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Contributor
MyFico_704
Posts: 91
Registered: ‎06-26-2009

CC - Great FICO score but starting to have hardship.

[ Edited ]

All,

 

I have excellent credit, last time I checked my score was about 12 months ago and the average was 780, and have never missed a payment since.  Recently our cc spending has gotten out of hand and with the current job situation I don't think we're going to be able to continue to afford and make the payments. I have a cc with $33k balance and monthly payment of $1100, rate of 27% (b/c I was a few days late 3 times the past 12 months - NOT 30 day late).  I called the cc company to see if there is anything they can do. They offered to put me in a program that would close my account, reduce my payments to $650/mo and also reduce my rate to 5.5%. I have 5 years to pay this off.  

 

It's a great deal I think...BUT I don't want to close my account with them b/c I have only 7 years of excellent credit history. Closing the account, I heard, will impact my FICO score negatively.. ....Of course being late and filing bankruptcy could be worse.  It's pretty obvious that I should take the deal.....but to make sure I don't miss anything...... Can someone please tell me if I have any other options?  I don't want ruin my credit...

 

Update 2 hours after original post-- **CLARIFICATION** The original rate was 10.99%. I've never been 30 late or worse. The reason it changed is because I sent the payment in 2 days late last month and because the balance is from cash advances the default rate is 27%***  I checked my credit report yesterday and everything is fine, no lates, no additional line items that were negative. I did NOT get my score yet though.....

 

***cc is with Bank of America***

Message Edited by MyFico_704 on 06-26-2009 10:57 AM
Message Edited by MyFico_704 on 06-26-2009 11:06 AM
Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009

Re: CC - Great FICO score but starting to have hardship.

[ Edited ]

 

 

It's a great deal I think...BUT I don't want to close my account with them b/c I have only 7 years of excellent credit history. Closing the account, I heard, will impact my FICO score negatively.. ....Of course being late and filing bankruptcy could be worse.  It's pretty obvious that I should take the deal.....but to make sure I don't miss anything...... Can someone please tell me if I have any other options?  I don't want ruin my credit...


What are you talking about? You are paying a 27% rate you do not have good credit. You might have a good credit score but you have a bad relationship.

 

You cannot pay your current obligations and you went on a binge, OK you need to accept the fact that you have made some serious mistakes and button down and pay your bills.


You don't want to close an account you cannot manage? What options are there? Take the deal.

 

Being current on your payments will still show on your credit report.

 

You bit off a lot more then you could chew and now you have to pay for it. I am sorry there is no quick fix except maybe BK.

 

BK may be a good option for you, you need to explore it though

Message Edited by usmc58555 on 06-26-2009 09:58 AM
Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007

Re: CC - Great FICO score but starting to have hardship.

There is something seriously wrong with FICO not heavily penalizing a person that is carrying a significant balance on a card at 27%. They need to improve on their scoring system to make that a 100+ point hit. If their system is designed to rate credit risk, this person is an extremely poor risk. One step from disaster.

 

The good point is that the OP is looking for help and is starting to realize the problem. I can't see how FICO could work that in to their scoring system.

 

Sorry to be a bit hard on you, OP, but you need to fix this ASAP.

Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009

Re: CC - Great FICO score but starting to have hardship.


GregB wrote:

There is something seriously wrong with FICO not heavily penalizing a person that is carrying a significant balance on a card at 27%. They need to improve on their scoring system to make that a 100+ point hit. If their system is designed to rate credit risk, this person is an extremely poor risk. One step from disaster.

 

The good point is that the OP is looking for help and is starting to realize the problem. I can't see how FICO could work that in to their scoring system.

 

Sorry to be a bit hard on you, OP, but you need to fix this ASAP.


 

Interest rate is not a factor of fico.


If it was no one would ever be able to improve their credit.


The OP is looking for help way too late (but still better then never) and is trying to maintain his "Quality of life" in regards to his CLs and feeling of self worth that brings. He needs to accept that he cannot change what he is under and needs to accept a drop in FICO that if he enters good practices now willbe recoveredfrom in years.

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Frequent Contributor
wndrwmn78
Posts: 256
Registered: ‎04-16-2009

Re: CC - Great FICO score but starting to have hardship.


MyFico_704 wrote:

All,

 

I have excellent credit, last time I checked my score was about 12 months ago and the average was 780, and have never missed a payment since.  Recently our cc spending has gotten out of hand and with the current job situation I don't think we're going to be able to continue to afford and make the payments. I have a cc with $33k balance and monthly payment of $1100, rate of 27% (b/c I was a few days late 3 times the past 12 months - NOT 30 day late).  I called the cc company to see if there is anything they can do. They offered to put me in a program that would close my account, reduce my payments to $650/mo and also reduce my rate to 5.5%. I have 5 years to pay this off.  

 

It's a great deal I think...BUT I don't want to close my account with them b/c I have only 7 years of excellent credit history. Closing the account, I heard, will impact my FICO score negatively.. ....Of course being late and filing bankruptcy could be worse.  It's pretty obvious that I should take the deal.....but to make sure I don't miss anything...... Can someone please tell me if I have any other options?  I don't want ruin my credit...


 

Honestly, I would check your report and FICO through this site ASAP. Even though your credit reports may reflect a perfect payment history, your score has most likely drastically dropped due to your heavy UTI. 12 months of heavy UTI is a long time. Hopefully seeing your current score would help you realize that is a good deal to take. You'll get a ding for the account closing, but keeping it current, even while closed, will help you so much more than if you end up not b eing able to make the payments.

 

Good luck! Let us know what you decide to do...


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Super Contributor
marty56
Posts: 5,679
Registered: ‎10-06-2007

Re: CC - Great FICO score but starting to have hardship.

What you were offered is mini-DMP.  Other than increasing your monthly income, this is the best option.  Dont worry about your scores since you probably wont be applying for credit during the time it takes to PIF the account since the CCC might require you not to open any new accounts during this time period.  If this account is with BofA, that would be a safe bet and they will cancel the deal if you do.

 

Once the account is PIF, you can rebuild by adding a new account latter.  Do not be tempted to do a debt settelment.  That will destroty your credit and you might get a judgement against you as well.

 

Also if you havent done so, using a written budget is a must.

09/12/2013 FICO: EQ: 772 EX:813 TU:752
Moderator Emerita
LilMirth
Posts: 3,091
Registered: ‎08-09-2008

Re: CC - Great FICO score but starting to have hardship.

OP, your credit won't be ruined by taking the deal to close the account. From a financial standpoint, I think it'd be a wise move that will save much more of your money. Keeping more of your money (rather than losing it to interest) will allow you to pay down your overall debt much faster if you committ to a well thought out plan to get rid of it (debt). If the account is closed, it will still remain on your credit reports for up to 10 years. And, making good on paying back the debt just might endear the lender to reopening the account later.

 

I certainly understand your desire to protect your credit reports and FICO score. It's a matter of dollars and sense these days. You don't want your other lenders to take adverse pre-emptive action that will put you back in this same boat with other cards that you may be working to pay off. You don't want to pay higher insurance premiums, etc... In my mind, that's a perfectly good enough reason to take the deal so that you're not in danger of default or bankruptcy in the future-- far more potent threats than any temporary FICO hits that may result from a closed account with a balance (IF they close it with a balance).

 

Other options? 1) Increase your income. You mentioned an "our" when referencing your credit card spending. Would it be an option for either you  or your partner to get a 2nd or a 3rd job. The job market is tough right now, but if one or both of your could find something, increasing your income would be immensely helpful. 2) Can you return some of the things that you've purchases? 3) Can you sell things to raise money to pay down debt?

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Established Contributor
cartercorp
Posts: 851
Registered: ‎07-01-2008

Re: CC - Great FICO score but starting to have hardship.

Take the program.TODAY. dont wait any longer And as far as a BK that's just plain bad advice.A BK is a last you want or need...
Valued Contributor
usmc58555
Posts: 1,673
Registered: ‎02-18-2009

Re: CC - Great FICO score but starting to have hardship.


cartercorp wrote:
Take the program.TODAY. dont wait any longer And as far as a BK that's just plain bad advice.A BK is a last you want or need...

 

Some people- depending on their circumstance can heavily benefit from a BK.
Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: CC - Great FICO score but starting to have hardship.

Unless some of us are trained psychotherapists or mental health providers and have met privately with a member and formed a diagnosis, it's not our place to speculate on another member's mental status. And if we were and we did, we would be violating patient confidentiality, so there you are.

Several posts have been removed from this thread. Tough love is fine (with a little compassion, please), but do not engage in this sort of public labeling.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

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