Another thing on the 401(k) loan. Remember that 401(k) contributions are pre-tax. Any money that you use to pay back a 401(k) loan is money that has been taxed. Later when you start to draw on your 401(k), the cash is taxed on the way out. Basically the money you pay back for the loan ends up being taxed twice. This does not mean that a 401(k) loan is always a bad idea. What would you rather do, pay up to 23% interest to a bank or about 5-10% interest to yourself? Any money you loan out of your account is no longer working for you in funds or whatever. Given the performance of the markets in recent years, a higher interest 401(k) loan might not be a bad idea. ;)

I too like the 0% interest balance transfers if you can find an agreeable deal. Remember to cancel old cards though. What you call "available credit", creditors call "potential debt". It ain't the best idea to have a ton of cards around. Even if you cancel a card, they hang out on your credit report for quite a while.

When we arrive to the US, the credit thing was a major headache...we naively thought that if you had a good salary and no debts, it was easy to get a credit (say for a car)...Nah...no credit history, no credit...OK? so how do I get one? We even tried to get a store card, buying a couch, paying $499 first, and the last dollar the next month...Nah!

Anyway, now is fine...mortgage, car etc...How do you know you have too much credit? Obviously, when you can't pay, or when you can only stick to the strict minimum payment (that you then pay in 40yrs!)...
are there rules of thumb?

For obvious reasons, I need to remain anonymous. My husband owns a business. He started it years ago. Several years ago, I started working with him. We experienced a very severe cash crunch. We decided to "save" his credit, and paid all of his debt in a timely fashion. My credit rating got destroyed in the process, and I have quite a bit of debt to pay off. Two credit card companies sent my accounts to collection agencies. The bank closed down a bank account of mine, as I was overdrawn, and did not pay back the overdrawn amount. They sent my account to court. I paid off that one. However, I have not paid off the credit card accounts for several years. At the end of it all, my husband's credit rating is excellent. Mine is awful. But the good news is that we are now making lots of money with the business, with lots of extra cash. I am now in a position to pay off all of my debt. What should I do to repair my credit rating? What can I negotiate with the collection agencies / credit card companies that would accelerate the restoration of my credit rating. I.e. if I pay the full amount owing, is there anything they can do to repair my credit rating? The collection agencies have offered to let me write off the debt for about 80% of the full amount. Should I take them up on their offer? At least I'm in a position to pay off everything now.

is to never buy anything that depreciates in value on credit. Real estate, education, and businesses (should) appreciate and can be put on credit. Cars, cashmere, and carbon depreciate and should be purchased with cash.

There is lots of advice out there for proper debt ratios, but my rule of thumb serves me well.

Rich

IMO, if you can get a better deal for yourself with a loan from your credit union this wouldn't adversely alter your credit to any large degree.

Yes, the length of time you have been a customer does have relevance in credit reporting. But if you close the accounts they don't go away. They stay on your credit report for years and having that decade+ paid as agreed history will continue to help you.

anonsusie: There is no quick fix for your credit rating. The delinquencies, collection accounts etc are going to stay with you for a long time. Having said that, the best way to help your credit is to pay 100% of what you owe. By paying the full amount owing you demonstrate that even though you went through a few bad years you ultimately made sure your creditors received the full amount due to them. I would not recommend taking the collection agencies up on their 80% offer. This will show up on your credit report as something like:

"Collection account- settled for less than amount due."

and this is much worse than:

"Collection account- Paid."

I would pay everything off now.

Getting back to Anonsusie question, "What should I do to repair my credit rating"? What about these services that say they can help restore your credit ratings by challenging and having unfavorable remarks removed from your report.

Every consumer should review their credit report every year or so to ensure all their trades are reporting accurately. If there are inaccurate unfavorable trades then you can discuss and fix them with the creditor. You don't need to pay an outside company to do this. If you have accurate unfavorable trades there is no way to remove them...only pay them off 100% (if applicable) and focus on building good credit.

But aren't you paying transfer fees for the balance? As a % of the transferred amount? If not, how are you avoiding them?

As a general rule, financial services are there to liberate you of your money when you're too lazy, or foolish to figure out where the catch is. There are exceptions I'm sure.

Rule one: Don't ever buy something with a credit card unless you have the money to pay it off before accumulating interest. If you treat a credit card as a loan account, you're likely going to be chasing debt forever.

Rule two: If it sounds complicated, chances are it's hiding the real cost or risk in the details.

Rule three: If it sounds too good to be true........

If you've got multiple debts accumulating interest, identify what debt is costing you most and prioritise closing that out, then move onto the next worst and so on. Pay as little as you can to service the others until it's their turn. If you can consolidate your debt by getting a lower interest, lower risk loan to pay off the high interest stuff, do it. If you can't do the maths yourself, or get someone (not trying to sell you something) to do it for you, it's very possible you'll just make things worse. Remember rule 2.

I love these 15+ year thread revivals!

Maurice

You can do a lot of rolling in 15 yrs...

History repeating

Yikes!

It was top of my feed. Wasn't me that revived it - I blame Michaer27 ;)

I wouldn't close any accounts outright if I were you. Doing so will increase your debt/income ratio and lower your credit score. Simply stop using the high interest cards and transfer any balances to the card you have that has the lowest interest rate. Another suggestion is calling and requesting credit limit increases. While you might take a little ding to your score in the short term, your debt/income ratio decreases and will help our score.

That being said......you'll shoot yourself in the foot if you increase your credit card spending after consolidating them or using the limit increases!

Wow, I guess it was me. But I don't know why. It just showed up in my feed and I didn't check the date. Guess I can now claim to be a paleontologist as well as an animal behaviorist. Or resurrectionist.

Feel free to let the thread die, again.