For the last two years I have been trying to improve my credit. Pay all bills ontime or early, I have not applied for any credit (no inquires) paid off debt, increase my earnings, added no new collections, recieve credit counceling . I had originally had about 6,000 worth of debt utility bills, cell phone mostly 1500 still remains as credit card debt w/total debt of 4,000. I have student loan in good standing, financed two cars (JD BYRIder), and now a third with no late payments. My score went up from 550 to 590 and now back down to 560 in two years. What can I do to keep it up, why would it go up and then down? What can I do besides what I cam currently doing to keep it up?
Am I being impatient with my credit?
First, congratulations on making the effort to clean up your past behavior. You are setting a good example for others.
Two common reasons for a FICO score going down during your good behavior: (1) paying off a once-dormant account will make the account, and all the damage you originally did, seem more current in the scoring formulas. Note: this scoring concept is not the same concept as (illegally) re-aging the debt, which is a legal concept associated with unethical collection agents. Back to bringing the account current: Leaving a delinquent account alone will age the delinquency. The older a delinquency gets, the less it hurts your score: but this improvement is slight compared to the jump you%26#039;ll get when the delinquency falls off your credit report 7 years after it was first charged off.
(2) Your credit history gets so long that you get moved to a different Fair Isaac (FICO) scoring group. You get scored relative to others in your scoring group. In a 0 - 2 years of history group, delinquency is much more common, so you don%26#039;t look so bad compared to others, and your score is a little higher. But when you are moved to a 2 - 5 years history group, you%26#039;re in a group of people who have cleaner behavior, and your delinquencies look relatively worse in the new group than they did in the inexperienced group. So your score shifts lower, until you get relatively cleaner than some of the others in your group. The good news: the older the history in your scoring group, the higher your score can potentially go with continued good behavior.
So take some time to go through your records and find out the date that every charged-off account first went delinquent (that first 30-day late). They generally get charged off 6 months after the first delinquency. No matter how many collection agents the original debt has been assigned or sold to, this debt must drop off your credit reports 7 years after first charge-off, which is 7 1/2 years after first delinquency. I assume an absence of court judgments. Mark your calendar, and be willing to dispute the lack of removal from your credit reports once the 7th anniversary of charge-off arrives.
(3) Illegal re-aging of your accounts by unethical collection agents (CAs). Go to http://www.ftc.gov and you%26#039;ll see that the US Federal Trade Commission administers two powerful laws: the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). Look at the dates of the original debt and the corresponding CA%26#039;s trade lines on the credit reports. First, only one of the trade lines can have a balance: the latest creditor that owns the debt. Make sure all earlier creditors show a balance of $0. Second, a CA cannot report a debt as newer than the date of your last activity with the original creditor, which should%26#039;ve been the charge off date.
(4) Stop taking on new debt (that 3rd car loan in particular). The car loan, if you opened it in the last 12 months, cost you a hard inquiry that hurts your score slightly until it is one year old, and it will fall off completely after 2 years. You then started your installment contract at 100% of what you owe on the auto, and this is high utilization of the original loan balance. Paying the loan balance down will improve your utilization and raise your score. Yes, you can pay the loan off early - or refinance it at a lower rate, just watch for pre-payment penalties in your loan contract.
Note: high utilization on a car or other secured installment loan hurts much less than high utilization on credit cards.
The fastest way to increase your FICO score, without any outside help, is to pay down your balances, with paydown of your revolving credit (for example, credit cards) balances giving you the most points for the buck.
30% of your score is credit utilization: how much of your credit limit is used up by your balance? On each revolving account, you need to keep your balance below 30% of your credit limit, or you will hurt your FICO score. For example, if you have a $200 credit limit, you must not have a balance higher than $60, which is 30% of $200. Do NOT close a paid off cc account. They also look at total utilization: they total up all your balances, and all your credit limits. That total percentage utilization must be kept below 30% of total credit limits. Close that paid off account, and you%26#039;ll take away $0 in total balance, but you%26#039;ll take away $$$ in credit limit, and up goes your total utilization.
15% of your FICO score is for length of credit history. The average credit user has an oldest open account that has been open for 14 years. They also score you on the average length of time all your open accounts have been open. So if you close that paid off account, you%26#039;ll hurt your score because (1) you lose an old account and (2) the average age of your accounts could go down.
10% of your FICO score is credit mix: what types of credit accounts do you have listed as open? The good types of credit are: mortgage, secured auto loan, department store card (Macy%26#039;s, Home Depot, etc.) and major cc (V, MC, AmEx, Disc). Ideally you want to show good behavior in one open account of each good type. The bad types are: payday loans, personal finance loans used for purposes of getting cash advances, checking account overdraft loans and secured, sub-prime credit cards. One exception: if you have no open credit card, and you can%26#039;t get a prime credit card, a secured card is ok. The point: you need to build good history, not just clean up the bad. So if your credit card debt is all in closed accounts, open one new credit card and make one small NECESSARY purchase (gasoline, groceries, a utility bill on auto-pay through the credit card) each month and pay it off in full each month.
Back to dealing with Collection Agents: My favorite sites for do-it-yourself credit repair are the specialized message boards at:
http://www.creditboards.com
http://www.creditnet.com
They are free. Ask questions and you%26#039;ll get expert answers. It is excellent for self-education.
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Am I being impatient with my credit?
Credit is for people that can not manage money. The better a person is at going into debt the better the banks backs like you. You paying my interest! Try having my credit rating. It terrible, why? Because I pay cash by saving first, that is patients. I own everything I have! Credit for people that where never taught to budget money. Public schools are very good at teaching this. I got lucky and had a Coach that had to teach us business math, one day he brought the Stock Pages! :-P
Am I being impatient with my credit?
The credit score shows how someone can manage credit over time.
35% of your credit score is determined by your payment history. So any accounts you have in collections is going to harm your score. An unpaid collection account is probably the worst thing to be on your report next to a bankruptcy or repo. If you are paying on them, continue to pay them down. If you are not paying on them then you need to make arrangements to start paying. Until you do you probably won%26#039;t see your score rise much if at all.
30% of your score is your credit utilization and amounts owed. That is the amount of credit you have used Vs. available. Not knowing your exact numbers but say of that current $4000 you said you have total available of $5000 so your utilization is 80%. Generally they don%26#039;t want to see anything over 30% utilization on your total debt, anything higher starts to knock your credit down. So you need to make sure you get and keep this number low.
New Credit accounts for about 10% of your score, so it probably took a hit when you got your new loan. If you pay on time every time this will have little to no effect after a couple of months.
If you maintain good credit management your score will rise over time.
Am I being impatient with my credit?
Cash management can be characterized as the well-organized usage of cash through corresponding management of costs, collections and cash balances. The goals are to diminish expenses, advance control and improve returns. Cash administration engages adapted services offered by the bank%26#039;s staff to the company%26#039;s financial officer. Traditionally the transfers were usually opened by the company%26#039;s financial officer via mails, telephone calls, faxes or appointments to the bank. With the development of high technology, cash administration services have been computerized to a large degree. Most of the banks let their clients to perform online transfer services (payment, collection and liquidity management) through PC or Internet. This system allows performing most of the cash management functions themselves without relying on a bank staff to act as the doer of their requirements. Read more about it at: http://www.credit-card-gallery.com/artic...
Am I being impatient with my credit?
Go to www.freecreditreport.com and its 12.99 a month and it well show u what u need to do to help your credit score go up u may need a credit card to show u can pay your bills on time..
Am I being impatient with my credit?
Small steps like paying your bills on time and using only part of the credit available to you. Also use your credit cards for making small payments regularly, so that it is reflected in your credit record. More tips available at http://www.acreditlibrary.com/buildcredi...
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