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Post by cookiemonster on Mar 16, 2011 19:33:25 GMT -5
Hey everyone! I'm new here but I used to lurk on the MSN Money boards a few years ago.
I'm wondering what the best way is to repair my credit. I'm currently at less than/around 50% of the limit on each card and am unable to pay much more than the minimum right now due to being unemployed. I am hoping I will be able to pay everything off by the end of the year, if I get another job. But I also need to rebuild my savings and retirement. I have five open credit cards, the oldest one I've had since 2006. For most of them, I had spent up to the total credit limit and some even went over due to interest charges (and then over the limit fees being added on). Once my debt is paid off, what is the best way to repair my credit? Should I keep any accounts open? Close them all and open a new card?
All of the interest rates are really high, 24.99-29.99%.
The only other debt I have are student loans.
Let me know if you need any other information. Thanks!
ETA: Changed the interest rates.
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Gardening Grandma
Senior Associate
Joined: Dec 20, 2010 13:39:46 GMT -5
Posts: 17,962
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Post by Gardening Grandma on Mar 16, 2011 20:19:36 GMT -5
The short answer is that once your debt is paid off, I'd leave the accounts alone. I would use one or two of them to keep them active, but pay them off each month.
In time your credit rating will improce.
Aside from that, I'd make it a priority to build an EF.
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kgb18
Senior Member
Joined: Dec 18, 2010 8:15:23 GMT -5
Posts: 4,904
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Post by kgb18 on Mar 16, 2011 20:24:41 GMT -5
The best way to repair your credit is pay down your debt and pay everything on time. After that only time will boost your credit score. Don't close accounts that have a good history (meaning you always pay them on time).
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Post by cookiemonster on Mar 16, 2011 20:35:19 GMT -5
gardeninggrandma - It is definitely top priority to rebuild my EF once I am re-employed. At this point, it is a big relief to at least have 50% of the debt paid off.
kgb18 - I do have one credit card that has a "was past due 30 days" listing from November 2008. Should I close that eventually or does that information ever go away? All other cards and loans have always been paid on time.
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kgb18
Senior Member
Joined: Dec 18, 2010 8:15:23 GMT -5
Posts: 4,904
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Post by kgb18 on Mar 16, 2011 21:12:28 GMT -5
It goes away after seven years. If it's just one card, you could close it. It might ding your credit score a little initially, but it should recover quickly. Where people really get into trouble is closing several accounts at one time. That has a much worse effect on your score.
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RoadToRiches
Familiar Member
Formerly "indebt"
Joined: Jan 4, 2011 11:08:00 GMT -5
Posts: 965
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Post by RoadToRiches on Mar 17, 2011 9:37:09 GMT -5
cookie, it's all time...just keep paying and pay them off quick and wait. I know it sucks. I am in a same position. Just make sure you pay everything on time and forget about your credit and score right now. It will come back up. Just concentrate on paying all this stuff off. Don't close any cards for now.
The general rule is that bad stuff stays on your report for 7 years, but in reality, it matters if your "30days late" is less than 2 years. Once that 2 years period passes it has almost no effect on your score.
Get this...long time ago when I was fixing my credit report, I had a judgement listed. I got it removed from my reports and my score DROPPED! lol
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