08-26-2012 10:55 AM
This is my first post here on the myFICO forums! I have officially decided that I want to take control of my credit and decided this would be a good place to stay focused and gain inspiration via others success stories. I turned 18 in March 2008 and the big economic meltdown didn't occurr until October of that year, so credit was still fairly easy to access. Within that first year I opened an array of credit cards - First Financial, Citi, HSBC Orchard, and Juniper - and took out $15k in private student loans from Chase (no cosigner necessary). My Citi card alone started off with a credit limit of $2k and within 6 months had been raised to almost $4k. Despite the fact that college can be expensive, I also went through an episode of depression which resulted in compulsive spending and a failure to recognize or appreciate any potential consequences that may arise. By the time I hit 19, my cards were all maxed out and I was extremely behind on all of them, regularly being called by collecting agencies. About 2 years ago I finished settling all of my original credit cards. I knew at the time that settling them was going to come at a cost, but at the time I just wanted to start fresh and the relief that came with being done with them seemed worth it.
Today, I am 22 years old and my goal is to have an easier time accessing credit by the time I finish college, which will be in about 2 years. At that point I will have my bachelor's degree and ideally I will go directly onto graduate school. I currently have an Equifax score of 535 and right now my goal is 750, though I will be happy with any level of improvement.
Current Credit Situation:
Direct Federal Student Loans - $21,800 + Interest
Chase Private Student Loans - $15,000 + Interest
BB&T Auto Loan - $10,000 @ 16.49%
Credit One - $272 (Credit Line: $300)
Capital One (secured) - $0 (Credit Line: $200)
Total Debt: ~$46,500
Clearly, I have a high amount of debt (mostly student loans) and a bad history of making payments, along with the multiple settled accounts from two years ago. I purchased my car in January (2012) and while I know the interest rate is extremely high, I figured it would help improve my credit overall and it was literally the only option I had in regards to financing a vehicle without a cosigner.
I simply do not know where to even begin! Part of me feels hopeless and that there's no way I'm going to be able to do much of anything to improve my credit until I finish school and have a regular full-time job, but ideally I'd have it improved before then, because eventually I'll need to be able to get an apartmetn and/or have to replace my car.
Any advice would be greatly appreciated!
08-26-2012 01:12 PM
Start goodwilling those settled accounts. pay everything from here on in on time. Get a pocket calender and mark all the boxes for the next year when a payment is due. Then when you make payment put an X through the box. A little caveman but it works for me and I have a clear mind.The student loans are there multiple fees for being late or are they still in deferrement?? Also try to get on parents or relative or goodfriend's credit card as an AU they must have a clean history no baddies associated with the account and the older the CC is the more it will improve your AAOA. Also google student loans or ask community if they know of any programs that reduce interest. What are the interest rates? If they are high maybe if we get your score up you could refi with better terms. Also join a credit union. What state are you in?
08-26-2012 02:55 PM
Thank you for the reply annielorie!
What does goodwilling my settled accounts entail doing?
The student loans are still in deferrment, as I'm still going to school full-time and have about a year and a half left until graduation. I want to say the interest on the federal student loans is around 6-7% and the private student loans around 9%, but I am not 100% certain. I'm considering paying a small amount to the private student loans now, since those along with my auto loan are probably my most expensive debts. Ideally, I would definitely like to pay off my car ASAP, as I still need to pay off about $1,500 of the principle balance until I'm at the point where the cars value is equal to or more than what I owe on it.
I'm pretty much on my own when it comes to anything related to finances, as my parents are uncomfortable putting my name on anything due to my credit history thus far. So, anything I do will have to be done on my own!
I'm located in Virginia.
08-26-2012 03:59 PM
Definitely pay and get your util down on the CC. Since the student loans are in defferement, concentrate on paying the auto loan off. That's a high percentage rate and will save you money. After that start paying down those student loans. You seem to have a good idea of where you are in your current finances so good luck to you!.
08-26-2012 04:03 PM
08-26-2012 04:04 PM
08-26-2012 04:40 PM
That's true Shogun, the auto loan is probably what I should focus on first, as it is also the loan that would have a more immediate impact should anything go wrong vs the student loans which are deferred.
It's been a while, so I don't know exact numbers, but I settled 4 CCs - most were around $500-800 and were settled for about half those amounts. The Citi card was at around $3k, settled for around $1,200. I still owe $10k on my car, no penalty for early payment, not exactly sure how many payments I have left.
One of the biggest reasons I'd like to begin this process is because I've been ignoring just how much debt I've taken on and it wasn't until I needed to finance a car back in January that I felt the immediate impact of having bad credit. On one hand discovering how much debt I have has been a bit of a downer, but at the same time I also have a sense of relief now that I feel like I'm beginning to gain control of my finances, even if the first step is simply knowing how much I owe.
08-26-2012 07:04 PM
Responsibility is the key. And I found that making myself goals, small steps, helped to keep from getting overwhelmed. Take you a piece of paper and state your goals and a sensible time frame. I did ths and found that my real goal was trying to beat those goals which I did. It really gives you a good view of your situation and you can see your progress which makes you want to try harder.
08-26-2012 08:55 PM
Right. I think one of the reasons it has taken me so long to really address this and actually do something about it, is because I haven't really even known where to start. For example, how much should I be using to pay down debt vs how much should I be setting aside in case of unexpected expenses? I have a tendency to spend what I earn, whether that be on bills or day to day expenses. I'm also not entirely sure what a realistic timeline. Also, my debt-to-income ratio won't be improving anytime soon, so how much will that impact it?
Thank you again for the advice!
08-26-2012 09:05 PM
Budgeting 101 I assume would apply here. Everyone's situation is different of course. See if there are ways to increase your income, even if just a little bit. Work overtime if you can, if you have stuff just laying around, can you sell it for something? Every little bit helps Use the snowball technique, after you pay one bill off, take what you were paying on that one and concentrate on the next one. You'd be surprised at how fast you can pay somethings down this way.