Bad Credit Problems

Hello everyone, I'm new to Google Groups and a friend recommended I try this out to get an good answer to a very tough question.

I am a 26 year old artist/assistant currently living in New York (moving to Philadelphia). I just found out that I have a credit score of 575 and that my credit card company (USAA) canceled my credit card due to flagrant delinquent payments. I was incredibly naive and did not understand that credit cards needed to get paid off EVERY MONTH. Believe me, I know that now, so if you can spend as little time flaming me for stupidity, that would be wonderful :)

Due to anxiety about mounting fees, I did not check my bills often. I also know now that was incredibly irresponsible as well. My main question is: now that the damage is done, what is the most effective way of restoring my credit rating to a passable level and how to get a credit card again so I can start a healthy system of paying it off on time every month.

Thank you so much in advance for your advice!

--Stressed out in NY

Reply to
crossedantlers
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You might try going to a credit union or a local bank (i.e. one that isn't part of a huge conglomerate), explaining your situation, and seeing if you can get a credit card with a low limit secured by a corresponding deposit. If you pay that regularly for a few years, they might start to trust you again.

Failing that, you could get a debit card.

The trouble, of course, is that even if you realize you've behaved irresponsibly, there isn't any easy way to prove that realization to other people aside from behaving responsibility for a suitable period of time. Which might be years.

Reply to
Andrew Koenig

Andrew Koenig wrote on [Thu, 23 Aug 2007 18:25:24 -0500]:

A debit card won't help in this situation, at all. They are not reported to CRAs.

If you can't get a credit card from a local CU, bank or whatever, try a gas station, store card, or similar. Or, find a good secured card issuer.

Pay it off on time every month, don't let your balance get abover 30%, and within a 6 months your credit will start improving, and should be pretty good in 2 years.

As for the USAA account, if that's not paid off, ask them to take it off your credit report if you pay it off, get it in writing, pay it off and enjoy.

Check your bills, pay your bills every month, live and learn.

Reply to
Justin

Well, not exactly. You must make the minimum payment on time each month. Depending on the card, it's 2-5% of the balance. Ideally, you would not charge more than you can repay when the bill comes due.

This is tough. You can get away with the occasional payment a few weeks late, but the key is to never miss a minimum payment.

The secured card (as Andrew suggested) is the way to go. And clearing up whatever was still outstanding. You don't want a charge off on your account.

JOE

Reply to
joetaxpayer

One technique that I've adopted is to set up an automatic payment of the minimum balance. Virtually every card has that feature from their online account management tools now. That way I can be sure not to miss that minimum payment and then pay anything additional on the cards when I pay the other bills during the month.

BAJ

Reply to
none

none wrote on [Fri, 24 Aug 2007 03:59:54 -0500]:

I have my cards setup for pay in full every month. Works a charm.

Reply to
Justin

Of course this assumes a bit more, that one is watching their charges enough so they never run the risk of overdrawing their bank account or bouncing the payment. I had a card that offered 5% cash back on all gas, drug store, and grocery purchases, but it had a payment cycle that was pretty short. I set it up to pay $100 automatically, and the couple times my manual payment missed their deadline, I just had an interest charge, as the minimum was still paid. The 5% rebates were canceled, I guess they had too many 'deadbeats' just collecting that money, and I killed those cards. JOE

Reply to
joetaxpayer

Many good answers to you question. Simply put, pay all of your bills and debts on time and as agreed. One good way to enable you to do this is to have enough savings to cover your cost of living for six months. this cushion will ensure you can pay as you go, rather than delaying payment till you have the money. best of luck.

Reply to
David

So, you did not like your bills, experienced anxiety, and did not pay them?

Anyway, your problems go beyond having a bad credit score, you need to make more money, save more, and owe less.

Credit score will eventually come back, but you need to do first things first, which is pay what you owe and save.

i
Reply to
Ignoramus2733

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