CREDIT... Learn me...

Curmudgeon wrote: Any more, you pretty much have to have a credit rating to do anything, even get a job. The way that used to be done: go to three or four of those dinky finance companies, borrow, say, $500 from each and stick the money in the bank. (Of course this was back in the days before 'fog a mirror' credit cards.) Then use the money to make the payments on time. Pay it off a little early. Yeah, you pay the interest but you would have anyway, right? Now you have some credit history.

That's a damn good idea... Maybe do something like that with my bank as well?

Conquest351 wrote:

Curmudgeon wrote: Any more, you pretty much have to have a credit rating to do anything, even get a job. The way that used to be done: go to three or four of those dinky finance companies, borrow, say, $500 from each and stick the money in the bank. (Of course this was back in the days before 'fog a mirror' credit cards.) Then use the money to make the payments on time. Pay it off a little early. Yeah, you pay the interest but you would have anyway, right? Now you have some credit history.

That's a damn good idea... Maybe do something like that with my bank as well?

Paying finance fees and interest on money you don't need?

ronholm wrote:

Hahaha! No no no... The house is FAR from paid for. It was just built, we've only been paying for it since January. Wife's bankruptcy was due to a divorce and her ex leaving her with all the bills while he took all the stuff. She's smart with money and has been able to get her credit score back to very good in that little time. I think she had it back up to over 650 in 3 years.

Ok.. That makes the situation a bit different.. But again.. Whatbis the need for a credit score? What are you currently struggling with? Job app? car insurance? something like that? Or just personal emotion?

Not struggling with anything really. Just know the need for some type of credit score and I figured that while I'm not in any real dire need for anything, I can focus on building up a decent credit score for when I do get myself in a dire need.

ronholm wrote:

Conquest351 wrote:

Curmudgeon wrote: Any more, you pretty much have to have a credit rating to do anything, even get a job. The way that used to be done: go to three or four of those dinky finance companies, borrow, say, $500 from each and stick the money in the bank. (Of course this was back in the days before 'fog a mirror' credit cards.) Then use the money to make the payments on time. Pay it off a little early. Yeah, you pay the interest but you would have anyway, right? Now you have some credit history.

That's a damn good idea... Maybe do something like that with my bank as well?

Paying finance fees and interest on money you don't need?

I'm sure I'm going to have to pay interest on anything I'm going to get for the time being. I do like the 0% cards, but I haven't seen any of those offers in my mailbox.

Conquest351 wrote: Wife actually filed bankruptcy in 2005 and has gotten her credit back to over 760 in that period. She's smart and responsible, I'm not so much.

This doesn't make much sense. I'd say you the smart responsible who has made it to 33 wihout ever using credit is the smart one. She (unless for medical bill purposes only) is the one who has filled for bankruptcy due to some debt related issue.

Why do you feel that you Need credit? I don't understand this. As long as you have your 3-6 month easy access emergency fund fully funded and for some larger catostrophic event could lean on retirement savings and cashing out other less liquid assets why do you need credit? Assuming you keep your assets insured, have health insurance and can cover your full deductable at any time I'm just not sure when you would find oneself in the situation that you "MUST HAVE $30K TODAY!!".

The only reason I am keeping some credit cards active (no other credit items for our family) is for Online purchases (which if your really don't want to use credit Paypal is an option most places) and because some things that reference credit score would possibly go up if I let it fall (Auto/home insurance namely).

I'm not Anti-credit. It has it's place. There are times when it makes sense to borrow to start a buisiness or invest in rental property but all of those things would be better without having to pay a bank 2-4% if it would be at all possible to start with cash.

Dave Rammsey may come accross as an Asshat but he has to be to get his basic point accross that the average American family would be WAY better off if over the course of their life they spent 100% of their money with a purpose and none of it to Interest payments. He provides a proven functional plan to help people get from debt to wealth building. My wife and I followed it and no have No debt. Would I be better off now with low interest car payments, A mortgage, and a bunch of 0 interest credit card payments and a larger investment portfolio? Possibly, however its unlikely that we would of been able to get there but instead have continued basically servicing our debt and putting a minimal amount into savings.

ronholm wrote:

Conquest351 wrote:

Curmudgeon wrote: Any more, you pretty much have to have a credit rating to do anything, even get a job. The way that used to be done: go to three or four of those dinky finance companies, borrow, say, $500 from each and stick the money in the bank. (Of course this was back in the days before 'fog a mirror' credit cards.) Then use the money to make the payments on time. Pay it off a little early. Yeah, you pay the interest but you would have anyway, right? Now you have some credit history.

That's a damn good idea... Maybe do something like that with my bank as well?

Paying finance fees and interest on money you don't need?

Yeah I don't understand that either. I really think having a credit card with rewards and paying it off is the best idea. I know you really don't like the idea of a credit card but a credit card can actually give you some benefits other then just building a credit card and as long as you pay the balance at the end of the month won't cost you anything plus it is safer when you go out to eat at a sit-down restaurant or get anything on the internet...

In reply to ronholm:

That's the cost of building a credit history. It sucks but there it is. As I edited my original post to reflect, you have to have a credit history to do damn near anything any more, even get a job or have the power/water/etc turned on, so it's a necessary evil.

I'm at the point where I'd much rather pay cash for everything but unfortunately, as Conquest351 has discovered, that does not build a credit history. IIRC his deal was the builder holds the note on his house (which is how he was able to buy w/o credit because no bank would touch that even with the relaxed regs), but I can pretty much guarantee you they will sell the loan off pretty quick. Now, as that gets noted, it will definitely build a credit history but typically that's sort of slow.

The method I mentioned is much quicker and builds more of a history. Handling more than one account at a time in a responsible manner is part of your overall score, along with utility bills and stuff like that.

I plan to buy a piece of property sometime in the next couple of years to build a retirement home on, and I'll need credit for that since I won't be able to pay cash up front (unless I hit the lottery). So keeping my credit good is worth the cost of paying some CC interest.

Conquest351 wrote: Wow, you guys are friggin fast. 3 responses in under a minute.. As for the house, no it's not paid off. We just had it built (had a build thread on it here) and moved in on Dec. 18th last year. Wife actually filed bankruptcy in 2005 and has gotten her credit back to over 760 in that period. She's smart and responsible, I'm not so much. I've heard about putting $1k in a CD at the bank and borrowing against it and paying that off helps a lot and is relatively quick. Anyone done this? I really REALLY want to stay away from credit cards. I have a Visa check/bank card that works for everything I need it to.

Your credit score is based upon CREDIT. Many of the secured loans (borrowing against your CD or secured credit cards) don't report to the credit bureau. If it doesn't report to the credit bureau then it's not doing you any good.

The wife's ex liked to spend money. Liked to buy things on their CC's. When they divorced, somehow the CC's all got left in her name and she was responsible. The big B was the only way out.

As for the CC's for myself... Ugh... LOL I really REALLY want to stay away from them, but I do understand the rewards. I'd love to get a 0% card that offered Southwest rewards or something. Put fuel on it and pay it off. Sounds easy enough...

Curmudgeon wrote: In reply to ronholm: That's the cost of building a credit history. It sucks but there it is. As I edited my original post to reflect, you have to have a credit history to do damn near anything any more, even get a job or have the power/water/etc turned on, so it's a necessary evil. I'm at the point where I'd much rather pay cash for everything but unfortunately, as Conquest351 has discovered, that does not build a credit history. IIRC his deal was the builder holds the note on his house (which is how he was able to buy w/o credit because no bank would touch that even with the relaxed regs), but I can pretty much guarantee you they will sell the loan off pretty quick. Now, as that gets noted, it will definitely build a credit history but typically that's sort of slow. The method I mentioned is much quicker and builds more of a history. Handling more than one account at a time in a responsible manner is part of your overall score, along with utility bills and stuff like that. I plan to buy a piece of property sometime in the next couple of years to build a retirement home on, and I'll need credit for that since I won't be able to pay cash up front (unless I hit the lottery). So keeping my credit good is worth the cost of paying some CC interest.

The house was built and we got a typical mortgage on it. Guess who's name is on all the mortgage paperwork? That's right, not mine... I'm on some of it, but my credit score, or lack thereof, actually hurt us. We got a killer interest rate of 4.5% on the mortgage, but I'd like to get some type of credit score just so I can maybe purchase a new car sometime in the future or something like that. You're right though, I've actually had companies where I applied ask me why I don't have a credit score. I ask them what business it is of theirs.

Conquest351 wrote: ... I'd love to get a 0% card that offered Southwest rewards or something. Put fuel on it and pay it off. Sounds easy enough...

Famous Last Words.

Why not pay cash for the new car...

You don't need credit for that?

just start making the new car payment now? I started doing this a long time ago.. I have never found a new car I have liked better than the account.

Again.. what do you really 'need' a credit score for?

Conquest351 wrote: As for the CC's for myself... Ugh... LOL I really REALLY want to stay away from them, but I do understand the rewards. I'd love to get a 0% card that offered Southwest rewards or something. Put fuel on it and pay it off. Sounds easy enough...

Believe me I hated the idea too. But for me it seemed the best way to build my credit without having to go into debt and also to protect my money with internet purchases (which in my case is hard to avoid because you can't go to the local parts store and buy Triumph racing parts lol).

Hmmm. So making house payments is not building you a credit history but it is keeping hers up. That does not bode well for the future of your credit history.

The even scarier part about that: since you are not on the mortgage you probably are not on the deed meaning you have no ownership interest in the house. If (dog forbid) something happens to her or you get divorced, you have a real problem, as in you would have to either walk away from your interest in the house or try to qualify to assume the mortgage. You may want to hurry this up a bit and see about possibly having the mortgage company tack you onto the loan later.

Believe me, I have been there and done that.

As several have pointed out you need some sort of credit to be able to function nowadays. It's as simple as that.

Getting insurance, getting a job, turning on utilities, renting an apartment, buying a home...............the list goes on and on.

But no one says you have to abuse credit. Moderation!

To build credit I recommend people get a few small credit cards and use them just for things they presently pay cash for like gas or restaurants. Then pay them off or way down every month.

I've worked on people's credit for decades and whether you have 50% balance to credit limits vs. 33% or 10% doesn't seem to matter much at all. Once you pass the 50% threshold the benefits to you are very, very minor. So if you have $X amount of money and are trying to spend it wisely to get your credit score up to buy a home or something, you'd be better off to reduce balances to 50% on two accounts than to pay one down to 33% or 10%. There's simply not much difference between them.

They spend plenty of money marketing debt these days don't they?

Oh, and do NOT buy a truly NEW car. I think you know the reasons why. Buy a 3 or 4 year old ride, if you have to finance do it for the absolute shortest period possible.

ronholm wrote: They spend plenty of money marketing debt these days don't they?

That's for damn sure. 'What's in YOUR wallet'?

In my case it was a good thing to have CC's, I ran them up out of necessity when I got divorced. When I sold the house I paid them off, then when I bought this place I ran them back up paying for repairs. But the cool thing is that once the one year wait period is up (that has to do with several different things) I will mortgage the house for WAY less than is owed and use that to pay off the CC's. I will then close the one account and keep the one that's with the same bank which will have my mortgage. No mortgage broker this time, I'm going direct. Since I have already had/paid 3 mortgages with them I should have no problem getting another. That all works toward my ultimate plan to have a paid for house by age 65.

carguy123 wrote: As several have pointed out you need some sort of credit to be able to function nowadays. It's as simple as that. Getting insurance, getting a job, turning on utilities, renting an apartment, buying a home...............the list goes on and on. But no one says you have to abuse credit. Moderation!.

THIS!!!!!! It was so hard for me leaving college to get a lot of things figured out like utilities and rent.

Credit score has a big effect on the price of your auto insurance as well. With a better score they consider you more responsible and somehow a better driver.

carguy123 wrote: As several have pointed out you need some sort of credit to be able to function nowadays. It's as simple as that. Getting insurance, getting a job, turning on utilities, renting an apartment, buying a home...............the list goes on and on. But no one says you have to abuse credit. Moderation! To build credit I recommend people get a few small credit cards and use them just for things they presently pay cash for like gas or restaurants. Then pay them off or way down every month. I've worked on people's credit for decades and whether you have 50% balance to credit limits vs. 33% or 10% doesn't seem to matter much at all. Once you pass the 50% threshold the benefits to you are very, very minor. So if you have $X amount of money and are trying to spend it wisely to get your credit score up to buy a home or something, you'd be better off to reduce balances to 50% on two accounts than to pay one down to 33% or 10%. There's simply not much difference between them.

Why would we want to take a well reasoned position and do anything in moderation though? It's so much more fun at the extremes.

[If a "sarcasm font" existed, there's a chance I might have used it in this post.]

OK... Lots of viewpoints here... Lemme see if I can break them down...

• Get credit card, put BS on it I normally pay cash for, make sure the credit card works for me rather than me working for it (ie rewards, cash back, etc)

• Take out a bank loan or something similar and keep the money in an account and just pay it back over time and write the interest off as the cost of gaining credit.

• Save up $40k and pay cash for anything and everything I could ever need and don't worry about credit. This is pretty much impossible given my current income. Not a bad plan though, and one I'd much prefer.

Conquest351 wrote: OK... Lots of viewpoints here... Lemme see if I can break them down... - Get credit card, put BS on it I normally pay cash for, make sure the credit card works for me rather than me working for it (ie rewards, cash back, etc) - Take out a bank loan or something similar and keep the money in an account and just pay it back over time and write the interest off as the cost of gaining credit. - Save up $40k and pay cash for anything and everything I could ever need and don't worry about credit. This is pretty much impossible given my current income. Not a bad plan though, and one I'd much prefer.

You forgot:

• Subsistence farm, make your own clothes, berkeley society.

MG Bryan wrote:

Conquest351 wrote: OK... Lots of viewpoints here... Lemme see if I can break them down... - Get credit card, put BS on it I normally pay cash for, make sure the credit card works for me rather than me working for it (ie rewards, cash back, etc) - Take out a bank loan or something similar and keep the money in an account and just pay it back over time and write the interest off as the cost of gaining credit. - Save up $40k and pay cash for anything and everything I could ever need and don't worry about credit. This is pretty much impossible given my current income. Not a bad plan though, and one I'd much prefer.

You forgot: - Subsistence farm, make your own clothes, berkeley society.

Well I live on 47 acres, I'm sure I could grow SOMETHING. I'd love to grow sugar and make my own ethanol & rum and sell it. LOL Bottle the rum in little gas cans... It'd sell itself!!

Conquest351 wrote: - Save up $40k and pay cash for anything and everything I could ever need and don't worry about credit. This is pretty much impossible given my current income. Not a bad plan though, and one I'd much prefer.

If you see 40K as an 'impossible' goal...

You have no business ever letting thoughts of a new car ever cross your mind.

(sorry if it sounds like I am being a jerk... but.......)