Forum Thread

My experience with bad credit - may help others,

spuddaddy 46 60 August 22, 2016 at 02:42 PM in Finance
Deal
Score
+1
2,084 Views

Thread Details

The purpose of this thread is to help others who may have bad credit or over extended themselves .....

I got over extended in Credit in 2008. I was caring to much debt in 08 and when the housing crash happened all of the credit card companies cut my limits which made my utilization rates go up which in turn sank my credit score. Then all of the companies raised the interest rates on my cards and some even tacked on special fees (Thanks Bank of America) because I was high risk.

By 2012 I was in a hole so deep I defaulted on 4 cards, the cards went to charge offs. I settled for 20 to 40 cents on the dollar on these cards in 2013. I still had 6 cards that I kept paying on even though I was struggling to pay them. I was in a constant cycle of trying to pay down the cards but never able to get the cards down before a bill would run them up again.

At one point my credit score was in the low 600's (may have been lower but I did not check immediately after the charge offs). What did help me was the 6 cards that I made regular payments on improved my credit score to the 620 to 630 range.

After a year and half of regular payments I was able to get a $25,0000 personal loan with Avant a rate of 27.99 - crazy rate and on the surface but not much help. But what helped me tremendously was two things - the transfer from credit cards to a personal loan made my credit score go through the roof. Easily 30 to 40 points. The second thing that happened was that Avant did not report the loan to the credit bureaus for roughly two and a half months. So on my credit report it appeared I had paid off $25,000 in credit card debt for two months. Again the net affect was increased credit score. As soon as my credit score got to good from fair (Equifax) I went out and got three more loans - LendingClub, Prospero and Circleback. All loans now ranged in interest rates from 11 to 16 percent.

I immediately paid off the Avant loan which cost me about $700 in interest with one of the new loans. Avant has no origination fees.

I cannot guarantee you will get a 2 month reprieve on your credit report like I did but credit companies are usually consistent on how they report loans.

Now after another year I was able to consolidate all loans at a 10% rate through Sofi. Also managed to get a car loan at 5.7 rate. Now I will leave my credit alone for the next 12 months, hopefully move up to excellent credit and look at getting the loans down to sub 8 percent.

The one company that never would approve me was Upstart, LendingClub was by far the easiest to work with.

I hope this helps someone else.

16 Comments

1 2

Sign up for a Slickdeals account to remove this ad.

Joined Jun 2008
Lord Of The G-Strings
4,421 Posts
521 Reputation
#2
You got 3 loans? Were they all $25k or smaller amounts?
Reply Helpful Comment? 0 0
#3
Keep playing the game with the lender and the credit scores. Let us know how it goes. It's always interesting to see how people have compound interests working against them by borrowing in the name of raising the credit score.
Reply Helpful Comment? 1 1
Joined Jan 2006
Master of My Domain
4,140 Posts
864 Reputation
#4
It sounds to me like you're digging yourself into a new hole for the sake of improving your credit score.
Reply Helpful Comment? 2 2
As the username says ...
#5
The last thing you need is the ability to borrow money again.
Reply Helpful Comment? 1 1
Quote from charles052 View Post :
You have blind faith whereas I do not.

Quote from skiman View Post :
I can't escape the mental picture. theblaze.com is very clearly some sort of information anus yet some posters seem eager to attach their lips and deliver the product here.
Joined Dec 2005
My # is bigger than yours
34,513 Posts
6,254 Reputation
#6
Quote from vaultaddict View Post :
The last thing you need is the ability to borrow money again.
No biggie, he can always default on them like he did with the 4 credit cards.
Reply Helpful Comment? 1 1
Quote from w3kn View Post :
What a shitty thread.
#7
Quote from spuddaddy View Post :
The purpose of this thread is to help others who may have bad credit or over extended themselves .....

I got over extended in Credit in 2008. I was caring to much debt in 08 and when the housing crash happened all of the credit card companies cut my limits which made my utilization rates go up which in turn sank my credit score. Then all of the companies raised the interest rates on my cards and some even tacked on special fees (Thanks Bank of America) because I was high risk.

By 2012 I was in a hole so deep I defaulted on 4 cards, the cards went to charge offs. I settled for 20 to 40 cents on the dollar on these cards in 2013. I still had 6 cards that I kept paying on even though I was struggling to pay them. I was in a constant cycle of trying to pay down the cards but never able to get the cards down before a bill would run them up again.

At one point my credit score was in the low 600's (may have been lower but I did not check immediately after the charge offs). What did help me was the 6 cards that I made regular payments on improved my credit score to the 620 to 630 range.

After a year and half of regular payments I was able to get a $25,0000 personal loan with Avant a rate of 27.99 - crazy rate and on the surface but not much help. But what helped me tremendously was two things - the transfer from credit cards to a personal loan made my credit score go through the roof. Easily 30 to 40 points. The second thing that happened was that Avant did not report the loan to the credit bureaus for roughly two and a half months. So on my credit report it appeared I had paid off $25,000 in credit card debt for two months. Again the net affect was increased credit score. As soon as my credit score got to good from fair (Equifax) I went out and got three more loans - LendingClub, Prospero and Circleback. All loans now ranged in interest rates from 11 to 16 percent.

I immediately paid off the Avant loan which cost me about $700 in interest with one of the new loans. Avant has no origination fees.

I cannot guarantee you will get a 2 month reprieve on your credit report like I did but credit companies are usually consistent on how they report loans.

Now after another year I was able to consolidate all loans at a 10% rate through Sofi. Also managed to get a car loan at 5.7 rate. Now I will leave my credit alone for the next 12 months, hopefully move up to excellent credit and look at getting the loans down to sub 8 percent.

The one company that never would approve me was Upstart, LendingClub was by far the easiest to work with.

I hope this helps someone else.
Just for the record, I wouldn't recommend your "strategy" to others in debt. It looks like you took on a lot more risk to bump your credit up a few points, which translates into short-term nothing. You took on more debt with more interest payments and you defaulted on loans.

I don't see the purpose of your path and can wholeheartedly say it was not an effective or recommended way to work on the debt. Whether or not it worked for you is really moot as it would absolutely translate into more problems if others followed these steps.

I'm fascinated by the obsession you had with a few points on your score. I honestly cannot fathom any real-world benefit for chasing those points as you had way bigger fish to fry.

This is a good example of how not to get out of debt for others to follow.

Best of luck to you in the future. Don't default and let your lenders eat your mistakes.
Reply Helpful Comment? 2 1
#8
Quote from eekthecat View Post :
Just for the record, I wouldn't recommend your "strategy" to others in debt. It looks like you took on a lot more risk to bump your credit up a few points, which translates into short-term nothing. You took on more debt with more interest payments and you defaulted on loans.

I don't see the purpose of your path and can wholeheartedly say it was not an effective or recommended way to work on the debt. Whether or not it worked for you is really moot as it would absolutely translate into more problems if others followed these steps.

I'm fascinated by the obsession you had with a few points on your score. I honestly cannot fathom any real-world benefit for chasing those points as you had way bigger fish to fry.

This is a good example of how not to get out of debt for others to follow.

Best of luck to you in the future. Don't default and let your lenders eat your mistakes.
I think what he did maybe will help others. He's getting beat up for sharing his experience. I actually gave him rep right when he posted.

I've somewhat been down road dealing with cc.

Miss few payments they can and will 1. cut your credit limit which decreases your credit score. 2. bump you interest rate to 35% from whatever it was before 12%. NOT JUST ON WHAT YOU CHARGE GOING FORWARD BUT ON YOUR CURRENT BALANCE. PISSED ME OFF MOST ABOUT WHOLE DEAL. I owed chase money I thought I had interest rate of 12%. Chase cut my Credit Limit to what I owed and bumped my interest to 35% on what I had charged a year back.

My take on his story he got overextended. Probably had cc companies bump him to 35%. 35% went to 28% personal loan. Then at 11% to 16% spread between 3 loans. Now 10%. And he was able to get a halfway decent rate on a car loan. depending on where he lives people do actually need a car.

I could be way off and he got a Porsche at a good rate and increased his cc debt by another $10k but i don't think so.

CCs are way most people get in trouble. Using cash out of wallet easiest way to avoid. cc companies know they'll make money even with their miles and sign up bonuses.

I don't think he cared about his credit score. He was trying to get his interest rates down. And he found a little bit of a loophole accidentally through his experience that he was sharing. not a fun experience and not fun sharing the experience.
Reply Helpful Comment? 0 0
Last edited by tennis4789 August 27, 2016 at 12:24 AM

Sign up for a Slickdeals account to remove this ad.

#9
Quote from tennis4789 View Post :
I think what he did maybe will help others. He's getting beat up for sharing his experience. I actually gave him rep right when he posted.

I've somewhat been down road dealing with cc.

Miss few payments they can and will 1. cut your credit limit which decreases your credit score. 2. bump you interest rate to 35% from whatever it was before 12%. NOT JUST ON WHAT YOU CHARGE GOING FORWARD BUT ON YOUR CURRENT BALANCE. PISSED ME OFF MOST ABOUT WHOLE DEAL. I owed chase money I thought I had interest rate of 12%. Chase cut my Credit Limit to what I owed and bumped my interest to 35% on what I had charged a year back.

My take on his story he got overextended. Probably had cc companies bump him to 35%. 35% went to 28% personal loan. Then at 11% to 16% spread between 3 loans. Now 10%. And he was able to get a halfway decent rate on a car loan. depending on where he lives people do actually need a car.

I could be way off and he got a Porsche at a good rate and increased his cc debt by another $10k but i don't think so.

CCs are way most people get in trouble. Using cash out of wallet easiest way to avoid. cc companies know they'll make money even with their miles and sign up bonuses.

I don't think he cared about his credit score. He was trying to get his interest rates down. And he found a little bit of a loophole accidentally through his experience that he was sharing. not a fun experience and not fun sharing the experience.
I get what you are saying. But several facts remain.

1) There ARE better ways. His way was not optimum.
2) Because his method was not optimum and could cause SEVERE financial repercussions, this is not a recommended scenario.
3) The quote below shows that he didn't have the right priorities, he did what he thought was right, but that doesn't make it so. A $25k personal loan at 27.99% is insane under ANY circumstance. The fact that anyone would talk themselves into believing this is their best option is either foolish or stupid.
Quote :
After a year and half of regular payments I was able to get a $25,0000 personal loan with Avant a rate of 27.99 - crazy rate and on the surface but not much help.
The fact is, if you are borrowing money from someone, IE: a credit card, and you stop paying them, OF COURSE they will slash your credit. If you pay the minimum payments (which are NOTHING) you can keep your rate as well. I think what most people do, is try to explain the bad events that happen and how they were unavoidable. The fact is that if you make a couple of good decisions in the face of real hardship, you can avoid all of this mess.

I wouldn't call what he did any loophole. I don't see anything that was proficient in relieving his debt.

I'm not railing him, but it does need to be made clear that anyone reading this thread does not think THIS IS the path to debt redemption. That is the only reason I'm posting in rebuttal. The sad thing is people in similar situations tend to follow the path of least resistance from people that were in similar situations rather than address the problem head on. It reminds me of the time-honored tradition that is passed from poorly experienced financiers that move unsecured debt to secured debt when times are tough... or that borrow against protected retirement funds to slow their sinking ship.

It's never a bad thing to ask for help when you need it. Everyone needs help sometimes. The problem is when you try to find your own path and don't have the experience to make the right decisions -- that's where it really makes sense to get another take where they don't have any skin in the game. I have nothing to gain by telling you this path was wrong. I don't sell a product that gains me either. But it does gain an individual better finances to avoid similar mistakes.

At any rate, good luck to the OP's future and good luck to anyone that needs to get out of their financial hole. You can do it, just make sure you get help before it gets too bad. If even that help is asking a friend to be the voice of reason to NOT JUSTIFY your continued bad decisions that got you there in the first place.
Reply Helpful Comment? 1 0
#10
Quote from eekthecat View Post :
I get what you are saying. But several facts remain.

1) There ARE better ways. His way was not optimum.
2) Because his method was not optimum and could cause SEVERE financial repercussions, this is not a recommended scenario.
3) The quote below shows that he didn't have the right priorities, he did what he thought was right, but that doesn't make it so. A $25k personal loan at 27.99% is insane under ANY circumstance. The fact that anyone would talk themselves into believing this is their best option is either foolish or stupid.


The fact is, if you are borrowing money from someone, IE: a credit card, and you stop paying them, OF COURSE they will slash your credit.
Ok in my case. I can't speak to OPs. Chase raised my rate from 12% to 35%. Not on FUTURE purchases, but on PAST purchases. Plus, some extra fees. Sarcasm I'm sure everyone knows and studies their cc agreements. BTW think cc companies got lawsuited on that practice. His path from 35% to 10% would have been optimum in my case.

insanely as it sounds 27.99% is better than 35%.

Once I was in that situation what do you think my optimum path was? Agree that I should have avoided situation (hindsight is 20/20)but I was where I was.
Reply Helpful Comment? 0 0
#11
Quote from tennis4789 View Post :
Ok in my case. I can't speak to OPs. Chase raised my rate from 12% to 35%. Not on FUTURE purchases, but on PAST purchases. Plus, some extra fees. Sarcasm I'm sure everyone knows and studies their cc agreements. BTW think cc companies got lawsuited on that practice. His path from 35% to 10% would have been optimum in my case.

insanely as it sounds 27.99% is better than 35%.

Once I was in that situation what do you think my optimum path was? Agree that I should have avoided situation (hindsight is 20/20)but I was where I was.
It's really hard to address the almost infinite scenarios revolving around someone's personal debt and finances. Almost always (no matter how "poor" someone claims to be when they have tens of thousands of dollars of credit card debt) is the reduction in frivolous spending. All too often someone will transfer this debt elsewhere and then start the cycle over again because their credit card is now a debt haven for more spending.

I guess I'll just leave it with: the issue is rarely the credit card or how to pay debt. It's almost always the spending habits of the individual spending more than they are allowed and not understanding what debt and credit is. You can't really fix debt long-term until an individual understands what their spending capacity is along with the ability to say they can't afford an item even if they have $75,000 of credit available to them.
Reply Helpful Comment? 2 0
#12
I can see both cases
yes you need to do what you can do and 27.99 is better than 35 but 7% might not be enough savings
It can work as long as you don't go overboard like eek says.
To me OP's plan was good until he went and bought the car
live and learn but OP's still learning
Reply Helpful Comment? 0 0
for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20)
Joined Jun 2008
Lord Of The G-Strings
4,421 Posts
521 Reputation
#13
Quote from eekthecat View Post :
I get what you are saying. But several facts remain.

1) There ARE better ways. His way was not optimum.
2) Because his method was not optimum and could cause SEVERE financial repercussions, this is not a recommended scenario.
3) The quote below shows that he didn't have the right priorities, he did what he thought was right, but that doesn't make it so. A $25k personal loan at 27.99% is insane under ANY circumstance. The fact that anyone would talk themselves into believing this is their best option is either foolish or stupid.


The fact is, if you are borrowing money from someone, IE: a credit card, and you stop paying them, OF COURSE they will slash your credit. If you pay the minimum payments (which are NOTHING) you can keep your rate as well. I think what most people do, is try to explain the bad events that happen and how they were unavoidable. The fact is that if you make a couple of good decisions in the face of real hardship, you can avoid all of this mess.

I wouldn't call what he did any loophole. I don't see anything that was proficient in relieving his debt.

I'm not railing him, but it does need to be made clear that anyone reading this thread does not think THIS IS the path to debt redemption. That is the only reason I'm posting in rebuttal. The sad thing is people in similar situations tend to follow the path of least resistance from people that were in similar situations rather than address the problem head on. It reminds me of the time-honored tradition that is passed from poorly experienced financiers that move unsecured debt to secured debt when times are tough... or that borrow against protected retirement funds to slow their sinking ship.

It's never a bad thing to ask for help when you need it. Everyone needs help sometimes. The problem is when you try to find your own path and don't have the experience to make the right decisions -- that's where it really makes sense to get another take where they don't have any skin in the game. I have nothing to gain by telling you this path was wrong. I don't sell a product that gains me either. But it does gain an individual better finances to avoid similar mistakes.

At any rate, good luck to the OP's future and good luck to anyone that needs to get out of their financial hole. You can do it, just make sure you get help before it gets too bad. If even that help is asking a friend to be the voice of reason to NOT JUSTIFY your continued bad decisions that got you there in the first place.
His info is interesting and I don't see you posting 'the right way'. Typical higher than thou. If all the people on this forum represented America we'd all have 800 ficos and zero debt.
Reply Helpful Comment? 1 1
#14
Quote from Metric View Post :
His info is interesting and I don't see you posting 'the right way'. Typical higher than thou. If all the people on this forum represented America we'd all have 800 ficos and zero debt.
Or there is good advice for people in a bad way and there is really bad advice. I guess it depends on what makes you feel better about your situation. No one is "higher than thou". But if misinformation is being posted, one should give another viewpoint.

You are entitled to your opinion, whatever that may be. However you didn't really post an opinion. You just tried to berate mine. I would recommend trying harder to support the thread content instead next time.
Reply Helpful Comment? 0 0
Joined Jun 2008
Lord Of The G-Strings
4,421 Posts
521 Reputation
#15
Quote from eekthecat View Post :
Or there is good advice for people in a bad way and there is really bad advice. I guess it depends on what makes you feel better about your situation. No one is "higher than thou". But if misinformation is being posted, one should give another viewpoint.

You are entitled to your opinion, whatever that may be. However you didn't really post an opinion. You just tried to berate mine. I would recommend trying harder to support the thread content instead next time.
Sadly you are part of the slickdeals finance elite. I couldn't berate your opinion as you didn't offer one; you merely pointed out tha his post was misinformation (and how could it be given it was HIS experience) but offered no alternative.

People in glass houses shouldn't walk around naked.
Reply Helpful Comment? 0 0
Last edited by Metric September 7, 2016 at 01:49 PM
Page 1 of 2
1 2
Join the Conversation
Add a Comment
 
Copyright 1999 - 2016. Slickdeals, LLC. All Rights Reserved. Copyright / Infringement Policy  •  Privacy Policy  •  Terms of Service  •  Acceptable Use Policy (Rules)  •  Interest-Based Ads
Link Copied to Clipboard