YOUR CREDIT SCORE: Do You Really Know?

  • HndsmKansan

    Posts: 16311

    Apr 05, 2009 11:41 PM GMT
    So I'm in the midst of doing a sort of fun thing.. I'm buying a new car..

    Here I talked over the last month about GM and whether it was really a good time to buy a new car.. and I remember last year I even ask you all what types of vehicles you recommended that were sporty and very good with gasoline mileage for gas purposes.

    Sooo the negotiations start. I did my homework as any analyst should. I walked out when they wouldn't give me what I wanted for my 2006 trade in.
    (They later relented)
    The rebates improve... $4,500 off now... and need to examine whether 0%
    financing will be best with a little rebate, or to take it all.

    I know my credit situation so I'm pretty confident about whats up....

    Then as all fall into place and my credit report is pulled, the finance people come out a little confused, "Are you aware you have a state tax lien on your record from 2003 for $101.00?"

    Yes.. and I was not happy. Due to an little (and it was) disagreement with the State of Kansas on whether I got a refund in 2002, I was aware that one of the 3 credit reporting agencies STILL have this intact (thus lowering my absolutely perfect paying history to a credit score of 750)... Not something you like to see, but all went fine.

    Credit is SO VERY IMPORTANT. Do you know your score and do check it frequently? Its more than just a percentage charged for a loan, poor credit can hit you with your job or a place to live........
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    Apr 06, 2009 1:04 AM GMT
    It's sad that our credit scores have such an impact on our lives. A lot of companies are checking credit scores as a prerequisite for employment. Insurance companies use your credit score to determine risk. Low score? Then expect higher premiums.
  • Webster666

    Posts: 9217

    Apr 06, 2009 2:45 AM GMT
    My credit score was somewhere over 800 when I bought my house.
    I haven't checked it since.
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    Apr 06, 2009 3:29 AM GMT
    HndsmKansan said Do you know your score and do check it frequently? Its more than just a percentage charged for a loan, poor credit can hit you with your job or a place to live........


    Yes, I know it. I keep track of it. You need to realize that do keep constant track of all three agencies credit scores on you, you'll probably have to subscribe and pay a little monthly fee, though.
  • silverfox

    Posts: 3178

    Apr 06, 2009 4:27 AM GMT
    I have LIFELOCK and yes I know my credit score and yes I know immediately if anything major changes ......

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    Apr 06, 2009 4:30 AM GMT
    silverfox1 saidI have LIFELOCK and yes I know my credit score and yes I know immediately if anything major changes ......



    I forgot to add...I just refinanced using aimloan.com. As soon as filed the application and electronically "signed" the document, I got an email that listed my three credit scores (with the major credit scoring agencies). These scores were used as the first springboard decision point on my loan app.

    It's important. Protect your credit rating.
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    Apr 06, 2009 4:30 AM GMT
    mine is exactly 720 which is great considering i'm a college student with two degrees and getting another one and i've never had to take out one student loan.
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    Apr 06, 2009 4:30 AM GMT
    Countrywide apparently had some information theft and gave their mortgage holders a three year credit monitoring subscription. So, every month I get emailed my credit report if something has changed. It's actually pretty sweet knowing exactly what makes my score go up or down. It also helps when I need to use the credit for a purchase because I'm educated.
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    Apr 06, 2009 5:06 AM GMT
    Yes. I've worked for a Credit Reporting Agency and, while the scores themselves are somewhat bull in that they aren't consistent (there are hundreds of public scoring models and endless private ones), I don't ever want to have to call in and get the same excuses I got when things went badly.
  • MSUBioNerd

    Posts: 1813

    Jul 27, 2009 8:38 PM GMT
    In general, CreaseHem, few of the loan consolidation companies are truly in the best interest of the consumer. Many of them will advise you to stop paying any of your creditors, send money to the consolidation people, and the consolidation people will attempt to negotiate with your creditors. The problem is that your creditors don't actually have to listen to the consolidation people, and thus you'll incur penalties that will add to the principal of your debt, and make it take even longer to get out from under it.

    If you're carrying substantial debt, your best bet is to slash your discretionary spending (including things like high speed internet access, cable television, eating out, any fancy coffee drinks, all-inclusive cell phone plans, etc.), determine which debt source is charging you the highest interest rate (for many people, that's a credit card; for others, it might be privately-backed educational debt as opposed to governmentally subsidized student loans), make the minimum monthly payment of everything else and pay off your biggest interest rate debt as soon as possible. Then switch the biggest remaining interest rate. If you keep it up, you'll accelerate the pace of getting out of debt, as each month a greater and greater percentage of what you're paying will go to the principal, not the interest. Draw up a budget and stick to it; as tough as it may sound, it's thoroughly possible as a single person to feed yourself on $30 a week. You can get DVDs to watch and books/magazines to read through most public libraries. And you can even do a lot of exercises without a gym, particularly in the summer.

    There are a few types of debt that won't hurt you over the long run, and making the minimal monthly payments is fine; primarily these are mortgage on a place you can actually afford (in general, your mortgage + property taxes should be no more than 31% of your income) and student loans. Car loans aren't always a bad idea. And sometimes even if you have the cash up front, you can get a better deal by taking up an appliance or a furniture dealer on a 0% interest loan for 6-12 months, as long as you're careful to pay it off as soon as the introductory terms end. A lot of people, though, get into debt for poor reasons, trying to live a lifestyle beyond their means with clothing, vacations, meals out, and entertainment that they simply can't afford. Or they live paycheck to paycheck, never building up any savings or investments, and then run into huge problems if they lose their job or try to retire. Even in your 20s you should be able to contribute to an IRA, even if that's the only investment you can afford at the moment.

    As for the original topic, all 3 of the major credit reporting agencies report my credit score as above 800--a spotless record on paying off my credit cards in full each month helps, but the relatively low income I have as well as a lack of history of things like student loans or car loans keeps them from reaching all the way to 850. I check them only about once a year.
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    Jul 27, 2009 8:47 PM GMT
    Credit scores aren't always the best measure of your financial freedom. They are however a measure of how well you can manage debt.

    For example. A person who never uses credit cards, has no loans. and has a million dollars in the bank has nothing to worry about financially, but will no doubt have a poor credit score. However a person with substantial debt but still manages to make every payment on time every month will most likely have a greater credit score, but much less flexibility financially. One of the most influential factors in determining your credit score is payment history and the emphasis is weighted more heavily on recent times. For example, all things being constant, a man who made a late mortgage payment in 1999 will have a better score than another man who made a late payment in 2007.

    All you can do is just be smart with your money. I have no choice, college debt sucks. I still pay all my bills on time in full each month and have maintained a credit score up into the 700's!!!
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    Jul 27, 2009 8:52 PM GMT
    CreaseHem saidI've heard about consolidation, settlement, and bankruptcy. The Rescuedebt person I talked to said he can improve the payment by decreasing what I owe by 50% with a 15% interest rate. He made it sound like settlement is the best option to me.


    I am sure he made it sound wonderful. Put another way, suppose someone who owed you money arranged with a third party to "negotiate" what is owed to you down by 50%. How would you feel?

    I'd feel cheated and pissed. While the credit card company might settle for something rather than nothing, the fact of the matter is that if you do that, you've just proven you are a terrible risk for credit. No matter what the Rescuedebt person says...that goes on your credit score...and it should be on your credit score.

    Instead, I would negotiate with your credit card company directly. Try to see if you can spread the payments out over a longer period. Show that you are aware that you are the one that made the decision to spend more money than you can afford to spend.

    As for me, like MSUBioNerd, my credit scores are way over 800...and that's because I pay off my credit card each month (note, just one card) and have also paid off a couple of mortgages. By the way, it's true I could afford to get those mortgages....but if I couldn't afford them (meaning, make the monthly payments) I would never have encumbered the debt.
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    Jul 27, 2009 8:52 PM GMT
    I track it monthly. It doesn't change much more than 5 points up and down, up and down. I happier with my credit score than my bank account.

    CreaseHem in addition I'd add the following:
    Bankruptcy is a bad idea since that will be on your credit record for a decade. Consolidation loans are more often scams than not.

    Pay off your highest interest loans first. In other words, pay minimum on your low interest loans and put every extra penny you can into the high interest loans. If you pay off a credit card DO NOT close it, just cut up the card and leave the account open. An open account with a zero balance is better than a closed account as far as rating goes.

    You can get your credit score for about 40 bucks across all three rating agencies. Just so you know there is a 3-6 month lag in your score against your actual improvement, but negative events (buying a new car or applying for a new credit card) go on the record immediately.