Tuesday, September 13, 2005
Clearing Up the Credit ... Humpf (the humpf comes later, scroll if you wanna skip the credit advice)
Like most people I racked up a ton of credit card debt in college, not law school, college....okay and during my year off. By law school I knew how evil credit cards where/are and I stirred away from them but the damage was done. I had almost 10,000 in credit card debt and my interest rates were awful (one company actually had me at 25.99%!) I knew I had to get this down I didn't know how. So here is my advice for people with access to student loans. I know you techinically aren't supposed to do this, this is not legal advice, but this is what I did.
Before any of this pull your credit report. It is now free to pull your credit report once a year. My mom (who has been in banking for 25 years) says that you should pay the extra and pull it every six months to protect identity theft.
1. Take out an extra student loan to pay off your credit card debt. If you have lots of credit card debts and high revolving balances then you are almost certain to get better interest rate than you have on your credit cards.
***in case someone out of the norm is looking at this revolving balances are the balances you carry month to month. Also, if the amount you are carrying is almost as high as your available credit that is a bad thing on your credit score.
***You should also look at your credit card statements and know your interest rates. So many people do not know there rates. When they get offers they can't evaluate if it is a better offer.
2. Use your loan to pay off your debt in order by who has the higher interest rates. Once you pay off a card HIDE IT. Do not use it. Do not close the account. Having available credit that you DO NOT USE reflects well on your credit score. Hide it, don't use it, and make sure you check your statements ANYWAY to make sure no one else is using it and to make sure there are no finance charges.
3. A few months after you get down your credit card debt you will get offers for better credit card rates. Wait for one that has a really low interest and a no balance transfer fee and transfer your balances. Hide the credit cards again and don't use them.
4. Once you have fixed all of that use your cards responsibly. Keep low revolving balances. Having credit and using it responsibly looks great on your credit score and will help you get a house and a car.
Note:
a. You will never pay off your credit cards by paying the minimum payments....ever ever minimum payments are an evil trap.
b. This is the plan I used and my credit score has gone up over 80 points in a year.
c. I've done lots of research into this. My mother is an international banker and my father helps people finance their car purchases. I am not a debt consultant or financial consultant or anything like that. I am a regular person who has just done lots of research
So here is the HUMPF
A year ago I applied for my student loans and was VERY unexpectidly denied. I pulled my credit report and found that I was listed as in default on a payment to a Michael Marketing Group. I had no friggin clue who they were. It took a long time to track them down.
Apparently Michael Marketing Group is the WORST debt collection agency EVER. The debt was for a hospital stay. It was legitimate. By they NEVER called me and I never received any mail from them. After telling the man this and sending him the money (which I could have sent much earlier had they contacted me) I was told that he would completely erase it from my credit report.
So I was looking into buying a house (and decided against for other reasons I will probably write about tomorrow) and I pulled my credit report (and John's) and here is the Humpf. He didn't do what he said he would do, it was there on my credit report and it didn't even say I had paid it off. The account was listed as inactive (they hadn't sent anything to the credit agencies since last July). It wasn't adversely affecting my score but there it is.
I contested it in my report and have to call the man I spoke with (who shall remain nameless as I do not want to be sued for defamation) today. I have the letter he sent me a year ago (KEEP YOUR FINANCIAL RECORDS) and I want this off of my report completely. I hate when people say they are going to do something and don't do it.
Seeing as I thought this was expunged from my report I almost didn't put it on my bar membership application. John didn't think I should and it was a good thing I disagreed because if the Florida Bar pulled my report they would have seen it and I would have looked like a liar (not good for potential membership).
On an unrelated note John also has some mortgages on his report which are probably his parent's (since he and his dad have the same name). Pull your credit report (it's free) once a year at least, only good things will come of it.
Like most people I racked up a ton of credit card debt in college, not law school, college....okay and during my year off. By law school I knew how evil credit cards where/are and I stirred away from them but the damage was done. I had almost 10,000 in credit card debt and my interest rates were awful (one company actually had me at 25.99%!) I knew I had to get this down I didn't know how. So here is my advice for people with access to student loans. I know you techinically aren't supposed to do this, this is not legal advice, but this is what I did.
Before any of this pull your credit report. It is now free to pull your credit report once a year. My mom (who has been in banking for 25 years) says that you should pay the extra and pull it every six months to protect identity theft.
1. Take out an extra student loan to pay off your credit card debt. If you have lots of credit card debts and high revolving balances then you are almost certain to get better interest rate than you have on your credit cards.
***in case someone out of the norm is looking at this revolving balances are the balances you carry month to month. Also, if the amount you are carrying is almost as high as your available credit that is a bad thing on your credit score.
***You should also look at your credit card statements and know your interest rates. So many people do not know there rates. When they get offers they can't evaluate if it is a better offer.
2. Use your loan to pay off your debt in order by who has the higher interest rates. Once you pay off a card HIDE IT. Do not use it. Do not close the account. Having available credit that you DO NOT USE reflects well on your credit score. Hide it, don't use it, and make sure you check your statements ANYWAY to make sure no one else is using it and to make sure there are no finance charges.
3. A few months after you get down your credit card debt you will get offers for better credit card rates. Wait for one that has a really low interest and a no balance transfer fee and transfer your balances. Hide the credit cards again and don't use them.
4. Once you have fixed all of that use your cards responsibly. Keep low revolving balances. Having credit and using it responsibly looks great on your credit score and will help you get a house and a car.
Note:
a. You will never pay off your credit cards by paying the minimum payments....ever ever minimum payments are an evil trap.
b. This is the plan I used and my credit score has gone up over 80 points in a year.
c. I've done lots of research into this. My mother is an international banker and my father helps people finance their car purchases. I am not a debt consultant or financial consultant or anything like that. I am a regular person who has just done lots of research
So here is the HUMPF
A year ago I applied for my student loans and was VERY unexpectidly denied. I pulled my credit report and found that I was listed as in default on a payment to a Michael Marketing Group. I had no friggin clue who they were. It took a long time to track them down.
Apparently Michael Marketing Group is the WORST debt collection agency EVER. The debt was for a hospital stay. It was legitimate. By they NEVER called me and I never received any mail from them. After telling the man this and sending him the money (which I could have sent much earlier had they contacted me) I was told that he would completely erase it from my credit report.
So I was looking into buying a house (and decided against for other reasons I will probably write about tomorrow) and I pulled my credit report (and John's) and here is the Humpf. He didn't do what he said he would do, it was there on my credit report and it didn't even say I had paid it off. The account was listed as inactive (they hadn't sent anything to the credit agencies since last July). It wasn't adversely affecting my score but there it is.
I contested it in my report and have to call the man I spoke with (who shall remain nameless as I do not want to be sued for defamation) today. I have the letter he sent me a year ago (KEEP YOUR FINANCIAL RECORDS) and I want this off of my report completely. I hate when people say they are going to do something and don't do it.
Seeing as I thought this was expunged from my report I almost didn't put it on my bar membership application. John didn't think I should and it was a good thing I disagreed because if the Florida Bar pulled my report they would have seen it and I would have looked like a liar (not good for potential membership).
On an unrelated note John also has some mortgages on his report which are probably his parent's (since he and his dad have the same name). Pull your credit report (it's free) once a year at least, only good things will come of it.
