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I saw my credit score for the first time today. 646.
This is interesting - I'm surprised how low it is, but then again, I have little credit history. I took out a car loan (which I paid off prematurely, and was small to begin with), about $20,000 in student loans (which I have not paid a single dime on, as I have qualified for a string of deferments and forebearances), and two store card accounts - Newegg and Amazon.com. I used the Newegg one to buy a laptop in 2009 and remembered to pay the whole thing off right on the due date, although I was hit by an additional charge which I refused to pay. The Amazon.com card I mostly have good history paying off, although it does not deduct automatically from my bank account so I have missed occasional payments, even though they are very small (minimum of $25.00).
Could the deferments / forebearances be negatively impacting my credit score, or is it my lack of credit history that's the problem?
Could the deferments / forebearances be negatively impacting my credit score, or is it my lack of credit history that's the problem?
No and No...
Quote:
Originally Posted by tvdxer
I used the Newegg one to buy a laptop in 2009 and remembered to pay the whole thing off right on the due date, although I was hit by an additional charge which I refused to pay.
Did you just refuse to pay or did you get it settled with the card issuer and they agreed to drop those charges. If you just uped and refused to pay, you kicked your own self in the rear on that.
Quote:
Originally Posted by tvdxer
The Amazon.com card I mostly have good history paying off, although it does not deduct automatically from my bank account so I have missed occasional payments, even though they are very small (minimum of $25.00).
Missing payments hurts you. It's not how much the payment was, or why you missed it. The fact that you are not paying when due is what hurts you.
Have you reviewed your credit reports to see what they are reporting? Thats even more important than some single number.
My advice is pay whatever the creditor wants every month. They have total power of you when they extend you credit. Its a very risky game but its rewarding if we play it right.
1) never keep a balance over 50% of your limit. This lowers your score by 30 points or more
2) do not apply for credit very often. If someone wants to pull your credit, it will lower your score. For those more advanced who might be reading this, I know there is more to it than this but for a beginner lets just leave it simple for now.
3) Always pay your credit on time. Paying your rent late or your cell phone bill is NOT credit the same way a credit card, or car loan, or mortgage is. ALWAYS make sure you make your minimum payments on credit cards, car loans and mortgage or any other offical credit.
Cell phone is NOT credit. Rent is NOT credit. But they are signed contracts and if you DEFAULT altogether they can put that on your credit. So keep this in mind but give priority to the actual credit.
Realize credit is mostly a scam. It invites you to get into debt so you are always enslaved to the creditors and the interest they charge you. You were smart to PAY IT OFF .
Use your credit at least once every 3 months. This keeps the tradeline active. So instead of paying that cell phone bill with your debit card.........put it on your credit card. Then a week later pay that off with your debit card.
If you follow some basic rules, you can build credit to your advantage.
Heres another little detail most people starting out don't know. You are not late on your credit report until payment is 30 days past due not when the creditor collects a late fee.
An example: Bill due on the 1st with late fee collected on the 5th. As long as they have your payment posted by the 30th it will report as paid on time to credit bureaus. Most peoples first reaction when they get behind is I've already incurred a late fee with creditor A so let me pay creditor B before I get another late fee. This is good in the short term but could come back to haunt you for years if you don't get it paid in the 30 day window. Even when life throws you a curveball pay bills in order due to keep the pain(late fees) short term and not long term(lowered credit score through late payments for 2 years).
Credit scores seem to fluctuate a great deal because of one reason or another. If one is late on a mortgage or credit card payment it usually can drop the score up to 100 points or more. How long does it normally take to right the score? I know the seven year plateau erases it from the report but does anyone know a little more about how fast it returns?
I checked my credit score a few years back. It was in the mid 600s. I never really cared because I don't plan to borrow money, but I was a bit surprised it was that low.
I've been debt free for almost 20 years and am not a big spender. (I shop mostly at yard sales and thrift stores.) I have two credit cards that I use moderately and pay off every month. I pay cash for an older car and keep it for 5-10 years.
I did ask at the folks at my local office of the insurance agency I use (State Farm) if my credit score was taken into account in my policies. They said no. I only have basic liability on my car, and renters insurance.
I'm not planning on buying and going into debt on something big just to boost my credit score.
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Missing payments hurts you. It's not how much the payment was, or why you missed it. The fact that you are not paying when due is what hurts you.
