BigSoccer Personal Finance and Credit Repair: New low 2% APR

Ha. Stumped you.

 

There's a phone number to call to opt out of all "pre-approved" solicitations from credit cards. I can't remember it for sure right now but I'll look it up at work tomorrow.

It's something like 866-4OptOut or something like that. More tomorrow...

 

I don't care if they send them to me, but if they say I'm "pre-approved," there's an assumption that, you know, I'm actually pre-approved.

 

"Pre-Approved












to apply for"

is what's in fine print at the bottom.

 

I've got a question....



I didn't see it in the other thread, but I'm sorry if it's already been asked. I am applying for some student loans since I am going back to school this fall. Is there any advantage (or disadvantage) of going through my own bank for the loan, as opposed to any other lender, assuming the rates are approx. equal?

Any info would be greatly appreciated.

 

Ian... ive got a question... how come the finacial world, and everything that involves, lenders, money, clients, mortages, loans, credit, rates, feds, escrow, interest, payments, options, points, ect ect ect ad nauseum... well... how come it all really generally sucks and is confusing as all hell?

 

Here's your answer:

 

Because our education system fails to teach personal finance.

 

Just posting so I'll get email updates when people post here. Carry on!

 

This is the first year I've volunteered w/ junior achievement and I'll be teaching a personal finance class at my old high school this fall that is one day a week. It's for the kids who are in an econ class, so it's not required, I definitely feel it should be though, it's a big thing kids need to learn before they go off to college.

 

OK, guys, here's my situation: I still have some utility bills left over from before I moved back home. I know I should get those paid off ASAP, and I'm working on it, but what should I do to minimize any problems when I get back into my own place again?

After that I've got one closed credit card that I think I'm going to pay off before I zero out my still-active credit cards. I've got the closed one at a lower interest rate temporarily, and my Capital One accounts just have obnoxious interest rates, but I'm thinking I should take care of the closed account first. Or am i wrong?

Thanks for your help.

 

If you're looking to max your credit score, in general, it's best to pay off open accounts (while keeping current on closed ones), before you pay off closed accounts. Companies look at how much of your open, available credit you are using, and once an accounts been closed (even if there is still a balance on that account), it's not included in the calculation.

 

I saw this on MSN, and thought it might be helpful.

http://moneycentral.msn.com/content/Banking/creditcardsmarts/P123470.asp?GT1=6705

 

FWIW, I'd pay off the higher-interest rate cards first (while remaining current on the closed one). Paying off the higher rate card means more money in your pocket, or better yet, more money to pay off other debt since you are paying down a balance with a higher finance charge.

Same concept as not paying off a 2% car loan with a windfall (say a tax refund) when you can invest and get a 7% return on your money. In the long run, it's more money for you.

BTW, "Go Runners!" (CSB '83)

 

Thanks for the great job Ian.

I have a question about CC's? Does the closure of a CC acount affect your credit score? I read somewhere that it does. Also, does it pay off to keep your oldest CC acount open since that's the beginning of your credit history?

Thanks

 

Yes and yes.

Credit scoring has three components that apply in this case:

1. Your payment history. The longer your history of making payments, the better.
2. Your overall debt to credit ratio. The more credit you have, the more you can get, assuming you don't use too much of it.
3. Length of credit. The longer you have credit, the better risk you become.

That said, if you don't use the credit card and can replace it with another, and most importantly don't plan on applying for a mortgage or anything like that sometime soon, you can safely close the account without tanking your score.

As soon as I got my mortgage, I cut my credit cards down from 3 to 1, knowing I wouldn't need to worry about the effect on my score.

Sachin

 

Thanks Sachin.

I plan on taking out a mortgage in two years time so I assume the best time to close some accounts is now. The accounts I'm planning on closing are dept. store CC's so the limit is not that high ($750 I think) to affect my debt to credit ratio.

How long before my score goes back up to what it was before closing the accounts?

 

Thanks Ian.

One last question. Does the size of the credit available on all CC's combined have a bearing on one's credit score? Say does a $20,000 avaiable credit mean a higher score than a $2,000 available credit everything else being equal?

 

Percentages matter. If your total credit lines on your CC's for example are 4,000 and you're using 2,000 (2k available), it's much better if say you have 22,000 in total credit line and you're using 2,000 of it (20k available). Your score is based on dozens of variables, so it's hard to draw out 1 thing and say how much of an effect it's going to have, but all things being even, using less of your available credit (percentage wise), is better. I worked some analyzing software that I have available from my employer, and it all depends on your situation, but I worked it based on my numbers, and having 20k available vs 2k available was a difference of about 15 points.

 

my friend is thinking about using a debt solutions non profit to pay down their debt. i was wondering what are the consequences for doing so, and what you'd recommend. i heard some shady things going on with those kinds of angencies, but i can't seem to find any pertinant information on specifics. the agency they are looking at is called Financial Debt Solutions

thanks

 

It depends on what the company does, and what types of arrangements they negotiate with the creditors. The goal of those places is usually to get you out of debt, not improve your credit scores. A lot of times they will negotiate payoff balances/settlement payoffs for less than what the balance actually is, if they do things like that, it will have a negative effect on your score because the creditors will report back to the bureau that the bill settled for less than the balance.