

oops forgot to add that at myfico.com you can actually read up on what contributes to your score. What percentage is length of credit, what percentage is debt to income ratio etc.

Elli

I was in the same boat a while ago. The bank told me to take out a small personal loan for about 5000$, then pay it back over a year. I put it on automatic withdrawal payments to make sure it was all done on time, and voila! Credit! The next year I bought a house and got the mortgage from them.

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Techie Media

This is a great place to start.
www.myfico.com

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sales [AT] techiemedia.com

detoxed

www.equifax.com sells your Fico score and credit report for $12.95

VirtuMike

One day someone will stand up to these people. Think about it. They do in fact conspire to make rules across the board. They tell you that you have to have loans and other financial histories, but all of those financial histories cost you money to get. That represents their profit. Basically they are conspiring to force you to pay fees to themselves for you to get loans, and by using these three agencies, they are monopolizing the flow of money.

Someday a lawyer might see some profit in this and take a swing at the system.

Seeing our new Canadian-American webmaster getting screwed because he has no history and is forced to buy a history just twists my gonads.

The only satisfaction I see from this whole process is that bank employees make squat and the only excitement they get all day is talking about last night's Friends episode while standing around a water cooler - A WATER COOLER *I* PAID FOR.

I'm 2/3 finished with Atlas Shrugged and I am learning so many things.

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BradShaw

Amazing to see how different your posting style is now compared to in May. You made alot more sense then. Back to step 1 of 12?

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This sounds like a plan endorsed by Tom Vu

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rowan

In Australia you don't get a credit rating - just a 7 year history of enquiries and defaults. If a company checks your record, it generates a new entry explaining the reason for it (eg application for a $10,000 loan). If you default then that also gets listed, even if it is paid off after listing.

It's up to you to prove that a loan which was applied for, was granted and then paid in full.

I recently applied for a home loan so I ordered a copy of my credit report to check that everything was fine. I was surprised to see only a single entry... an enquiry regarding a car loan last year (which I was approved for). In the past 7 years I've signed up with several new utility companies as I moved, signed a couple of mobile phone contracts ('free' phone so they are giving me credit), and applied for two credit cards. None of them were listed.

It's possible that when I applied for the car loan, my credit history for the 7 years prior was completely blank!

rowan

Oh yeah, in aussieland credit cards are considered a liability too, even if you pay them off without fail each month. It's something like a long term loan, rather than a bunch of short term loans. I pay mine off each month, and instead of getting brownie points with the bank, it gets a $2k monthly liability listed on my app.

spankstrocko

Anyone know anything about the firm www.lexingtonlaw.com?

I have heard from some people that they are good, but honestly I am not sure. I wanted to see if anyone had any personal experience with them first.

I am trying to get some things off my record that are hurting it that should not be on there.

Spankstrocko

twistyneck

I've heard good things and bad things. I'd try to do it myself first. There are TONS of resources online to tell you how to do it.

Jamie

I'm currently using Lexington Law firm, if you're like me and don't have time or want to hassle with disputing they are the way to go.

I've had 4 things completely removed from my credit in the last 30 days from two bureaus. Even if the information on your credit report is "valid" you can still have it removed. I had 3 things removed from Equifax within 2 weeks. Experian took 30 days. Still waiting to hear back from Trans Union.

The fair credit act states, if the creditor doesn't provide proof of the debt back to the bureau within 30 days. The bureau has to remove it from your credit. Most of the creditors don't have the time to respond to disputes or are usually very unorganized. So it's pretty easy to have things removed.

I also know someone who works in one of the bureaus credit dispute section. They said they get so many disputes they don't have time to really investigate each one. They remove 90% of the disputes that come in.

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spankstrocko

Sounds good. I may give it a go.

Spankstrocko