improving cedit, advice and help

[88jbody]

I have been working on fixing and improving my credit. over the last 4 years it has gone up about 50 points.

looking at my equfax (full copy not one i got online) I got a photo copy o the one they pulled for when I was considering a car purchace.

as it looks right now the biggest negative on the report is for my credit card. it has been in good standing for quite a wile but there were some previous late payments showing. a few 30 day alte and one 60 day late. do these late payments showing on there get removed after a period of time? or is there something i can do to ofset what that is bringing my score down?

otherwise I have been seing a steady but slow improvement of my credit over the last 3 or 4 years.

the only other negative was a very old bill in collections that I have made a settlement with and have paid in full. I havent checked since to see if it has been reflected on my credit (was about 3 months ago)

credit utilization is about 50%,
current credit is my small credit card owing $500 on it ($600 limit)
a car loan original balance 45k, owing just under 30k now
and a 7k personal loan that is recent. was used to pay the collection account, some expenses I had for my kids and things like that.

just trying to set my self up to buy a home and so I want to start with getting my credit up to par.

any suggestions or helpfull tips on credit building apreciated,

I was recently declined a credit card from my bank still though.

[s dime]

500 owing on a 600 dollar limit is not a good thing IIRC. Should be less than 50%. I know, easier said than done...

[JohnnyHockey]

Get rid of the $30,000 car!!!!! Holy... If you have bad credit already and you want to get a mortgage, forget the car loan on a $45,000 vehicle... Unless you have a a really high paying full time permanent job that you've had for a long time... It's all about debt servicing per month with their calculations, how much is your car payment?

[The_Rural_Juror]

You probably need to build credit somehow with utilities bills, line of credit, or secured credit cards (https://www.lifeoncredit.ca/top-6-se...for-canadians/) Good luck.

The car loan is a bit of a red flag though.

[revelations]

Here is how the FICO scores are roughly calculated in Canada.

[88jbody]

Originally posted by s dime
500 owing on a 600 dollar limit is not a good thing IIRC. Should be less than 50%. I know, easier said than done...

actually that is not difficult i was told 60-70% of limit. the thing is it take nothing to spend that on my credit card. I make payments bi-monthly now to prevent being late on a payment due to processing time. I just have been doing quite a bit of online purchaces lately. so its been getting paid and used alot lately. my concern with the credit card though is the 30 and 60 day lates still showing from a couple years ago

[88jbody]

Originally posted by JohnnyHockey
Get rid of the $30,000 car!!!!! Holy... If you have bad credit already and you want to get a mortgage, forget the car loan on a $45,000 vehicle... Unless you have a a really high paying full time permanent job that you've had for a long time... It's all about debt servicing per month with their calculations, how much is your car payment?

edit: what would be considered bad credit?

well to get rid of the car would leave me alot of negative equity right now becasue I did consider downgrading to a less expensive car so looked into trade in value 6 months or so ago, and adding that to a cheaper car would end up leaving me with not much less owing and likely a similar payment to what I have now. But also I love this car and plan on keeping it until the end of its life.

Ill give a bit more background on the car.
4 years ago I bought a used car 12k, 14% intrest credit score in the 440s, kept 11 months traded it in for a brand new car now that I was approved for a beter rate but had 7k negative so that rolled into the new car. new car with the 7k negatived added in came to $44,500 but at 3.5% intrest instead.

my job is very secure, going on 8 years and depends what you consider high paying for income.

car payment is 540/mo just under 3 years left until its paid for so it will be very close to paid off when I go to buy a home.

so in 3 years my car is paid off, and the personal loan will be paid off 6 months after that. clearing up about 900/mo in payments. that is without considering any extra payments made which is what i normally do with my income tax is put it on the debts with the highest intrest

[s dime]

http://www.nomoredebts.org/blog/cred...re-canada.html

[Amysicle]

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[revelations]

Originally posted by 88jbody


well to get rid of the car would leave me alot of negative equity right now becasue I did consider downgrading to a less expensive car so looked into trade in value 6 months or so ago, and adding that to a cheaper car would end up leaving me with not much less owing and likely a similar payment to what I have now. But also I love this car and plan on keeping it until the end of its life.

Ill give a bit more background on the car.
4 years ago I bought a used car 12k, 14% intrest credit score in the 440s, kept 11 months traded it in for a brand new car now that I was approved for a beter rate but had 7k negative so that rolled into the new car. new car with the 7k negatived added in came to $44,500 but at 3.5% intrest instead.

This is what makes no sense, and one reason why people are in debt, perpetually:

- buying a used car for 12k, with an interest loan of 14% ???

Why not purchase a good, used Yaris or Civic for $2-3k if the rates are going to be that stupid? The depreciation on a $2-3k vehicle is much less than one on $12k.



- jumping into an immediate, money-losing venture with a new vehicle ???

Why then, after making the previous decision (where you already gave up large sums of cash for nothing) jump into a decision where you are GUARANTEED to lose 10% of the price of a vehicle, the moment its driven off the dealer lot?

This could be 3-5000$ easily, not even talking about GST, BS fees, etc.

NOW, you are also losing huge sums of money every day with depreciation. Also, include the higher premiums for insurance - mandatory comprehensive coverage ....... all this to get a lower interest rate, on a much more costly and money-losing purchase.

I just dont get it ....

[dirtsniffer]

He's aaking for advice not your scolding.

OP, try to pay a little extra on your loan and your car loan. Will help if you can pay them off early. You're still 3 years out but don't be discouraged.

[revelations]

Originally posted by dirtsniffer
He's aaking for advice not your scolding.

OP, try to pay a little extra on your loan and your car loan. Will help if you can pay them off early. You're still 3 years out but don't be discouraged.

That is no where near a scolding - no personal attack was conducted.

I was trying to give advice. OP tried to rationalize their previous financial decisions that lead then to this situation. If no adjustment is made, chances are good the same mistakes will just be repeated.

[scboss]

Trust me sell the car. I know it sucks but if you want to build your credit as fast as possible its just screwing you. I literally had to sell all my toys to afford university and since then i only buy cash. It takes a while but if you keep them mint you can easily upgrade each year in cash. I literally went

skyline/honda 600rr> 500$ ek civic> 350z> lexus is350 > g35 >Evox all within 6 years.

Sell anything that doesnt make you money and pay your debt asap!

[88jbody]

Originally posted by revelations


This is what makes no sense, and one reason why people are in debt, perpetually:

- buying a used car for 12k, with an interest loan of 14% ???

Why not purchase a good, used Yaris or Civic for $2-3k if the rates are going to be that stupid? The depreciation on a $2-3k vehicle is much less than one on $12k.
Why then, after making the previous decision (where you already gave up large sums of cash for nothing) jump into a decision where you are GUARANTEED to lose 10% of the price of a vehicle, the moment its driven off the dealer lot?

This could be 3-5000$ easily, not even talking about GST, BS fees, etc.

NOW, you are also losing huge sums of money every day with depreciation. Also, include the higher premiums for insurance - mandatory comprehensive coverage ....... all this to get a lower interest rate, on a much more costly and money-losing purchase.

I just dont get it ....

ok, so lets say I did not do this, my credit score would still be low

the point of the used car at 14% was 2 reasons,
1. my wifes car had been hit and run and written off
2. build credit.

it acomplished both those becasue my score is now 615 and my wife has a safe reliable car to drive kids around in. (I still drive an old cheap veichle myself 2001 with 375,000kms)

also insurance is cheap, $135 for everything but glass on the new car, as well as plpd on my truck that is s small expense really

Now I could have chosen to buy a cheap new car instead of the 38K mine was (+negative equity). and it would have shortned the term and payment. But then I know we would be unhappy with it, and if i was going to be unhappy then I would have bought a 2-3K car

It was the easiest and quickest route to improving my credit and has done that. infact the 2 car loans are the exact things that have built my credit.

I am not concerned about my debt load it is very manageable, its my credit score becasue I believe I was told I should not bother trying to apply for a morgage until it is 690+

the payments on my debts (car, personal loan, credit card) are about 4 days income /mo I dont think that is excessive or a concern

Originally posted by Amysicle
Good job on working towards cleaning up your debt. It's always tough to be digging yourself out of a hole but once you're done, it feels amazing.

If you can, pay off your credit card in full and don't charge more than you can pay off in a month. I assume you're paying 20% interest on the balance you carry. If you can get in the habit of not carrying a balance, you'll end up paying $0 in interest even if you use it for everyday purchases (gas, groceries, etc.). So just pay what the full statement amount is before the end of your grace period. It takes a couple of months of consistency before you notice the difference.

Equifax and TransUnion will send you a free credit report once per year (no score) if you mail in your request. This might be something cheap to do if you want to see if that collections bill has been updated on your report. If it hasn't, get that info updated.

There's really nothing you can do about those late credit card payments except for time. Don't apply for too much credit. If you're shopping around (car loans, credit cards, mortgage approvals) all at once, that's going to raise some flags. You would be better off asking for a limit increase on your current CC IMO.

I don't work in the finance industry, so you can take my advice with a grain of salt. My husband was in a similar boat to you though, but with me making sure payments were on time and cleaning up his messes, his credit rating is now better than mine. I think it went up 250 points in 5 years.

Good luck!

I have a full and recent credit print out (the one my bank pulled so has more info than the free ones) everything has a rating of I1 or R1 except the one collection and I have paid that off now.

For asking for an increse on my credit card I had not becasue of those late payments showing on my history, so now maybe I may do that. I dont carry a large balance on my card I usually pay most of it off monthly and only leave 100 or so owing

when I had got my personal loan the 2 things they pointed out that were hurting my credit was the lates on my credit card and the one collection, so I paid that off with the personal loan.

[88jbody]

Originally posted by warcaster
Trust me sell the car. I know it sucks but if you want to build your credit as fast as possible its just screwing you. I literally had to sell all my toys to afford university and since then i only buy cash. It takes a while but if you keep them mint you can easily upgrade each year in cash. I literally went

skyline/honda 600rr> 500$ ek civic> 350z> lexus is350 > g35 >Evox all within 6 years.

Sell anything that doesnt make you money and pay your debt asap!

my concern is increasing my credit score. would not continued payments on the car raise my score better than having no debt?

If I sell the car though, I need 8k more than the current market value to pay it off. and I dont have 10k in my savings. plus money to replace the car so another 2k for something reasonably reliable so I dont worry about my wife and kids being stranded on the side of the road.

so 12K for that which is half of what I owe on the current car anyway. so it would save me about 15-16K, but I would need the cash to pay off the loos on the loan upfront.

I do the cheap car for me, my veichles I generally spend 500-1000 for and keep them going as long as possible, my wife, she gets the new car to daily drive most of the time.

I think people are miss understanding somewhat this as me having issues with my expenses and month to month expenses. but that is not a concern it is stricktly just credit score that I am wanting to work on. I am not underwater at all on a monthly expense aspect. this last year been a little more tight lost 10k/year after the downturn, hopefully that can start picking up for me next year. so I dont have as much to save as I would like but I am not underwatter

[revelations]

Originally posted by 88jbody


ok, so lets say I did not do this, my credit score would still be low

the point of the used car at 14% was 2 reasons,
1. my wifes car had been hit and run and written off
2. build credit.

it acomplished both those becasue my score is now 615 and my wife has a safe reliable car to drive kids around in. (I still drive an old cheap veichle myself 2001 with 375,000kms)

also insurance is cheap, $135 for everything but glass on the new car, as well as plpd on my truck that is s small expense really

Now I could have chosen to buy a cheap new car instead of the 38K mine was (+negative equity). and it would have shortned the term and payment. But then I know we would be unhappy with it, and if i was going to be unhappy then I would have bought a 2-3K car

It was the easiest and quickest route to improving my credit and has done that. infact the 2 car loans are the exact things that have built my credit.

I am not concerned about my debt load it is very manageable, its my credit score becasue I believe I was told I should not bother trying to apply for a morgage until it is 690+

There are easier and cheaper ways to build credit rather than giving freely , probably > ten thousand dollars, to the used and new car dealer.

Try doing the math on how much the previous 2 vehicles have cost you vs. buying a cheaper vehicle privately. I made the same mistake decades ago when I was young and dumb (mind you, I had the money and a low interest line of credit at the time) .

My wife has a 3000$ vehicle that she drives around in with our kids. Very safe and reliable. She has proper winter tires (studs) to further increase that safety in the 6 months of winter we get here.

[Escape]

Originally posted by 88jbody


I dont carry a large balance on my card I usually pay most of it off monthly and only leave 100 or so owing

Umm why??? Why not pay off the full balance every month?
What's the point of leaving $100?

[HiTempguy1]

You dont need a credit score of 690 to apply for a mortgage. If you go with a broker, you should easily get pretty close to the best rates on a fixed mortgage if you have a score around 650+.

Credit is built on making payments on time and not defaulting on bills, plus your credit utilization. An auto loan in your situation makes zero sense.

You should get rid of the car, you can get a perfectly reliable NEW car for $15k if necessary.

But other than that, its not crazy complicated. The more bills/payments you have that are made on time, and keeping your overall utilization down will be your best bet.

Having said all of that, with the new mortgage rules, considering the debt you have and how long it appears to be taking you to pay it off, you probably can't get a mortgage for a full size house.

I know a lot of people earning close to 6 figures, and as a single income.family getting their first mortgage, banks gave all of them tons of hassle. They REALLY hate car loans, especially crazy ones like yours as its all liability with little actual value. Plus a huge red flag.

[revelations]

Going back to the original question of (re)building credit, /r/personal finance has some really good comments about this :

The most important thing is to pay off any credit debt you have.

All factors that affect credit, from least important to most:

1) Don't apply for too many credit cards. This is a low impact on your credit and makes a small difference. Ideal amount is no more than 3. Most of these credit inquiries expire after 2 years.

2) Have more accounts. The more the better... 21+ is considered excellent. These don't have to be open accounts, they are factor by the total number of accounts you have had in your lifetime. Student loans, if you have any, are applied to this. I have an excellent rating with this factor just because of my student loans.

3) Don't close unused credit cards. The longer you have an open account, the better. If you have a credit card, keep the account open.. you don't have to use the credit card (although you should check the terms of the card to be sure the account doesn't close after an extend time of inactivity.)

4) Don't let accounts get sent to collection agencies. Derogatory marks like these have a high impact on credit score.

5) Make payments on time. Don't be later. Payment History is a high impact factor as well.

6) Most important factor is credit card utilization which is total credit balance you owe on all accounts divided by the max credit limit of all your accounts. 0-29% is best> Higher than 30 is considered fair.

Don't want to advertise, but Credit Karma has been a great resource for me. I was able to raise my score from 590 to 700 in just a couple of months using their information and recommendations. Again, not advertising, just giving advice on what helped me the most.

Hope all goes well for you!

https://www.reddit.com/r/personalfin...ise_my_credit/

[scboss]

Originally posted by 88jbody


my concern is increasing my credit score. would not continued payments on the car raise my score better than having no debt?

If I sell the car though, I need 8k more than the current market value to pay it off. and I dont have 10k in my savings. plus money to replace the car so another 2k for something reasonably reliable so I dont worry about my wife and kids being stranded on the side of the road.

so 12K for that which is half of what I owe on the current car anyway. so it would save me about 15-16K, but I would need the cash to pay off the loos on the loan upfront.

I do the cheap car for me, my veichles I generally spend 500-1000 for and keep them going as long as possible, my wife, she gets the new car to daily drive most of the time.

I think people are miss understanding somewhat this as me having issues with my expenses and month to month expenses. but that is not a concern it is stricktly just credit score that I am wanting to work on. I am not underwater at all on a monthly expense aspect. this last year been a little more tight lost 10k/year after the downturn, hopefully that can start picking up for me next year. so I dont have as much to save as I would like but I am not underwatter

If your concern is getting a mortgage then being out of debt is a huge factor. I get what your saying but i would think keeping your credit cards paid off and eliminating your loans would be way more valuable then making payments on a car. Best of luck seems like your on the right track!