A Week's Worth of Bank Suckitude

[emt_cookies]

My mom made the effort to help me build my credit score. I know it can go horribly wrong with some parents. Basically, she put me on her credit car she barely used but made she paid if she use it. I had my first checking account at 15 or 16 (my mom was on the account) and then I opened my 2nd sole-account at the age of 17 at a different bank. Then when I was 18, I had a credit card that I kept on over-paying instead of carrying a negative balance. Then at 20, I went for my car loan cosigned by my Mom. Then 2 months later (21 now), I had a Wal-mart credit card. The Wal-mart Credit Card keeps on going up an they recently made it a discover car. My 2nd checking account just gave me a credit card.

Unfortunately, my friend who is 22 too has no credit. He has applied to try an get credit but no one will take him. Not even the bank where he has a checking account. He waited too long to try and get a credit card after high school. He also paid cash for his car so that messe things up.

(My S key is sticking by the way)

[Rapscallion]

I'm cruious - you mention credit scores of roughly 600, but I have no frame of reference on this. It's not common practice in the UK for a person to know their credit worthiness. I know that I have a reasonable credit rating (one card, paid off every month barring one when it got caught up in a deluge of xmas mail, loans paid barring the mortgage, have an overdraft from one specific incident [needed a car due to someone else driving into mine and never been in since]). However, I don't know any numbers.

What is this scoring system you have for credit? Could do with a frame of reference.

Rapscallion

[Ghel]

We use the FICO credit scoring system. There's a few other systems in use in the US, but they're pretty similar. The credit scores range from 336 to 843, with higher being better. We usually look for a credit score of 650 or higher, though we also look for the reasons underlying the score, as I mentioned above.

Various things are used in the formula for the credit score. I don't really undertand it all, but some of the things it looks at are payment history (usually for the past 2 years), debt load (comparison between current balances and credit limit), and number of open accounts. Things that negatively effect an account include collections, garnishments, tax liens, bankruptcy, and excessive inquiries.

In the US, you can get the content (but not the score) of your credit report once a year for free from any of the major credit reporting agencies, or all 3, at annualcreditreport.com.

[taxguykarl]

What is this scoring system you have for credit? Could do with a frame of reference.

From the horse's mouth.

[protege]

Imagine his surprise when one day, after logging on to see how much credit he had left, he had over $1500 available!

I bet he was surprised! I know that my credit limit is pretty high--it's been increased several times over the last decade. Right now, I could buy a new Corolla with my credit card I might be crazy, but I'm not stupid

Still, I do find it troubling that credit is so easy to get ones' hands on. I have several credit cards--a Visa, Discover, several store cards. Even so, I get about a dozen new offers from every lender on the planet. If I wasn't careful with my money, I could easily find myself in a massive financial mess. Too many lenders are careless when it comes to extending credit towards people. With me, very little gets put on the credit cards--if I don't have the money, I don't buy it. It's pretty rare that I carry a balance. The exceptions were when my A/C unit blew up a few years back, and when I had some work done to the MG.

Both were necessary--the A/C because I get migraines (my home turns into an oven in summer), and the car had been sitting a long time. I felt, that the longer it sat out in the open...the bigger the risk that something would happen to it. By that, I mean it could be vandalized, hit, or broken into. That went on the card as well, and wasn't on there long. I was able to make a few payments...and then by juggling some investments around, I could pay off the balance in full. Otherwise, I don't carry a balance at all--I try to pay it off every month. Also, I don't buy any "toys," unless the bills are paid.

Occasionally though, you can beat the lenders at their own game. When I bought my current car, money was very tight. I simply couldn't afford monthly payments, but the old car was falling apart. After some careful thinking, I came up with a plan. What I intended to do, was to shuffle some investments around, put that towards most of a new car, and then finance the rest. "The rest" was only a couple of grand. I'm sure the dealer (and the bank) wasn't too happy, since they'd miss out on some income...but oh well. It cleaned out most of my savings, but my monthly payment is less than $150 (about half of what a *lease* costs), and I'll have the car paid off by April.

I'm not trying to toot my own horn, I'm really not. After watching my parents get into money troubles in the '80s, and just *now* get out of that mess, I decided that I wasn't going to repeat their mistakes. Watching them struggle made a big impact on me. I've been poor, and it fucking sucks. Not going through that again.

[Ghel]

From the horse's mouth.

Thanks for the link. That spells it out very nicely.

In addition, the credit reports we pull list reasons the customer's score isn't higher, and (per regulation) we have to pass that information on to the customer if we decline the credit.

[Rapscallion]

Thanks - makes it far clearer.

Rapscallion

[Andara Bledin]

Nice to know that making sure I have money instead of going into huge amounts of debts screws me like that :S

Every time you need to buy something like, say, an appliance, save up the money, find a rent-to-own place with a low rate, then make payments until the deadline and pay it off right before. You'll build credit (my fridge from 4 years ago is the only reason I qualified for a car loan last year) and won't be out much in the way of money.

As for a credit card, look into something secured from your bank. You should be able to get one with a nominal fee (mine is $30 annually, which isn't even one dinner out), and after a year, they will likely review the account and if it's in good standing, return your deposit. In my case, I paid off the bill in full pretty much every single week (a $300 limit only covers so much and I wanted to use it constantly for the points). Other than the annual fee, I think I've paid all of $50 in interest in the last year and the points returns have more than covered that.

I plan to be buying a Wii in this manner, despite already having current credit reports for both car and house payments.

Weird that you don't have a credit file with a loan in your name.

If it's far enough back, it just doesn't count.

My co-worker is trying to buy a house after having moved to this state a couple of years ago. Unfortunately, he's been renting a room from a relative so he has jack squat for anything current on his credit rating so he's being treated like he doesn't have any history at all, which is frustrating the hell out of him, since he actually does have history, it's all just older than the banks want from him.

It took some convincing to the CSR over the phone that yes, he wanted to lower his credit limit.

From what I understand, having your credit limit lowered (or closing a credit account) actually puts a hit on your record.

^-.-^

[taxguykarl]

An even then you can be forgiven for wonder aloud (and not facetiously) if you're reading a chapter of Catch-22. As you can't use the credit lines you have if you want a high score. Please notice that income is irrelevant in credit scoring. It's not for nothing that Dave Ramsey calls FICO an "I love debt" score. When we re-financed our mortgage, I found that my wife's score is about 60 more than mine, because she has no late payments and a car loan.

[EricKei]

From what I understand, having your credit limit lowered (or closing a credit account) actually puts a hit on your record.

^-.-^

It gets better -- IIRC, having too MUCH credit (or too many different cards) can also hurt your credit.

We're screwed either way.

[Moogles]

I've been turned down AT BANKS for a credit card because I "don't have a credit score". I had even brought proof that the car loan was in my name and they told me that it *might* be in my name, but it wasn't it their computer system so it didn't count.

[Ghel]

I have noticed that, although credit information is supposed to be shared among the three major credit bureaus, it sometimes isn't. So a loan or credit card might show up on Transunion, for example, but not on Equifax or Experian. So if the bank only pulls one credit report, they might not be getting a full picture of your credit history.

We've run into this a few times at my bank, since we only pull Transunion.
The credit union across town reports to Equifax. When we had our loan special going, people whose mortgages were at the credit union didn't show up on the credit reports we pulled.

[teh_blumchenkinder]

It's not common practice in the UK for a person to know their credit worthiness.

It's not common here either. This is a problem. Identity theft takes advantage of this, as I touched on in my previous post. The once-a-year-for-free is a newish thing in law here in the U.S., to help stop/retard identity theft and to help know where your finances are. As for myself, I only recently found out my own score and content because I got a new apartment, and the lady doing the thing was all "there is no reason why I should not tell you your own stuff. Here, have the report you paid for with the background/application fee." I don't expect to get an actual number again until I get a credit card, or buy a house (as my car was given to me (but I still think of it as 'not mine,' long story) and other purchases aren't as major.)

[Geek King]

It's not common here either. This is a problem. Identity theft takes advantage of this, as I touched on in my previous post. The once-a-year-for-free is a newish thing in law here in the U.S., to help stop/retard identity theft and to help know where your finances are.

Another reason to keep track of your credit report in the U.S.: A lot of places use your score for things other than granting you credit. Even some businesses will check your credit score before hiring you. A screwup in your credit report could cost you a job. Before that law (and a couple of others) that allowed you to check your report, the credit companies would not let you see your own report, and were not held accountable for fixing their mistakes.

I had an uncle whose report got merged with someone else's ID. The other person had terrible credit history, so my uncle was pretty screwed until he got it cleared up and the two reports got seperated. Now the credit reporting agencies have to fix such things in a timely manner after being notified, or you can sue the pants off of them if their mistake costs you an opportunity.

[EricKei]

Note for people in the US --

As was at least referenced above, you are legally entitled to one free set of Credit Reports (tho not necessarily a free Score) once per year. The simplest way to get it is from www.freecreditreport.com -- HOWEVER: Doing it thru them will automatically sign you up for a paid "credit monitoring" service @ $15/month. Thus, you have two options: a> Do that and then cancel the service within the time limit (7 days), ideally as soon as you get your 3 reports; or b> Just go to the three individual credit bureau's websites (all listed on the above site) and do it yourself with no strings attached.

Also, there are certain situations in which you are entitled to additional free reports during the year (I think having a Dispute filed is one of them). I'm sure there are others here who can elaborate on that better than I can ^_^

edit: FCR has changed - you can get a free report, theoretically with no strings, from them with a 2 day delay or so before getting your data, OR pay them a dollar for the previously free set plus your Score more or less right away, which signs you up for the paid service (you have 7 days to cancel). NOTE: No matter what method you use, you will need to answer some proof-of-identity questions; I've had these sites ask me things like where I lived in the 80's...and this was within the last year or two!