This question is for Flagpole or any other people with useful financial advice.
I am 26 years old and just started my first salaried job (was in grad school for 3 years after college). It isn't that much, just $44K a year, but I am hoping that I can turn my financial situation around.
One thing I won't be able to get rid of any time soon is my $180K in consolidated student loans, ans that is something I will have to deal with. However, I am hoping that since student debt is considered "good debt (what ever that means)", that I can work on improving my credit history and score. I just checked both Experian and TransUnion, and my credit scores are 609 and 632, respectively. What is affecting my score the most is payment history and credit to debt ratio. I have missed a few payments in the past on three accounts, and these accounts are all closed. Two of them are closed at my request, and the other one was at the CC company's request.
The good news is that the debt isn't that large, and I plan to have one of the cards paid off in the next month. The other two I will hope to have paid off by the end of March or April, as these are $800 and $600 roughly.
My question is what I should do after that. I am wondering whether I should try to reopen the closed accounts and just not spend on them, or spend very little and pay off the balance to keep the cards active. I have heard that CC companies often require a new application and account if the current one has been closed for over 6 months, and a new inquiry might hurt my credit score. I know that if they don't reopen the accounts, the "closed by consumer" will remain on my account for a good 7 years.
So, my only option to rebuild my credit seems to be opening a new CC account. I was looking at secured credit cards, and these seem to be a good option to start with. I am not sure what else I can do though so I was hoping that I could get some input from you guys.
One other thing is I need a car, and I am debating whether to get an older car that may run into problems, or to put $5K down on a 2008 car I saw, and finance the rest. Payments would be about $250/mo for 60 months.
I want 2011 to be my turn-around year, so any advice would be helpful.