PDA

View Full Version : Whats a good credit score



billbenson
11-10-2008, 11:13 PM
I had a bankruptcy about 6 years ago now. I've had a house for about 1.5 years. 7 credit cards maxed out that are pretty much paid off. I paid one from $5k to $300 and they just canceled me. Most of the credit cards are real high interest. Received an offer on one card with a $5k limit to move funds from other cards to that card at a 4% APR. I paid off that card and then moved debt from other cards.

I assume that until the bankruptcy disappears, which it should at 7 years, there is a limit to how high my credit score will go. In June it was 650 ish. Now its 725 ish. I assume that is because I have paid my credit cards down.

So given the above, what should my credit score goal be?

Also, at what point do the credit card companies give you the 0% financing offers for 6 months. I have a friend who has good credit and juggles credit cards for 0% with about 100k in credit across 11 cards. I used to get those offers, but I haven't seen any since I maxed my cards out buying my house.

Evan
11-10-2008, 11:40 PM
Credit Karma (http://www.creditkarma.com) is a great website to figure out your credit score. I was skeptical at first, as that is something you usually never get or have to pay for. But that's a good website to check, in case you're wondering :-)

Your credit score is good, and you're probably higher than 75% of Americans. The bankruptcy will "go away" at the 7th year. And presumably your score improved because of your reduction in debt, which is generally favorable. If you had $50K debt and $60K worth of potential credit but managed to pay off $20K, having $30K into $60K is much better than $50K into $60K in determining risk.

My credit score is very good according to CreditKarma (and my free credit reports), which I've worked hard since 18 to establish. At 21, I know many other people who live lifestyles that exceed their normal means. I remain pretty conservative financially and always pay off my debt in full. Almost all of my credit card offers seem to be 0% for 6 months, but I shred them. The last thing I need is more "temptation" to have more debt.

Give it a few more months, they should start reappearing. But perfect credit really is overrated, there are many studies out there that shows having "perfect credit" really isn't the best thing.

billbenson
11-11-2008, 12:38 AM
This gets worse.

One of my credit cards is Aspire. I had paid the card down to $350 or so. I received a letter today stating my account was closed. If you google aspire credit card you will get a bunch of horror stories. I read a few and went on line and paid my balance in full. After doing that I remembered that they charge $4.95 for online payments. That means that I have a $4.95 balance.

Did some more searching and find out that they are extremely difficult to close an account with. They play games with false promotions and after the fact charges, then hit you up for late payment fees for charges you didn't know you made.

Any idea how to make sure I close the account? Phone doesn't work. Eternal hold. Battery actually went dead in the phone. Called back on a different phone and the battery went dead after 2 hours of hold again.

Only thing I can think of is to send a cashiers check and a close my account letter registered mail.

Evan
11-18-2008, 11:33 PM
I'd send a check instead of a cashiers check, so you can check to see if it's cashed. Write "Payment in Full/Account Closure" at the bottom of the check, even though those tend to be non-binding per the legal agreement. Also include your letter with this check.

Send it certified mail, which will verify that they indeed received it. They will be required to sign to acknowledge receipt of your letter. Registered mail only will indicate who has been in custody of your envelope and it's treated a bit differently. This will do nothing for you.

billbenson
11-19-2008, 12:22 AM
Where it sits know is I made payment in full, but forgot about the 4.95 pay online charge. The following day, I sent them a check for 9.90. That should cover the online payment for paying off the balance and the charge for paying a second time the online payment charge and the charge for paying the online payment charge a day later (I hope that made sense).

Right now my account shows a balance of 4.95. A friend suggested I send them 15 dollars, but that would leave a credit balance and they could keep the account open, change the terms in the future... Unless they sent me a check, the account wouldn't be closed at their option I would think.

I did manage to talk to an actual person in india and he said the account would be closed when they received the above payment. If this doesn't work Evan, I'll take your advice.

Pretty wild scam though.

Steve B
11-19-2008, 02:43 AM
I wouldn't worry about getting the next set of credit card offers with tempting terms.

I would suggest having only one or two credit cards and paying every balance in full at the deadline via an automatic draft arrangement to guarantee you are never late. This is especially effective if you have overdraft protection on your checking account - to guarantee your payment is always made to the credit card companies. I've been doing this for 20 years - so I've never been late or had to pay any interest.

billbenson
11-19-2008, 03:26 PM
You can do that steve, if you have cash in the bank. I don't have cash so I need credit cards as a fallback. From a credit score standpoint, you want to maintain your cards at about 50% of their limit. You will do better than paying them off. Banker even confirmed that one to me. Having said that, I want to pay them off.

On a side note, if you travel at all, particularly internationally, I would always have 4 credit cards and $500 or so in cash. I used to do about 100% travel for work. Mostly Latin America. I had a wallet with $50 or so in it and one credit card. I had a pocket sewn on the inside of my pants where I kept some more cash and a credit card. I kept two credit cards and the rest of the cash in my hotel, but not in the safe. I only got robbed once - Argentina of all places. Argentina is pretty safe.

Once I was in Caracas and went to the US Embassy for something. Some kid was there naked. They stole everything. His passport was in the hotel safe. Because they stole all his credit cards and money, the hotel wouldn't let him into the safe for his passport. Without the passport, the guard at the embassy wouldn't let him into the Embassy. I went into the embassy and got someone to go out and help him.

By the way, I also always traveled with a list that had numbers to call if my card was stolen.

orion_joel
11-19-2008, 08:03 PM
This is something that i think i would like to look into in Australia, as i do not know that we have Credit Scores as such like you have in the US. Maybe we do but it is something that i have never really looked at.

I would think mine should be fairly good, I have two credit cards, which are always paid to the balance due, which means they do have on going balance, but never have interest charged on them. I have had a personal loan, which was paid out early, and have never had anything go to a collections agency. So i am thinking it may be worth checking what my report actually says.

Evan
11-19-2008, 09:54 PM
You don't want to exceed 50% of your credit limit, as doing so signals a big red flag to credit carriers. They figure you're trying to max out one card, and they know how much other credit you have and figure you may do the same with all of them. Once your debt-to-income ratio becomes too high, your credit will also drop. Like anything, using your credit responsibly is your best bet. Don't buy something if you know you can't pay it off or make decent size payments (more than the minimum).

orion_joel
11-19-2008, 10:04 PM
oh i dont think that i have a issue there my creidt card balance is maybe at a max 5%, sometimes it may go up to 10%, but even if i was to max the card out this month it would be paid off the following. the only time it exceeds the 5-10% is for business purchases, which are always paid at most within 7 days to me, and paid off the card as soon as they are due.

billbenson
11-20-2008, 05:31 AM
You don't want to exceed 50% of your credit limit, as doing so signals a big red flag to credit carriers. They figure you're trying to max out one card, and they know how much other credit you have and figure you may do the same with all of them. Once your debt-to-income ratio becomes too high, your credit will also drop. Like anything, using your credit responsibly is your best bet. Don't buy something if you know you can't pay it off or make decent size payments (more than the minimum).

But you don't want to have a bunch of available credit that is unused either. They don''t like that. When you apply for a credit card, they really don't know how much you make. They don't ask for tax forms. They must have a way of looking at assets to compare to debt to determine credit as well. In my case, they may be able to look at the APR I am paying on credit cards and make an assumption there? Why would I have high APR credit cards if I didn't need to?

Evan
11-20-2008, 02:40 PM
Having unused credit doesn't hurt you at all, it's abusing credit that hurts you. I have several credit cards I never use, except to make a few purchases each year just to keep it active.

They know what your credit score is because they frequently will check your credit to determine whether you've defaulted on any of your cards or whether you all of a sudden have a ton of credit used. Defaults, which are becoming questioned, can lead to all of your credit card interest rates to increase. If the credit card company also reassesses your risk, they can increase/decrease your interest rate.