Help understanding my credit score / finances?
TJ Egan Asked: Help understanding my credit score / finances?
Hi, I am a 22 year old male living in upstate NY. I have been working full-time for almost a year after graduating college. I was a computer science major so I don;t really get how all this credit stuff works.
Right now, my credit score is ' 710 ' … According to FreeCreditScore, the report says 2 factors lowering my credit score are:
– You have too many recent hard inquiries
– Your have too many installment loans
What does that mean? My parents told me to build up credit, so right now I am paying the following:
– Target store card ($500)
– Amazon store card ($1375)
– Bank of America credit card ($2,500)
– Capital One credit card ($2,000)
– Chase credit card ($4,000)
– Student Loans
My car payments are made directly to my dad, as I went through a private seller and am just paying my Dad back. I also have a Time Warner account. I have never had a late payment. Is this good? What can I do to improve my score? Right now I have about $3,600 in credit card debt from college and other things, and about $28,000 in student loans. I have $2,500 in a deferred compensation plan through my job. I make $52,000 a year. Someone be my financial guru and tell me where I stand, and where to go from here?
Answers:
You're doing fine.710 is a very good score.Thecomments are just for why it's not 800, which almost nobody's is.With fewer credit cards it would be even higher – but don't worry, you're doing great.Paying off the cards each month would raise it even more.
Sorry Egan
Your parents are idiots. Borrower is a slave to a lender. Pay off the debt as soon as possible, PAY OFF THE DEBT.
Plenty of way you build your credit score. Put gas charge on credit card and PAY IT OFF every month.
PAY yourself first, put 15% in retirement account like 401k, Roth IRA. Pay your bills second.
If you continue to carry debt, you will be living pay check to pay check.
You have TOO much credit for a 22 yr old.Pay them off and stop charging.
I have often obtained my personal no cost credit reports with this specific certain location. Has never failed us!
I'm afraid you got some pretty bad advice from your parents.Credit score is really misleading.The only thing that a good credit score enables you to do is borrow more money.It's a really poor indicator of your overall financial health and position.So whereas your credit score may be fairly good, I'm looking at more than just that to tell me how you are doing.
What I"m looking at more than anything is the amount of debt you have.You make 52,000 per year so that means you bring home about 35-40,000.Including your student loans, you have just about 38,000 in debt – just about as much as you make in a year.And that's not including the car that you're paying your parents for.So in order to build credit, you've shouldered yourself with a tremendous amount of debt that is going to probably take you years to climb out from under.So not a very good strategy at all.
What you need to do now is stop using your cards, stop borrowing money and begin the process of paying back this debt.Stop your deferred comp and develop a monthly budget that gives you extra money every month to pay off some debt.You need to stop using debt as a way to leverage your credit.It's a really good way to wind up poor. Although you might have a good credit score, I'd rather have some money.