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Discussion in 'Credit Talk' started by jfpruitt, Jun 19, 2001.
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I think you are going to have a really hard time to convince a credit grantor to settle for less than the amount owed if you have never even been late. I think you're going to have to pony up.
The alternative would be to stop paying the accounts and completely trash your credit. Not a good alternative.
I didn't quite understand. Are you saying that if one settles for 50% or more, then it will be reported paid in full? What if the settlement is 30% or 40%, it can not be "paid in full?"
Back in 1998, I decided to go with a "Credit Counseling" company and they had 3 of my accounts closed. I have been paying faithfully on them since. They are still closed. I don't have any blimishes on my credit report except the large amount of revolving debt. Do you think my credit score will increase when I pay these off with a personal loan or will it still be "debt"??? The personal loan I'm getting is through a very well known bank and not a finance company with a 9% APR. I'm hoping by paying off my credit debt that my score will increase dramatically since I have no late payments or collections. However, if I settle, I dont a bad mark on my record. what do you think? Settle or Pay??
If you read the archives of this board, and see how much trouble people have in getting settled (which is just a nicer term for charge-off) accounts reported correctly and consistently to all CRA's - and how that affects credit scores etc. I think you're better off just taking the loan and paying off the full amounts. For me, saving 50% of the relatively little amount htat you owe wouldn't be worth that potential risk.
You don't mention, though, what your credit report looks like right now. Have you checked your score? Does the CRA say that your outstanding debt to balance ratio is the main problem? If you can get a personal loan from a bank for 9%, I'm thinking that your score must all ready be pretty high. .
oops...sorry you did say that your report shows no blemishes..... do you think your credit score is lower than what it should be based on this?
If you are all ready above 700, then I'm not sure that there is much credit out there that you COULDN"T get.....unless someone, like a mortgage banker or something is telling you that your debt to income, or debt to available credit ratios are too high....in which case new charge-offs probably wouldn't help you. Another option to lower that ratio is to open another credit account....maybe find one with a good balance transfer option instead of taking the 9% personal loan
My current FICO score is 642. The reason I got the loan is b/c its a school loan and that my bro cosigned for me. The loan is supposed to be for school related expenses but i talked with the company and they said they really dont care what I do with the money as long as I pay it back on time. My school is actually going to get paid through my current job, so I'm really using the loan for consolidation. I looked and they said the main reason for my score was due to the debt ratio. I'm wondering how that will change once its paid though. I'm just exchanging one type of debt for another. However, I'm told that student loan debt doesnt affect your score(unless you default) like credit card debt will. Does anyone know if this is true? Will I be better off exchanging credit card debt for student loan debt? I know the biggest benefit of this is that I will have about 600 more dollars a month and I will save a tremendous deal on interest.
Hmmm..well I'll just add my 2 cents (again!).
Is the 9% loan, an actual federal guaranteed (Stafford) loan? Or is it just one banks product? I ask because its generally pretty easy to get an unsubsidized (where the gov't DOES NOT pay the interest) federal student loan - and the interest rates are now down to like 7.25...and I've never heard of them asking for a co-signer regardless of your credit history. Check with your school's Financial Aid Dept. or the US Dept. of Ed website for details.
*My* experience with student loans - even the federally subsudized ones - is that if they are in DEFERRMENT (while you're still in school) they do not count against you if seeking a mortgage....but they are included in the score calculations - i.e. the amount of debt counts does count against me. When they aren't in deferrment, my experience has been that they are considered like any other installment loan. But other people may have had different experiences.
Finally, the debt ratio is one of the simple-est score factors for you personally to manipulate - and based on the posts on this board, correct reporting of settlement agreements seem to be the most difficult.
Is there a possibility that one of your currently open credit cards will give you a credit increase? Are all of your cards reporting your credit limit as well as your balance? Both of these factors may positively affect your debt to limit ratio.
OK - last time, I promise....
If you will save interest, and also have lower payments then it might be a good idea to go ahead and pay off the credit cards - it may or may not have a positive affect on your score, but I can't see that it would ever be a negative affect.
You also may get lucky and the bank may only report your loan to one CRA - which would then up your scores with the other CRA's when they show $0 balances on your credit cards.
Well the loan I'm getting is not through school but a private bank b/c I'm working and the financial aid office wouldnt give me a stafford. So, I went to this bank and got approved for the 30K. I'm not going to defer b/c the payments would almost double when I get out of school from 287 to 450. So, I'm going to start paying them now. As far as I know, the debt ratio is hurting my score b/c it shows that I have a credit limit of say 300 and the card is maxed out. This is on all my cards. Thats why I'm going to cancel ALL of my cards but 3 and then hopefully I'll just have 5 open accounts showing up. My car loan, my student loan, my 2 dept CC, and one Visa. Should this increase my score you think?
Really, I'll have to ask the bank that, I thought that the accounts were reported on all of them, not just one???
Ok, I lied....one more response.
I only know what I've learned on this board and other places, but you should maybe think twice about paying off and then cancelling your credit cards....if you have cards with say a $500 limit, but a $0 balance then this is going to have a positive affect on your debt to limit ratio.
If you compare your credit reports from say Experian and Equifax you will probably notice that not all of your accounts show up on both reports. Some creditors report to only one, or two. So there's always the possibility that the bank may not report to all three. Probably don't want to count on it, but its always possible.
Wow, that would be nice....Maybe I shouldnt cancel all my cards then. I just dont want to have to much 'potential' debt showing up. I think maybe I'll keep 2 more open then. that will give me 1 visa with a 6k limit, 1 MC with a 2k limit, and 3 store cards totally 4K....thats about 12K in "potential" debt....is that too much? I never know how much is 'too much"..
I remember in the past....before FICO came along...that the amount of debt you could "potentially" run up was considered by creditors. But I'm not sure that I've ever heard that anyone has ever been told that their FICO score is low because of this reason.
You may want to check you the FICO website and see what they have to say about that....I think I remember that they have now posted their reason codes and what they mean.