I have a bad credit history due to my now ex wife. I recently bought a new used car. I paid $5,000 down and financed the other $4,000 for 4 years. My plan is to pay for my first payment $1,500. The second payment $800. The rest of the payment I was going to pay $152 a mounth. This whole transaction should take a little over a year. Does anyone have a opinion on this? All answers are welcome.
2007-07-16 12:29:12 · 6 answers · asked by DR. Care 3 in Business & Finance ➔ Personal Finance
Overpaying isn't gonna help your rating much (maybe help a little by showing you have less debt). It would probably be best to set aside about $500 just in case you needed it later to keep from paying late. Paying it off early might actually hurt your rating. If you payed on it longer it would show you have a longer credit history with good payments (of course this is after a year or two from now).
Bad credit is a pain to get rid of. Basicly just have to wait it out (7 years?). While waiting you want to do stuff that will give you a good rating. That way when the bad credit stuff gets removed, you have a lot of good credit stuff left.
Unless you've got a really high APR on the 4 year loan, I would at least stretch it out for two years. Unless you are not going to keep full coverage insurance after the lien is removed from the title. Then it would be better to do the one year, and save the money on just getting liability.
Also try getting a cash back credit card. Chase Freedom is a good one. Use it whenever you can (but try not to go over 50% of what your credit limit is). And make sure to pay it off fully every month to keep from paying interest. But make sure there is at least some debt on it when the statement comes.
For instance, they give you a $300 limit. Buy your groceries and gas with it. When you get to about $150 debt on it, pay $100 toward it. This would keep around $50-$150 debt on the card when the statement comes up. Then pay whatever the full debt is stated as on the statement.
This will show that you can handle credit without getting too far into debt (why you don't want to go over %50). And that you can make payments on time. The amount of debt the statement shows is what really shows up on your credit report. That is why you want some on there, it shows you are using it monthly.
2007-07-16 12:46:48 · answer #1 · answered by af 3 · 0⤊ 0⤋
the simple answer. Credit HISTORY is just that. Paying a loan fast does not create history.
Mortgage payments are on the top of the list. Miss one of them and your score takes a real dive. Don't miss a payment on any loan.
The more credit cards you have the better. But don't run a balance more than 50% of your limit on any one card.
You will never get into trouble if you have the money "in the bank" before you swipe that credit card.
2007-07-16 13:39:52 · answer #2 · answered by Bill R 7 · 0⤊ 0⤋
One of the best way is to make regular payments on a regular basis. The creditors want to see that you can make the same amount on time every month. The longer you make these payments the better your credit will be.
2007-07-16 12:32:49 · answer #3 · answered by Jen 4 · 0⤊ 0⤋
Well, I think paying the large amounts is not nearly as useful to your credit as simply paying on time. It depends on your other debts, but maybe you should look at making regular and more substantial payments on all other debts. Part of the key is getting rid of debt. Part is in making payments on time EVERYTIME, but as I understand it, making large payments in and of itself will not improve your credit other than in that it reduces your overall debt. I just believe in doing things in an orderly way. One payment situation will not bring your credit all the way back, it's more an issue of your overall financial record over time.
2007-07-16 13:42:37 · answer #4 · answered by The Scorpion 6 · 0⤊ 0⤋
Do you've gotten a financial institution account, regularly the financial institution in which you preserve an account will supply you a bank card despite the fact that it is just a low restrict. Also, if you're refused a bank card in basic terms by means of filling out computerized varieties you've gotten a correct to invite for a man or woman to study your request
2016-09-05 13:50:26 · answer #5 · answered by ? 4 · 0⤊ 0⤋
Better check with the people you have a loan with and make sure they are set up to take a lump payment like that.
2007-07-16 12:34:29 · answer #6 · answered by mister_galager 5 · 0⤊ 0⤋