Credit score building ._.

Monito

So, I'm not good with money. It's safe to say that I am, in fact, bad with money. Not "maxing out credit cards" bad, but still...bad.

A while back I was attempting to move to Chicago. It wouldn't have worked out anyway, due to a death in the family, but while I was crashing at a friends place I was searching high and low for an apartment. The apartment finding service I went through ran a credit check on me, and it really hurt my already limited options (it was during a low moving time of the year...).

Anyway, the main problem is that due to previous anxiety/depression issues, I had basically completely stopped paying attention to my student loans. For years. I'm making payments now, but from what I've seen (I got one of those non scam free credit reports), actually paying for crap doesn't show up. I've lived in four or five different places, never missing rent or utilities, I had hoped that would count for something, but all that showed up (the report I got only showed history and negative stuff, it wanted to charge me for the actual number. Maybe not a complete non-scam?) were the missed payments.

I'm wanting to try and build it up, primarily because I'll be moving to a city where they will likely check for credit with rental companies (they rarely do that here...), but also in case I need to replace my car or other incredibly boring adult stuff.

I don't have any credit card debt, but I also don't have any open lines of credit. My student loan isn't massive, if I keep my payments up it will be gone in a couple of years at most.

If I make payments on my student loan, will that show up and improve the score? I theoretically have the money to drop it all now, but if making payments over a period of time will help my score more, I'll stick with that.

So...advice? I've heard getting a credit line and paying it off every month is supposed to help, but the idea of forgetting and falling into the spiral of interest makes me...hesitant. Credit cards freak me out to no end.

Enc

From the FTC Website:

What can I do to improve my score?
Credit scoring systems are complex and vary among creditors or insurance companies and for different types of credit or insurance. If one factor changes, your score may change — but improvement generally depends on how that factor relates to others the system considers. Only the business using the scoring knows what might improve your score under the particular model they use to evaluate your application.

Nevertheless, scoring models usually consider the following types of information in your credit report to help compute your credit score:

>Have you paid your bills on time? You can count on payment history to be a significant factor. If your credit report indicates that you have paid bills late, had an account referred to collections, or declared bankruptcy, it is likely to affect your score negatively.
>Are you maxed out? Many scoring systems evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it’s likely to have a negative effect on your score.
>How long have you had credit? Generally, scoring systems consider the length of your credit track record. An insufficient credit history may affect your score negatively, but factors like timely payments and low balances can offset that.
>Have you applied for new credit lately? Many scoring systems consider whether you have applied for credit recently by looking at “inquiries” on your credit report. If you have applied for too many new accounts recently, it could have a negative effect on your score. Every inquiry isn’t counted: for example, inquiries by creditors who are monitoring your account or looking at credit reports to make “prescreened” credit offers are not considered liabilities.
>How many credit accounts do you have and what kinds of accounts are they? Although it is generally considered a plus to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many scoring systems consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may have a negative effect on your credit score.
>Scoring models may be based on more than the information in your credit report. When you are applying for a mortgage loan, for example, the system may consider the amount of your down payment, your total debt, and your income, among other things.

Improving your score significantly is likely to take some time, but it can be done. To improve your credit score under most systems, focus on paying your bills in a timely way, paying down any outstanding balances, and staying away from new debt.

zepherin

Yes, student loans show up. Mine do at least, and they show which months I've paid on time or late. I've seen a lot of people do a lot of different things to build credit. The most effective I have seen was buying a car with a low loan, even when it wasn't needed stretched over a few years, then when that loan is paid off their credit is significantly better, partly because they have credit, and partly because their debt to income ratio is low, and trending downwards.

Here is what your FICO is based on
http://en.wikipedia.org/wiki/Credit_score_(United_States)

RoyceSraphim

Echoing the FTC website, don't apply for too much at one time.

Jasconius

Being late on your student loans is a massive negative to your credit.

There are only two states that a loan can be in to help your credit

1) "On Time". Meaning you are up to date on your payments as stipulated by the payment schedule you agreed to when you took our the loan.
2) "Paid/Closed". Meaning you paid the entire balance off.

The actual answer to your problem depends on exactly what state your student loan accounts are in. If you defaulted, then I think that will probably stay on your credit for a while no matter what you do, because that is regarded as a "derogatory" mark on your credit. In some cases you can get your creditor to notify the credit agencies to remove that mark if you pay up. But not all cases. Your mileage may vary. At least ask.

If you left your loan adrift for years, and are now just making regular payments but not making up for the missed payments, then that counts as late.

I would advise getting your annual credit report to see exactly how your loans are being reported to creditors, and then base your plan on that.

Enc

Defaulting on your loans is like bankruptcy, it goes away after a set amount of time once you take care of the total amount owed. I don't remember the exact amount of time, but I'm fairly sure it is cleared from your score after four or five years for student loans (bankruptcy is seven years).

Djeet

7 years.

Defaulting on student loans is incredibad for your credit. They often do not report nearly as aggressively as private debt (CC, mortgage, car note).

That said there is no quick way to rebuild credit. Timely payments over time is the way to build credit, making more money helps too. Pull your credit reps and you'll see. Consistent payments over time is what builds credit and there is no way to hurry that.

Since you don't have revolving credit and want to build it get a revolving credit instrument (CC or gas card) and start using it regularly.

kaliyama

Monito wrote: »

So, I'm not good with money. It's safe to say that I am, in fact, bad with money. Not "maxing out credit cards" bad, but still...bad.

A while back I was attempting to move to Chicago. It wouldn't have worked out anyway, due to a death in the family, but while I was crashing at a friends place I was searching high and low for an apartment. The apartment finding service I went through ran a credit check on me, and it really hurt my already limited options (it was during a low moving time of the year...).

Anyway, the main problem is that due to previous anxiety/depression issues, I had basically completely stopped paying attention to my student loans. For years. I'm making payments now, but from what I've seen (I got one of those non scam free credit reports), actually paying for crap doesn't show up. I've lived in four or five different places, never missing rent or utilities, I had hoped that would count for something, but all that showed up (the report I got only showed history and negative stuff, it wanted to charge me for the actual number. Maybe not a complete non-scam?) were the missed payments.

I'm wanting to try and build it up, primarily because I'll be moving to a city where they will likely check for credit with rental companies (they rarely do that here...), but also in case I need to replace my car or other incredibly boring adult stuff.

I don't have any credit card debt, but I also don't have any open lines of credit. My student loan isn't massive, if I keep my payments up it will be gone in a couple of years at most.

If I make payments on my student loan, will that show up and improve the score? I theoretically have the money to drop it all now, but if making payments over a period of time will help my score more, I'll stick with that.

So...advice? I've heard getting a credit line and paying it off every month is supposed to help, but the idea of forgetting and falling into the spiral of interest makes me...hesitant. Credit cards freak me out to no end.

I'd just pay it off. Don't suffer the interest just for the sake of credit - a credit card will do the same thing for you. I don't know the exact proprietary formulas the bureaus use. Credit karma is a rough kluge that I would use to get a sense of what your score is being reported at.

Just offer to pay it off. You could always offer to pay the loan off in full immediately in exchange for removing the negative report. Though, that of course means less money for them. So the logical bargaining position would be to offer to not pay the loan off immediately in exchange for removing the negative credit report when done. But without any idea of what lender's policies are can't give further advice. You should google that and see what your lender does with other debtors.

Monito

Thanks for all the advice! Apparently most of the leasing companies in my current city seem to only pay attention to renting related bad credit (late rent, evictions, unpaid utilities etc), I was told they pretty much ignore student loans. Rather than burn up a chunk of my savings all at once, I'll pay it off over the course of a few months, and maybe get a gas card.