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Reboot Your Credit - LIVE Q&A with Dear Penny & Credit Sesame

Join us!  Robin Hartill, (aka Dear Penny and resident CFP) will be LIVE to answer your questions about credit.   

A special guest will join Dear Penny this week! Tony Wahl, a personal finance expert from Credit Sesame, will also be available to provide advice on your credit topics.

Please stop by and submit your questions.  We look forward to helping you set yourself up for success in 2021!

What too pay off first

Beau W.
Hello there, I have a credit card and a line of credit with a credit union. Both have about $1700.00 balance yet to payoff. Line of credit is a 7.9% interest rate and the credit card has a 8% rate. I have the money too pay one off. Which one is better too pay off for my credit score going up?Read More...
Since they are both similar amounts and similar interest rates, I'd pay off the one with the highest monthly payment. If that, too, is similar then it doesn't really matter. Paying off either will lower your usage of available credit, which will raise your credit score in a month or so. I would use the monthly payment of the one that you paid off to make extra payments on the one that you didn't to get that paid off quicker.Read More...
No ma'am. All current and on time payments.Read More...
Last Reply By JeremyM · First Unread Post

Settlements for Credit Cards

Lendsey Kallaby
I have credit card debt and am working to pay it off. I have enough cash to make a settlement with one of the credit card companies. What are the pros and cons of a settlement?Read More...
We need more info about your situation to be able to offer any solutions. But pretty much CC debt in collections will result in NO benefit to pay it off. The damage of poor payment history, credit utilization rate and being in collections has already done its damage. Settling now will not raise your score. IMHO It is a waste of money. Take that money and open a secured credit card and restart new, responsibly paid CC debt.Read More...
Hi @Lendsey Kallaby ! I'd recommend taking a step back and looking at your finances overall. Your cash and your credit are both integral to your overall financial health. Instead of focusing on using the cash to settle your debt, I recommend thinking about how this cash can best help you reach your financial goals based on your current situation. Will this cash be better served to pay rent or other bills to help prevent accumulating additional credit card debt? Or will you be better served...Read More...
Last Reply By Leslie Kay · First Unread Post

Bankruptcy

Felicia Sullivan
Hi I'm currently in bankruptcy and it just started, How can I sharpen my credit/make better while in Bankruptcy?Read More...
You need to wait for your bankruptcy to discharge BEFORE obtaining any new debt or you may get yourself in legal trouble. Most creditors ask this question when you apply.Read More...
I'm encouraged and thanks for the reply. "I'm showing up and Not giving up.Read More...
Last Reply By Leslie Kay · First Unread Post

Rebuilding from scratch

Kimberly Andujo
3 1/2 years ago I got sick and had to resign from a state job. I literally lost everything and became homeless for about 2 years. I've worked hard to get a stable home while fighting for my SSDI. My credit is in complete shambles all the while owing a lot of debt. Debt that I am watching being sold over and over that seems to reset the date and add to my already massive amount owed. I currently survive on $245 a month. How can I started rebuilding? I'm willing to take care of my debt even...Read More...
Perhaps you would consider filing for bankruptcy and getting a fresh start? If the debt is mainly 3-4 years old as I think that you are saying. There are ways to do this on your own if you study enough and there are some attorneys that allow you to do the tedious paperwork for a discounted fee to represent you in court. At $245 per month, you need to focus on your current needs and NOT old debt. That is not enough money to feed and house yourself without help. Once you get SSDI your debts...Read More...
Couldn't agree more with @Dear Penny here. You should prioritize your basic needs above anything else. And as a first step, contacting your lenders and banks to negotiate deferments can also help, even to just to alleviate some of the stress you're feeling about missing payments. There are some resources in this guide that you may find helpful, including contact information for lenders so you can negotiate a payment plan (you can also try reaching out to your utilities companies and landlord...Read More...
Last Reply By Leslie Kay · First Unread Post

Bankrupty

I am in credit card debt of @6000, pretty much all of which is over 120 days past due and balances gone into write off or sold to collections. I had a Chapter 13 which was dismissed in Nov. of 2019. The only outstanding balance is my car. I was going to refile Chapter 13 but have to move out of state. My question is this; Would I be better off to do a new chapter 13 or voluntary repo on my vehicle and file chapter 7? Or do I try to settle/make pmts to collections? i hope to be able to buy a...Read More...
You need at least a score of 640 to be considered for an FHA backed loan regardless of how long your bankruptcy has been on your credit report. I am just now seeing my BK dropped from one of my credit reports and I only gained 27 points even though it knocked off 174 points when it went on there. And I was expecting at least a 100 point gain with the loss of it reporting. Advice has mainly been that I would see this increase. I am telling you that it is not true. 2-3 years after a BK to...Read More...
Hi @annabell93 ! As @Dear Penny mentioned, it may be helpful to have someone help you with your finances to help get you back on track. In addition to the National Foundation of Credit Counselors, we've also put together this list of other free resources and what to look for in a credit counselor. When it comes to paying collections, just paying them off isn’t likely to affect your credit history in the short term. Once a debt has been paid or settled, the next step is making sure that the...Read More...
Last Reply By Leslie Kay · First Unread Post

All manner of Financial hardship

Cynthia Alvarez
i'm on extended home loan forbearance and filing for loan modification via my bank servicer. They have been helpful in every way. However there may be other avenues for me to look at because aside from shelter, I have no money left in my budget after paying my monthly obligations. I'm retired, now aged 79 & lost 99.99% of my nest egg . I need more options to rescue myself from becoming a homeless pauper. I have gone thru 2 sets of market crash-cum-recessions. The first dessimated my nest...Read More...
Thank you for the important pointers you sent a few days ago. Much, much appreciated. 04/09 I did fail to directly negotiate with my credit card issuers. I was feeling humiliated and couldn't focus from mixed messages that led to late payments. 06 to 08 I did follow referrals including FannieMae & HUD (hope hotline). I turned to searching websites trying to learn as I go. I had phone sessions with non-profits on debt management and foreclosure prevention via 311/govt/churchprograms.Read More...
Hi @Cynthia Alvarez , I'm sorry you're going through this. I echo what @Dear Penny said: focus on your immediate needs right now to help get you above water. In addition to United Way, here are some other resources to help with groceries and necessities. In the meantime, there are some steps you can take to help your credit as well: Reach out to your existing credit card companies and utilities companies as well to see about arranging payment plans or discuss forbearance options. Many are...Read More...
Last Reply By Cynthia Alvarez · First Unread Post

APR - credit cards

angelicaf89
I gotta question! How short of a time frame should a credit card provide before the APR kicks in. (an ideal time frame to stay away from debt) To accept and not to accept!Read More...
Hi @angelicaf89 ! If you're looking to see how much you could end up paying in interest, here's a handy calculator you might find helpful. In general, if you pay your bill in full by the due date each month, you won't pay interest. However, as @Dear Penny said, it's important to check the fine print!Read More...
Hey @angelicaf89 ! Usually there's a grace period of 21 days between your credit card's closing date and when the bill is due. If you pay off the balance in full during those 21 days, you won't get hit with interest. But if you don't pay off the balance in full, you give up the grace period. Interest starts to accrue as soon as you make purchases! Also, credit card companies actually aren't required to offer you any grace period — but most still give you the 21 days. I'd be nervous about an...Read More...
Last Reply By Tony Wahl · First Unread Post

Student Loans

I keep getting calls telling me that I qualify to repay my loans in a smaller balance or possibly eliminate all together. I'm currently under Chapter 13, are these calls legit? My understanding there is a percentage of my repayments are going to this debt, and that I will still have to pay back student loans and IRS, correct?Read More...
Hi @Ladybug Lynn ! You're right to be suspicious. Government agencies such as the IRS, Medicare and Medicaid, social security, U.S. Department of Health and Human Services, etc. rarely call consumers directly, and the government would rarely ask you for a fee or personal information of any kind over the phone. Here are a few other red flags to look out for when it comes to potential fraud and scams.Read More...
@Ladybug Lynn This doesn't sound legit. It's very rare that student loan or IRS debt can be reduced or discharged in bankruptcy. When you file bankruptcy, a lot of your personal information becomes public record and that can make you a target for scammers, so you have to be extra vigilant. But regardless of whether you're in bankruptcy, any time someone calls you and claims they can get rid of your debt, you should be extremely suspicious. Here's some information from the Department of...Read More...
Last Reply By Tony Wahl · First Unread Post

Derogatory items

Mark Mitchell
Do you have example letters we can use to remove derogatory items on our credit report. Don’t they have to respond to a written dispute within 30 days or they have to remove it ?Read More...
Hi @Mark Mitchell ! Here is more information , including the contact information, for filing a dispute with the credit bureaus. I believe this is the template letter link that Dear Penny shared with you: https://www.consumer.ftc.gov/a...s-your-credit-report Good luck!Read More...
Thanks for the response. I just went to the link you sent and it indicated the page could not be foundRead More...
Last Reply By Tony Wahl · First Unread Post

Where to start

Wilhelmina Brantley
There are a few companies who claim to help you begin to rebuild your credit. I have a ton of late payments, etc. Is there a company that in your experience will truly help me as I go along the path of rebuilding?Read More...
Hi @Wilhelmina Brantley ! There are lots of different credit counselors out there, and there are several things to look for when choosing one that fits best for your needs. Here are a few considerations to keep in mind: Accreditations and certifications: This is a great start to verifying that the agency you’re working with is a reputable agency. Most legitimate credit repair agencies are nonprofit, so be wary of any companies that are for-profit and claim to be a credit counseling agency.Read More...
Good morning @Wilhelmina Brantley ! Unfortunately, time is the only thing that can heal negative information on your credit reports. Late payments stay on your reports for seven years, but they do the most damage in the first two. No credit repair company can have accurate negative info removed from your reports — and it's a HUGE red flag if they tell you they can. If you need help, I'd recommend credit counseling through a nonprofit agency. You can find one through the National Foundation...Read More...
Last Reply By Tony Wahl · First Unread Post
I was recently told that although my credit payments and everything is perfect, because I had an account that was closed but still had a balance, that this was affecting my credit score. I transferred the balance to an active card to stop it from negatively affecting me. But I am curious to know if this is true, and what other factors that people might not necessarily think of could be affecting ones credit score negatively?Read More...
What happens if the creditor closes your account for no activity ?Read More...
Hi @Moore Income ! It's a great question. While most are aware of the "big" credit factors that affect your credit, like making on-time payments and keeping credit card balances low, there are a few other factors that have a smaller impact on your credit score. Credit Age: Unless it's absolutely necessary, we recommend not closing a credit card account after you've paid it off. Having older accounts contributes to a longer credit age which can help boost your score. Credit Mix: Lenders like...Read More...
Last Reply By Mark Mitchell · First Unread Post

Credit Score

I have an 800 credit score and want to figure out what I can do to make it 850.Read More...
@Tony Wahl hit the nail on the head. Had I left a couple of accounts active without closing them out, then I think that the score would be even higher. @Dear Penny , thank you so much for breaking it down to me in that order.Read More...
An 800 credit score is certainly something to be proud of! @Dear Penny is right about the bragging points. There's no real benefit to having a 850 score vs 760. (Here's more about why that is.) When you have a score like that, you want to focus on keeping it that way: You basically need to have a ton of available credit but not utilize much of it. Keep your monthly credit card balances below 10% of your available credit limits. Continue to demonstrate a perfect payment history on different...Read More...
Last Reply By mememe · First Unread Post

Bankrupty and Credit Score

Leslie Kay
Has anyone waited out the 10 years after BK and seen an increase in your credit score once that mark drops off? If so, how many points did it raise as a result? I am very close to losing this black mark and actually it has already fallen off of my Transunion report, but I did not see any change in my credit score. I am wondering what other people may have experienced. Thank you for a moment of your time!Read More...
It's a great question, @Leslie Kay . It is possible to have an excellent credit score even with a bankruptcy on your report. That's because most scoring models focus on more recent activity, usually the last two years. So if you've been actively rebuilding your credit since you filed for bankruptcy, you may not see a significant increase when it drops off your report.Read More...
Good morning @Leslie Kay ! Once it falls off your credit reports, you'll probably see an improvement to your score within about 30 days. Just how much your score will increase could vary pretty widely, but I've heard a lot of people say that they've had increases of 50 to 100 points after a bankruptcy was removed. Would any community members be willing to share their experiences on this one? @Tony Wahl Do you have any additional insight?Read More...
Last Reply By Tony Wahl · First Unread Post

senior who wants a house

diane franzen
I am 72. I have some money in a savings account. I have always wanted a house. I have been renting forever. Is this a good choice right now? thank youRead More...
@diane franzen It sounds like this could be a smart move since you'll be paying cash. Having no rent/mortgage payment will definitely make retirement a lot more comfortable! @Leslie Kay Banks are prohibited by the Equal Credit Opportunity Act from considering age as a factor in whether they'll lend to you, but of course, you still have to show your ability to make payments. Lenders will usually consider income from Social Security, a 401(k) or IRA, a pension, etc., in determining whether you...Read More...
Thank you for all the responses. I was planning on using cash, I just would like to have a small house with a garden. My rent increases every year and once I stop working it's all downhill. I want to spend my last years in a place that I enjoy. Maybe I'll check out those tiny houses.Read More...
Last Reply By Dear Penny · First Unread Post

Retirement strategy

Omi
Hi, I am in my 50's, getting out of debt and repairing credit. I do not own a home. When I do get out of debt and start saving, is my money at this late time better off being socked away in savings or invested? also, is it even worth purchasing a home? I have read that owning a home is part of building wealth, but in my 50's, is it too late to glean the benefit from owning? or is it just a badge of honor? (I do want to own, but just wondering if that is the best thing for my money to be doing).Read More...
This is a lot of great information. I will contact a financial counselor. I own my car and I am paying off my credit cards while I am still working. I have 401(k) retirement funds along with an IRA. I have a lot of learning to do in handling money. Thank you to everyone who contributes here.Read More...
That is terrific Big Lew! Congrats!Read More...
Last Reply By diane franzen · First Unread Post

Better credit - how to proceed

Renee Daley
Dear penny hoarder I finally got my credit cleared and need a car ,computer , and a credit card how should I go about it.Read More...
I have used Rent a Center for my computers because they have 6 months same as cash and will meet pricing if you show them proof for the same unit cheaper elsewhere. It doesn't drag on your credit as a huge utilization of credit.Read More...
Discover. You can start with $200 and the lowest interest rate plus you earn cash back. Plus NO annual fee!Read More...
Last Reply By Leslie Kay · First Unread Post

Credit Repair

CGreene
Can credit score really assistance with improving my credit score? I don't feel comfortable with giving a company the power to my personal information. Are there any reputable ones?Read More...
I worked with Lexington Law over 6 months and found that they only will address a few items per month to stretch out your monthly payments to them plus some of the ones I wanted their help with they just told me to contact them myself. They got some things removed but no better than me doing it myself which I have done since then. You can find stock letters and info online by googling. That spell out exactly what to say and not say. Disputing thru each credit bureaus links is the easiest and...Read More...
Thanks for the helpful information😁Read More...
Last Reply By Leslie Kay · First Unread Post

Email your creditors

Sarah L reyes
Hi! I’ve been in the process of updating my credit and removing negative information. I cannot find the addresses to send letters anywhere. Help! I would like to send certified mail, requesting removal of paid in full accounts.Read More...
They all have email options that are quicker for resolution and issue tracking. I have also faxed them, you have to really search for that number. But I sent over a whole list of issues and they were quickly resolved over 1 month.Read More...
That's great that you're being proactive about removing old accounts! You can also find the contact information and mailing address for each of the credit bureaus here . It may take about 30 days for them to remove the error on your report, so be sure to keep an eye on it.Read More...
Last Reply By Leslie Kay · First Unread Post

Bankruptcy

Christine OBrien
I have just been discharged from bankruptcy as of August 2020 this is all good as now I have a clear slate my current car was not added in the bankruptcy and I have been making payments on time right along when is it a good idea to refinance my Honda FitRead More...
SELF CD & secured credit card are pretty forgiving and improve your credit score quite quickly. The interest rate is better than most high-risk credit options. I only wonder if I will need to keep renewing because when it is paid off after 2 years and they refund my CD money I will lose the benefit of payment history. I don't see a good exit plan. Their customer service is terrific. They are quite forgiving and will usually waive any fees you may accrue. All you do is email them. It...Read More...
Hi @Christine OBrien , It's a great question. You've already got the first step taken care of—after filing for bankruptcy, the most important thing you can do is make on-time payments. It will take time to rebuild your credit after filing for bankruptcy, like @Dear Penny said, but here are a few steps you can take to start moving the needle: Take out a secured card: This is especially helpful for those looking to build credit from scratch or with a very low score. A secured credit card is...Read More...
Last Reply By Leslie Kay · First Unread Post

Collections

How long is the state of limitations on collecting a debt in Colorado and can a collection agency keep adding a fee on the debt each month which keeps the debt showing as current on my credit report?Read More...
@Carey Hume It looks like the statute of limitations in Colorado is six years for most debts. That means they have six years from when the account originally became delinquent to sue you for it. But it will still stay on your credit report for seven years. Typically the debt collector is allowed to charge interest and fees, but the terms are spelled out in the original credit agreement. The laws may vary by state, though.Read More...
Last Reply By Dear Penny · First Unread Post

Credit Scores

Rick Campbell
I know there are different types of scores and different ways to calculate scores. Can you explain the differences between an Auto Score, Mortgage Score, Credit Card Score, etc.. What is the difference, what does an auto score weigh differently than a credit card or mortgage score, explain what each type considers that makes it different. Also, of all the types of scores, which would be the highest for the the same person. Would regular score be higher than auto, or mortgage, etc. Thank you,...Read More...
@Rick Campbell That's great! To echo @Dear Penny , a 780 credit score definitely gives you plenty of options!Read More...
@Rick Campbell That's awesome! I doubt you'll have any trouble whatsoever with a 780 credit score. I'll have mine paid off in about 3 months too! :-)Read More...
Last Reply By Tony Wahl · First Unread Post

How do I increase my score?

Naimah Muhammad
How do I increase my credit score>Read More...
Great question! In addition to the tips that @Dear Penny provided, here are a few others: Get another credit card: It seems counter-intuitive, but getting an additional card and spreading your spending across multiple cards (vs just spending on one card) will lower your credit utilization, which will in turn have a positive impact on your credit score (credit utilization makes up 30% of your credit score). Just be mindful that applying for a new credit card can temporarily lower your score...Read More...
Hi @Naimah Muhammad ! Your first step depends on whether you have any credit accounts. If you don't have a credit card or loan, you may not have credit at all. In that case, look for a starter credit card, which is designed for people who are building credit. You may qualify for an unsecured card with a low limit that doesn't require a deposit, or you may need to get a secured card, which will require you to pay a deposit to use as your credit line. Once you have credit (or if you already...Read More...
Last Reply By Tony Wahl · First Unread Post

Reboot your credit for 2021!

Dear Penny
Hello Penny Hoarders! It’s Robin, aka Dear Penny. I’m sure we’re all ready to say goodbye to 2020, but there’s still time to get some good out of the year — by using the next few months to make sure your finances and credit score are in good shape so you can have an even better 2021. We’ve partnered with Credit Sesame to help answer your questions around improving your credit score and overall financial health. Looking forward to your questions!Read More...
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