credit building

[omegabrock]

what are some of the most effective ways of building credit? i have heard things from getting small loans and paying them off and get another one, to getting a credit card and keeping the balance low to paying the negative things off of your credit report. my credit was low 400's a few years ago and now it's mid 500's but it seems to be stagnant. i've heard stuff on your credit is supposed to roll off after 7 years, but i have a repo that is going on 9 years and still there...along with a lot of other medical bills from 06-07. i think those are the main things bringing my credit down and the amount owed is way too much to think about paying off right now. any tips?

[Denton]

I don't know of any other way than what you mentioned.

Watch your credit cards. Without me paying attention, the banks raised my limits to the point where sports cars could be bought with them. That scared the crap out of me when I realized it, being paranoid that thieves might do just that. I cancelled all but one card, and called that bank to set the limit and ask them not to raise it without me first asking.

Paranoia should be your close friend.

[1moretoy]

Pull your credit report and any accounts you don't use (even if they show $0 balance) cancel them and have the merchant send you a confirmation letter for record. Too much available revolving credit even if it has a zero balance, will drive your score down if left open.

[James m]

I had no credit and that was my problem. I paid cash for everything.
I was told to open a credit card and charge something and immediately pay it off to get good credit. Now I owe alot but my score is about 640?

[Slippy]

Credit is a Two Headed Monster that can bite a hole in your ass the size of Texas...or it can be an excellent business partner if managed correctly.

My advice is somewhat Age Driven. At my age (early 50's) I strive to be like Dave Ramsey and have a 0 credit score and pay cash for everything. But its kind of like our goal of living a Self Sustainable Prepared Lifestyle; It may never happen 100% but we strive for it.

But when we were young, buying homes and cars were obviously important things and credit played a big role. But times were certainly different back in the 80's and 90's.

Whatever you do, go SLOW. I recommend that you establish a relationship with a local community bank or Credit Union and forget the big mega banks. I've had an account with a Credit Union since I was a teenager back in the late 70's/early 80's and have used them for various things over the past 35 years from cars to short term loans etc. The relationship has paid off, but it took time.

Pay off the balance on any credit cards that you have EVERY SINGLE MONTH. One credit card is more than enough for most families.

Like others have said, Close Any Account that is still open and get a letter from them proving the account is closed.

I've got a couple of very small real estate loans on investment properties ($30k and $40k respectively) but that's it. We have not carried a balance on a credit card since the late 80's but we still put everyday stuff on our credit cards like gas, groceries and some monthly household expenses but that's it. And of course I use credit cards for business travel.

Good luck but remember, Prov 22:7..."The rich rule over the poor, and the borrower is slave to the lender."

[SquirrelBait]

Credit is a Two Headed Monster that can bite a hole in your ass the size of Texas...or it can be an excellent business partner if managed correctly.

My advice is somewhat Age Driven. At my age (early 50's) I strive to be like Dave Ramsey and have a 0 credit score and pay cash for everything. But its kind of like our goal of living a Self Sustainable Prepared Lifestyle; It may never happen 100% but we strive for it.

But when we were young, buying homes and cars were obviously important things and credit played a big role. But times were certainly different back in the 80's and 90's.

Whatever you do, go SLOW. I recommend that you establish a relationship with a local community bank or Credit Union and forget the big mega banks. I've had an account with a Credit Union since I was a teenager back in the late 70's/early 80's and have used them for various things over the past 35 years from cars to short term loans etc. The relationship has paid off, but it took time.

Pay off the balance on any credit cards that you have EVERY SINGLE MONTH. One credit card is more than enough for most families.

Like others have said, Close Any Account that is still open and get a letter from them proving the account is closed.

I've got a couple of very small real estate loans on investment properties ($30k and $40k respectively) but that's it. We have not carried a balance on a credit card since the late 80's but we still put everyday stuff on our credit cards like gas, groceries and some monthly household expenses but that's it. And of course I use credit cards for business travel.

Good luck but remember, Prov 22:7..."The rich rule over the poor, and the borrower is slave to the lender."

Slippy is good, Slippy is wise. Trust Slippy.

[SquirrelBait]

I don't know of any other way than what you mentioned.

Watch your credit cards. Without me paying attention, the banks raised my limits to the point where sports cars could be bought with them. That scared the crap out of me when I realized it, being paranoid that thieves might do just that. I cancelled all but one card, and called that bank to set the limit and ask them not to raise it without me first asking.

Paranoia should be your close friend.

I prefer to think of paranoia as reality on a finer scale.

Having said that, Anytime the bank does you a "favor" without you first asking give it the hairy eyeball...

[Inor]

Personally, I think having good credit and a lot of it can be as useful a prep as having a basement full of food. I travel so much for business that I need to have a credit card without a limit. I average between $2000 and $3000 per week when I am on the road in just normal travel expenses (airfare, hotel, car and food). If flights start getting cancelled due to weather or other unforeseen problems, that can easily balloon into an additional $1000 or $1500 depending on what city I happen to be stranded in. So, having a credit card with basically an unlimited line of credit has saved my butt more than once. Without that, I would be stuck sleeping at the airport on a mat on the floor.

That being said, the only credit card Mrs Inor and I have had for over 15 years now is an AmEx which requires me to pay it off completely every month. Also, at the end of the year I exchange the travel points I have earned throughout the year into AmEx gift certificates and use those to pay for new tools for my wood shop or "luxury" stuff for our home. (My shop is pretty much full now.)

So, like Slippy says, credit is a VERY valuable tool, but it needs to be used with restraint or you can get into a LOT of trouble real fast.

[Nightshade]

ok boss here's how you raise your credit. it is what i am currently doing and it is working well. open up a secured credit card with your bank of choice. only put small purchases on the secured card like gas at the gas station or a small grocery bill and then pay it off immediately once the pending goes through. do this for 4 months or until your credit is at 700. once it is at 700 apply for one more credit card. do not use that credit card except for small purchases like gas. despite what others have said not using a credit card will not hurt your credit, if you leave it open and do not use it it will not affect you. one other thing to note. never max out your limit..stay under 33% of your credit limit each purchase. pay that 33% off and then repeat the process on a schedule. i had no credit 6 months ago and now my credit is 730. ..research it a bit more, but what I'm telling you will work. take note of avoiding "Hard inquiries"...check that phrase out online it will help you

[omegabrock]

from my understanding, building credit from no credit is a lot easier than trying to fix it. i only have 1 credit card right now, limit is 300 and i keep the balance between $30-50. if i have to use it for something during the month, i pay it back down as soon as money comes in. i have a secured loan with a credit union that i took out when i first got my back pay from disability. that's been about 6 years now. it comes out automatically and is never late. also, i have a car loan and the wife has a lease...it just seems like my score is stagnant and isnt going anywhere. once i can buy a house, i would like to think i won't care anymore but damn...it's just waiting for this score to come up so that i can

[James m]

Did you try calling those companies to make sure they are reporting to the credit bureaus.

[Montana Rancher]

Sorry to rain on the parades of the prior posts but this is the main point.

1. you need to have credit and you need to make your payments on time

2. You need to have stable employment history (at least 10 years with the same company)

3. You need to have tangible assets.

You will not get over 700 credit rating with only a good payment history, you will not get over 800 without a stable employment history and you will not get over 800 without substantial assets

My suggestion after a lifetime of having 880ish credit rating is to avoid credit completely

That being said I earn several thousand dollars in Costco rebates, and Cabelas bucks gaming the system, (I don't pay any interest on these cards)

But I am older and benefited from the fiat currencies through the 80's and 90's and 00's.

[omegabrock]

hell, honestly i don't even care to have 700+...i just want it high enough to buy land and build a house lol

[Slippy]

Sorry to rain on the parades of the prior posts but this is the main point.

1. you need to have credit and you need to make your payments on time

2. You need to have stable employment history (at least 10 years with the same company)

3. You need to have tangible assets.

You will not get over 700 credit rating with only a good payment history, you will not get over 800 without a stable employment history and you will not get over 800 without substantial assets

My suggestion after a lifetime of having 880ish credit rating is to avoid credit completely

That being said I earn several thousand dollars in Costco rebates, and Cabelas bucks gaming the system, (I don't pay any interest on these cards)

But I am older and benefited from the fiat currencies through the 80's and 90's and 00's.

At the risk of making The Montana Rancher mad...(whose posts and life experience stories I really enjoy reading)...there are some inaccuracies in the assumptions of FICO Credit Score...which used to be the Fair, Isaac and Co score system.
Today, FICO scores are determined by some (but not limited to) the following criteria;

Payment History
Debt Burden
Length of Credit History
Court Judgements/Tax Liens etc

Also, please note that the highest FICO credit score is 850.

Please forgive me Montana Rancher and even though I am miles and miles away from you, please do not shoot me 'cause if there is anyone that can, it would be you!

Respectfully, Your Friend, Slippy

[Montana Rancher]

At the risk of making The Montana Rancher mad...(whose posts and life experience stories I really enjoy reading)...there are some inaccuracies in the assumptions of FICO Credit Score...which used to be the Fair, Isaac and Co score system.
Today, FICO scores are determined by some (but not limited to) the following criteria;

Payment History
Debt Burden
Length of Credit History
Court Judgements/Tax Liens etc

Also, please note that the highest FICO credit score is 850.

Please forgive me Montana Rancher and even though I am miles and miles away from you, please do not shoot me 'cause if there is anyone that can, it would be you!

Respectfully, Your Friend, Slippy

Thank you for keeping me honest, I get a credit report every year as I have Life Lock coverage and they send them.

If I misstated my credit rating it was an honest mistake, I was thinking 880 and it could easily have been 780. Since I have no debt at all it is easy to lose focus on the actual numbers.

Having a good credit rating just allows you to get into more debt, there are pros and cons to this thinking but IMO having less is better as we near the collapse

[omegabrock]

so, i pulled my credit yesterday from a site that is apparently more accurate in terms of what lenders look at and it was 611...the lending company i looked at said their minimum is 600 but it could also be worked around because im doing a VA loan and they look more to debt/income ratio. waiting to hear back on approval. the guy said he would let me know before lunch today. would have heard yesterday but the IT guys had to fix some stuff on his computer...all of this waiting is driving me up the ****ing wall...

anyways, for the prayers, i could use some. for those that believe in luck, send some my way. this is 1 step closer to my life long dream if it goes through

[1moretoy]

Hope it all works out for ya