Credit 101 Thread

[Troy Loney]

I think you guys are too concerned about the inquiries. that's the same as like being afraid to report a fender bender to the insurance cause your policy might go up $25/year.

[Pen48guins]

What is the best method on building credit back up?

Few cards went to collections during a rough patch.

Currently have one that is used and paid off completely each month. All the cars are payed off and students loans are paid on time.

[Kraftster]

Question: What goes in to determining how high of a limit to give when applying for a new card? I want to consolidate my remaining cc debt onto a 0% card, but I don't want to waste the credit inquiry if the limit won't be enough to move the debt to the card.

Debt to income to determine how much debt you can service.

How do they learn of my income?

[Troy Loney]

you tell them.

[Kraftster]

you tell them.

I guess its been too long since I applied for a credit card. I don't remember providing income information.

[Kraftster]

I think you guys are too concerned about the inquiries. that's the same as like being afraid to report a fender bender to the insurance cause your policy might go up $25/year.

According to Credit Karma, two inquiries will lower my score 5 points. I assume that won't make a difference in refi rates, but I guess I am just thinking I should play it safe since rates just went up for the first time in a while and its more important that I get the best rate available, if possible.

[Idoit40fans]

Yeah i'm not that worried about pulls right now, because I'm not going to be opening any new loans any time soon, but I'm still trying to make sure I get a good limit so i can move this debt around.

[Kraftster]

I guess the main thing I'm curious about is how unused credit limits affect what sort of limit I can get. I have a big chunk of unused credit now that I am at about 40% credit utilization, but I don't have 0% APR for balance transfers on those limits so I have no interest in using it. I just wonder if a new card is going to be likely to give me a high limit knowing I have that other unused credit out there.

[Idoit40fans]

I'm in a very similar situation. I have plenty of unused credit, but I'm trying to save some money as I pay the debt I do have off over the next year.

[MWB]

I guess the main thing I'm curious about is how unused credit limits affect what sort of limit I can get. I have a big chunk of unused credit now that I am at about 40% credit utilization, but I don't have 0% APR for balance transfers on those limits so I have no interest in using it. I just wonder if a new card is going to be likely to give me a high limit knowing I have that other unused credit out there.

Seems like the limit is tied to income. Last summer we were carrying no credit card debt month to month. We applied for a new card that had a very low rate to pay for a project. Got a credit limit higher than any other card, about 20% of our income. This was through a credit union though. I also think you can ask for a higher limit.

Also, do you pay a 3% transfer fee on balances? Seems like most cards have that.

[Kraftster]

Yeah, there's a 3% transfer fee. If I paid all of the transferred debt off in 18 months, I would save more transferring it to 0% than I would keeping at current rates and paying the same monthly amount towards the combined debts.

[tifosi77]

I just signed up for a CreditKarma account, going through stuff now. It says my credit history is only 5 yrs and 2 mos, yet the only derogatory marks left on my report go back to my college days (early-mid 90s). Porquoi? Only have one credit card, and it's a low limit account. That might be referencing that account.

My report shows my paid off car loan and one late payment (it was a 60-month loan). Will that one missed payment in five years - which may have actually happened six or seven years ago - still be impacting my credit rating?

Also, is it true you can challenge a collection agency to provide 1) proof the debt being collected is legitimate (i.e. a signed credit agreement), and 2) proof that the agency is authorized to collect the debt (i.e. a signed agreement between the creditor and the agent) and if they are unable to provide both, the collection has to cease and the thingy is to be removed from your credit report? That pops up from time to time on TV shows, and I never know if it's legit or not.

[tifosi77]

Okay, looking at my CreditKarma report in more detail. There are two collection items.

CREDIT COLL $833
CA BUS BUR $100

I have no idea what either of these items are, but near as I can tell, these are the only negative items. And I would hate for less than $1k of debt to be screwing me over. How do I find out what they are and what steps can I take to remove them from my report?

[Idoit40fans]

I recently let 2 store credit cards expire. Kohls(I worked there, having it was simply the easiest way to get the most people possible my discount.) and JCPenney(Bought a bed, got 20% off if I signed up) both expired and obviously i'm taking a hit on my credit. A couple years down the road, I trust this will be beneficial to me since I won't be using them, correct?

[Kraftster]

Yeah, I have a Target card from college that I have had paid off for about 8 years now, haven't had a new card since then. It still shows up as positive credit history and it still shows me having the whopping $750 limit or whatever it was available for use.

[Idoit40fans]

Haha. I actually still have the JCPenney card, so that hasn't gone away, but the Kohls one is definitely done, I am fine with that. I think I may actually keep the JCP card, may need to buy stuff soon.

[Letang Is The Truth]

Does any one have a recommendation for good rewards credit cards? The current one I use funnels rewards to my fidelity investments while accruing world points as well but would like a Big Bang from starting a new card with X0,000 points somewhere

[mac5155]

What do you want as far as rewards? Cash, airline miles, etc. I use discover open road. 2% at gas stations and restaurants, 1% everywhere else.

[bhaw]

Just saw all the new activity here (long work days... no internet this weekend when we moved).

1. credit limit: 2 things - credit score and income. A super high score will make them not even ask for income sometimes. Some cards just start lower and make you build up. Depends on the card.

2. credit karma isn't 100% correct, it's just a good tool. a mortgage credit report scores differently than an auto credit report and different than a revolving account report. For example, Credit Karma reports the TransUnion score and my mortgage TransUnion score is 30 points higher than what CK is reporting. So don't take it 100%, including when it models for inquiries.

3. best way to build credit is to repay on time with current loans. paying the student loans on time will help along with the cc that you pay monthly. You could open a 2nd card that you use once a month for gas and pay it off regularly as well to help out, but it's not necessary.

It says my credit history is only 5 yrs and 2 mos, yet the only derogatory marks left on my report go back to my college days (early-mid 90s). Porquoi? Only have one credit card, and it's a low limit account.

That's your oldest active account.

My report shows my paid off car loan and one late payment (it was a 60-month loan). Will that one missed payment in five years - which may have actually happened six or seven years ago - still be impacting my credit rating?

Yes but minimally. The more credit you have, the less impact it has.

How do I find out what they are and what steps can I take to remove them from my report?

You can file a dispute with the credit bureaus (takes 10 minutes on the phone per bureau). If it's not legit, it will get removed. If it is, you can ask for a copy of your report, which will have the contact info for the collection agency or servicer and call them. I'm not well versed on making it disappear, but I got a collection removed by an agency b/c I told them I was never notified of the collection. I told them I'd be happy to pay it off (it was only $50) if they removed it from my credit. Get that in writing before you pay.

Idoit... no idea what your last question was.

If I get a new card, it will be cash back rewards. I had points on my wells fargo debit card and I accrued some ridiculous number of points b/c I used it for everything for 2 years (groceries, gas, bills, entertainment, restaurants, etc). I think I could either get some stupid thing like a toaster or $50 in my account. I think the spend over those 2 years was upwards of $50k in transactions.

[bhaw]

to tie this thread full circle and show you that you don't need to be super OCD over credit... most of you know my fairly recent history with bankruptcy a few years ago, foreclosures in 2009. We closed on and moved into a house this last week. 3.75% rate on an FHA loan. for the rebuilding credit... rehabbed a student loan (this is a little known awesome feature of student loans), 2 car loans. Got my scores in the 660s and one over 680. Mortgage will help get it up there over the next few years. Need to refi one of the car loans in 6 months or so (rate sucked... FB friends saw that bundle of joy go down).

End of the day, use your credit to help manage your money. Don't use your money to manage your credit. I'm trademarking that line.

[columbia]

I've been using Credit Karma for a few months, to check up on some older "issues."

You can get your Trans Union credit score + one that is labeled as a combination of all three major bureaus.

There's no charge and it seems to be scam-free.

[tifosi77]

So I got a new credit card a couple months ago, and my score went up 15 points the week after activation. As of today, it's back down that same 15 points. I charged a few hundred dollars on the account upon activation, but all but about $75 was paid on the first bill. There has been no other credit activity.

???

[mac5155]

Credit score jumped 34 points in one month. All I did was pay $1000 in CC debt off. Sheesh

[mac5155]

well, other than the minimum payments on 2 vehicle loans and student loans, but nothing substantial.

[Idoit40fans]

The only negative mark i have on my credit now is excessive debt. If I get that paid down, I expect that mine should jump pretty drastically too.