My Monthly progress

[taxesformuchlessinc]

This is a list of all of my debt as of November 13, 2009:

Type of debt           Amount owed    Interest rate    Monthly payment
Home mortgage       $43,807.73            6.00%             $442.66 ($130.89 is escrow)
Installment loan       $ 2,559.96            6.90%             $130.33
Prosper loan           $1,062.74             13.17%            $ 35.46
Credit Card             $1,369.87             7.90%             $ 28.00
Credit Card             $   188.32             ? ? ?                 $ 10.00
Store Card              $      0.00             ? ? ?                 $   0.00
Line of Credit          $      0.00             18.00%           $   0.00

On December 13, January 13, February 13 and so on I will update my progress.  I planned to have all of these paid off by May 31, 2010 except the mortgage.  I have been debt free excluding the mortgage 2 times.  I did it in April 2007 and then again in March 2008.  I am going to attempt to do it a third time but I'm going to leave all the credit cards and that line of credit open.  This should shoot my credit score through the roof.  Maybe it won't.  Anyways, I will keep everyone posted on my progress or failure whatever the case may be.

taxesformuchlessinc

I don't know what the interest rate is because I never carry a balance on these cards.

Mod edit: took out funny faces for readability,

[go4reward]

If you want good scores and lower rate in the future. Don't delay your payments.

[go4reward]

My first line of credit was October 2000.   I have never missed a payment since then.  This alone will not increase my credit score.  I would love to close all of those credit cards and that line of credit.

I firmly believe closing those revolving accounts would reduce my credit score more than being 2 months behind on one of my accounts.

go4reward, were you suggesting that I close all of these revolving lines of credit and continue to make my payments on time?

taxesformuchlessinc

I believe if you can reduce your revolving line of credit to less than 20% and continue make payments on time, but do not close the line of credits and credit cards, they should benefit your credit scores. Perhaps others can provide other opinions as well.

[BAEVentures]

FICO explanation follows (data compiled from About.com):

Payment history is 35% - Lenders are most concerned about whether or not you pay your bills. The best indictor of this is how you’ve paid your bills in the past. Late payments, collections, and bankruptcies all affect the payment history of your credit score. More recent delinquencies hurt your credit score more than those in the past.

Debt level is 30% - The amount of debt you have in comparison to your credit limits is known as credit utilization. The higher your credit utilization – the closer you are to your limits – the lower your credit score will be. Keep your credit card balances at about 30% of your credit limit or less.

Length of credit history 15% - Having a longer credit history is favorable because it gives more information about your spending habits. It’s good to leave open the accounts that you’ve had for a long time.

Inquiries are 10% - Each time you make an application for credit, an inquiry is added to your credit report. Too many applications for credit can mean that you are taking on a lot of debt or that you are in some kind of financial trouble. While inquiries can remain on your credit report for two years, your credit score calculation only considers those made within a year.

Mix of credit is 10% - Having different kinds of accounts is favorable because it shows that you have experience managing a mix of credit. This isn’t a significant factor in your credit score unless you don’t have much other information on which to base your score. Open new accounts as you need them, not to simply have what seems like a better mix of credit.

--------------------------------------------------------

      35% - Your Payment History
      30% - Amounts You Owe
      15% - Length of Your Credit History
      10% - Types of Credit Used
      10% - New Credit

Your Payment History Includes:

    * Number of accounts paid as agreed

    * Negative public records or collections

    * Delinquent accounts:

         1. total number of past due items
         2. how long you've been past due
         3. how long it's been since you had a past due payment

What You Owe:

    * How much you owe on accounts and the types of accounts with balances
    * How much of your revolving credit lines you've used--looking for indications you are over-extended
    * Amounts you owe on installment loan accounts vs. their original balances--to make sure you are you paying them down consistently
    * Number of zero balance accounts

Length of Credit History:

    * Total length of time tracked by your credit report
    * Length of time since accounts were opened
    * Time that's passed since the last activity
    * The longer your (good) history, the better your scores

Types of Credit:

    * Total number of accounts and types of accounts (installment, revolving, mortgage, etc.)
    * A mixture of account types usually generates better scores than reports with only numerous revolving accounts (credit cards)

Your New Credit:

    * Number of accounts you've recently opened and the proportion of new accounts to total accounts
    * Number of recent credit inquiries
    * The time that's passed since recent inquiries or newly-opened accounts
    * If you've re-established a positive credit history after encountering payment problems
    * In general, checking to make sure you aren't attempting to open numerous new accounts

[go4reward]

Wait, I thought zero balance account should be good. But I know for sure that if you keep one of your credit card current (meaning making purchases monthly and pay it on time).

[BAEVentures]

It is better to use your card and pay the balance in full monthly, than it is to leave it at $0 and never use it. The transaction amount, ie what you are billed on your statement, reports to the credit agency everytime your creditor sends you a bill (is the case with most anyways) after you pay that statement in full, it will show as I you had a $1000 and now that balance is $0 showing creditors that your are capable of managing your credit use. If you fail to use your card at all, many creditors will assume you don't even know you have it, and will ignore it. Also, it shows as available credit to you, and some creditors are concerned when available credit limits reach an amount greater than your gross annual income. My bank explained the latter to me recently as one of my cards had a $90,000 limit and I only make roughly $50,000 a year. I had them drop the limit back down to $15,000 =). 

[go4reward]

Looks like you are making good progress on your loans. Keep it up, your credit score will get better over times.

[foofiter]

That is a fat refund. Personally I would look at why it was so big and adjust my withholding next year so I don't have to give the government a free loan.

Only other tip I can provide is to keep one of the credit cards open. The one with the longest history. Even if you cut up the card and don't use it you will still maintain your credit history and improve your available credit ratio. It is also good to have in a bind such as a lost/stolen debit card and you need gas or food.

That's my 2 cents. Good luck on the path to being debt free. I am working on this myself and you are much better off than I am currently!

- Foo

[deskguy]

 taxesformuchless - do i have this right? you pay no taxes and get $6k back in refunds? well, not refunds since you didn't pay in the first place.

 as an old retired fart on a meager pension and social security that amount to less than you make, i pay taxes so you don't have to.

 i was tempted to say, 'is this a great country or what?' but i'm not so sure.

 deskguy
 

[go4reward]

You are heading in the right direction, keep up the good work. Clear off the debts first before something luxurious.

[taxesformuchlessinc]

The End