The Do’s and Don’ts of Closing Old Accounts
The Do’s and Don’ts of Closing Old Accounts

Closing old and unused credit accounts on your credit reports can help you avoid unnecessary fees and guard against identity theft. However, it can also cause your credit score to drop if you are not careful. Here are a few do's and don'ts for closing those dormant accounts:

Do...

  • Consider closing unused and idle accounts. These accounts could be charging you unnecessary fees and are often targets for identity thieves. Close the accounts with annual fees and the highest interest rates first.
  • Check your credit reports online to see the status of your accounts. Look for late payments, high balances and signs of identity theft. As a bonus, checking your credit report can save you time by providing you with contact information for each of your creditors.
  • Be aware that you can cancel accounts that have an active balance. You can ask your creditor to close the account to new charges and continue paying down the balance each month. This may be a good way for heavy credit users to prevent new spending while they are reducing their balances. However, watch out for hidden fees.
  • Keep four to six credit accounts open. This will keep your credit score and debt balances healthy. Signs of active and responsible credit use are viewed positively by creditors.
  • Designate one card for regular use and try to pay the balance in full each month. Reserve the other cards for emergencies only so that you are not tempted to overspend.

Don't...

  • Close the oldest account on your credit reports . This could cause your credit history to appear shorter and could harm your credit score.
  • Just throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the credit company. You should receive an account closing confirmation letter in 10 days.
  • Be pressured to cancel several accounts all at once. Gradually paying down and closing accounts may be the best plan if you are unsure about the impact on your credit score or the amount of debt you need to carry. If you want to cancel numerous credit accounts, spacing the closures over time will reduce the chance of attracting negative suspicion from potential creditors.
  • Over-consolidate balances onto one card. If your credit balances rise to above 35% of your available limits, you may see a drop in your credit score.
  • Forget to check your credit reports for updates and errors after you close your credit accounts. Wait 30-60 days for the creditor to report the closed account and the credit reporting agencies to update your records. While the accounts and their payment histories will stay on your report for 7 or more years, they should be marked as "closed."


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Helpful to 207 out of 215 people

you have to remember, these systems are created by hand full of powerful financial institutions.  the more business you give them, the better is your credit score.  If you close you credit accounts, loan accounts, etc.  then you are debt free.  And you no longer need them.  They dont like this loss of business, and your score decreases.  The longer you are in debt, the more you need them, and the better business they get from you. And better credit scores.  These institutions never want to see you debt free .... remember !!

Comment by
manojsanhotra

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Helpful to 34 out of 42 people

wow you are so correct and that is valuable information.

Reply by
bluegalye

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Helpful to 38 out of 49 people

what a screwed up system!

Reply by
URTHEBEST

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Financial institutions have nothing to do with the credit reporting companies. They are individual for-profit companies, NOT financial companies. Being out of debt is very important but keeping revolving credit lines open is also very important. You can and should have open lines (credit cards, home equity loans, etc.) without having debt. If you close them all you will tank you score and not get a loan when you need one. Managing what you put on them is your responsibility. Get cards with no annual fees and rewards for using them, pay the balance each month and you wil be getting $ FROM the banks and keep you score health at the same time. 

Reply by
Barlow1968

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Credit card is a privilege. Is not a right so use it wisely . Wise people make money off of credit card by rewards.

stupid people pay credit card company by paying interest . 

Reply by
Reindav72

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I paid off my mortgage and my score went down.  You are so right.

Reply by
Hug56

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I have heard that those who pay off their debt every month are called "dead beats" by those who operate these credit scam agencies. 

Reply by
lanediver

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Helpful to 489 out of 517 people

I paid off my car loan that I had with Wells Fargo. After that was paid off, the account was reported as closed. My credit score went from a 765 to 743 because of this. I do not think it is right that if you pay off a car loan that you should be penalized if that account is closed. It should be that you get better credit when you pay off a loan. I even paid the loan off early. One should be rewarded for dealing with credit appropriately.

Comment by
lynnh3

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Helpful to 151 out of 159 people

That should bea reporting error. They are supposd to say  paid in full...

Reply by
huseofrio

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Similar thing happened to me. I paid off a loan for some furniture in Nov and a student loan in Dec. The furniture was one of those 0% deals for 18ths the student loan came out of deferment in Feb. For both loans I paid extra each month, paid every payment on time or early, paced it so that it took about a year to pay off each, and the account just automatically closed once they were paid in full. However, I checked my score today, to my surprise, it dropped! I have had no inquiries, no new accounts, no late payments, just a reduction in total debt, I'm listed as having great activity, and it shows the accounts closed themselves. This is the stupidest thing I have ever seen. Scores should increase by paying extra and early, as long as you keep activity, but the opposite seems true.

Reply by
holdem769

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Helpful to 7 out of 7 people

I too just paid off a car loan early and my score went down by 7 points this really stinks.

Reply by
xwarren

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Helpful to 6 out of 6 people

I just closed my last credit card account (I had 3 of them) and my credit score went from 757 to 722...are you kidding me?!? Not happy right now.

Reply by
telle33

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Helpful to 2 out of 2 people

agreed.

Reply by
jewelzdevone

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I agree, I paid off two car loans and a mortgage and it dropped me 25 points, that bullcrap

Reply by
cmaeham

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So True!!! That same thing happened to me. I thought the early pay off of my car loan would raise my score. However, my score dropped 6 points. This is totally unfair!!!

Reply by
honestyplease2

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I had a credit Card account with HDBC , I paid my bills in full each month, after year and a half, they sent me a lett stating that my account was closed.

Obiviously they did not like that I was using their money all month and paying it in full; in year and a half I was with them they have not made a penny from me.....

Reply by
Schlimer

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Same thing just occured with me. I knew about closing credit cards but Auto loans should not be considered the same way -- afterall eventually the car must be paid off. I took a hit of 9pts for paying off my car 2.5 years early. Go figure. What a racket.

Reply by
Ldo1999

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I agree. I think the less you owe the better your score should be. If you pay as you go, you should be rewarded.

Reply by
okiegene

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They don't give a **** about your credit score.  I paid mine off this past January and my score dropped 12 points.  They just sit there and play God with peoples lives.

Reply by
notsotinytim

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I agree with you on this statement I also paid off a student loan early and my credit score plumeted also.

Reply by
ts52493

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Absolutely Agreed!
 

Reply by
itsmeleec

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You are punished for that because they don't wanbt you debt free, they want you to be a debt slave and great servent and pay them interest.  You escaped the debt plantation and they don't like that and thus your credit rating was reduced.  It's expected you will go hog wild crazy off the debt plantation.  See how it works, now?  You aren't a good slave by not replacing your previous loan with a new one to enrich the slave masters.  Get it?

Reply by
vanscoyoc

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I totally agree with you.

The whole credit system in America is jacked up.

You get dinged for EVERYTHING. It's always a lose lose situation.

Totally absurd and we as consumers need to take back the market and do it the way we want it done!

Reply by
D5389

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People, it's their Game and their Rules. Learn the rules and play the game. Remember the Golden Rule,he who has the gold rules.

Reply by
sgtrock314

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Think about the real estate boom of the last decade.  When people "refinanced" it looked like their old loan was paid off in full.   Paying off an account for real looks similar.  

Reply by
kflannery

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I have been working hard at keeping my payments on time rebuilding my credit score because I had to file bankruptcy a few years ago, I just paid off my auto loan through Capital One, which was $10,000 and now it says my score dropped 29!!!!! So now my rating has gone from fair to poor. That is such BS!! It should have gone UP 29 points, not down. I'm just so sick right now.. how can you be penalized for paying things off early? 

Reply by
MLCequest

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I agree same thing happened to me.

Reply by
crmontoya

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Agree it has to be dumbass liberals who came up with this credit crap. It makes no sense what's so ever.  

Reply by
Ddyrich

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I had 764 and just because of closing my oldest credit card account with $300limit, my credit score has dropped to 706.... Instead being reward for making payments on time and being responsible, they just penalize you as much as they can.. *******s!

Reply by
yorx54

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I paid 2 cars off and 1 installment also purchased a new vehicle. My credit score dropped 55 points right when I'm ready to buy a second vacation home! Can't win for losing in our new society!!!

Reply by
Bcharles85

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if you pay off something thats old doesn't it become a new debt or something like that?

Reply by
spazitude80

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Is there anything we can do to fix it? I paid off my car loan last month and I checked my credit score today and it dropped 13 points!  Same deal. I made all payments timely and my overall debt has been reduced  but my credit score dropped. That makes no sense. 

Reply by
Puglife13

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Well does it count in a good way if it got paid off from insurance yes an unfortunate event

Reply by
B3nDc0x

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The thing to remember when dealing with credit is the "Credit System".

The "Credit System" system is not set up to be beneficial to you.  It is set up to benefit the lenders.  If your confused, it helps them.  If you pay off a loan early, thus taking away interest that would be paid to them, it helps you and penalizes them.  

The "Credit System" is about how they can make more money from you.  Leave common sense out of it.  Sucks, but it is how it is.  This is why we share information in an effort to game the crooked and corupt  "Credit System".  Fair has nothing to do with it.

Reply by
bdj2

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Ork with your senator to enact laws that  track and report your credit fairly. I agree if you pay off a loan your score should go up.

Reply by
TonyFf

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think about it from the banks point of view.  If you pay it off early, then they don't get as much interest. 

Their FAVORITE type of creditor is one that always makes the payments, but also who pays the most interest while making their payments. . . so more accounts open, and not 0 utilization.

Credit score really is all about how reliable you are to make the banks money.

Reply by
wolfemancs

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Actually I feel the pain I just did the same thing and they dropped my score by 15 points

Reply by
Tjshadow

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I paid off mu car as well and it made my credit score go down as well. Why does it say closed when it should say paid in full?

Reply by
mocuz

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I agree with you,i just had the same sort of thing happen to me,in mycase it was a credit card that i closed becaue i never used it,the orginal thought was to have a credit card  just incase of unforeseen emergency,well that didn't happen thankfully and i closed the card out,my score went from 749 to 703 because i thoght i was doing the right thing for me and my bank.

Oh well what can you do,oh i know i can go out get a credit card,use it and go deeper debt,that will do it!!. 

Reply by
stacysdad

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I feel your pain. I just paid off my car loan a year early. Score before 753, score after 688. Nice reward for being responsible.

Reply by
humorous2me

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I completely AGREE! I paid off my $40,000 car, I'm still in school & my credit report score dropped 30 points when the account with capital one got recently closed. That's not fair. 

Reply by
Maradona17rj

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I just paid off my student loan early and then my credit score dropped 13 pts. I don't understand why they punish responsible people.

Reply by
durango329

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I had the same thing happen to me and couldn't believe it my score dropped 18 points after paying off my car and I also paid it 2years early it shows as closed this is not right or fair to us . 

Reply by
teliamarie

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I complete agree with this. I did the same exact thing and my score dropped 9 points. Why am I penalized for doing a good thing?

Reply by
Barron13

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i was going to ask the same thing, i just paid my car off three week s ago and paid 4000.00 i looked at my score and it dropped 11 points, i dont undestand why it was lowered, i also though that it would have went up. i need answers 

Reply by
yolanda1420

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I too just paid off my car loan with Wells Fargo and my score dropped.  This has to be an error I will fight this with on all 3 credit reports.

Reply by
carriegeneane

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This just happened to me too! I paid off my car loan, and my credit score went down 14 points!  I agree that it should reflect positively, rather than negatively, because it meant we dealt with credit well! Ugh. Just another step behind on the journey of increasing my credit score.

Reply by
annabellemn

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well, agree with you lynnh3! A part of it is that the types of credit play a role in the overall credit calculation process. So, while you still might have a mortgage and credit cards, this type of debt is gone and that's what hurt your score. I hate the fact that everyone must owe something to be in a good standing.

Reply by
DieSonne777

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My daughter's credit score was decreased by 15 points after she paid off her car loan early as well.  I totally agree you should be rewarded for managing your credit appropriately and paying loans off early.   

Reply by
WLTHYlady

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I totally agree with lynnh3 with regards to auto loans. What I don't understand is that I was in the same situation ( paid off my auto loan 1 1/2yr early) However, my credit score increased by 35 points.

Reply by
preciousjade

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Helpful to 819 out of 897 people

Does student loans bring your credit score down even though they are deferred?

Comment by
devrab

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It affects your score, but whether it helps or hurts depends on your other credit situation.  My fiance is in school and a CreditKarma user, and seeing as how many people liked this I figured I'd reply so anyone who sees it later and wonders can read it.

PROS:

- Does show as an active account, so your number of accounts is helped

- Listed as an installment loan, so if you only have credit cards (no loans or mortgages, which is typical for college students) then it helps the variety of accounts

CON:

- It's listed as a balance that is 0% paid, so it does hurt your credit utilization.  If your credit cards have low balances, this won't hurt you too bad and the account/variety will counteract it.  But if you have high/maxed credit cards, then your debt will go up and your utilization will get worse, so it might hurt a bit.

It's a fabulous starting point for future credit building for students and people with low/no credit, as it's an installment loan with guaranteed approval which can be hard to obtain.  If you make payments on-time after graduation, it can be the starting point to the fabled 750+ level before you turn 30.  But if you have trouble with keeping your credit card balances low then it can hurt your credit in the short term, as it does affect utilization which is 30% of the score.

Reply by
dcgmoo

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It doesn't seem to affect the score that much. On my report, they say that the reason I have high credit is because I don't have any installment loans even though under the installment loan section, it lists my student loans. I now have 2 student loans in the deferment phase ($7500+$2750) with a credit score of 763 and I'm 21 so my credit history is less than 3 years total. Using this information, it seems to indicate that student loans don't affect the credit score too much.

Reply by
devbo2

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Helpful to 3 out of 3 people

GOVERNMENT ISSUED (stafford/perkins) Student Loans are not credit based, they will not bring your score down or up, however if you go in default on your student loans, this will show on your credit report. So no, as long as you pay them after your deferment is over, your credit score will not drop.

Reply by
yendihunt

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FEDERAL Student loans harm credit in these slight ways:

* New account, thus diluting overall account age

* Adding the your overall indebtedness, thus making credit utilization higher on the balance (especially if the loan exceeds the original balance)

* As long as you PAY MORE THAN MINIMUMS on loans, your credit might drop.  However, you will bounce back as soon as balances drop.  We are built oin a credit society.

AVOID PRIVATE STUDENT LOANS!

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Reply by
bpround

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A deferred loan is still money due in the future.   It's an obligation to the borrower.  But it doesn't mean it will lower the credit score.   Having an income, how many credit cards and balances and how timely you pay your bills will determine your overall credit score. 

Reply by
Kathleen

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Helpful to 4 out of 5 people

To improve your credit score, you need to make monthly payments so that it shows "goods pymt history". Things like this boost your score!

Reply by
keela2010

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Helpful to 1 out of 1 people

yes they do because they are a liability

Reply by
hesterly28

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yes they will and don't let anyone tell you different!!  Also if you miss one payment after the defferral stops the will start the charge off process and sell you loan and after you start making your payments thru someone else their damaging information will continue hurting your credit for the next 7 to 10 years after deferred account payments start!!  THANK YOU SALLY MAE and THANK YOU ECMC!!!!!  Direct Loans is helping me to take care of the account and consolidate everything and gave me low $50 a month payments without interest for 8 more years!!  Then it should all be cleaned up and credit report in better standing, but went from 820 to 579 thanks to deferred student loans, but time is on my side.  Also I can hope that it taught me a lesson, and don't put of too tomorrow what should be paid today even if they say it's ok!!!! If I would of needed my credit right after school, I would of been screwed. So watch yourself if wedding bells are in your near future, and take a job to make even a small payment of some type $25 a month is better then nothing, and I  promise you will thank me for this one day!!!!

Reply by
elishamb

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Not necessarily.  While student loans could have an effect on granting you credit, since they aren't  revolving (like a credit card), they don't have a large effect on your score.  If they do, it'll be minimal.  If anything, it provides a good source of payment history when you start paying them.  Don't focus on your score too much, because a good lender won't.

Reply by
prometheus2wise

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I have open deferred student loans, I've just paid off my three credit cards between $1,000 and $1,500 each, and my score went up by nearly 100 points.

Reply by
frannyd22

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I have heard that student loans don't affect your credit score as much as a revolving account (credit cards). However, when you go to buy a house, they will still take in to consideration how much your monthly payment WILL be and that could affect your interest rate.

If I were you I would contact a lender to see what they suggest (if you are house shopping, anyway).

Reply by
emilyharvey0

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Helpful to 3 out of 5 people

no, student loans are a good thing to have on a credit report since you are not missing payments. once you start your repayment process it will look excellent on your credit report because it will show u can pay off a loan.

Reply by
dmoreland2

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As I read through some of the comments it seems that what would make perfect sense really does.  Think about this for a moment...  Typically when one pays off a securred loan or similiar type of credit line your score drops rather than increases, true.  Why?  Consumers are dooped into believing that if they pay on time every month and demonstrate responsible financial behaviors that they should be rewarded by being given a good credit score. 

This does not happen, why?  The reality of it is that virtually all banks and credit agencies WANT you to remain in debt.  Big banking has a way of manipulating the monetary system even through credit scores.  Have you ever wondered who actually owns or funds the credit reporting agancies or FICO?  Doing a liitle Google research will help get a much clearer picture of why things are the way they are.  Play the game just dont get in over your head...

Reply by
Kimmie1289

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only helps shows as an active account that being "paid" every month

Reply by
Camerone9

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Was this helpful? Absolutely it was.Everything about Credit Karma is helpful.Finally an organization that truly represents themselves accurately.

Reply by
develdog

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My deferred loans actually raised my credit score. They are in good standing each month that they are deferred.

Reply by
Juliet83

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Yes they do. After the payment due has been deferred it is still a good idea to try and pay the debt off and most of the time you can do so at a reduce rate and cut the owed amount in half.

Reply by
tjthomp2903

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As I entered repayment my scores stayed roughly the same other than fluctuating because of my utilization, so I don't believe they do. If anything, they help your score because it builds credit history even when deferred.

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Reply by
natetc11

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Just dont pay for it and it will not affect your credit. It will be buried after a few years down the road.

Reply by
mytuhua

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Very helpful

Reply by
tcmitchell13

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no

Reply by
prock251

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My student loan help my credit, but I ensured when paying the interest was also paid.

So I sent in more if they as for $50.00 I sent in $100.00.
 

Reply by
hvy916

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ty

Reply by
lildebbie55

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NEW TO THIS SO i HOPE THIS IS RIGHT PLACE TO ASK A ?  STUDENT LOAN BALANCE WAS $15,000.00.   UPDATED, BALANCE PAID IN FULL, BUT CREDIT REPORT STATUS ON ACCOUNT IS LISTED AS CLOSED.  BALANCE PAID IN FULL SHOULD INCREASE MY SCORE.   THIS IS MY INTENTION BUT... IT ACTUALLY LOWERED MY SCORE BY LISTING ACCOUNT STATUS AS CLOSED INSTEAD OF PAID IN FULL...ZERO BALANCE.   PLEASE...CAN SOMEONE SHARE INFORMATION ON HOW TO FIX THIS!!!!!   THANKS FOR LISTENING

Reply by
Gypsy13

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Deferred Student Loans have very little to no impact on your credit score, however, once they come out of deferment or go into forebearance, they can cripple your score if you dont stay on top of them as they greatly increase your debt/income ratio on in a status requiring payments. Forebearance doesn't help as they simple accumulate more interest further increase your debt/income ratio.

Reply by
pipes229

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if u dont pay them off! YES!!!!

Reply by
angelo11

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How about getting your credit score up to 800-900 then 0 out your cards-use cash VOIOLA!

Reply by
clearwater07

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i asked the lady that does my taxes this last year and she told me as long as the loan stays deferred it will not bring your credit score down , but once they are no longer deferred do not fall 2 or more months behind on your payments like i did they will report it and it knocked my score down almost 50 points

Reply by
ohme79

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Yes; this will affect your credit score very much, don't deferre any payment unless you are in dire need of it...

Reply by
rwg63

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NO! They can not properly be considered as credit or bad because they are deffered or forebeared its only when its defaulted you see the effect

Reply by
tamariajoy78

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I paid off my student loan this month, and my credit score dropped 16 points.  They don't like that I'm closing my credit accounts!

Reply by
lmdawley

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No

Reply by
milz09

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No it doesn't...at least not yet. Your credit score is based on payment history, among other things. If you are not yet making payments then there is nothing to report. Your student loan issuer knows this. It is noted in your file when you are to start making payments and from THAT point on, if you fail to make payments or whatever they will report it and THEN it will affect your credit score. Right now it might actually be helping your credit score without even doing anything yet because it is considered an installment loan, which is very good as far as credit is concerned.

Reply by
akire332

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I don't think so.  Those type of accounts are usually considered "in good standing" and do not negatively effect your score as an adverse or negative account that went to collections would.  The only negative side to student loans is that if you aren't working, and you are going to school full time (like I have been) and you have accumulated a great deal of loans, it makes it practically impossible to get a non-federal loan or credit card because your debt-to-income ratio is too high.  I tried to get a low-interest loan from Citi Financial in order to pay off a ridiculously high-interest loan from GE Capital (which I would advise never doing business with), and they couldn't grant my request because of my debt-to-income ratio.

Reply by
ScottyLDS

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I hope not. I have over $200K on a doctorate. Does anyone know the answer to this one?

Reply by
MerryLW

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If deferred they should have little to no effect on your credit

Reply by
deltachisac77

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Not sure if anyone responded to your question but no student loans that are deferred don't bring your credit score down. How do I know well because I have a deferred student loan as well and my credit score is fine.

Reply by
aundreaxm

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Hello, I am not an expert, but from my experience (with $300,000 in student loans), student debt does not affect your credit score #, however credit cards do look at all of your types of debt when considering you.

Reply by
arepic

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Does student loans bring your credit score down even tho they are deferred?

Reply by
1943cookie

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Real Estate Investing Mentors have taught me to Rotate Credit Accounts; useing an average of 2 actively at any one time.  Call bank at end of 6 months & request higher limit, then request LOWER Interest rate for loyalty & responsible use; especially if you have been offered better rate by another company.  Then "Retire" [ I did not say close ] those two accounts ] and begin to use 2 other accounts.   This method is win-win. 1. You are NOT running up huge limits; if you are a wise steward of your Income and Outgo. 2. You are useing your % ratios wisely, even though you may have more than a few accounts open.  3. Showing steady usage while keeping your Credit Score healthy and growing.  4. Does NOT red flag your creditors causing them to think you are spending to fast and furious or in Financial Trouble; while preventing them from thinking

you are in Financial Trouble because you have to much credit or are closing accounts.  The face of Credit has changed dramatically over the past 4 years particularly.  Credit is STILL your "Good Name" when it comes to owning your own home, buying a car, sending your children to college.  Since the new bankruptcy laws were put in place Bad credit has changed also.  It really never goes away, but is contracted out to Collection Agencies over and over and over.  Proving you have PAID the bill in full is a nightmare that can follow you for years if not the remainder of your life..........

Reply by
MetherMakela

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i applied for car loan when the bank saw i  owed student loan they avageage the monthly income againsl payments they  were not going to approve me but wheni showed them it was defferred they did but my score has not been affecteded and i owe 30,000

Reply by
bear768

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I also had a student loan that was deferred and I did notice a low credit score because I still had an outstanding balance on my credit history and it looks bad to future creditors once they see a deferred student loan because it tells them if you cant pay your student loan how are you going to pay on a new credit loan.

Reply by
JMalone278

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no

Reply by
bzanca13

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I' am pretty sure they do. I have the same issue on this end. Thats why I' am here now.

Reply by
Txtrukr

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No, student loans have no impact if they are deferred, but the longer the deferred status you won't get the history reflected in your score that accounts for you making payments on time.

Reply by
wittingsun

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No. Only if you make late payments.

Reply by
ivopavlov

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I believe so because that is the problem i am having right now. When i go to my loan account, it says i don't owe wil December because i got a defferment, but for some reason it's showing on my credit as not paying...

Reply by
aimajin

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no, mine has been in forbearance for about 15 yrs. and it has not affected by score

Reply by
irene40read

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no.  however, If you intend to purchase a home, some lenders will use 1% of the total student loan balance.  If this happens, you will need to consolidate your loans and make payments as you would a credit card.

Reply by
peteangelin

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Yes!

Reply by
mallard08southern

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NO.

Reply by
audra1234

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I recently took a student loan and it raised my score by 9 points

Reply by
shithead99

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i wondered that same thing.

Reply by
bigmomma252

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No

Reply by
jwerkmanohio

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Great question devrab....I was going to ask the same question!

Reply by
pinksakura12

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Student loans raise your credit.  It's considered an investment.

Reply by
MOMSTWINS

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 I really haven't seen a change in my scores since I have had my student loan

Reply by
rosiebean17

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No. It does not bring the credit score down, unless you miss the payment schedule. I have a student loan and I haven't had any negative impact on my credit score.

Reply by
rainingsweet

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yes it does my wife didn't pay a loan and sure enough it was on her credit report as unpaid....pay it and you won't have a problem.

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Reply by
stretch20004

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I'm not an expert, but I do have pretty good credit.  I think student loans that are in deferment help your credit score.  They help because they read 'paid as agreed' while they are in deferment, and having accounts in good standing helps your credit score. 

Reply by
poodlekiss1922

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No, your account will be reported as "current" when you're in a deferment. Deferments keep your score from going down and prevent you from default. So don't forget to set them up[!

Reply by
gsarti

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Students loans affect your credit score by (1) increasing the number of accounts in your credit history, (2) allowing you more of a chance to make payments to show credit worthiness, and (3) (this is indirect but could be a powerful tool) giving you an opportunity to take out student loans to pay off credit card balances at much lower interest rates.

Reply by
christiancho

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dont have a student loan

Reply by
debora1977

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The author suggests some things I disagree with.  One of them is to not close your oldest credit line.  If that oldest credit card (such as in my case), charges a high annual fee and a monthly fee on top of that, it is going to be the first card I close!  I might take a dip in my credit, but that extra money will pay off my other debts faster!  However, if you can, try to find another card such as a credit union or Wells Fargo secured credit card that charges a very low (or no) annual fee and open that account first, then close the high fee account.

Secondly, rotate your credit card use, so that no one account gets reported in the same month.  Use one card for no more than 20% of your credit and pay it as soon as the bill comes in to avoid any interest charges.  As soon as that bill is posted, switch to another card for the second month.  When these hit your credit report, if you time it right, it will only show one of your cards at use at one time.

As far as keeping or closing accounts based on interest rate, that is only important if you don't pay the balance due!  If you can get to the point where you pay a card in full each month, interest rate no longer matters, as long as you have a 25 day or more grace period (some cheap cards have no grace period and accrue interest from day one).

Finally, NEVER take a cash advance on a credit card!  You are better off going to a cash advance/payday loan place than to pay the extra charges and interest on a credit card cash advance! 

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Comment by
JDinFL

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That is actually exactly my point of view as well! I am getting ready to eliminate my credit cards with high annual fee and keep my newest no fee card as a main one.

I did not rotate the cards. Is it going to hurn my score if all 3 of my CCs are in use (less than 20%)?

Reply by
DieSonne777

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Work for wells fargo and have learned a lot about credit, you can absolutely close any account is not goving anything back but headaches (annual fees etc) but make sure your credit card history averages 5 yrs or more before closing anyone so that your credit remains strong. 

Reply by
rubianocristianc

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the problem is that closing an old account should not reduce a credit score, i don't see the logic to it.

credit history should show accounts even close ones that have been opened since people have their first credit card.

It unfortunatly another way credit card have found to keep their customers by scaring them.

Comment by
gwenaellp

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Remember the credit score is not a measure of wealth.  It is a measure of your willingness to go into debt stay in debt get more debt and have a excellent pymt history.

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Reply by
jte1958

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I so agree,why should you be penalized for closing your accounts. I beleive if you close accounts they should give you points, not decrease your score. Believe this or not:

I had 4 active accounts that I paid off, one at a time. Once I paid it off, I closed the account. To my surprise my credit score went higher. It maybe that I didn't close them all at once (it took me 1 1/2 yrs). I personally just feel better knowing the account is closed. If I get a decrease in my score so be it, am sure that it will increase over time. It's funny how the credit system works.

I have 2 more accts that am going to pay in full and close this year also. Oh well, let the chips fall where they may. Good luck to all!

Reply by
PURPLEMAXIMA

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It has always bothered me that if, for example, you are approved for $10,000 ------- anything over $3,500 is view as a negative impact.

If creditors are happy, up until you spend 35% of your available credit... why don't they only approve you for $3,500 to effing begin with? Mother bugger sons of boogers... That just seems so stupid to me.

Reply by
tiffanydenve

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But here is the logic for the creditor. Be sure to read the fine print because if the creditor assign you a credit limit of $10,000 and you use over 35% of your limit along with the credit balances of your other accounts, your credit score will probably decrease.

Since you score has decreased, you have become a greater credit risk. Consequently, your interest rate will probably be increased leading to hefty profits for the creditors. Yes! It is a conspiracy.

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Reply by
JohnHoer

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The credit bureaus have been closing my good closed accounts little by little.  I've had several installment loans that have been paid with a timely payment history be deleted without my request.  Why is this happening? I've had one closed car loan disappear and two paid mortgages be deleted, too.

My Experian Credit Report is nearly a thin file due to this. And it's nearly impossible to have a creditor report the account again. It's very difficult not to believe that the credit bureaus are doing this to artificially keep credit scores low.

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Reply by
JohnHoer

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One factor in a credit score is the ratio of debt to total credit. You need to keep this lower than 35%.  For example, if you have four credit cards with a line of $2500 each ($10k total) and your combined balance is $2500, you are using 25% of your total credit line. Now if you cancel two of those credit cards (assuming they had $0 balance), your credit line drops to $5k and your debt to total credit available is now 50%. Using 50% of your credit as opposed to 25% of your total credit looks bad in the 'eyes' of the credit agencies. Keep old lines of credit open. It's a sign of committment. I'm still paying off Discover from 1995 ($1400 more to go). They just 'rewarded' me with a new card with a $7500 limit. My old card has a limit of only $6900 (it was $5300 last November).

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Reply by
jaymez619

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I fully agree with you. Now that my credit is so much better I closed out 2 accounts that charge me 59 dollars a year to have them and I applied for and got 2 cards with no annual fee and my credit score dropped about 40 points. Very Unfair I think. They should look at the entire picture. I was not about to pay over 100 dollars for something I didn't need and now I am being penealized for it..

Reply by
play2win34

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I took a personal finance class in college a couple of years ao. It was explained in the class that the credit score was based on, among other things, your debt to income ratio and showing a history of making timely payments for an extended period of time. Running up a balance on a credit card and paying it off each month does not show a payment history, it appears to the credit card companies that you use the card, save the money during the moth and then pay in full. Have you ever wondered why city water companies, electric services, gas companies do not report to credit agencies unless you don't pay the bill? It is because the bill is paid each month. If you ever get disconnected from these services, it may show up on your credit report, but the good payment history doesn't.

I currently work for a company that has been in business for over 35 years and the company can't get a decent credit card to save their souls simply because they pay off the balance each and every month. Being their bookkeeper, I have never paid a finance charge in the 5 years I have worked for this company.

Reply by
cctow6617

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When you close out old accounts,whether you use them or not, It reduces the amount of credit available to you. That is why your score could go down.

Reply by
seester

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I also thought that closing unused account would be seen as a good thing.  I think the rationale behind scoring higher for unused credit lines is that you can manage those account, and are able to hold back on spending even if you have approved credit.  It also shows that whatever you use up you end up paying back, and are not in a trend of using up all the credit available to you.  Not sure if it's the best way to measure this, but I guess it does have some sort of logical basis. 

Reply by
omareduardo

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Wow that happened to my mom. She bought a treadmill and opened a card to do so because of some offer.  She asked for $1500 and was given 15k.  not  sure why.  Well in 2008 when the economy was crashing, they lowered her limit to her balance.  She called and complained and they raised it back up but not back to the 15k. 

A lot of companies lowered limits regardless of personal history.  I wont say which company i work for but I do know that if you have this card and you kept up a positive payment history through that time, that this company is now little by little restoring the higher limits.  Hope that helps.

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Reply by
ktjojo74

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How about I have been paying down my credit card, so the bank lowers my credit limit!  Now I am using 90% of my credit as opposed to less than 50% I was using before they lowered the limit.  They're making it so my credit will only get worse if I pay down my debt.  This should be illegal if it's not!

Reply by
bbum

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If you look at it like this it makes perfect sense. Jason has $10,000 of credit he can use. He has 4 cards. He decides to close the smallest one which only gives him $1000 of credit. Jason now only has $9000 in open credit. The credit companies don't look at who closed the account, just that it was closed. Also, it automatically looks like Jason can't manage $10,000 of open credit, he can only manage $9,000. 

Reply by
meganantrim

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You could also ask the credit card company to change your credit card type to a non annual fee one. I did with 3 of my credit cards, and all of them said yes and changed to a "free" card, two of them are giving me "points" now.

Reply by
GCAPPUCCIO

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I am at a loss - I have a "D" on one of my responses apparently because about 9 or 10 years ago I closed several credit cards I did not use.  I THOUGHT this would improve my Credit, not hurt it.  It says I currently use 4 credit cards, I pay off the balance each month.  Can you give me an answer why my score is "d"?

Reply by
jburnell

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You explained that beautifully. Thank you.

Reply by
ebryant975

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Unfortunately our System is not based on Common Sense. Its Based on Making Money

for those That have it.

Reply by
hytf

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While I agree with your sentiment because it does  seem if you are closing an account you are being "responsible." The credit score is not measuring your overall wealth but rather how you manage that wealth. Which is why several factors play a role into your credit score: utilization, history, credit inquiries, deliquencies, etc. 

Reply by
raquelr85

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i made the mistake  closing old accounts and so  now at 57 it says i have accounts that are only 6 years old not  true i have accounts for 25 years or longer how do i correct  and doesnt credit companies see old accounts anyway???????????

Reply by
amccutchen

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very good''

Reply by
smutty

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at bbum - you are incorrect it does happen.  and at cctow it is not illegal. there is a little something called card agreement. credit card company can change your account at any time. I had success by payng off the balance due each month but leaving the new charges.  0 interest rate but kept utilizing the card. 

Reply by
blockhart0928

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call cc company back ask when it will b reviewed or when it was done last time. the 1st person u talk 2 wont know the answers. insist on speaking with a supervisor or someone who CAN ANSWER those questions. i'm sure u get JUNK MAIL all the time from other companies offering no transfer fees & a lower intrest rate. tell whoever that if they cant or wont lower ur rate 2 match or better what u recieved in the mail ur going 2 take the JUNK MAIL offers up on their better deal. i did this with a big banking company. it worked great. i went from a 21%  and a 24.99% down 2 14.99% on both the cards i had with them. & they wont want 2 lose ur business or the money they can make  (even at a lower rate)  from u. i'm waiting on new JUNK MAIL offers now so i can do it again.& if u dont get those JUNK MAIL offers never underestimate the power of a good POKER BLUFF.  LOL  good luck & happy savings 2 u.

Reply by
longstreet1

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Same thing happened to me.  I closed an old account because my ex-husband's name was on it.  That started a domino effect I never imagined.  One of my CC companies took that lowered percentage as a "credit risk" and lowered my credit limit to just over what I had on the card.  Then it looked like I was using over 90% of my credit card and they used THAT to raise my interest rates to over 20%.  My other CC company saw this transpire on my credit and raised interest rate as well.  Since that time I've paid nearly all the debt off and have asked to have my interest rate lowered... they say my account is "up for review" soon - In other words "we haven't squeezed quite enough money out of you yet".   I can't wait to be debt free and never have to play their money games anymore.  I'll work for myself, thank you very much, not their companies.

Reply by
christyr2b

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You are totally wrong on a number of your comments. First off if you pay your balance in full every month, that constitutes a payment history. Regardless of paying an entire amount owed or a minimum payment on a card would count as a payment history that would be positive as long as it is paid by or before the due date. Any payment is considered part of a payment history!!! I find it hard to believe that a credit card company would deny credit because the business pays its balances off every month. Credit card companies still make money off of people that pay their balances every month every time they swipe the card. That is known as a processing fee and usually a creditor will make around 1%-3% per swipe.

Utilites normally only forward information to collection agencies when they have to. They usually do this to sell off the delinquent debt to recoup some of the "lost" money and write the difference off that was owed as a loss on their taxes. Utlities are not creditors which is why the payments for those do not show up on credit reports.

Another reason the business may not receive a new credit card is due to the income they make and the underwriting requirements of the company they are applying to. Certain banks have policies that they refuse to lend to certain types of higher risk business (strip clubs, payday loan companies, etc.). Just because you were supposedly denied by one bank doesn't mean another bank has the same rules....

Reply by
purdueboiler06

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agree too!

Reply by
mydaddied

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Credit only started really in the 80's or 90's. Stores may haven given you credit, but it wasn't a national thing till later.

Reply by
meganantrim

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Thank you for sharing your exsperience I am so happy we are able to have a say in our credit these days. I remember when you aplied for credit somewhere they would not let you even look at your credit report. That just does not seem right what if something was incorrect.

Reply by
stacialt

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@lawdog46 (Just read the article so I'm not sure if you're still curious why this is, but here's my response). One of the ways credit scores are calculated is through percentage of use. For example, you can borrow $10,000 total on all accounts and you only use $3,000 you're in a good spot because you're using 30% of availble credit. If you close a card you aren't using, then all of a sudden you can borrow less but still perhaps owe $3000. Your percentage drops. Another reason it may drop is because the length of time is another factor in your score and if the card being closed is extending your length of time then that will also drop your score. Hope this helps someone!

Reply by
cbrhode

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My credit reports don't show my first cards.  I've had credit since 1976 and my  credit reports only show about 10-15 years.

Reply by
Tashinawin

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i dont,then everyone will closing account that they cant pay and getting rewarded for dumping their balances for points?its not reasonably.you close your credit it decreases your available credit,therefore decreases your your score.act responsible then maybe the whole world economy would not be crashing .cant affo

Reply by
kenya0

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its the ratio between the amount of credit you have and the debt amount that you have - that is what can potentially knock your score down. as long as your debt is less that 30 percent of the credit you have allotted to you it doesnt matter.  of course the credit length history plays into that as well.

Reply by
persephones

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I also agree.  If you keep all card accounts open, you could me tempted to used them more often then needed.  I have a friend that closed two credit accounts and aand did a transfer of the balances to new card and one year later starting using the other two acounts again.  What a shame as she is in debt for 3 cards now.

Reply by
rosiebean17

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Agreed.

Reply by
dmb31508

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Lowering a score when an account is automatically closed when the debt is paid for (i.e. mortgage, auto loan) is a freaking scam.  It's just another excuse that financial institutions can use to increase your APR's so they continue to get gobs of money for absolutely no reason at all. 

I shouldn't have to pay more for my next house because I just paid off my $300,000 mortgage in 10 years.  Obviously I was extremely responsible in making my payments, so I should not be penalized for being so responsible. 

Oh, and for those of you who want to argue and say that credit scores aren't meant for determining payment responsibility, I have a quote that came directly from my Trans Union credit report that was received from myFico.com. 

The quote says "The reason consumers with good FICO scores get better interest rates is because they pose less risk of missing payments or defaulting on a loan.".

Hmmmmmmmmmmmmmmmmmmmmmmmmmmm, I wonder how I pose a higher risk this month (after paying off my mortgage 20 years early) than I did last month?  Nothing else changed on my report, except my mortgage has been marked as $0 balance and closed.

This credit scoring system we have, my friends, is the largest scam in the history of mankind. 

Comment by
clphillips72

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I agree 100% as the same thing just happened to me after paying off a 40K car with perfect pymt history never a late and they close the account - I take the hit on my score, now......THIS EFFIN SUX!!!

Reply by
platypus1555

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i agree with you 1000% we are living in a huge BIG scam,in almost every aspect of our lifes,''SAD''

Reply by
juanca1234

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Good article, I am always curious how the agencies calculate credit worthiness, so anytime you can get some insight on how to build credit or keep it from going down, then I am glad to read it.

Comment by
athalonius

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Not just credit cards, credit accounts.  This means auto loans, mortgage, etc...

Reply by
sstone0115

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two cards are enough. 

Reply by
marmars46

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Good article but that they said one skould keep between 4-6 credit cards that is absurd.

Reply by
ballbeater

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i just read that even if you do pay off a credit collection debt, it will still remain on your credit report.  my question is, after its paid in full.  what will become of my credit score at that moment?

Reply by
creditcaregirl51

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can u get a mortgage with a tax lien 

Reply by
karenn1

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My score went from an 805 to 766 after paying off mortgage. It is very sad to know that in order to get a good score you have to have debt. Now I could care less about my score, I would rather be debt free.

Comment by
BoomBamBoom

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I paid off my motorcycle loan a couple of months ago. Once it was reported, my score went down 4 points.! *******s! I worked hard to pay off that loan early, just to be punished?
On a good note, I did save myself tons on interest. But it does suck..!!

Comment by
jjfrom818

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I have paid off 1 credit card and 1 loan and my credit score keeps going down.  I did so my credit score would go up and I could get pre approved to buy a house.  Now I am screwed with a fair credit score.  What the heck!!!  So wrong to do this to a person!!  I think the system sucks!!!

Reply by
URTHEBEST

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Important information. I would be tempted to close out old credit cards that aren't needed.

Comment by
tlmilkman58

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There is so much wrong with this statement I don't know where to begin! First of all, I have run automobile dealerships and I assure you that there is NO advantage to paying cash for a car. The dealer actually prefers that you finance because they make more money. If the dealership procures the financing for you, they participate in profit from the lending source. Exceptions: when there are advertised rates of 0% or close to that the dealer gets zip and you get a fantastic rate that banks or C/Unions can't compete with. You have the same "negotiating power", regardless of how the car is paid for.  The SAME negotiating power.

"The more in debt and constant payments, the better your score".  This is bunk.  Banks look at debt to income, number of open accounts, age of accounts, times late on accounts from 10 days to 30 days etc and if you have too much open credit, have been late on installment loans or credit cards and if you have more than 35% of your net income going out, you are scored negatively. Anyone who pays full sticker price for a car in todays market is a fool....any car. Mr "dandmjohnson" hasn't a clue.

Reply by
Scott60

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Yeah...cash is king until you need a mortgage

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Reply by
BungalowMo

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The advantage to paying cash is that you don't pay $30000 for a $25000 car, and while you technically might not have more negotiating power with cash you also cannot be sucked into the game dealerships play of "How much monthly payment can you afford?"  This is a gimmick designed to get your focus off the price of the car and the value of your trade and onto what they want you to think about.  Paying cash allows you to pay attention to the actual cost of the vehicle  and in doing so will almost always get you a better deal.  And don't try to talk about leveraging money because it is crap.  If you pay cash for a car, then invest the amount of money that you would have paid in payments you will come out WAY ahead versus keeping the money invested and financing the car. 

Reply by
bbgrl143

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Paying cash for things is always best, as it saves you money and allows you to get the best deals on anything.  A credit score doesn't score anything but how much in debt you are.  The more in debt and constant payments, the better for your score. 

For instance, buying a car....if you have cash to spend, you have negotiating power on the purchase price of the car.  If you buy it on credit 99% of the time you pay the sticker price and then finance it over 5 years, paying interest.  If you were to buy a car for a couple of thousand, put money into an account equalling what you would pay in a car payment, that that 2,000 car and what you save for a couple of years and trade up in car.  Do it again a couple of times and you can have an awesome car for a great price.  You save money from interest and have that money to invest in other ventures, such as a good mutual fund to make a great return on investment.

Reply by
thedreamlife00

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You sound like a Dave Ramsey fan. Cash is King!

Reply by
kingcharles81

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paying cash for cars does nothing to help build your credit, it just won't hurt it. if you want a car loan to help, you have to take out a car loan and then pay on it. feel free to pay it off early.

Reply by
dandmjohnson

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Yes Dave Ramsey " Live like no one else, so you can live like no one else"

!!!

Reply by
sherryp5165

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Thank goodness for thedreamlife00, breathing some intelligence into an intellectual void. I will not have either the time nor the patience to correct everything wrong being said in this thread, so let me focus on 2. First, no one seems to appreciate the time value of money.  By financing at low rates (low = below inflation, or as of this writing less than 2%) actually increases individual weath by insulating the borrower from the cost of inflation. Basically, you are allowing your money (the aforementioned cash) to grow at above inflation rates while using somebody else's (the financing company's) money at below inflation rates.  Second, to remove the falacy that a credit score is simply a measure of "how much in debt you are", one should understand that having low debt levels actually increases your credit score, provided you have some open credit accounts (even at $0 balances). Having no credit whatsoever is catastrophic to one's credit, and can do anything from preventing the purchase of a home to inhibiting the landing of a new job. thedreamlife00 is head and shoulders the most informed person on this thread.

Reply by
suprmanjp08

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Paying cash for 3 new cars has absolutely no impact on your credit.  Neither does paying 1000's on a hospital bill.

These are not parts of your credit history.  The only one that *could* be, is if you stop paying the hospitla bill & they send the acct to collections.

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Reply by
BungalowMo

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I was surprised our credit had not raised much the past couple of years we have bought and paid cash for 3 new cars and paid 1000,s on hospital bill for husband's open heart surgery.

I am thankful to have maintained our excellent score. Thank you, everlyn Hottinger

Reply by
hottmeem

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so right. Dealerships deal with a buy rate (the rate the lender is offering, and a sell rate (the rate the dealer is offering). These rates can be points apart.  If you pay cash that profit is eliminated and the dealer must find other ways to make this deal profitable.  They cant sell you GAP because you dont need it. So warranty and other add-ons and price are the only way they have to go.  The desk manager has the job to get as much money built into the price of the car as they can, it is the Finance managers job to add as much padding as possible on the back end of the deal.  It is the consumers job to be aware of this info and make smart educated decisons when presented with these options. 

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Reply by
ktjojo74

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YOU need to research the history of the vehicle you want. Try www.consumerreports.com-get a paid subscription, and use the inside back page to learn, for $12, yes, I said $12.00, how to get the REAL Price the dealer paid for the vehicle you want. Then, go in with 30% down and drive home. Japanese cars go the most miles w/o major repairs, btw, and are usually the best on gas, too. ALthough when you do repair them the parts cost more, they last longer between repairs, so ultimately Japanese is the way to go. Our family has had 3 Mistubishi vehiles in a row, every single one ot them repair-free for life. Go figure, go research, go to the tote-the-note lot if you have to, but buy Japanese vehicles for longevity. When you're better off, you can upgrade to the luxury brands; Lexus (Toyota),  Acura (Honda), Infinity (NIssan), etc. Finance only the amount of car you can afford. Use a credit union to do your banking; their finance and mortgage rates beat banks every day.

Reply by
samiams5877

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He was merely pointing out, that it's better to pay with Cash for things, as apposed to buying them on Credit, and as someone who's done exactly that most of my life, I can tell you that, IF, you can pay with Cash, it IS a better way to go, because then, nobody gets a percentage of anything, nor do any interest rates apply. There's no late fees, or, any penalties costs either. Paying with Cash, also drops the middle Man too. The drawback to using cash only though, is that your Credit Score will suffer for it, because you're not buying anything on Credit. Everybody talks about paying your Bills, but seems to forget that daily Bills exist too, that would only show up on your Credit, if, you refuse to pay their balances off. Things like, Electric, Cable, Water, Garbage, Phones, Gas, all are daily Bills that are never mentioned, yet impact your like tremendously. My problem is not paying my Bills, it's being overwhelmed in debt. Credit related or not.

Reply by
Zulpo

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I have to disagree.  By using a credit card properly, we were able to take a trip to Disney World for next to nothing. 

Reply by
pattygal

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A car loan is an installment loan, and it most certainly DOES affect your credit score.  One of the reasons stated for my "fair" credit score is a LACK OF installment accounts.

Reply by
apolloone

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If you don't think cash is power.  Negotiate for your next car with what you are willing to pay in cash sitting on the desk in front of the sales manager.  The physical presence of the cash IS POWER.  It works!

Reply by
k2dsbradford

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dandmjohnson-

Actually you are wrong regarding your statement "... A credit score doesn't score anything but how much in debt you are..".

I have zero debt and only a house mortgage and have an excellent credit rating. Your score takes into account your debt, your on-time payments, your credit debt to credit amount ratio, and how long you've had credit to arrive at the score.

I agree paying in cash in certain instances is to your advantage, but unfortunately not everyone has enough liquidity to pay in full with cash.

Reply by
stevecva

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we are living in times were credit is everything  if you can pay cash good but credit history to grow your're crdit is needed buy youre pay half down make payments for 6 months andmake payments for 6 monthsbuilding youre score is a matter of knowing how the credit system works you can be rich but if you dont have credit you cant get loan  or start business if times get hard but you have no credit to get buy to until you get on your're feet then what will due live on the street

Reply by
bear768

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I apologize...I meant "the dreamlife00" Sorry dandmjohnson.

Reply by
Scott60

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Paying cash does not get you a better price on a vehicle.  It could sometimes be the exact opposite.  Overall, yes, you will save money in the long run by not paying interest.  Also, points held by the finance manager who closes the deal will not be a a concern.  But as I said, cash is king ONLY at a "buy-here-pay-here" lot.  That is true only because those who purchase vehicles at those places can't get approved for a loan at a big name dealer so they have no choice but to rent-to-own (finance) at a back lot dealer.  Think of it this way, say you were a car dealer, and you have someone that will be financing a car through your motor credit co for 5+ years. The consumer has no idea what interest rates the bank is offering, only the finance manager doing the paperwork does, and you know over those 5+ years the company will be making money not only on the interest earned, but also on the points held on the deal that the consumer has no idea was even available to them (higher interest rate applied than originally offered by the bank), which in turn is all profit to the dealership.  Then you have a consumer who just wants to pay cash, and the profit within that bottom line price is the only profit the dealership will see.  If thats the case, who do you think is going to get a better deal offer?  If I were in business, I would give the consumer who is financing the more attractive out the door price, cause in the long run I'm going to be more profitable.  I don't understand the above person's idea of investing money into a depreciating investment to use as a future tool to obtain something nicer in the future.

Reply by
mculmo1025

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Again, this has nothing to do with credit worthiness, it just means you had a load of cash.  Paying cash for any purchase doesn't affect your credit score, because - wait for it - IT WASN'T BOUGHT O CREDIT.

Reply by
apolloone

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i may be worng but if you pay cash is not reported all so debit cards do not report to credit reporting   agents its not fair if you paid cash  but if you  o money collection agents will report

good luck taximanrose43@yahoo.com

Reply by
taximan43

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If you want a car loan to help your credit that is good, if you pay more than your montly payment is. Then also make an adittional "down payment" after the first 12 months. This will knock your interest down very low. If you can get a 4 to 8% rate, you can have them finance you for just about nothing making larger monthly payments, and knocking the pricipal down after a year. The way to go is cash......the guy who sells his house for gold has it figured out.

Reply by
delux114

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You don't have to close cards. The CC companies will close them due to non-use.

Reply by
127ice

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When I cancel my credit card my score went down I think is wrong.

the credit card I closed was not in use for three years and I had to pay an annual fee.Why I get my score lowered?

we are the only country in the world using this unfair and corrupt system

I am very upset!!!!!

Reply by
pjapostle

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Amen i have been reading this for 30 min., and I agree with pattygal noone thinks about all the

other bills that come in. What about those everyone, all this talk about credit, I have been on the

side of both, good and bad and let me tell you these little bills are the worst.

Reply by
Barts71

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You're right about what the banks look for with credit, but you can get a better deal buying a car in cash.  Maybe not at the dealership you worked at, but used dealerships that are privately owned have owners who would love to see that money right now.  I've done it 3 times now.  Asked a price and tried to negotiate with them, and then went to my own finance company to get approved for a loan.  Held the cash I was willing to pay and they've dropped the price by thousands.

Reply by
sstone0115

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(if you do k2dsbradford's trick of piling the cash on the desk, i mean)

Reply by
scbomber

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Better look over your shoulder when you come back in a few years for the next car though. . . :)

Reply by
scbomber

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You can file a dispute online with the credit reporting agencies for free.  It is well worth doing.

Reply by
maryhicks1957

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Hi Kristal88,

I work at the largest wholesale volume dealership in the world.  The reality is with you having poor credit and your fiance' having 0 credit is going to be tough.  To get a car loan, plan on coming up with about a 1k down and look at financing a relatively inexpensive car.  Expect a fairly high interest rate.  Pay this for about 1 year.  This will put you in a much better place.  Then after a year, trade that car in on a newer vehicle.  Your interest rate will be far better and both of you will have built some credit.  Make sure you're making your payments...  Very important!!!

Reply by
cbrs

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"The guy who sells his house for gold has it figured out."...WOW YOU ARE A FOOL!!!

Reply by
swimmer2010

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You have NO idea about what you just stated

Reply by
xau52

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I couldn't understand anything bear768 was saying! I wouldn't take advice from someone with his vocabulary skills.

Reply by
Mudcatjoe

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They now have what is called a "Dream maker's" loan for people with limited credit, The bank takes into account things you pay monthly like your rent and utility bills. Unfortunetly only a few banks offer this program and you have to ask about it, but it opened up a whole new window for me when I was applying to buy a house. Been a year since I started looking for one and haven't found the one yet. So good luck to all of you Dave Ramsey fans out there. You can buy a house with NO credit history!

Reply by
autumnwinner

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Cash is not always a better way to go if you can MANAGE your consumer debt.   i will borrow money all day long at 0.0% or 0.9% so I can keep my money invested.   Even at these low rates you can get a 5 year CD at 1.5%.  You win by not paying cash. 

Reply by
smokey1324

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thedreamlife00......I agree. cause all the debt on MY credit report......I should b able to get anything I want then....he doesnt have a clue @ all...

Reply by
trsims

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paying it off early hurts your credit.  Not only dso you have a hard credit inquiry and a loan but if you only get 12 months of payments on it your credit will drop.

Reply by
michellephlp

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The Dreamlife00. That,s why they call you a salesman. Blow smoke up everyones BUTT and laugh all the way to the bank. Get a LIFE  :~(

Reply by
johhnybee

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i guess this works if you are negotiating with 12 year olds.

I walk into a dealership with excellent credit and a low debt-to-income ratio. I know (and they know I know) that I can go to any dealership in the valley and buy something, and that their competitors will offer me the best deals and the best rates because there is not going to be any question of the financing going through.

If you need a giant pile in cash in front of you to feel powerful, try putting a roll of quarters in your pocket next time instead. It would certainly be cheaper. 

If you are unable to resist being manipulated by a car dealer because he starts talking about "monthly payments" instead of "total cost" then bring your mom with you, or your dad, or a mature older sibling.

There are better ways to address these problems than walking around with a wad of cash in your pocket people.

Reply by
chadwickian

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you paid cash thats why it didnt improve. 

Reply by
iloverei

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If you pay cash for everything, then there is no reason to be concerned about a credit score in the first place.  If you don't, then a credit score is important...simply put. 

Reply by
lindalaughs777

3 Contributions
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YES!  Habitat for Humanity!!!

Reply by
Kactuskarla

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Can you tell me where to get one of these "Zero-debt house mortgages?"  LOL

Reply by
watkins656

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They have me owing a school loan that I paid off, owing a mortgage - I'm not buying a house, and owing a car loan. My ex husband is the one with the car loan that he didn't pay off. He bought it after we were divorced. He may have used my information and sent his new wife to college. I need some help getting all this stuff straightened out. I'm a US veteran and can't even use my VA Loan to get a house because of all the inaccuracies. Anyone have any suggestions? I have been working on raising my score but it seems like everytime I make some headway. Something else will show up! Being a single woman and never having taken care of the money issues. He wouldn't allow it. I'm lost.

Reply by
Animator

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Not necessarily true - Installmet loans add to the diversity of your types of accounts which increases your score.

Reply by
sarabushey

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Why on earth would you announce your name online to enable people to hack any of your accounts and destroy your "excellent credit score?"  THAT was what struck me as the dumbest thing about your post, not your assumption that paying cash for cars and paying your hospital bill gave you good credit.  It doesn't.  But Evelyn, it may not matter if you continue to announce your name and credit standing.

Reply by
airesflora

2 Contributions
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LOVE HIM!!!

Reply by
riahleigh

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Car loans won't  improve your credit scores. Having revovling accounts will.

Reply by
kasaundrag

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thank you for the advice! my fience and i are looking into getting a new car but i have poor credit and 1 dealer told us my fience has N/A credit that sertin dealer wanted to put us into a car that was around 9k but had 128k miles we turned it down but are worried about gtting finances then i can bring about 1k and he brings in like 1,200 home a mos how do we ask the dealer down on a new car with our credit?

Reply by
kristal88

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The only thing is that if you finance with the car dealer, they may give you a better deal on the car.

Reply by
wcsu1975

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canceling out  old credit hurts your're score try use it once in awhile the longer you have the card and haev history of making  on time payments increases youre score

Reply by
bear768

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