Credit report - do I have to wait it out?

KTdidit · August 2013

Hi ladies, I mostly lurk here but I've asked a question here and there and you have all been really helpful.

DH and I have made up a budget that (mostly) works for us. Exceptions have been that he spend waaaay too much money on my birthday weekend and last minute entertainment (fairs, concert). But for the most part we are in a much better financial situation than even just 6 months ago.

I have been keeping an eye on both of our credit reports, we are trying to do everything we can to get our scores up to buy a house in about 2 years. I see on his that a lot of the negative factors are that 1) he doesn't have a credit card (no real solution to this yet, any cards he qualifies for have initial fees and monthly fees), 2) he has items in collections (we are paying them off as we can), 3) in the past he was late in paying things and 4) he has multiple inquiries.

Is there anything we can do about his past late payments? Or do they "fall off" eventually? Same for the inquiries?

I'm desperate to get things fixed as soon as we can so that he can have a year or so of consistent good credit behavior.

Apollo11235 · August 2013

Unless there are any errors on his report, there's not a lot you can do beyond waiting - of course, while making all your payments on time.

His late payments will eventually fall off (maybe 5 years? I think it depends on the bureau), but the more on-time payments he makes in a row, the better. The inquiries are only kept for 2 years, I believe.

If he can handle it responsibly, it's probably a good idea to get his name on a credit card (a new one or one of yours) to build his credit. If you do this now, the inquiry won't be a problem for a mortgage in 2 years.

moonprincessd · August 2013

Remember looking at your credit reports also lowers your credit scores. So don't look at them more than once a year!

Other places who look at them also lower the scores. My husbands score got lowered because we updated our contract with Verizon and they looked at it and then we bought a house, and our loan agent sent us a copy of our reports and on there is said something along the lines of too many credit report look ups. It didn't drastically lower it, but we have really good credit scores.

If you have bad scores, you'd want to avoid that. Even getting a credit card can lower it, canceling one can lower it, having too many cards can lower it. Credit scores are a REALLY tricky business.

Basically all you can do now is pay of payments on time.

MommyLiberty5013 · August 2013

To clarify something...if you have signed up for a credit monitoring service (pay a monthly fee to do so) that reports on all three bureaus for you, and sends you alerts if your credit changes, this does not lower your score. The inquiries AKA shopping for credit, are what lower the score. A simple product that watches your credit for you does not lower your score.

To raise his score - avoid attempts to get him credit. Stop applying for new CCs...resist the temptation to think, "Oh, maybe now he'll get approved."

Also, make on time, in full payments. Every single month with no exceptions.

I have prior lending/banking experience and I have seen numerous credit reports with payment histories. Late or slow payments do eventually fall off the report. However, that takes about 2-3 years.

I agree that getting his collection items paid is important. And, the sooner the better. As long as you have some savings set aside for emergencies already, I would put all extra money toward getting these collections paid...this might mean cutting things in the budget like cable, fancy phones, alcohol, eating out and other non-essentials.

KTdidit · August 2013

MommyLiberty5013 said:

To clarify something...if you have signed up for a credit monitoring service (pay a monthly fee to do so) that reports on all three bureaus for you, and sends you alerts if your credit changes, this does not lower your score. The inquiries AKA shopping for credit, are what lower the score. A simple product that watches your credit for you does not lower your score.
To raise his score - avoid attempts to get him credit. Stop applying for new CCs...resist the temptation to think, "Oh, maybe now he'll get approved."
Also, make on time, in full payments. Every single month with no exceptions.
I have prior lending/banking experience and I have seen numerous credit reports with payment histories. Late or slow payments do eventually fall off the report. However, that takes about 2-3 years.
I agree that getting his collection items paid is important. And, the sooner the better. As long as you have some savings set aside for emergencies already, I would put all extra money toward getting these collections paid...this might mean cutting things in the budget like cable, fancy phones, alcohol, eating out and other non-essentials.

Thank you for clarifying! He signed up for freecreditreport.com and we sign in every so often, mostly when we get an alert that something has changed.

We haven't actually applied for any credit cards for him, I've just reviewed the offers he has gotten in the mail and they aren't good so I figured that was all he really qualified for. If I add him to one of my credit cards will that really help him?! (he is so bad with money he has even admitted he can't be trusted with a CC) I have one with a $1000 limit and one with a $5k limit, would one be better for him than the other?

MommyLiberty5013 · August 2013

kaholland4 said:

MommyLiberty5013 said:

To clarify something...if you have signed up for a credit monitoring service (pay a monthly fee to do so) that reports on all three bureaus for you, and sends you alerts if your credit changes, this does not lower your score. The inquiries AKA shopping for credit, are what lower the score. A simple product that watches your credit for you does not lower your score.
To raise his score - avoid attempts to get him credit. Stop applying for new CCs...resist the temptation to think, "Oh, maybe now he'll get approved."
Also, make on time, in full payments. Every single month with no exceptions.
I have prior lending/banking experience and I have seen numerous credit reports with payment histories. Late or slow payments do eventually fall off the report. However, that takes about 2-3 years.
I agree that getting his collection items paid is important. And, the sooner the better. As long as you have some savings set aside for emergencies already, I would put all extra money toward getting these collections paid...this might mean cutting things in the budget like cable, fancy phones, alcohol, eating out and other non-essentials.

Thank you for clarifying! He signed up for freecreditreport.com and we sign in every so often, mostly when we get an alert that something has changed.
We haven't actually applied for any credit cards for him, I've just reviewed the offers he has gotten in the mail and they aren't good so I figured that was all he really qualified for. If I add him to one of my credit cards will that really help him?! (he is so bad with money he has even admitted he can't be trusted with a CC) I have one with a $1000 limit and one with a $5k limit, would one be better for him than the other?

Bolded. To answer your first question: Will it help his credit? Yes, it probably will. HOWEVER, I sounds like he isn't ready to be added if even now he says he cannot be trusted and has poor money management skills and restraint. For this reason, I would not add him. All it takes is one little slip up for him to damage your CC and then your credit will be hurt too.

Until he can be trusted by you and by himself to behave wisely with cash and/or a debt card, he should not use credit. Let him prove his credit worthiness by using non-credit means of spending money. If he can do that, than you two should explore the credit route for him.

This may mean putting off buying a home for longer than 2 years. Or, it may mean that you get the mortgage loan in your name/income/credit only.

Mama-Bear · August 2013

Definitely make sure you have no collections out there, even old. When DH was still in college there was an administrative error, they signed him up for 2 sets of classes in the same semester (same exact classes) so the computer charged him for two. We didn't learn this until we tried to purchase our first home and it was out there. We had to get a letter from the school to take to our lender stating that it was an error while we tried to get it cleaned up on his report (they absolutely wouldn't approve a loan with any collection). I'm not sure if it got put back on or if we didn't get it completely off because when we went to purchase our second (current) home we had to do the same thing again.

Mama-Bear · August 2013

Definitely make sure you have no collections out there, even old. When DH was still in college there was an administrative error, they signed him up for 2 sets of classes in the same semester (same exact classes) so the computer charged him for two. We didn't learn this until we tried to purchase our first home and it was out there. We had to get a letter from the school to take to our lender stating that it was an error while we tried to get it cleaned up on his report (they absolutely wouldn't approve a loan with any collection). I'm not sure if it got put back on or if we didn't get it completely off because when we went to purchase our second (current) home we had to do the same thing again.

KTdidit · August 2013

MommyLiberty5013 said:

kaholland4 said:

Thank you for clarifying! He signed up for freecreditreport.com and we sign in every so often, mostly when we get an alert that something has changed.
We haven't actually applied for any credit cards for him, I've just reviewed the offers he has gotten in the mail and they aren't good so I figured that was all he really qualified for. If I add him to one of my credit cards will that really help him?! (he is so bad with money he has even admitted he can't be trusted with a CC) I have one with a $1000 limit and one with a $5k limit, would one be better for him than the other?

Bolded. To answer your first question: Will it help his credit? Yes, it probably will. HOWEVER, I sounds like he isn't ready to be added if even now he says he cannot be trusted and has poor money management skills and restraint. For this reason, I would not add him. All it takes is one little slip up for him to damage your CC and then your credit will be hurt too.
Until he can be trusted by you and by himself to behave wisely with cash and/or a debt card, he should not use credit. Let him prove his credit worthiness by using non-credit means of spending money. If he can do that, than you two should explore the credit route for him.
This may mean putting off buying a home for longer than 2 years. Or, it may mean that you get the mortgage loan in your name/income/credit only.

If I were to add him to my CC, he would NOT get a physical card. It would be forcredit score purposes ONLY. He also doesn't have a debit card to our joint checking account.

He has a prepaid debit card right now that he is using, to have his own spending money and to learn to get better at not blowing all of it. I have faith that this sytem will work, eventually. It just atkes him a while to learn

Erikan73 · August 2013

My husband sounds like your husband, We've been working since last December on his credit. We paid off 3 credit cards, successfully disputed some items that were incorrect on his report and started working on paying off his debts. We have payment arrangements with those companies. I make sure that those payments and any active bills (car payment) are made on time to show that the late payment issue a thing of the past. In less then a year we've raised his credit score 80 points. He lives only with his debit card which only has his allowance (I know sounds childish but can't think of a better name) available on it, once it's gone, he is done until next payday. For the record, I have a weekly allowance to. We give ourselves each so much per paycheck to do with whatever we want (golf, shopping, lunch, etc) and not have to answer for that money.

kyrgyzstan · September 2013

moonprincessd said:

Remember looking at your credit reports also lowers your credit scores. So don't look at them more than once a year!

Other places who look at them also lower the scores. My husbands score got lowered because we updated our contract with Verizon and they looked at it and then we bought a house, and our loan agent sent us a copy of our reports and on there is said something along the lines of too many credit report look ups. It didn't drastically lower it, but we have really good credit scores.

If you have bad scores, you'd want to avoid that. Even getting a credit card can lower it, canceling one can lower it, having too many cards can lower it. Credit scores are a REALLY tricky business.

Basically all you can do now is pay of payments on time.

The bolded is not true. You do not get a hard pull from checking your own credit.

moonprincessd · September 2013

WishIcouldbeinthe'stan said:

moonprincessd said:

Remember looking at your credit reports also lowers your credit scores. So don't look at them more than once a year!

Other places who look at them also lower the scores. My husbands score got lowered because we updated our contract with Verizon and they looked at it and then we bought a house, and our loan agent sent us a copy of our reports and on there is said something along the lines of too many credit report look ups. It didn't drastically lower it, but we have really good credit scores.

If you have bad scores, you'd want to avoid that. Even getting a credit card can lower it, canceling one can lower it, having too many cards can lower it. Credit scores are a REALLY tricky business.

Basically all you can do now is pay of payments on time.

The bolded is not true. You do not get a hard pull from checking your own credit.

oops, you're right, it just looks bad. Companies can see how many times you checked, and if they notice you checking it a lot, well that doesn't look good...

kyrgyzstan · September 2013

moonprincessd said:

WishIcouldbeinthe'stan said:

moonprincessd said:

Remember looking at your credit reports also lowers your credit scores. So don't look at them more than once a year!

Other places who look at them also lower the scores. My husbands score got lowered because we updated our contract with Verizon and they looked at it and then we bought a house, and our loan agent sent us a copy of our reports and on there is said something along the lines of too many credit report look ups. It didn't drastically lower it, but we have really good credit scores.

If you have bad scores, you'd want to avoid that. Even getting a credit card can lower it, canceling one can lower it, having too many cards can lower it. Credit scores are a REALLY tricky business.

Basically all you can do now is pay of payments on time.

The bolded is not true. You do not get a hard pull from checking your own credit.

oops, you're right, it just looks bad. Companies can see how many times you checked, and if they notice you checking it a lot, well that doesn't look good...

http://money.msn.com/credit-rating/7-nasty-credit-myths-that-will-not-die-weston.aspx #2

No, that's not true either. The only pulls companies can see are hard pulls.

moonprincessd · September 2013

fembrist said:

WishIcouldbeinthe'stan said:

moonprincessd said:

WishIcouldbeinthe'stan said:

moonprincessd said:

Remember looking at your credit reports also lowers your credit scores. So don't look at them more than once a year!

Other places who look at them also lower the scores. My husbands score got lowered because we updated our contract with Verizon and they looked at it and then we bought a house, and our loan agent sent us a copy of our reports and on there is said something along the lines of too many credit report look ups. It didn't drastically lower it, but we have really good credit scores.

If you have bad scores, you'd want to avoid that. Even getting a credit card can lower it, canceling one can lower it, having too many cards can lower it. Credit scores are a REALLY tricky business.

Basically all you can do now is pay of payments on time.
The bolded is not true. You do not get a hard pull from checking your own credit.
oops, you're right, it just looks bad. Companies can see how many times you checked, and if they notice you checking it a lot, well that doesn't look good...
http://money.msn.com/credit-rating/7-nasty-credit-myths-that-will-not-die-weston.aspx #2

No, that's not true either. The only pulls companies can see are hard pulls.

+1. yOU CAN CHECK YOUR OWN CREDIT AS MANY TIMES AS YOU'D LIKE DURING THE YEAR WITHOUT PENALTY, BUT ARE ONLY ENTITLED TO ONE FREE REPORT (darn it, just realized cap lock was on, sorry) from each of the three credit bureaus. If you want more than one, you'd have to pay for any additional one. Views to your own credit report do not show up as inquiries that may affect your credit rating (or "hard" pulls). Higher numbers of hard pulls (by other parties) adversely affect your rating. As time goes on, the sting from an inquiry lessens, until it finally falls off two years from the date of inquiry.

*takes a deep breath

I'm just going off of what my husband told me and he knows more about credit than I do. Anyone got any better sources than MSN?

Hudson_Hawk · September 2013

I've been using the Credit Karma app to keep on top of my credit score and prioritize targets to improve my credit. Its a credit monitoring service (and it's free) and is somewhat like Mint.com wherein it will pull your balances into your dashboard and give you reminders on payments, etc. My score has jumped 12 points in two months because of using the app. I was able to identify two delinquencies that for some reason didn't show on the most recent report I had pulled. One was from when I had my son and the other I'm still researching and will likely dispute because I'm hitting brick walls trying to contact them. The app will show you letter ratings for how you're doing and will put your progress into easy to understand metrics (ex. you've reduced your overall credit utilization by 8%), which you can compare to the progress you're seeing in building your score up. It also has a score simulator which shows you which actions have the biggest impact on your score (like shopping for credit).

If you really want to build your husband's credit then I agree with the PP's approach of adding him to your oldest and most up to date card. But don't give him the physical card. OR, consider a secured card. Yes you have to put in money up front, but the limit will be low and there's little he can do to get into trouble. After several months of on time payments they'll issue an unsecured card. But if there's a way to build his credit without adding an additional card into the mix then that's the way I'd go.

kyrgyzstan · September 2013

moonprincessd said:

I'm just going off of what my husband told me and he knows more about credit than I do. Anyone got any better sources than MSN?

Do you want WSJ to do an article on it or something? I also found the info on MyFico. But instead, the next time your husband lets a credit report be checked in your house, look at the section for inquiries. It will either say inquiries visible by others and inquiries visible to you, or only show the hard pulls.

Hudson_Hawk · September 2013

^this. Using MSN for gospel money advice is like writing a research paper using facebook as your primary reference. You can easily google a topic, but then look for legitimate sources in the results. Or google the names of experts in the credit/finance industry and look for pieces that they've written or contributed to.

moonprincessd · September 2013

Hudson_Hawk said:

^this. Using MSN for gospel money advice is like writing a research paper using facebook as your primary reference. You can easily google a topic, but then look for legitimate sources in the results. Or google the names of experts in the credit/finance industry and look for pieces that they've written or contributed to.

Exactly. I want a credible resource, MSN is not, or at least my professors in college wouldn't consider it to be... I guess I'll have to do the research myself.

emily1004 · September 2013

The MSN article on inquiries is accurate. My source: I work for a consumer law firm and we deal with the credit reporting agencies everyday. If anyone wants more information or is confused send me PM.

kyrgyzstan · September 2013

moonprincessd said:

Hudson_Hawk said:

^this. Using MSN for gospel money advice is like writing a research paper using facebook as your primary reference. You can easily google a topic, but then look for legitimate sources in the results. Or google the names of experts in the credit/finance industry and look for pieces that they've written or contributed to.

Exactly. I want a credible resource, MSN is not, or at least my professors in college wouldn't consider it to be... I guess I'll have to do the research myself.

Well, yeah. You are. Like I said, look at your credit report section on inquiries. And would your professors in college take your husband as a source? Lol.

short+sassy · September 2013

Alas, I know FAR too much about credit scores and how they work because I had to learn. Generally speaking, late payments are dropped after 7 years, though the longer ago it was the less it counts. But check that! They don't always drop off after 7 years and at that point you would need to write a letter to the credit agencies to have it dropped. Quite frankly, you can also always claim those are errors and ask to have them removed. If a company doesn't care or doesn't respond in time, the late payment will be dropped off anyway, even if it was valid. Inquiries are supposed to be dropped off after 2 years, but always check to make sure they are. Inquiries actually don't affect a score that much anyway, but every little bit counts.

The collections are what REALLY pull a score down. And paying them off doesn't even help that much, because your credit report will still show that debt went to collection. It only changes it to a "paid" collection. Banks generally require all collections are paid off before they will underwrite a home loan. Collections, whether paid or unpaid, drop off after 7 years. BUT paying on a collection starts that clock over again. So, if he has some collections that are nearing the 7-year "expiration", don't even pay those. I hate to tell people not to pay their bills but, in that case, it could actually hurt you.

Putting him on your credit cards is an excellent way to raise his score, especially if he doesn't already have a "revolving, ie credit cards" type of credit. The more "types" of credit a person has, the better their score is. And the older their lines of credit are, the better. He will basically get all the same "goodness" you have from having those cards in long-term good standing, even though he was just added on. Just DON'T give him an actual card, if he can't be trusted with it. I'm sure you can even add him to your account without giving him signing authority.

Another way to boost credit scores and do it fairly quickly, is keep your credit card utilization rates below 25-30% (preferably 25%). What that basically means is keep your balance below 25% of the credit limit.

hoffse · September 2013

OP I skimmed some of the posts so I'm not sure if anybody has mentioned this, but freezing your credit might be a good option for you. Every state has passed laws permitting this. I would suggest doing whatever you want to do by way of adding him to your accounts (though like PP's mentioned be careful with that), and then I'd freeze your credit and his credit for the next couple of years until you're ready to buy a house.

If you aren't sure what that is, it's basically a way to prevent people or companies from extending you credit without your permission. The credit bureaus put a freeze on your credit account, and you have to submit a PIN that they provide along with all your personal info to temporarily or permanently lift the freeze in order to get new loans/credit. If nothing else, it blocks random, soft pulls on your credit and you will stop getting as much junk mail with credit cards that you are "pre-approved" for. It's also a great way to help prevent identity theft because thieves won't be able to open new credit under your or your husband's SSNs without the PIN. You can still view your credit score, etc. with a credit freeze. You just can't get new credit, and outsiders can't "inquire" into your credit while it's frozen.

The only really important thing about the whole process is to NOT lose the PINs - they are issued by the various credit bureaus and you won't be able to unfreeze your credit when you need it without the PINs.

Also to note: some states have a small (usually less than $10) fee to freeze, unfreeze, etc. your credit for each bureau. It varies by state, but I think the cost is worth it.

H and I both keep our credit frozen 99% of the time. It usually ends up taking me about 15-20 min to unfreeze each bureau, and that's inconvenient enough that we only do it when we really need to get new credit for some reason. I also don't like paying the fee to unfreeze it unless I have a good reason for it. So not only does it prevent pulls on your credit and helps deter identity theft, it also makes us less likely to apply for random credit cards just because we run into one that sounds like a deal. You might find it to be useful for you and your H while you're getting back on good financial footing to help you discipline yourselves with credit.

sarahtrg · September 2013

@hoffse - who does one contact to freeze their credit?

hoffse · September 2013

You contact the credit bureaus directly. Links below:

Experian: https://www.experian.com/freeze/center.html

Equifax: https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

Transunion: http://www.transunion.com/personal-credit/credit-disputes/credit-freezes.page

Again, be sure you're done with all the credit stuff you need to do for awhile before freezing them because it can be a PITA to lift. For some reason, I can lift online at Transunion in about 30 seconds, but the other two always require me to call in and talk to somebody. They will ask you a bunch of security questions (ie: which credit card did you open in March of 2008 and what is your credit limit on that card?) to make sure you are the person you say you are. Also note that if you move while your credit is frozen you sometimes have to put in an old address to unfreeze them - the credit bureaus do get caught up eventually but only after creditors have reported your new address to them. Just know that updating your accounts can be slow.

All of this adds to the inconvenience - but it's ultimately worth it for the security IMO. Example: my purse was snatched out of my arms in downtown Atlanta back in October. I had JUST started a new job so I had my social security card in my wallet (lesson learned: never be lazy about putting it back in a safe place once you're done with it). While it was a pain, I wasn't worried about the guy opening new accounts under my name, even though he had pretty much every piece of personal info about me. That one experience made all the inconvenience that comes along with being cautious worth it.

And I can't stress this enough: put the PINs they send you in a safe place and whatever you do do NOT lose them. I keep ours in the same file as our birth certificates.

sarahtrg · September 2013

Thanks @hoffse. What do you (and anyone else with input) think are the MUST DO's financially before freezing your score(s)?

hoffse · September 2013

Nothing is a "must do" - but if you are planning on buying a car in a few months or are contemplating getting a new credit card soon I would just take care of those items before you freeze it. It will save you some trouble.

I would say H and I unfreeze ours about once every two years or so, usually for a week at a time. That gives us enough time to request a loan, get a new credit card, etc. before our credit automatically freezes again. If applying for a mortgage I might leave it open a little longer to give the bank time to pull your credit. I think the next time we will be unfreezing our credit is next fall/winter to buy H a car. We will probably join a credit bureau and open an additional Fidelity AmEx in his name at the same time for business expenses (best overall rewards credit card out there, by the way - 2% back on everything that automatically gets dumped in our retirement accounts). Anyway, you see what I mean. 98% of the time you don't need your credit unfrozen. So when you do unfreeze it on those rare occasions, you might have another errand or two that you want to get taken care of at the same time.

Note that you can CLOSE credit cards with frozen credit - you just can't open them. You can, however, open bank accounts or other accounts that don't require a credit inquiry.

Credit report - do I have to wait it out?

Re: Credit report - do I have to wait it out?

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