WTF? Credit score of 550

[estet_5]

Suze is not worth the Charmon Ultra I wipe my you know what with.  If you want some really good information go to www.creditboards.com  That site is basically people that all talk about credit.  Some of those people have 800 scores and up to 20 cards with hundreds of thousands of dollars in available credit.  You can read the forums to see how people have recovered.  There are always people with 500 level scores that give a walk through of how they did it and got into the low 700s or something.  I found it useful for a young person to see what not to do, and how to get out if something happened.

[lawdude]

One thing I did that helps is I called each credit card company and asked them to lower my interest rate.  You would be surprised how many CC companies will lower it, and quite significantly!

Also, I paid $35 per month for a service to clean up my credit, and it improved my credit score quite a bit.  I did that before I started law school, in early 2003.  I think the site is lexingtonlawfirm or something.  All they really do is have you mail them your credit reports, and they send letters to each and every "bad" report, denying your liability.  Often, those companies don't respond in time to the letter, and it is taken off your record.

[NeXD]

Do not close any credit card accounts.  Pay them off, yes.  Cut up the cards, or put them away permenantly, yes.  Do not close the accounts.  A large chunk of your FICO score comes from your credit history and your amount of available credit to used credit ratio.  You close a card you erase history and you make the overall percentage of your debt to available credit higher. 

Plus if you pay of a card you create leverage.  Pay off one card and THEN call and ask to close the account.  They will transfer you to a person in their retention center who will offer you a balance transfer deal.  Get a low rate for the life of the balance transfer.  If you ever mess up (make a payment even a day late) your rate will skyrocket.  Then you just call the card you just emptied and transfer back.  The companies will negotiate with you if you can free up one card. 
I have 7 cards.  They used to all carry balances.  Now only 4 do, as I consolidated.  All at 4% or lower for the life of the balance transfer.  All are set up for automatic deposit from my bank- so I can't be late.  The other three which are open keep my available credit high.  These cards are not in my wallet, they are in a drawer.  My credit score even though I have limited income and way more debt than you is 718.  I get incredible low balance tranfer offers in the mail every week and they just keep raising my credit limits.  Of course this system requires discipline, but it saves you the most money in the end.     

If you haven't done this already, collect all your statements.  On one piece of paper create a spreadsheet with the name of each card, the minimum payment, the amount you paid last month, the percentage rate, the amount of finance charges you paid last month, the total balance and the total available credit.  This information all in one place is very powerful.  It will show you the exact amount you owe.  It will show you how much it costs you each month to owe all of that.  It will help you pick which card you want to tackle first.  I suggest the one with the lowest balance so you can follow plan above.  Once your actions start to save you money and once you see the balances start to go down, you will get more motivated to keep moving on eliminating your debt.  I make this chart in a notebook every month, and it has saved me so much money in interest charges.  Plus it just feels more managable once you write it all down.     

I couldnt agree more.  Consolidate to one payment and cut up the rest but keep them open.  I have a >800 score as of march with 18K in student loan debt.  I have some closed accounts which i regret, but have 3 open credit cards and a 48 month paid for car loan with no late payment strikes.  Pay your stuff on time and your score gets better.  However, likely the damage has been done for several years to come.

[SLJ0720]

Does incurring student loan debt lower your credit score? 

[dkast]

Do whatever you can do to fix it.

Its going to be hard with the money you are making though. 

Why is the pay so low your an attorney?

Consolidate the loans and get a credit card and pay the whole amount on time. 

Try and get another job also or goto court and try and solicate clients.

[rapunzel]

Does incurring student loan debt lower your credit score? 

I doubt it as long as you are current on payments.  It does factor in when a mortgage lender weighs you debt to income ratio.

[istically]

Does incurring student loan debt lower your credit score? 

Of course it does! By the third year of law school your score is gonna be like 550 if your mommy and daddy are not paying for law school!

[onfut]

I have a FICO score of 700 and I was denied credit by a crazy loan company. Go figure!

This is because credit score is only half the equation.

You may have the 700 score needed to qualify for a $500,000 mortage, but if you only make 35k/year, you won't have enough money to make the payments, which means: no loan.

Lenders look at not only your credit score, but your Debt-to-Income ratio as well.

Specifically, there are two ratios that are important:

(1) "The Front End" : the amount of your projected housing payment divided by your monthly pre-tax income

(2) "The Back End" : the amount of your projected housing payment PLUS any minimum payments you have on any other debts that appear on your credit report divided by your monthly pre-tax income

Usually, lenders like to keep the front end under 25-36% (IE your projected housing payment is no more than 25-36% of your monthly pre-tax income) and the back end under 40-45% (meaning your TOTAL debt payments, for housing and credit cards and car payment, etc. are no more than 40-45% of your gross monthly income).

If the loan that was denied was for a student loan, that may have to do with the fact that student loan lenders often pull only the information that interests them, not everything, AND they consider you as having no income because you will be studying.

They are different beasts all together.

Excellent advice!

[rapunzel]

Of course it does! By the third year of law school your score is gonna be like 550 if your mommy and daddy are not paying for law school!

My credit score is substantially higher than that and mom and dad haven't been paying for anything for over half a decade.  It does not lower your score to have debt.  It lowers your score to not pay on time.  Creditors want to know that you can repsonsibly handle your debt, not that you don't have any at all.   

[marketster]

My credit score is substantially higher than that and mom and dad haven't been paying for anything for over half a decade.  It does not lower your score to have debt.  It lowers your score to not pay on time.  Creditors want to know that you can repsonsibly handle your debt, not that you don't have any at all.   

Well, if you have only $30,000 in debt your score may not be substantially lower, but if you're someone whose mommy and daddy do not pay for law school, you'd end up with something along the lines of $150,000 - $200,000 in debt. Case in which the credit score has to be stupid not to go down!