2million - My Journey to Financial Freedom

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Monday, January 30, 2006

My Credit Score Has Been Repaired!

Last year, I discovered my credit score was taking a small beating from taking advantage of several 0% balance transfer credit cards offers. I used these interest free loans to earn interest in higher yield online savings accounts like this one from HSBC Bank.

At the time I had several credit card accounts with outstanding 0% balance transfers on them and as a result my score was approximately 687.

Over the weekend I was considering making an offer on a house and decided I wanted to make sure my credit score was is a position where I could obtain the best financing rates if I needed to find a mortgage. I knew I my score needed to be at least in the lower 700s to qualify for the best rates.

I decided to go to Experian and ordered my credit score for $5.95. I quickly found out that my fico credit score had gone from roughly 687 to now 766! I have to say I do feel relieved that my credit score has rebounded to where it used to be.

After implementing my action plan to improve my credit score, I still have 2 credit cards with 0% balance transfers that have high a high percentage of the limit borrowed (87.1% & 94.2%), but apparently they don't have as serious an impact on my score as I expected.

Current 0% Balance Transfer Offers

Company

Current 0% BT

Limit

% Limit

Expires

BofA

$ 12,345.00

$13,100.00

94.2%

Jun-06

Citi

$ 16,106.00

$18,500.00

87.1%

Aug-06



I guess the good news is I should be able to continue to take advantage of 0% balance transfer offers (in moderation) to continue to boost my interest income.

19 Comments:

  • Glad to hear it. Hopefully in a few months I'll be doing the same.

    By Blogger franky, at 11:36 AM  

  • When you got the 0% credit cards, how did you actually get the money available in your credit line in your hands so you can deposit it into a savings account?

    Thanks,
    Alex

    By Anonymous Alex, at 3:26 PM  

  • Very good news for you. I am thinking about taking out some 0% credit cards. I never even knew they had them. Although I never bought anything on credit I doubt I will get one.

    By Anonymous Anonymous, at 3:44 PM  

  • Alex,

    It depends on the company. I think Citi all I had to do was call them up and they sent me a check for the balance transfer amount that I just cashed in my bank account. Another technique I used was have them make the balance transfer to another credit card that I didn't have a balance on and then asked that credit card company to send me a check for the credit in my account. At one point I also had them send the balance transfer to my HELOC and then wrote a check from my HELOC to pull it out. Actually if you have a HELOC or similar type loan you can sometimes earn better returns by putting the free loan in the HELOC for the time you have it. The beauty of a HELOC is you can pull the money back out to pay off the balance transfer when the 0% APR is getting ready to expire.

    By Blogger 2million, at 3:59 PM  

  • How heavy are the credit checks for this cards?

    By Anonymous Anonymous, at 4:29 PM  

  • 2million,
    I am one of the readers that got here frm businessweek. I am totally impressed with this site and am now a regular to read and learn from your experiences.good luck to you with your goal!!

    By Anonymous Anonymous, at 7:02 AM  

  • Make sure your Experian score is reflective of your overall credit scores.

    Example: A week ago, I was perusing through my credit reports when I came across Experian's $5.95 offer for an instant score - I was exhilarated to see 731 showing on the screen, as my credit just six months ago had been reported as only "Fair."

    However, I was a little skeptical of how my credit could have shot up so quickly - from 669 on Transunion on 10/18/2005 to 731 on Experian on 1/17/2006. Furthermore, I did not do anything significant to improve my credit score in that period, other than paying off $4500 on one of my cards.

    So I purchased, unexcitedly, an Identity Guard service (www.identityguard.com) for $24.95 for 3 months, which includes all 3 of my scores. On the very same day. And this is how it came out: Equifax: 676, Transunion: 679, and Experian: 668.

    I called the Identity Guard folks, who knew even less than the little I knew about credit scores. The phone jockeys simply read form replies and could not fully explain how an Experian score could be different by SIXTY-THREE points on the same day. Of course they gave me a spiel about how the $5.95 Experian score could be a 30 day, 60 day or 90 day measure, as opposed to the time period they use, (I forgot what it was) but my credit reports have not been updated dramatically within the past year to show significant movement up or down on the scores.

    Thus I am relying more on the lower number as the realistic measure. I expected to see modest improvements anyways, until I finish disputing the only damaging aspect of my credit. But I do wonder if Experian uses a wildly different formula to reveal their scores, especially when someone drops only $5.95 for a quick overview, as I initially did.

    By Anonymous Andym, at 6:14 PM  

  • What do you folks think is the most popular credit agency for your "to-be" creditors to check your credit score with before handing you out a loan? With all 3 credit scores known should I rely on one more than others? Although I agree with Andym with his approach to rely more on the lowest score...

    By Anonymous crawlspace, at 7:10 PM  

  • 2million, I found that my networth in taxable account increased by 4% in Jan with me not contributing even a penny thanks to stock market gains. You must have also seen solid gains in your networth this month without doing anything.

    By Anonymous Anonymous, at 12:39 AM  

  • 2million,

    Do you mind sending me a referral to a HSBC online savings account... we can both get the incentive.

    thanks,
    chrisgwinner at gmail dot com

    By Anonymous Anonymous, at 12:59 PM  

  • I've finally got nearly everything set up. ING direct is ready to go. Threw in 5 bucks to make sure it works. I've got two cards in hand ready to go. Total CL available is $36,500. I believe I have another $20,000 on the way.

    You've made some comments, I believe, and I've read elsewhere, that utilizing more than 50% of the available CL is detrimental to your credit score. You also mentioned however, that the two high balances you have have not adversly effected your score significantly.

    Now that I'm ready to go I need to decide how uch I'm going to put into ING. My question is this: (no need for a drum roll) Should I limit it to 50% of the available CL or get more bang for the buck and nearly max them out?

    Have you only had to use the tricks, like the HELOC, when the card company wouldn't issue checks? I'm assuming anytime they do issue checks, you can deposit them into a local bank account. Then transfer the balance to an internet bank. Please correct me if I'm wrong. I'm ready to get it going. Thanks for all you help and insight.

    By Anonymous Ryan, at 11:16 AM  

  • ryan,

    If you dig into my archives you can see some of the results form my balance transfer expierence, obviously if you are concerned about your credit score, don't take out the max, but remember your credit score will "heal" over time, so if you don't need to get a mortgage or anything you could probably do a larger balnace transfer without problems.

    As far as the checks - yes I have been able to depoist them into my checking account and then transfer the money over to a high-yield savings account.

    By Blogger 2million, at 9:56 AM  

  • cool this is great!

    By Blogger Chris, at 12:32 AM  

  • Crawlspace,

    Having recently gotten a mortgage, I confirmed with my lender:
    They order all three credit scores and take the middle.

    n

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