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Title: How do I improve my credit?
Post by: pianoman9701 on May 20, 2022, 11:54:35 AM
Once you realize that the credit industry's view of good credit is counterintuitive, you're on the road to improving your credit. I'm not a certified financial advisor or tax professional.

First: you must have credit to have good credit. Our parents always told us to pay all of our bills on time and not take out credit if we could pay cash. So, paying your bills on time? Good! Not having anything on credit? Bad for your credit score. Lenders want to see credit responsibility, in addition to seeing that someone's business is worthwhile for them. For example: If you have a credit card but never leave a balance at the end of the month (even just $10), you're a freeloader and even though you pay the bill on-time, without ever paying interest, you cost the lenders money. Installment loans, like those for autos and boats, show credit responsibility. Just don't go overboard (little boat pun there). Having too much credit out there raises your debt-to-income ratio and for mortgages, the maximum, including the mortgage, is 45-50%, depending on the type of mortgage. (to determine debt-to-income, divide minimum monthly payments of everything but utilities by gross income to get the DTI %.)

Next: closing accounts. Be careful closing any accounts prior to applying for credit. This includes credit cards, paying off vehicles, or other installment and revolving accounts. Just keep paying on time.

Next: Opening accounts If you are planning on getting a loan, don't apply for any other credit or credit limit increases.

Next: Do Not Default Or Be Late On Government Loans...Ever! This means student loans, FHA, USDA, or VA mortgages. Pay on-time always.

Next: Paying off creditors for delinquent debt. If the debt is less than three years old, pay it and then request that it be Deleted from your credit report. Sometimes they will, especially with medical bills. Sometimes they won't. If they agree, ask them to send you an email with that in writing. If the debt is more than three years old, contact the creditor and ask them if they'll delete it from your credit report if you pay. If so, great and get it in writing. If not, you should consider carefully whether or not to pay it because every time you make a change to a credit item, the seven year clock resets. So if you pay a debt that's four years old and they don't delete it, it's now on your credit as a delinquent debt for another seven years instead of three. I know, counterintuitive.

Lastly: To get a loan, you must have income. Especially for those self-employed people and taxes, if your deductions eliminate all federal tax liability, you may be happy with your tax man, but then your income shows nothing. And that's exactly how much income a lender will consider when qualifying you for a loan. Nothing.

If you have questions about any of this, I'll answer. But I'm not a tax or financial advisor professional.
Title: Re: How do I improve my credit?
Post by: STIKNSTRINGBOW on May 21, 2022, 06:48:40 PM
It is the "seven year" thing I have a question about.
.
I have had unpaid medical from an ER visit that was completely ridiculous for service rendered.
.
(Triage, and prescription for toothache)
$600?+?
.
I ignored it, but probably should have paid it...
.
But really...
Yep!
You are correct!
Your tooth hurts.
Here, buy some antibiotics and ibuprofen.
.
That's $600+?
.
It's been several years, but I get notices from a collection agency.
.
Is it worth paying off?
.
Title: Re: How do I improve my credit?
Post by: Stein on May 21, 2022, 09:00:06 PM
It's going to be on there for 7 years, paid late is better than not paid, but neither are great.  I had the same thing with an apartment I moved out of.  I fought them, the joker they sold it to and the credit agencies.  They had no proof of the debt, but it sat there for 7 years.  If that's all you have it's not a big deal from my experience.
Title: Re: How do I improve my credit?
Post by: STIKNSTRINGBOW on May 21, 2022, 09:13:27 PM
Truth be told,
I am 56 years old.
.
Never used credit.
.
Was told to start building credit.
.
It only hurt.
.
"Neither a borrower, or lender be" was my mantra.
.
As soon as I owed money, I paid it.
.
If I could not pay it..
.
I saved until I could.
.
What cost me was those unexpected bills that had no direct influence on my life.
.
They will not kill me for not paying for my tooth, but they will turn off the power to My house.
Title: Re: How do I improve my credit?
Post by: pianoman9701 on May 22, 2022, 11:09:12 AM
It is the "seven year" thing I have a question about.
.
I have had unpaid medical from an ER visit that was completely ridiculous for service rendered.
.
(Triage, and prescription for toothache)
$600?+?
.
I ignored it, but probably should have paid it...
.
But really...
Yep!
You are correct!
Your tooth hurts.
Here, buy some antibiotics and ibuprofen.
.
That's $600+?
.
It's been several years, but I get notices from a collection agency.
.
Is it worth paying off?
.

That's up to you. But if it's been years, it's probably worth it to wait until it falls off at seven. If it's been more than seven, you can contest it with the reporting agency(s).
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