Wednesday, October 20, 2010

FICO = Confusing Voodoo Numbers



Since I'm going to be job and apartment hunting soon, I decided it was time to check on my credit score.  Ack! 

I have a bunch of charged off accounts.  According to Suze Ormann, " If the state statute of limitations hasn't yet run out, paying something on your charged-off accounts will not help clear up your credit report and may start the collection agencies' clock ticking anew, so once again, think hard before you do this. Only time will repair your credit report-specifically, the seven years it takes until the credit bureau must, by law, remove the debt notation."  So, paying off these debts will not improve my score.    http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=MD012&SRCN=aoedetails&GnavID=84&SnavID=20&TnavID=&AreasofExpertiseID=19 I should have sued my ex for child support much sooner instead of letting him bully me and using credit cards to bridge the gap.

Also, I should have kept at least one or two of my credit card accounts active. I have on time payments for 2 cars, but that's not enough.  I need to have a credit card account to improve my score, but I don't qualify for a good rate on an unsecured card and I refuse to pay the ridiculous annual fees and interest the others charge.  I decided to apply for a secured card instead.  I started with my own bank, half expecting to be denied since one of my charged off accounts is with them.  Surprise!  I'm approved.  Using this card will improve my score since, unlike prepaid cards, it is reported to the credit bureaus.

Lesson learned:  Whether you've gotten into financial trouble or done the good deed and paid off all of your cards, keep the one you've had the longest open with a small balance which you pay on time.   

14 comments:

Brian Miller said...

true that...i used to work in credit...just be smart with shat you purchase this time...

Christiejolu said...

I have never used a credit card...My Dad always told me "If you can't afford it you don't need it" pointing his fingers in my face...LOL! I am too afraid to get one...

LL Cool Joe said...

I buy nearly everything with my credit card.

AmyLK said...

Credit scores are so confusing! Glad that you were approved and can start making improvements!

Sniffles and Smiles said...

Such good advice, Jen!!! Credit can be so difficult to establish and maintain!!! Best of everything to you!!! Have a wonderful week!!! ~Janine XO

Bernie said...

I always use my credit card but I never keep a balance. I pay off the balance every month and I have a good intrest rate.....I don't like giving them my money so I'm sure they would prefer a customer who only pays the minimum payment. Good for you Jen, now that you have the card you will be able to rebuild your credit and with a lesson well learned you will be fine.....:-) Hugs

Kelly said...

I look at a credit card as a way to use their money for a month, then pay it off. I prefer one to a debit card.

Alexis AKA MOM said...

Man it's a long road and I'm there with you girl!

Lourie said...

We have way too many...and most are maxed out. That being said, you are right...you need at least one. And one we will keep. We've had it since before we got married.

Tempo said...

I hear you..loud and clear. I've only had two loans in my whole life, never had a credit card, always paid everything with cash...and what do I get for that? A bad credit rating. I mean! WTF.
I recently applied for my first line of credit ever, and got knocked back. I'd tell you about it but all those four letter words would make your neat blog look untidy..

Slamdunk said...

Good advice--I did not know that.

gayle said...

Thanks! I didn't know this!!

luciser said...

Like this. never used a credit card.

kikio said...

Now i know that's true.

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