Wow 79.9% Interest rate

**Greebo** · 12-23-2009, 03:00 PM

The purpose in increasing your score was to get better rates on cars, is that right?

Well if you're going to have a car payment anyway - why not save the money up for a car ahead of time and pay cash? Then you don't need credit and you don't waste all that money on interest.

**NcsstyBrdsIngnty** · 12-23-2009, 03:20 PM

Originally Posted by Greebo

The purpose in increasing your score was to get better rates on cars, is that right?

Well if you're going to have a car payment anyway - why not save the money up for a car ahead of time and pay cash? Then you don't need credit and you don't waste all that money on interest.

Sorry, maybe a better background is needed. I ended up paying cash for my CRV. I was looking at a different vehicle, thinking of getting a loan to bump my credit score up, as I needed a new vehicle anyway and knew I would be buying a house within the year or so. When the guy at the dealership came back with 16% I realized that it wasn't worth it - 16% on 10k was more than I paid for the low credit card in fees. So I bought an older model for 6k in cash and got the CC which charged the crazy fees.

The true purpose of increasing the score, for me, was to purchase a home.

**Greebo** · 12-23-2009, 03:45 PM

Well it's after the fact now, obviously, but you don't need a credit score to buy a home. If you have a score, you want it to be good, of course, but if you have NO score, you just need to find a bank that does manual underwriting.

**littleplum** · 12-23-2009, 06:09 PM

Originally Posted by NcsstyBrdsIngnty

You are correct, that wasn't my only alternative. However, from sitting on forums that dealt with fico scores I knew that two CCs with increasing lines of credit and less than 8-10% debt to limit was my best option for bumping up my score. A loan (personal or car) by itself wouldn't have given me the same jump in score, so I opted for this card, the cap one, and a payment line that came from a local tanning salon (crazy isn't it?). My source for this comparison was from using base models that came with monthly credit score monitoring services, where you can model "what if's" that show how to increase your score.

I am not claiming this is the only way, but the card did serve it's purpose and I went from a mid500 to a low 700 over the course of a year. I am not, whatsoever, a proponent of a card that will charge 79%, nor am I proponent of not paying of the balance in full every month. I am, however, a proponent of second chances and this is how I recieved mine.

I think you misread what I wrote:

But that was really not your only alternative. Every credit union or bank I've done business with has offered a secured credit card, line of credit, or loan, and the fees and (effective) interest rates are MUCH lower.

A secured LOC is also revolving debt. It's similar to a HELOC, except that your deposit stands as the collateral, instead of a house.

**littleplum** · 12-23-2009, 06:11 PM

Originally Posted by Greebo

Well it's after the fact now, obviously, but you don't need a credit score to buy a home. If you have a score, you want it to be good, of course, but if you have NO score, you just need to find a bank that does manual underwriting.

But....that sounds like work.

**Greebo** · 12-23-2009, 07:53 PM

Originally Posted by littleplum

But....that sounds like work.

What part? The underwriting? Or finding the bank?

**NcsstyBrdsIngnty** · 12-24-2009, 11:33 AM

Originally Posted by littleplum

I think you misread what I wrote:

A secured LOC is also revolving debt. It's similar to a HELOC, except that your deposit stands as the collateral, instead of a house.

You are right, I thought you were talking about the secured cards that come from the same banks that provide the unsecured cards that we are talking about - with the same outrageous monthly, and payment fees. Just to be clear, are you saying to go to a local bank and apply for a secured line of credit? I looked into Wells and it doesn't operate the same way as these banks do (Orchard, premier,etc), it was closer to a $50/yr fee but I couldn't tell what other fees might be tacked on.

This one is a Very, Very interestiing alternative - and one I obviously didn't know about at the time. Just thinking on paper here: I am curious what the difference in credit score jump would be, but that thought is negated by the fact that it opens you to other alternatives that will help your credit score (if that is the main goal as it was for me). I would say that it could be difficult for someone to come up with the deposit on the card, but then that is negated by the thought that if you can't pay it then maybe you shouldn't be borrowing.

Thank you LittlePlum for reclarifying - definitely opened my eyes! Thought they were wide open. . . .

**littleplum** · 12-24-2009, 07:46 PM

Originally Posted by NcsstyBrdsIngnty

You are right, I thought you were talking about the secured cards that come from the same banks that provide the unsecured cards that we are talking about - with the same outrageous monthly, and payment fees. Just to be clear, are you saying to go to a local bank and apply for a secured line of credit? I looked into Wells and it doesn't operate the same way as these banks do (Orchard, premier,etc), it was closer to a $50/yr fee but I couldn't tell what other fees might be tacked on.

This one is a Very, Very interestiing alternative - and one I obviously didn't know about at the time. Just thinking on paper here: I am curious what the difference in credit score jump would be, but that thought is negated by the fact that it opens you to other alternatives that will help your credit score (if that is the main goal as it was for me). I would say that it could be difficult for someone to come up with the deposit on the card, but then that is negated by the thought that if you can't pay it then maybe you shouldn't be borrowing.

Thank you LittlePlum for reclarifying - definitely opened my eyes! Thought they were wide open. . . .

I can't speak for all credit unions, but two of the three that I belong to* are full service (including online banking) offer secured credit cards and secured LOC's. One charges 10% on borrowed funds and the other charges somewhere around 8% right now. The loan origination fees are very small at both - I've taken loans at both, and at one there were no origination fees, and at the other, it was $25 on a $15,000 auto loan.

In either case (SCC or SLOC), it is nowhere near as bad as one of the cards that target people with FICOs in the 500s. You have to remember that annual fees increase the effective interest rate. And they load those sub-prime cards up with fees before you even get it in your hand. OTOH a secured cc or LOC might have fees, but they are generally pretty minimal if you go through a CU. And at both the CU I belong to, if I wanted to have a SLOC, I can determine the amount by increasing my savings account size!

*Yes, we love credit unions around here!

**Judi Dial** · 12-25-2009, 10:53 AM

My reaction to this is that First Premier just joined the company whose cc we paid off that had a 19.9% apr...this year they sent us a letter they're raising our apr to 26.x%, we don't care as the balance is 0.00! If I could get DH to close the acct altogether I'd be happier, but they can charge us whatever they want on a 0 balance!

Although years ago, we paid off a credit card and kept getting dunning notices. We finally sent them a check for zero. That got bounced as the written amount didn't match the dollar amount!!! With that in hand we FINALLY (we'd been trying since the dunning notices started) to get a CSR at the company to realize that we weren't paying them, as we didn't owe them anything! But that took MONTHS....

Judi

**NikoSan999** · 12-25-2009, 11:31 AM

Originally Posted by Judi Dial

My reaction to this is that First Premier just joined the company whose cc we paid off that had a 19.9% apr...this year they sent us a letter they're raising our apr to 26.x%, we don't care as the balance is 0.00! If I could get DH to close the acct altogether I'd be happier, but they can charge us whatever they want on a 0 balance!

Although years ago, we paid off a credit card and kept getting dunning notices. We finally sent them a check for zero. That got bounced as the written amount didn't match the dollar amount!!! With that in hand we FINALLY (we'd been trying since the dunning notices started) to get a CSR at the company to realize that we weren't paying them, as we didn't owe them anything! But that took MONTHS....

Judi

Another example of "You can't fix stupid". Geesh....