DHP Financial post of the week: Credit Cards, do you abuse them or use them wisely?

[imported_Gman]

They say if you can't pay off the balance of your credit cards every month in full then you are in trouble ?

As an ex-creditholic I have learned my lesson. It took me about 2.5 years to pay them all off once I made up my mind enough was enough. I rarely use my cards now and if I have a balance I pay it off in full when I get the bill. What say you ?

-G

[GROOVE VICTIM]

A recovering creditholic myself, I've ripped up 3 Pre-Approved credit cards ranging from a Visa Gold, to a Discovery Platinum within the last 2 months. Since January, I've knocked out $3000 worth of debt that includes 2 credit cards and my car payment. By this time in 2005 I should be clean of all my debt. I now only have one credit card that was supplied by Capital One. This card is actually helping me rebuild my credit as I pay off the balance of a credit card that got out of control. They gave me an offer to payoff one of my credit cards by putting about 75% of my payments towards the debt and the other 25% for me to use. If I continue to make my payments on time and keep a good balance, they increase my limit by $50, but the limit will not exceed 50% of the debt that I'm trying to pay off. Check and Balances in full affect and it's a great discipline for me to use this card.


Peace

[rob gregory]

Peace.

I was forced to deal with my credit when my wife and I decided to buy a house.

Just as a side note, there was a whole bunch of stuff in my credit reports that should not have been there.

Between credit cards and the car note we are about $14,000 in debt. The good things are we stopped using the cards, we pay more than the minimun and we are always on time with our payments.

If all goes well(which I suspect it will) I will be an owner of a brand new home in October. They haven't finished construction on the house yet.

[imported_Gman]

Originally posted by GROOVE VICTIM:
A recovering creditholic myself, I've ripped up 3 Pre-Approved credit cards ranging from a Visa Gold, to a Discovery Platinum within the last 2 months. Since January, I've knocked out $3000 worth of debt that includes 2 credit cards and my car payment. By this time in 2005 I should be clean of all my debt. I now only have one credit card that was supplied by Capital One. This card is actually helping me rebuild my credit as I pay off the balance of a credit card that got out of control. They gave me an offer to payoff one of my credit cards by putting about 75% of my payments towards the debt and the other 25% for me to use. If I continue to make my payments on time and keep a good balance, they increase my limit by $50, but the limit will not exceed 50% of the debt that I'm trying to pay off. Check and Balances in full affect and it's a great discipline for me to use this card.


Peace

You paid off two credit cards in full and eliminated your car payment ? Way to go Groove [img]graemlins/OLA.gif[/img]

[ July 17, 2003, 02:33 PM: Message edited by: Gman ]

[GROOVE VICTIM]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by GROOVE VICTIM:
A recovering creditholic myself, I've ripped up 3 Pre-Approved credit cards ranging from a Visa Gold, to a Discovery Platinum within the last 2 months. Since January, I've knocked out $3000 worth of debt that includes 2 credit cards and my car payment. By this time in 2005 I should be clean of all my debt. I now only have one credit card that was supplied by Capital One. This card is actually helping me rebuild my credit as I pay off the balance of a credit card that got out of control. They gave me an offer to payoff one of my credit cards by putting about 75% of my payments towards the debt and the other 25% for me to use. If I continue to make my payments on time and keep a good balance, they increase my limit by $50, but the limit will not exceed 50% of the debt that I'm trying to pay off. Check and Balances in full affect and it's a great discipline for me to use this card.


Peace

You paid off two credit cards in full and eliminated your car payment ? Way to go Groove [img]graemlins/OLA.gif[/img] </font>[/QUOTE]Well I still have a ways to go on one of the credit cards but I will be finished with my car payments by mid September. I've been paying about 70 to 100 bucks extra on the car to cut down on the interest and so I will have a very small balance for my last payment. Can't wait for that sigh of relief to come.

[rob gregory]

Peace.


After I take care of my house business, I've really been considering consolidating my debt. Any thoughts?

[Discogoddess]

Any tips to share with us scrubs who haven't made good decisions re: credit cards?

[GROOVE VICTIM]

This is JMJ's expertise. He along with a few other cats gave some good advise on cars a few months back.

One thing that I decided to do was to change my lifestyle for the better. Dieting, self control when it came to spending, prioritizing, making sure that my needs were dealt with before my wants. It's a rough road but when you look back at the accomplishment of paying off 600 dollars, or 200 dollars within a set time period, it really makes you feel good inside.

For a period of two years I did not recieve not one credit card application, and now I'm getting them. I see this as a positive thing as my debt is getting back under control and the way I approach these applications is by saying to myself, "that's just one extra bill you'll have to pay every month if you apply, why bother?"


Peace

[ July 17, 2003, 02:46 PM: Message edited by: GROOVE VICTIM ]

[MC]

I had 3 different cards while in college Visa, MC, and Discover. I wasn't mature enough to maintain or manage them needless to say I maxed them all out. I hate to say this, but my parents paid them all out for me (5,000+). I was young and dumb. Ever since then I've hated credit cards, now I either pay cash or debit. I will never own another credit card nor will I advise anyone else do so.

[ July 17, 2003, 02:49 PM: Message edited by: Michael J. Carmona ]

[imported_Gman]

Originally posted by PhoreAyem:
Peace.

I was forced to deal with my credit when my wife and I decided to buy a house.

Just as a side note, there was a whole bunch of stuff in my credit reports that should not have been there.

Between credit cards and the car note we are about $14,000 in debt. The good things are we stopped using the cards, we pay more than the minimun and we are always on time with our payments.

If all goes well(which I suspect it will) I will be an owner of a brand new home in October. They haven't finished construction on the house yet.

Yeah Linda and I got our act together because we wanted to buy a house at some point as well. We purchased our house one year after cleaning up our credit. There was a fair amount of inaccurate entries on our credit reports as well. People really need to get a copy of their credit reports and look them over very carefully. Good luck to you on your home !

[imported_Gman]

Originally posted by Michael J. Carmona:
I had 3 different cards while in college Visa, MC, and Discover. I was mature enough to maintain or manage them needless to say I maxed them all out. I hate to say this, but my parents paid them all out for me (5,000+). I wasn't young and dumb. Ever since then I've hated credit cards, now I either pay cash or debit. I will never own another credit card nor will I advise anyone else do so.

Can you rent a car with a debit card ?

[MC]

Originally posted by Gman:
]Can you rent a car with a debit card ?

I doubt it, but I can't stand a credit card. I refuse.

[ July 17, 2003, 02:52 PM: Message edited by: Michael J. Carmona ]

[kev]

There is one rental company that will let you rent a car with a debit card (I've done it a couple o' times with them). Can't remember which one to save the life of me right now, but I'll report back later when I figure it out (c'mon braincells you can do it). And from what I know this is the only company that will let you rent with a dc.

I've watched people close to me get reeeaaaally into credit card debt when I was younger. I'm 31 now and still don't have a cc. People tell me that I should probably get one to establish a line of credit, but I noticed that the people suggesting that to me have credit problems.

[JMJ]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Michael J. Carmona:
I had 3 different cards while in college Visa, MC, and Discover. I was mature enough to maintain or manage them needless to say I maxed them all out. I hate to say this, but my parents paid them all out for me (5,000+). I wasn't young and dumb. Ever since then I've hated credit cards, now I either pay cash or debit. I will never own another credit card nor will I advise anyone else do so.

Can you rent a car with a debit card ? </font>[/QUOTE]Yes you can.....JMJ

[ July 17, 2003, 03:01 PM: Message edited by: JMJ ]

[imported_Gman]

Originally posted by GROOVE VICTIM:
This is JMJ's expertise. He along with a few other cats gave some good advise on cars a few months back.

One thing that I decided to do was to change my lifestyle for the better. Dieting, self control when it came to spending, prioritizing, making sure that my needs were dealt with before my wants. It's a rough road but when you look back at the accomplishment of paying off 600 dollars, or 200 dollars within a set time period, it really makes you feel good inside.

For a period of two years I did not recieve not one credit card application, and now I'm getting them. I see this as a positive thing as my debt is getting back under control and the way I approach these applications is by saying to myself, "that's just one extra bill you'll have to pay every month if you apply, why bother?"


Peace

Groove you are trying to leave the debt matrix. As you get closer and closer to being debt free they will try to pull you back in. By the way to you know what your FICO score is ? This is a number that the credit bureaus come up with to score your credit worthiness ?


FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your score.



These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History
--------------------------------------------------------------------------------

Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed
Amounts Owed
--------------------------------------------------------------------------------

Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History
--------------------------------------------------------------------------------

Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
New Credit
--------------------------------------------------------------------------------

Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems
Types of Credit Used
--------------------------------------------------------------------------------

Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
Please note that:

A score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
Your FICO score only looks at information in your credit report.
However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
Your score considers both positive and negative information in your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.



Great site to go to is www.myfico.com for understanding all about your fico score.

-G

['Magic' Juan]

I was one of the very few who was very responsible with his credit card. Had one at age 16 and only had to pay a late fee ONCE. Now I get all these other banks trying to offer me their cards plus I have a CC limit in the 10's of thousands. Michael, you really should consider getting at least ONE credit card because when it comes time to make a major purchase (such as a house), it will count. No credit history is a problem.

magic_juan

[GROOVE VICTIM]

YO I didn't know what a FICO score was until I started watchin Suzi Orman on CNBC on the weekends. I was like, "Whoooooooaaaaaaaa!!"

I thought getting a copy of your credit report would be enough to see where you stand and to see if there were any problems within the report, but the FICO score came at me from left field. Very important to know your FICO score!!!!!!


Peace

[JMJ]

Originally posted by Magic Juan:
I was one of the very few who was very responsible with his credit card. Had one at age 16 and only had to pay a late fee ONCE. Now I get all these other banks trying to offer me their cards plus I have a CC limit in the 10's of thousands. Michael, you really should consider getting at least ONE credit card because when it comes time to make a major purchase (such as a house), it will count. No credit history is a problem.

magic_juan

You are correct. No credit is as bad as bad credit, especially if you're in your late 20's - early 30's or beyond. Why would someone lend you $15k for a car or $80k for a house with no record of credit worthiness?? In MOST cases they won't.......JMJ ;)

[darrow]

I have two cards, now used wisely.

My main credit card is my payment method for almost everything...gas, groceries, take-out, home stuff, etc because it all goes to frequent flyer miles. The balance is paid off every month even if I have to sell myself on the corner to do so. I'll never carry a balance again (if there's an interest rate) on a credit card.

I have one other card whose balance is now on a card that briefly offered a 0% interest for two years. That balance will be gone way before then. I never use this card for anything.

[darrow]

Another word of advice regarding credit reports/fico scores.

If you go to a site like Equifax's for instance (www.equifax.com), you'll see you can purchase a 3-in-1 credit score. Through Equifax's site, you can get a comprehensive credit report that includes data from Equifax, Experian, and Transunion in one package as well as your FICO score from Equifax (the other agencies also have FICO-like scores but they are not called FICO).

My suggestion...don't do the 3-in-1 deals.

I did a 3-in-1 from Equifax. The Equifax report was cool. The Transunion one was all F'd up and had some other guy's stuff (same name, different ss#) on my report. Typically if you see a problem on a report, you can dispute it through the reporting agency. Not so in this case. I couldn't dispute the Transunion stuff through Equifax's online site. I had to dispute it through Transunion's site. The problem was that in order to dispute it, I needed a Transunion credit report. That meant BUYING a Transunion credit report (though I already had one via Equifax's 3-in-1 product). I ended up having to dispute Experian's also, so again...I paid for an Experian one.

Had I just gone to each three and got the reports individually, I probably would've saved a lot of time and hassle as well as a bit of money.

[Alanda Marquette from DiscoLadyLand]

no credit cards for me. Debit cards are the way to go. I am making a conscience effort to spend wisely and clean up my old messes. I believe if I were to ever get another card it would be an American Express card and that's it.

[JMJ]

Originally posted by GROOVE VICTIM:
YO I didn't know what a FICO score was until I started watchin Suzi Orman on CNBC on the weekends. I was like, "Whoooooooaaaaaaaa!!"

I thought getting a copy of your credit report would be enough to see where you stand and to see if there were any problems within the report, but the FICO score came at me from left field. Very important to know your FICO score!!!!!!


Peace

While your FICO, Beacon, or Empirica score is important, most lenders are looking beyond score when making credit decisions. Scores don't tell the whole story, nor are they as accurate as the bureaus would like you to believe. Debt to income ratio is very important. Debt to income helps determine your ability to pay. A good score means nothing if you're maxed on all of your accounts, and could cost you in the long run. Zero balances on your credit cards CAN be a good thing, as long as you continue to use the cards.......JMJ

[JMJ]

Originally posted by darrow:
Another word of advice regarding credit reports/fico scores.

If you go to a site like Equifax's for instance (www.equifax.com), you'll see you can purchase a 3-in-1 credit score. Through Equifax's site, you can get a comprehensive credit report that includes data from Equifax, Experian, and Transunion in one package as well as your FICO score from Equifax (the other agencies also have FICO-like scores but they are not called FICO).

My suggestion...don't do the 3-in-1 deals.

I did a 3-in-1 from Equifax. The Equifax report was cool. The Transunion one was all F'd up and had some other guy's stuff (same name, different ss#) on my report. Typically if you see a problem on a report, you can dispute it through the reporting agency. Not so in this case. I couldn't dispute the Transunion stuff through Equifax's online site. I had to dispute it through Transunion's site. The problem was that in order to dispute it, I needed a Transunion credit report. That meant BUYING a Transunion credit report (though I already had one via Equifax's 3-in-1 product). I ended up having to dispute Experian's also, so again...I paid for an Experian one.

Had I just gone to each three and got the reports individually, I probably would've saved a lot of time and hassle as well as a bit of money.

Most banks and finance companies use Transunion reports when considering auto loans, so make sure yout Transunion report is current and accurate. Check it every six months. You may be able to obtain a free report once a year in the very near future.......JMJ

[darrow]

Originally posted by JMJ:
</font><blockquote>quote:</font><hr />Originally posted by darrow:
Another word of advice regarding credit reports/fico scores.

If you go to a site like Equifax's for instance (www.equifax.com), you'll see you can purchase a 3-in-1 credit score. Through Equifax's site, you can get a comprehensive credit report that includes data from Equifax, Experian, and Transunion in one package as well as your FICO score from Equifax (the other agencies also have FICO-like scores but they are not called FICO).

My suggestion...don't do the 3-in-1 deals.

I did a 3-in-1 from Equifax. The Equifax report was cool. The Transunion one was all F'd up and had some other guy's stuff (same name, different ss#) on my report. Typically if you see a problem on a report, you can dispute it through the reporting agency. Not so in this case. I couldn't dispute the Transunion stuff through Equifax's online site. I had to dispute it through Transunion's site. The problem was that in order to dispute it, I needed a Transunion credit report. That meant BUYING a Transunion credit report (though I already had one via Equifax's 3-in-1 product). I ended up having to dispute Experian's also, so again...I paid for an Experian one.

Had I just gone to each three and got the reports individually, I probably would've saved a lot of time and hassle as well as a bit of money.

Most banks and finance companies use Transunion reports when considering auto loans, so make sure yout Transunion report is current and accurate. Check it every six months. You may be able to obtain a free report once a year in the very near future.......JMJ </font>[/QUOTE]Transunion was also very responsive and had the three questionable items off my report in no more than two weeks.

For some reason Transunion wasn't used for my home purchase last year but was for my refinance this year. Go figure.

[MC]

Originally posted by Magic Juan:
I was one of the very few who was very responsible with his credit card. Had one at age 16 and only had to pay a late fee ONCE. Now I get all these other banks trying to offer me their cards plus I have a CC limit in the 10's of thousands. Michael, you really should consider getting at least ONE credit card because when it comes time to make a major purchase (such as a house), it will count. No credit history is a problem. magic_juan

Goodlooking out MJ, but man I already purchased my house back in August of 2001. I get offers all the time, but it's all junk mail to me.