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First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not publicly available. Every score is calculated with a different formula, and can vary from each other widely. Lenders almost exclusively only use FICO scores, so ...
65
Yes, it can be a good idea to close unused credit cards. I am going to give some reasons why it can be a good idea to close unused accounts, and then I will talk about why it is NOT necessarily a bad idea.
Why it can be a good idea to close unused accounts
"I'd like to close the cards." That is reason enough.
Simplifying your financial life is a good ...
57
Yes, it is a very good idea to start your credit history early. It sounds like you have a good understanding of the appropriate use of credit, as a substitute for cash rather than a supplement to income. As long as you keep your expenses under control and pay off your card each month, I see no problems with the idea.
Try to find a card with no annual fees,...
45
My question is what more can I do to ensure this doesn't happen again.
Credit monitoring services can be helpful at detecting things like this early, but they can't actually prevent them, clerical errors will persist.
Shouldn't the hospital be penalized for ruining my credit over this 7
month period. I never received bills from them for the outstanding
...
38
Your dad may have paid an "opportunity cost" for that outright purchase. If the money he saved had been invested elsewhere, he may have made more money. If he was that well off, then his interest rate should have been the lowest possible. My own father is a multi-millionaire (not myself) and he could afford to have paid for his house outright. He didn't ...
29
There are several things that go into your credit history. I believe this applies to most credit systems, but I should warn you that most of my information is US-centric. There may be variations in other countries.
Some factors:
on time payment of a recurring expense - things you pay for after you receive them, rent, utilities, or a cell phone contract may ...
28
Credit scores, or at least components of them, can sometimes factor into how much you pay for car insurance.
Source: Consumer Reports: How a Credit Score Increases your Premium
26
Because even if you won the lottery, without at least some credit history you will have trouble renting cars and hotel rooms.
I learned about the importance, and limitations of credit history when, in the 90's, I switched from using credit cards to doing everything with a debit card and checks purely for convenience. Eventually, my unused credit cards were ...
24
In the long run, yes. In the short term, no.
Having more accounts and higher total credit limit is a good thing. From the potential lender's perspective, someone else has apparently reviewed your profile in the past and decided that you were creditworthy.
However, building credit account numbers should be a gradual process, just like accumulating the ...
23
Time: you will simply have to wait because as far as the computers are concerned, you are a credit risk and only time will heal those wounds.
Be credit worthy: during the waiting time you have to build the credit worthiness. Standard things are:
Pay your bills on time, every time.
Live within your means
Fix past mistakes you are responsible for, or work ...
22
Yes, it is possible that they wanted to get rid of you and waited for you to pay off your balance. I have heard of this pattern before.
If you're a flaky customer with late payments and carrying large balance - it is a sign that you may end up defaulting and going into bankruptcy. So once they had a chance to cut you off without any loss to them - they did. ...
21
A $250K earner might have $4M in retirement savings and $500K in available funds, but doesn't wish to spend all his liquidity on the house. In general, a house might cost 2-3 times one's annual income. It would take many years to get that saved up. They might want to have the house sooner.
It all goes back to choice, priorities, personal preference.
19
Yes you can do this yourself. I cannot speak for all the credit repair companies, but generally they are not reputable. Even if they are trustworthy, they cannot do anything you cannot do yourself.
Freeze your credit. Lock it down and prevent any new activity. This is for safety and I want you to do it so you know where you stand.
Get a copy of your ...
19
The FICO score is an invention of one company, FICO (formerly called Fair Isaac). The exact formula is a trade secret that the company does not reveal. This allows them to maintain a monopoly on FICO scores. The only way to know what your real FICO score is is to ask that single company what it is. They will not tell you, or anyone else, how to calculate ...
19
Would it be a good decision for someone ... to build up his credit history to apply for credit cards with "worse" terms than average, such as larger interest, shorter or no grace period, etc.?
It depends on what terms you can get. In your position I would consider these terms a high priority:
No annual fee.
A normal length grace period, or at least one ...
18
A secured credit card is the same as a regular credit card from a credit scoring perspective. The secured nature of the card is only known by the issuing bank.
With that known, the rest of the question becomes a credit scoring question regarding credit cards. It is always better for you, the borrower, to pay off the card in full every month. This will ...
17
With bad credit but good income, I would simply save a large down payment. You're much more likely to get a mortgage with 25% down and a history of recently saving that 25% to show.
14
These are the components of the FICO score. When you analyze this a bit, you see that both Payment History and Length of Credit History are time-based. You can have good payments going forward but only in real time. "Bad" things will take 7 years to fall off the back end.
The 'amount owed' is really credit utilization. If I am going to need to charge say $...
14
Yes.
Check your credit-card agreement that you signed. You will have given them authorization to periodically perform "soft" pulls of your credit report to recompute your credit score and adjust their risk-calculation for your account. This is routine.
Note that this is not a "hard" pull and this will not directly affect your credit score.
...but the fact ...
13
How An Additional Credit Card Affects A Score
Each card you have open affects your credit score in several major ways:
It changes the average age of credit lines you have, older is better.
It changes your overall credit utilization by affecting both the numerator (outstanding balance) and denominator (available credit) of the equation. Lower utilization is ...
13
I also am paying roughly twice as much in rent as a mortgage payment would be on the type of house I have been looking at, so I'd really like to purchase a house if possible.
Sounds like I need to rain on your parade a bit: there's a lot more to owning a house than the mortgage. Property tax, insurance, PMI, and maintenance are things that throw this off. ...
13
Potentially.
A large part of your credit score is the average age of your credit history. So if you have, say, four cards with ages of 14, 10, 9, and 3 years, your current average is 9 years, which is pretty good. If you were to close the 14-year card, then your average drops to 5.5 years, which isn't as great.
If you have a lot of credit lines and they'...
13
(I'm a bit surprised that nobody talked about the impact of multiple inquiries on a loan, since OP is concerned with credit building. Probably an answer as opposed to a comment is justified.)
Is it normal to have multiple hard inquiries in this case?
Yes. In fact when you shop for auto loan you are expected to have your credit score/report be pulled by ...
13
Mostly agree with JohnFX here, but one difference perhaps worth considering.
Since it's medical debt, once it's paid off it should not hurt your credit any more, as long as it's reported paid. (This differs from non-medical debt, which will remain for seven years even after being paid.)
For example, existing medical debt defaults that finally get paid ...
13
Credit is like dignity - it takes a long time to build but a short time to lose.
Your credit history is mostly made up of your prior activity for several years. There's no "quick fix" to raise your credit score in a short period. Paying your student loans on time will help, but it will take quite some time for that activity to make a big difference in your ...
13
Should I max out my first credit card in order to build credit if I can pay the balance immediately?
If it were me, I would max out the card with the purchase, then pay it off in full shortly after so you can continue using the card for more purchases. The only reason I suggest doing this is because you will earn between 1-5% cash back on your purchase (depending on what it is you're buying). If your CC didn't have any rewards I wouldn't recommend using the ...
12
The length of time you have established credit does improve your credit score in the long run.
As long as you can avoid paying interest, you might see if you can get a card with cash back rewards. I have one from Citi that sends me a $50 check every so often when I have enough rewards built up.
12
Contact the creditor, explain the situation, and if they agree to take it off your credit be sure to get it in writing from them. If they fail to remove it you can use the letter to petition the credit bureau.
If they don't agree to remove it from your credit, don't pay it now. It will reset the timer on how long the negative mark can remain on your credit ...
11
It is an issue of both utilization and average age of accounts.
If your cards with $0 balances on them are:
A) newer cards than the ones you are carrying balances on and you don't want them
B) much lower limit cards than the ones you are carrying balances on
then you can raise your score by closing them, as the utilization change won't be a large factor ...
11
The hospital has done what they can do in terms of repairing the damage; 30 days is reasonable given reporting frequency. No permanent harm has been done in terms of your credit. Further, since this is a medical collection, it didn't do a whole lot of damage in the first place; many credit scoring algorithms do not consider medical collections at all or ...
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