I am now engaged to my girlfriend of 6.5 years. We both are 23, live with our parents and are both still in school. We are going to be moving in together soon and we are weighing our options of either renting an apartment, house or buying a house. I make around 30k a year working as a manager and she makes about 20k working part-time at an accounting firm. She will be finishing her masters in accounting in December. Heres the snag we are in right now. She has amazing credit and i have very questionable credit (mid 500s). We were debating earlier on how to get the negative information off my credit report so we can consider buying a house but it seems like a long shot at this point. So i guess my question would be, whats the best route to go as far as paying off some of the negative stuff on my credit? Its nothing too serious, there are 4 different places i owe $400, $150, $500 and $200. Ive heard different stories like...it doesnt matter what you do, its going to stay on your credit for 7.5 years anyway and my fiancé says to pay everything in full that way it will say paid in full. I have done some searching on the interwebs but it doesnt really give me an answer im looking for. Is it imposible to get my score up in lets say...this year? I have a car loan in my name, and 2 credit cards. I have been terrible about paying things in the past because i forget to like an idiot. But now i have discovered a cool thing that seems to be the real deal...little thing called bill pay and thats worked out well so..any ideas? Thanks for reading if you made it this far...
First off I would consider renting a place at this point in your life. I would clean up your credit first and then straighten out your finances. If you have to plan ahead and save to pay a $1300 worth of loan, you're not ready to buy a house. It takes time build your credit back up and the waiting is worth it. If you're getting 1% higher interest on an 100K loan, that's $1K a year (I know I should be amortizing, but I only feel like doing quick math right now). Lastly, for a house hold income of $50K, you can buy a house, but why put that much financial pressure on yourself at an early age, it will limit your options down the road and cut into any future savings/investments. Then again, maybe the real estate market is going to rebound.....
Thanks. The only reason we are considering buying a house at this point is because my fiance has a job lined up to start out in the 60k range but i think you are right in the sense that we should not tie ourselves down so soon. My whole thinking was...why throw money away at rent when we can have that money going towards something. However, the older and more I look into it there is so much that goes into buying that it makes it not worth it. Especially with how the market has been the past couple of years.
If you really want to know how to take care of those small debts, go to www.creditboards.com. $50k combined income won't go as far you think it will. There may be many unexpected expenses as part of the wedding. As far as the new job, she is the first to get hired and will be the first to get fired in a layoff. This economy is still shaky. Are you living paycheck to paycheck or do you have a 6 month emergency fund(about $15k-20k probably for a $50k gross income), in case of an accident, that prevents you from working?
You're 23 and have been engaged for 6.5 years? So you were 16 when you got engaged? How do you ask someone to marry you when you're a sophomore in high school?
If you have delinquencies on your credit report, contact the companies, pay them off and have them remove those delinquencies. Those types of items don't necessarily stay on your credit report once they are paid off. Bankruptcies and foreclosures will. I assume you have requested your free yearly credit reports from all 3 bureaus so that you have up to date knowledge about your current situation.
You're 23 and have already messed up your credit score that badly? Maybe you need to wait until you're more responsible to get married? It's a big step.
First off, it's a horrible idea to buy a house with anyone other than your spouse. There are legal ramifications when you're married if she screws you that way. I know, I know- You're in love and it would never happen. But better to plan for the worst and hope for the best. And you don't have to express this nugget of philosophy to her either. Second, there's no reason why she couldn't buy the house solo when she gets her 60k job. My wife's credit is so-so (but should be clear this year), but mine is awesome. So I bought our current house by myself. Her credit and income had nothing to do with it. Of course, if we divorce she has claim to whatever we work out in the divorce settlement (we're deliriously happy, so that probably won't happen). Third, if it makes you sleep better at night, pay off the debt. But keep in mind that you're not paying off the original company that you ripped off. You're paying off a company that bought the debt at a reduced rate and that pays people to harass you to pay. If you do pay, you'll need to stay on top of them to report the payment to the credit agency. Even then it's a blemish that you defaulted then paid a collection agency. Not as bad as the debt, but still a blemish. Also, it's a new blemish that will last seven years from the time of payment, not the time of the original debt. If you're a good 4-5 years into the debt, I would just leave it alone and let it fall off. Don't engage with anyone on it who calls, because they can 'reactivate' the debt on your credit and the seven years starts over again. As others have said, building good credit is a slow process. There was a thread HERE this week with lots of good advice. Good luck!
No no no...i have been with her since we were 16. We hooked up at our first job. I asked her to marry me in October. That is funny but so true. Actually I live in the nicer side towards Space Center and Genoa Red Bluff, if it counts. They should rename it a new city altogether. I wouldnt dare drive through the other side of Pasadena. Thats what they are, delinquencies and yeah I just looked received my credit report. This is what I was looking for. Thanks! I can pay off the debt no problem. I was just wondering if it was the smartest thing to do.
You're 23 - you have plenty of time. BUT...before you get married - find a community center or a church that offers Dave Ramsey's Financial Peace University & Take the class TOGETHER..make sure you attend together. Its only 1 day a week for 13 weeks. During the class - Dave tells the story of some recent graduates who made about 75K a year together when they got married right after college, but continued to live like they were still in college (crappy car, crappy clothes, crappy food, lived in a garage apartment with cheap rent) They managed to save around 50K a year and in 5 years they paid CASH for a house and the husband gave the wife a check for 50K to furnish the house. Plus, the chances of you still being in the same area of town in 5 years are VERY slim for college graduates - even if you already have a job lined up. I felt I had a good job after college, but left in within 4 years & moved to DFW for a new job. Be patient...but Good Luck.
if you can repay the $1300 (to four different places) why wouldn't you? At least knock off the smaller ones. Seems crazy to carry that debt regardless of your credit score or house plans.
It's not guaranteed, but you can sometimes call the places you owe money to and offer to pay in exchange for them taking it off your credit entirely - not just showing that it was paid in full. They want your money more than they want to mess up your credit.
http://www.ftc.gov/freereports I tried freecreditreport.com They tell you which debt collection agency you owe money too. My cheap ass didn't pay the $140. I heard it goes away after 5 or 7 years. I'm not sure if that's true so I may ante up and pay it. I think it still shows on your report, but it doesn't hurt your credit score.
Okay iirc I used this one http://www.equifax.com/free30daytri...ck&HBX_OU=50&gclid=COjqpfz8waYCFdVf2godFQirJw They give you 30 days to cancel. If they ask why just tell them I know my rating now lol. Make sure you say "lol." :grin:
if you pay the $1250 that would look good to a loan officer. Be sure to get the paid in full letters and you can send that to make sure it's cleaned off your credit report. Are you trying to get of out of paying the $1250? If yes then at least pay the $150 and the $200 then apply for the loan that you are trying to get. As you apply for the loan dispute the $500 and $400 with the 3 credit bureaus. It takes 30-90 days for the dispute so you can argue with the loan officer that the $500 and $400 are not valid debt as well. So basically you are paying $350 to look like you are clean for $1250 temporarily. So that will mean that your $1250 debt looks a lot better than it does now. That *might* help you if you are applying for a loan. If you are trying to build your credit that $1250 will haunt you depending on what it is. If it's a credit card that looks worse than say a dentists office that you owe for a loose tooth fix.
