Tracy Winters
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It won’t raise your fico score
Canceling the credit card, in itself, won’t hurt your FICO score. Closed accounts in good standing remain on your credit report for at least 10 years. They just don’t count as much as open, active accounts.
However, your score could go down because of two side effects:
Increased Credit Utilization
Closing an open account lowers your overall available credit limit, which could cause your overall credit utilization (that’s the ration between your credit balance to your credit limit) to go above 35%, which would lower your score.If, AFTER canceling the card your credit balance is still low enough then this is not an issue. However, if you DO carry balances on other cards, this may affect your score.
Credit File Age
Closing an account has two effects:- Closing your OLDEST account will make your credit file age younger, because your file age is determined by the oldest “Open Date” of your accounts.
- Closing ANY OLD account will lower the average age of your accounts which can also lower your score. If the account you plane to close is less than 4 years older than your other accounts, then the effect be very minor.
In order for any account to build and improve your credit, you need to actually use it on a regular basis. Unused cards sitting the sock drawer do nothing to help your credit and are real potentials for problems with ID theft and fraud.
Whatever you decide, if you cancel a card – close it via letter and request written confirmation that the account is closed and 0 balance. Keep that confirmation forever.
Save your money!
There is no such thing as a credit repair company with a “solid reputation”. Most credit repair companies are pure scams, and most will do nothing for except take your money.
Even those that are legit, there is nothing they can do to remove legit negative items from your report.
The normal credit repair method is to dispute negative items and hope something falls off and gets removed.
Even if something is removed, it’s likely to show back up when the creditor next updates to the credit bureaus or when the debt is sold to aother collection agency.
Re: What a good credit score
If you’re just looking for a number – I would say anything above 700. A score above 700 indicated good credit management, and will usually get you approved for most credit cards and loans, with very good terms.
If you prefer more detailed information, here is a drill down…
First – I’m only talking about FICO. It’s the credit industry standard, and the only one that really matters. Everyone telling you otherwise is lying or having interest selling you something.
Credit scores are used in a verity of ways. They are used to determine whether or not you get a loan/credit card. They are used to determine your terms – i.e. interest rate etc. Since each lender/creditors set its own criteria, the answer to what a good credit score depends also on the lender.
FICO credit scores range from 300 to 850, with the national average being 680 – 700, depending on which of the three credit bureaus you ask.
With most lenders, a credit score above 760 will get you the best terms. A credit score between 700 – 759 will get you good terms. The next step is 680 – 699 with lesser terms and so on. (See this table for more details).
To get a good credit score (700 and above) you will need at least two years of good timely payments, and at least 3 different accounts – a credit card or two, a car loan and a regular loan.
See what-are-good-credit-scores.html for a more detailed explanation.
SOL and credit reports
There is no connection at all between the Statue of Limitation and credit Reports.
First – any derogatory item will remain on your credit report for 7.5 Years from the date of first delinquency. This time period cannot be restarted.
Regarding the Statue of Limitation:
- There are no limits to tax debt, student loan debt, and child support debt.
- Even if the S.O.L. has passed, that does not mean that you don’t still owe or that the collection agency can’t try to collect it from you. It only means that if you’re sued for the debt, you can use the SOL as an affirmative defense in court.
What this means is simple. If you are sued for the debt, don’t assume that nothing will happen since the debt is time barred. If you DO NOT show up, the collector will get a default judgment against you and be sure that they will execute that judgment. If you are sued, you need to show up, and tell the judge that the debt is time barred, as it is beyond the S.O.L.
- Unlike the 7.5 Yrs clock that cannot be undone, the 4 Yrs S.O.L. period can be restarted.
For example, if they contacted you a year ago to collect the debt and you said something like “I don’t have any money right now“, that could be seen as an admission that the debt is yours, and in some states, that admission could restart the SOL clock.
Bad credit is much worse
You ask two questions.
Considering your age, you probably don’t have credit history yet. Do you have a credit card on your name? Did your parents ever have you co-sign on their credit card?
If not, than you probably have no credit history. Your chances of getting a car loan is probably zero, unless your parents take the loan with you.
If you’re not sure pull put your credit report and find out for sure.
You need to build a good credit history if you ever want to get approved for a car loan. You can find a lot of information about it in this site.
You need to get a small secured loan, and a secured credit card. They are easy to get because they are secured. After 6 month you will have a fair credit score, and after a year who may try to get the car loan.
As far as bad credit vs. no credit:
The consequences are the same because as it goes to getting loans – you can’t get any loan with both.If you have no credit history – it may take you a year or two to establish good credit. If on the other hand you have bad credit – your situation is MUCH WORSE because it means that you have negative items on your credit report.
Negative items remain for a long time on your report (most remain for 7 years), and until they go away they will lower your credit score.
Hope this helps
Tracy
No such thing as yearly free credit score
Large number of people get confused between credit reports and credit scores.
The FACT Act that regulate the credit reporting business states that you are entitled for a free copy or your credit report once a year. This does NOT include a free credit score. It is true that your credit score must be provided to you upon request – but this service is not free.
There are many sites that claim to offer free credit scores, but most are just honey traps trying to get your credit card details and sell you services that you don’t need. All of these sites only offer a “free” credit score trial period, but request your credit card details. Sometimes you get charges for additional services just for clicking an accidental link. Then, you’re charged for not canceling the service in the required time frame.
There are, however, number of honest sites that offer really free credit score without requesting any creditcard details. See free-annual-credit-score.html for more information, and free-fico-credit-score.html for a list of truly free credit score services.
Employers do check credit reports
Increasingly common and somewhat controversial practice is taking place as employers check the credit of prospective new employees.
The argument for doing this is that employers believe they can use credit history to determine new employees’ trustworthiness and dependability.
The answer to your question depends on two factors:
- What type of job your looking into. If your job application is related to finance, than there is a good chance that your credit report will effect whether to employ you or not.
- What exactly are the bad items on your credit report. A few late payments probably won’t make a difference. Bankruptcies or judgments against you, on the other hand, will.
Clearly, there are situations where a bad credit history may be due to something completely out of an individual’s control, but this is still something to keep in mind.
remember that potential employers need your written consent to access your credit report, and they receive a censored version of it.
On the other hand, if you receive to give your consent to a potential employer – it may do more damage than the bad stuff that’s on your credit report.
In any case, if your job application is denied because of information that’s on your credit report – the FACT Act clearly states that the employer must inform you and provide you the name, address and phone number of the agency that provided the information.
Hope this helps..
It will build up credit for you
it’s a very good way to start building credit. It even has a name – Credit Piggybacking. It is common, legal and even the credit bureaus acknowledge it between husband, wife and kids.
As an authorized user the account will show on your credit report, building you credit history and a credit score.
It’s important to note that you don’t benefit from your father’s good credit. Yours and his credit are totally separated. You only benefit from the stream of positive credit information every time he pays his statement.
Adding you as an authorized user is preferable to adding you as a joint user, because you benefit from credit building perspective while not being held liable to any debt associated with the account, should anything bad happen in the future.
The only draw back is that much like it’s building good credit for you, if your father starts getting behind, or ever worse – defaults then it will ruin your credit as well as his.
I wouldn’t worry too much about it though. It’s rare for someone with bad credit to add another party as an authorized buyer on a card. It’s much more common with those with good credit to do this as they are aware of the benefits.
Down the road when you have established credit in your own name, you may want your father to remove you as authorized user from his card. Authorized user accounts can become problems when you apply for mortgages or car loans, because they get included in your debt to income ratio.
Good luck.
Your credit score will drop
I’m afraid that your credit score will drop, probably a lot.
Unfortunately, there is almost nothing you can do about it.
Late payments and other negative information can make your credit score go down significantly, and returning to pay your monthly payments won’t help a bit. The most you can expect is that your score will stop going down further.
The late payments remain on your credit report long after you’ve started re-paying them.
For the first two years they show up on your “Two Year Payment History”, and after that a record of you being late remains up to 7 years on your “Seven Year Payment History”.
Even if you pay retroactively up to being current – the fact that you were late remains, impacting your credit score.
With time (assuming no more bad information is added to your file) the impact of these late payments will diminish, but you’re looking at a very slow process that will take a few years.
This is why I’m always telling people – you can never over estimate the importance of NEVER being late, and keeping up payments no matter what.
Usually, the cost of having a lower score turns out to be more expensive than what would have been the cost of keeping current.
No need to worry. It’s normal
You have absolutely nothing to worry about. This happens all the time, and rarely has any affect.
These credit inquiries may look like hard inquiries, but in fact they are not. They appear on your report, but are not considered by the Fico formula and do not impact your score.
The Fair and Accurate Credit Transactions Act (FACT Act) gives the credit bureaus permission to sell your credit history information to credit lending companies. Consumers have the right to exclude themselves from receiving such pre-approved mailing offers.
Any time a company or other entity looks up your information – it generates a credit inquiry in your report. Even when you check your credit report – an inquiry is generated. However, as explained above, because these inquiries are NOT initiated by your search for new credit, they are NOT considered by the Fico formula.
You can request the 3 major credit bureaus (Equifax, Experian and TransUnion) to exclude your name from lists for pre-approved, unsolicited credit and insurance offers by calling 1-888-5-OPT OUT (1–888–567–8688).
Hope this clear things for you
Family?
How about asking a family member? low credit score loans usually come with high APR, and are therefore very expensive.
FAKKO Scores Explained
Helen,
If you purchased your credit score from anywhere but myFICO.com, then it’s a FAKKO score (sometimes spelled FAKO or FACO). FAKKO scores is an un-official term usually used in forums. It refers to any credit score that’s not a FICO score.
You’ve probably picked up the term in some score forum. FAKKO score is an un-official term usually used in forums. It refers to any credit score that’s not a FICO score.
The only place where you can get your FICO score is myFICO.com. If you purchased your credit score from anywhere but MyFICO.com, then it’s a FAKKO score. Even a FICO score purchased online may not be identical to the one your lender uses because there are many versions of the FICO score; each employs different weights and produces different score.
There is a consumer version (the ONLY one you can get), a special version for mortgage purposes (that usually produces a lower score), a special version for car loans etc.
These FAKKO scores should be used for educational purposes only, since they don’t necessarily reflect the scores that lenders really use to approve your applications.
As of 2011, every lender who either denies your application or approves you for less favorable terms is required to provide you a free copy of your credit score, if your credit score is the reason for that decision.
Hope this clarifies things for you. Form more information you can also see Understanding Fico Scores.
Re: credit bureau phone numbers
Here is an up to date list of credit bureau phone numbers for the 3 major credit bureaus. Since the credit bureaus update their contact information from time to time, if you’re experiencing any problem simply go online using the links provided and use the new published phone numbers.
Another important thing to note is that some credit bureaus use different phone numbers for general inquiries, credit report disputes, credit score purchase etc. For this reason I’ve also included a direct link to the credit bureau’s contact page, where they keep their own up-to-date phone numbers and other contact information.
Here is the 3 major credit bureaus contact information:
Equifax
Website: http://www.equifax.com
Phone: 800-685-1111
Address: Equifax Credit Information Services, Inc.,
PO Box 740256, Atlanta, GA 30374Click here to go diretly to Equifax’s Contact Information Page.
Experian
Website: http://www.experian.com
Phone: 888-397-3742
Address: National ConsumerAssistance Center (NCAC),
PO Box 9556, Allen TX 75013Click here to go diretly to Experian’sContact Information Page.
TransUnion
Website: http://www.transunion.com
Phone: 800-888-4213
Address: Customer DisclosureCenter, TransUnion Consumer Relations,
PO Box 2000, Chester, PA 19022Click here to go directly to TransUnion’s Contact Information Page.
Save your money
Paying ahead your student loans wouldn’t help a bit for your score.
It’s much better to keep paying your agreed payments. Just make sure you’re NEVER late on any payment.I guess that you probably have a thin credit report, i.e. a new report with only a few items on it.
Even one late payment can do much more damage than 12 on-time payment in a thine file.
If you can spare $300 and want to build credit – your much off putting it in the bank, freezing it and taking a secure loan.
This will help to build your credit a lot.
