Credit and Credit Scores: A short lesson

[DonkeyKongSr]

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what about credit consolidation programs? Are they worth it and how do they affect your score?

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bump 'cause I need an answer

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Dom,

I am not really qualified to answer this, but I am pretty sure these programs do hurt your score.

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However, if you have several lines of credit and some have no balance, playing the "lowest interest rate game" isn't a bad idea. If you leave any credit card with zero balance for an extended period of time these days, they will offer you all sorts of balance transfer options, often 0% interest on the balance transfer for 6 months to a year. There may be a charge for this transfer, but often that will be much less than the interest. Once that promo rate ends, look at the balance transfer offers on your other cards, maybe even the one you took it from in the first place, and toss the balance there. Basically, follow the lowest interest rate around making sure that the transfer charges won't exceed the difference in interest.

As long as you aren't cutting it really close to the max on one of those cards, you shouldn't see anything negative happening to your credit because you aren't increasing your overall debt at all and in fact may be lowering it by hundreds or thousands of dollars a year.

Oh yeah, 1 other thing: don't use the available balance on a card with transferred money because any purchases will draw interest until the balance transfer is paid off (i.e. 18% interest on $100 spent after a $2000 balance tranfer at 0% means the $100 keeps accumulating interest until the $2000 is paid off).

[Dave I]

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Could anyone explain how to do this yourself? Around 98-00 I got myself into some bad credit issues. I was in college and effed it bad. I had 2 CC's, one for like $500 and one for $700. Maxed them both out and never paid them off, they went to collections=My score suxs.

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believe it or not it's a good thing you never paid them back. if you contact them you may be able to work out a deal where you pay back some amount (50-100%) in exchange for them removing the entry from your report.

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While you could that, it would be dumb at this point as far as your credit report goes. The S.O.L. on the debt is way past (meaning they can't and will never try to collect) and it should be falling off your credit report any day now never to return.

Some unscrupulous collection agencies sometimes try to revive these old debts and mark your report, you owe nothing and the marks can be removed easily with a dispute to the credit reporting bureau.

Now if it was 2 or so years old, negotiating a payoff would be worth it. I've seen them go as low as .30 on the dollar.

[jba]

Dom isn't really being clear - banks will sometimes offer lines of credit under similar names. this is nothing but a line of credit that charges a lower interest rate than your revolving accounts do, this doesn't hurt your credit either.

some other programs marketed with descriptions like this will actually bargain with your creditors to lower principal amounts, this can adversely affect your credit.

[A S U]

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Could anyone explain how to do this yourself? Around 98-00 I got myself into some bad credit issues. I was in college and effed it bad. I had 2 CC's, one for like $500 and one for $700. Maxed them both out and never paid them off, they went to collections=My score suxs.

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believe it or not it's a good thing you never paid them back. if you contact them you may be able to work out a deal where you pay back some amount (50-100%) in exchange for them removing the entry from your report.

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While you could that, it would be dumb at this point as far as your credit report goes. The S.O.L. on the debt is way past (meaning they can't and will never try to collect) and it should be falling off your credit report any day now never to return.

Some unscrupulous collection agencies sometimes try to revive these old debts and mark your report, you owe nothing and the marks can be removed easily with a dispute to the credit reporting bureau.

Now if it was 2 or so years old, negotiating a payoff would be worth it. I've seen them go as low as .30 on the dollar.

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Wow seriously? Accounts were opened in 98 and all effed up by 99. Probably went to collections in 00. So all I have to do is get a copy of my credit report and have them remove the marks if they are 7 years old? Awesome.

Also are there companies that will handle all this for you? Any recommendations?

[Dave I]

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Wow seriously? Accounts were opened in 98 and all effed up by 99. Probably went to collections in 00. So all I have to do is get a copy of my credit report and have them remove the marks if they are 7 years old? Awesome.

Also are there companies that will handle all this for you? Any recommendations?

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They will be removed automatically after 7 years starting from the date they went to collections. So, figure sometime this year. Some of the credit reports tell you the date they will be removed from your report. I think Trans-Union is one that does this. That date will be the same for all 3 reports even if it's not listed on them. You don't have to do anything.

Get a copy from all 3 bureaus to see what is listed. All this can be done online and by yourself. No need to involve any 3rd party. In fact, you can dispute an item online at all 3 bureaus as well if needed.

Here is another tip. The creditor who put the mark there only has 30 days to verify a disputed item. Many can't verify and the bureau has to remove it. The older the debt the more likely this works. There are a lot of fly by night collection agencies out there. I would dispute any mark made by a collection agency and not the original creditor. The original creditor will almost always be able to verify it.

My credit is perfect now but when I was younger I messed it up bad. I have dealt with all the scenarios mentioned in this thread and all the credit reporting bureaus.

Also, here is a link for the S.O.L. for collecting debt in each state. Almost all are 3-4 years.

[kyleb]

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what about credit consolidation programs? Are they worth it and how do they affect your score?

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bump 'cause I need an answer

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Worse than bankruptcy.

[Bartman387]

Who gives a crap about your credit score? Pay cash for all, live without debt, and you're set. This is one of the craziest thongs out there. Being concerned about your credit score so you can be in debt forever.

Anyone heard of Dave Ramsey?

[punkass]

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Who gives a crap about your credit score? Pay cash for all, live without debt, and you're set. This is one of the craziest thongs out there. Being concerned about your credit score so you can be in debt forever.

Anyone heard of Dave Ramsey?

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For most of us, we need a good credit score to get good home loans, car loans, loans to start a business perhaps...

Not everyone wants to wait until they're 60 to pay for a house with cash.

[Roan]

Does using a Debit/Credit card that automatically bills from my checking account help my credit rating?

[bobman0330]

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Who gives a crap about your credit score? Pay cash for all, live without debt, and you're set. This is one of the craziest thongs out there. Being concerned about your credit score so you can be in debt forever.

Anyone heard of Dave Ramsey?

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Mortgage interest deduction...