Running the Household

Credit Soars

I want to buy a bigger house. Four children in a small house is a disaster waiting to happen. Actually, I think the disaster has already happened. With kids playing, eating, and sleeping on top of each other, our home has turned into a tornado of chaos, screaming, and mess. Getting financing has been a very difficult. There was a time when I was young, stupid, and really had no cares about my credit score. Unfortunately, your credit report haunts you for seven years. Much can happen in that time. You can finish school, get married, and start a family or any number of things that will have you worrying about your credit report. I had some old collections on my report, and many of them were reaching the 7 year mark. What I found through advice from credit consulting companies is that when you pay on a debt, the 7 year reporting begins anew. For instance, I had a $50 doctor bill that was six years and six months old. If I agreed to pay, it would show up as a new collection on my report and lower my credit score. Yes, it would show up as a paid collection, but a collection just the same. You will have creditors tell you differently in an attempt to get you to pay the debt, but I have confirmed with the credit reporting agencies that this information is correct. I contacted all of the creditors and agreed to pay them in full if they would remove the debt from my report. If they remove it, then it is like it never happened. Agreeing to mark as paid in full is not the same. I also found that not having a credit card was hurting me. I had not had a credit card since I was 19 years old out of fear of maxing it out again. I had done very well this way. Pay cash for everything. I thought this was responsible. Wrong. You must have a credit card. With a low credit score, you can only get a secured credit card. You have to pay a deposit for this type of card. But, this is what I did. I also found that my student loans were showing that I had a balance higher than my credit limit. This is because while my loans were being deferred for five years in school, they were also building some interest that put me over my limit. I had no idea this lowered my credit score. Next step, pay any amount over my credit limit on student loans so it didn’t look poorly on my report. So I paid all collectors who agreed to delete my collection from my report, opened a secured credit, and paid $115 on my student loans to get them back to the credit limit. The result: my score soared over 100 points! The whole system seems crazy to me. Open new credit cards that I don’t need, pay on student loans that are deferred, and don’t pay debt that is too old unless they agree to remove. And this is supposed to reflect well on your score? But I am now closer to buying a new home.