Credit and Credit Scores: A short lesson

[A S U]

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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.

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Great info, thnx for the help.

[RunDownHouse]

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Anyone heard of Dave Ramsey?

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If you'd started your post this way it would have saved me from reading the rest of it. Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

[Dave I]

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

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No, Visa/MC Debit cards tied to checking accounts are not reported to the reporting agencies.

[James Boston]

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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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Yes, I've heard of him, and even he is an advocate of having a good credit score. He's also aware that the vast majority of people can't pay cash for a house, and therefore need a mortgage.

[James Boston]

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Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

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RDH,

Really? I don't agree with the poster you're responding to, but I also wouldn't call having alot of debt "a good thing." Could you elaborate on why that is your position?

[Fast Food Knight]

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Anyone with a college education - maybe high school, these days - should understand why going into debt is a good thing.

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RDH,

Really? I don't agree with the poster you're responding to, but I also wouldn't call having alot of debt "a good thing." Could you elaborate on why that is your position?

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I think what he's trying to say is that it's difficult to build a good credit score without incurring some amount of debt. Therefore, the debt is helpful for your longterm plans such as buying a house, starting a business, etc. I don't think he's referring to having "a lot" of debt.

[IggyWH]

What are valid reasons to dispute a mark that will actually work?

I had a roomie eff me hardcore a couple years back and leave me with a huge gas bill to pay off myself. The gas company put me on a payment plan, which I didn't pay because I was trying to pay them off in one lump sum. Apparently, missing my payment plan payment led them to put a mark on my credit for past due 60 days (which there was no way in hell I went 2 months without sending them a payment, I just figured they used the 60 days from the back sum I owed). My account with them was soon paid in full and I moved away from that place shortly after.

I once again have an account with the same place for the last year and a half with no problems.

Do I have any chance?

[James Boston]

FFK-

Yeah, if that's what he meant, then I just took his post the wrong way.

However, I pretty sure debt is not a must for buying a home. If you have enough income, assests, and the down payment, getting a mortgage isn't impossible with a sub-par credit rating.

[PokerFox]

The correct ratio of debt to assets is very, very healthy. If you manage your debt correctly, you can afford things you never would be able to if you had to pay full price up front (obviously).

A great example is home equity loans or lines of credit. If you are 10-15 years into a 30yr mortgage on your house at x% interest rate, and you apply for a home equity loan equal to the remaining amount of money on your mortgage at a lower interest rate, you then pay off the mortgage with the loan and continue paying the loan at the lower interest rate.

BTW, the CD example was completely last-resort and something for people who have absolutely ZERO credit set up. Most people can't use credit cards responsibly; hence the CD option.

As a closing thought for right now, remember, rich people think of their home as an ASSET. Poor people think of it as a liability.

[Lestat]

I don't think that's totally correct. while payment "history" drops off after 7 years, the standing in which the account was closed stays on forever. In other words, it will say "Account closed by grantor" until he dies.