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Forum: Financial Planning and Budgeting


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August 28th, 2007, 08:10 PM
sara~b's Avatar Platinum Supermommy
Join Date: Aug 2006
Location: Pittsburgh PA
Posts: 10,350
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Hi all! I'm Sara, 22, engaged to Zack, 28, and mommy to Gemma, 2.5.

I am changing some things in my life right now. I can't talk about it on here because of a custody battle over DD. But anyway, I decided I should check my credit score in case I need a loan or anything like that to help with the changes. My credit score is only 581!

I have a mortgage (39k) and student loans (10k). I have less than $1000 in credit card debt. I had a few late payments on cc's when I was pg with DD but nothing for over 2 years! So why is my score so low? And how can I help raise it? I really don't understand how some people rack up 100k in debt but have better credit than I do when I always pay off my cc's the same month I rack up a bill and I have a tiny mortgage balance. Is it because I'm so young? I paid off my car loan in 2 months which I thought would look good! My mortgage is going to be paid off this year. My student loans will be paid off before I even graduate. I just don't know how to make it better! Any advice or suggestions!
Sara, 27, married to Shane, 31, mom to Gemma, 6, and Ashlyn, born 8/7/10

Running for my health and sanity!
PR's: 5k-25:05 (old PR 25:10), 5M-45:03 (old PR - 47:22), 10k - 52:00 (approximate - training), HM-2:25:58 (ran a 2:17:36 during marathon), Full- 4:49:25 (old PR -5:49:40), 50k-7:05:56, 50M-13:31:14, 100k- 18:59:31 (old PR 20:56)
(All of these PR's are going down this season!)

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August 28th, 2007, 08:50 PM
~Jess~'s Avatar Platinum Supermommy
Join Date: Oct 2005
Location: Central California
Posts: 16,959
Unfortunately, it just takes time. Not the answer you want to hear, I know. You are only 22, so your credit history can't be longer than 4 years. That's very short in the credit industry. Add to that, that you've had ANY late payments during that time, causes your score to plummet. It also kind of sounds like you've had a lot of accounts for only having 4 years (or less) of history. Opening too many accounts too close together can lower your score as well. Applying for a lot of credit also lowers your score.

So, really, you just need to:
1. Close any accounts that show late payments. The late payments will not drop off of your credit until the account has been paid off AND closed for 7 years.
2. Always make your payments on time. Even if it's just the minimum. It looks better if you pay $10 on time than $100 late, kwim?
3. Don't apply for new credit.
4. Try to keep your debt-to-credit ratio at or below 30%, excluding your mortgage. So, for example: If your credit limit is $10000, then you want to keep your balance below 30% of that, which would be $3000. The higher that ratio, the lower your score. Your best bet, pay off your credit card and let it sit. Don't use it. It will still look good on your credit as long as you've never been late.

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August 28th, 2007, 09:04 PM
BensMom's Avatar Ephesians 4:29
Join Date: Apr 2005
Location: The Lonestar State
Posts: 50,214
I am changing some things in my life right now. I can't talk about it on here because of a custody battle over DD.[/b]
If you need any nitty-gritty advice, you can pm one of us, and we'll post anonymusly for you.

I paid off my car loan in 2 months which I thought would look good! My mortgage is going to be paid off this year. My student loans will be paid off before I even graduate.[/b]
That's a lot of debt to be paid off so quickly! Either you have enough income that you probably won't need a loan (of course, I don't know the specifics of your situation, so who knows...), or you should go to someone who will personally process your loan rather than letting a computer do it. You'll be able to explain your situation, show how you plan to pay back the loan, etc. Then your actual score wouldn't be considered quite so much. Also, if you plan on getting a loan of any sort in the near future, don't change anything drastic on your credit report. That means (1) don't close any accounts and (2) don't open any accounts ... for 3-6 months before getting a loan, you should have no activity on your credit report other than monthly payments. In theory, it seems like paying off your student loan and/or mortgage quickly would look good, but it really doesn't. Potential lenders want to see a history of consistent payments to prove that you'll be as trustworthy with their money as you have been with someone elses. When they see large sums paid off quickly, they assume it's because you either don't need the loan or because you've paid it off with an emergency loan from family, friends, or a consolidation of some sort. Credit is a complicated thing.
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