Low Credit Scores (1 Viewer)

[Mario Kart]

The one card I use, my limit is $900. I haven't asked for it to be raised in ~5+ years. If I near my limit two weeks into the 4 week month... I pay it before midnight one night, then my limit is reset. Not difficult at all and I assume most do some sort of payment like this periodically. Watching my dad pay his bills, I'm under the assumption most older people wait for a bill and pay at the end of each month (billing period). People who know technology, I assume, pay off cards like I do more so than how my dad pays them off.

As far as rewards go. 1% is bogus given that rewards used to be 3%, 4%, and 5% on purchases. Too many people think 1% is good. Nope.

Unless you need to open up credit, it's better to wait for the bill. All things equal, I'd rather maximize the amount of time the money is in my account earning interest.

What interest?

If you pay from checking/savings account, each account can earn interest. Something like 0.000000022% so paying "early" or paying on time doesn't really matter overall, imo. But, some interest can be earned.

"Waiting until the bill was due earned me an extra $0.02."

Yeah, that is Em math at work here.

 

[None_More_Black]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

 

[thecatch]

The one card I use, my limit is $900. I haven't asked for it to be raised in ~5+ years. If I near my limit two weeks into the 4 week month... I pay it before midnight one night, then my limit is reset. Not difficult at all and I assume most do some sort of payment like this periodically. Watching my dad pay his bills, I'm under the assumption most older people wait for a bill and pay at the end of each month (billing period). People who know technology, I assume, pay off cards like I do more so than how my dad pays them off.

As far as rewards go. 1% is bogus given that rewards used to be 3%, 4%, and 5% on purchases. Too many people think 1% is good. Nope.

Unless you need to open up credit, it's better to wait for the bill. All things equal, I'd rather maximize the amount of time the money is in my account earning interest.

What interest?

If you pay from checking/savings account, each account can earn interest. Something like 0.000000022% so paying "early" or paying on time doesn't really matter overall, imo. But, some interest can be earned.

"Waiting until the bill was due earned me an extra $0.02."

It's de minimis certainly, but I'd rather have it then pay my credit card bill early for no good reason.

 

[Maelstrom]

There have been studies shown that people who spend cash spend less because there is an emotional element to cash that does not exist with credit cards (this actually does extend to all plastic, debit cards as well). So there is that reason to spend cash, not credit.

The other factor people do not take into account is risk. By charging on a credit card, you are, whether you realize it or not, taking on financial risk. If something happens financially (could be a job loss, medical emergency, etc), now in addition to the regular bills there is a credit card bill.

For the most part, I don't quite completely buy into the no-credit life that Dave Ramsey proposes, I think credit can be valuable if used correctly. But it can be incredibly dangerous (financially) if used incorrectly.

As for those with "no credit score", trust me, if they need it for something like say a house, someone will give them a loan and likely at competitive rates. They may not be able to qualify for a CC with a large limit but if they are purposely avoiding credit then they are also likely purposely investing in an emergency fund, and so don't need a CC with a large limit.

 

[Maelstrom]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

 

[mr roboto]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

 

[jon_mx]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

Higher demand tends to drive prices up.

 

[The General]

I still haven't seen any benefit for not using credit cards other than it may be too tempting for people to run balances.

 

[Cunk]

I applaud the folks getting out of debt but not really sure I understand the focus with going off the credit score grid. In terms of an optimal financial position, I would think you want zero debt and a great credit score. Just pay for certain things with credit and pay it off each month.

why use credit at all?

Because credit cards are convenient, and most young people can't just write a check for a house.

I understand most young people can't buy a house. Credit cards are convenient, especially for those that don't have money and put stupid purchases on a credit card that they honestly can't afford. I've known and read dozens of people that have used credit cards for items, like a $1,000 purse or $300 pair of shoes, that they absolutely no business purchasing. They have less than that saved in retirement, but those high priced items are going to really help them out.

If someone doesn't have the cash for something, then don't get it. I honestly don't understand how difficult that is to grasp.

I charge probably 99% of the stuff I buy, in dollar terms. I pay cash for fast food, and that's pretty much it. Everything else -- gas, groceries, prescription meds, clothing, frivolous entertainment, etc. -- all go on the card. I've never carried a balance in my life. Not once, ever. I get that some people have a problem with over-spending, but I don't have that problem. For me, my credit card is a fantastic convenience and gives me free stuff at Amazon. It's objectively better than cash in every imaginable way.

Exactly.

Exactly X 2. I could send you a huge list of stuff I got for "free" from Amazon this past year from simply using my credit card for as much as I can. And yes, I pay it off completely each month. If you can do this and chose not to then you are actually losing money.

 

[Juxtatarot]

I applaud the folks getting out of debt but not really sure I understand the focus with going off the credit score grid. In terms of an optimal financial position, I would think you want zero debt and a great credit score. Just pay for certain things with credit and pay it off each month.

why use credit at all?

Paying with cash for majority of things is just wasted opportunity to getting free stuff and not practical in many instances.

lol. I hope you really don't believe this. I really hope.

Thank you for your concern.I travel for work pretty extensively and use cards for everything and pay off balance every month. Hotel chain cards tied to an AMEX, Airline cards for my flights. The rewards pile up very quickly.There is no way I'm using cash in for any of that stuff because I can't, but why would I? I really don't use cash for anything unless I absolutely have to.

What am I missing out on exactly by paying in cash?

Good for you. If you pay off every single credit card every single month and have absolutely no balance at all then you are in the very extreme minority. A lot of research and articles have been written how people don't become wealthy because of the frequent flier miles they accumulate. To say spending actual cash is not practical in many instances is just not smart. There's reasons why so many tens of thousands of people are deeply in credit card debt each and every year. The common sense reason is they use it as a so called "convenience" because they don't have the cash.

Let's not get carried away now.

Not getting carried away at all. The poster said he uses his credit card a lot every month and pays it off every month. If he does then I stand by my original comments that he is in an extreme minority. Obviously, if someone only has $50 on their Visa to keep it active I'm not talking about them. I'm talking about the group that the poster was in that uses their credit cards extensively each and every month. From what I've read, heard, and actually seen, it's very rare than people that charge a lot their purchases every month turned around and pay them off within 30 days. If you think otherwise please let me know.

It isn't very rare. Do a Google search. It's closer to half.

 

[Juxtatarot]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

Incorrect. All of his accounts were closed for over 6 months. Closed accounts don't continue to be reported on monthly even though they will be on his reports for 7 to 10 years. I think that is where you are confused.

 

[None_More_Black]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

Incorrect. All of his accounts were closed for over 6 months. Closed accounts don't continue to be reported on monthly even though they will be on his reports for 7 to 10 years. I think that is where you are confused.

I will put it another way for you, you don't need open accounts to have a credit score.

 

[Juxtatarot]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

Incorrect. All of his accounts were closed for over 6 months. Closed accounts don't continue to be reported on monthly even though they will be on his reports for 7 to 10 years. I think that is where you are confused.

I will put it another way for you, you don't need open accounts to have a credit score.

Sure you do. (Within the last 6 months anyway). I work in credit and have seen no scores like this many times. The article is right about that.

 

[TxBuckeye]

I'm another one that pays everything with a card. I haven't paid a penny in interest in years. I've lost count of how many. I have to think it isn't as rare as some people here believe. But then again, maybe I just work with a more financially stable group of people than the average American.

 

[None_More_Black]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

Incorrect. All of his accounts were closed for over 6 months. Closed accounts don't continue to be reported on monthly even though they will be on his reports for 7 to 10 years. I think that is where you are confused.

I will put it another way for you, you don't need open accounts to have a credit score.

Sure you do. (Within the last 6 months anyway). I work in credit and have seen no scores like this many times. The article is right about that.

The payment history on a closed account will not be ignored by the FICO credit score, says FICO's principal scientist Frederic Huynh. You need to have an account open for 6months that reports to have a history. You think if you stop paying your credit cards, and the cards are closed, you will have no score profile in 6 months? No.

 

[Juxtatarot]

There is no way the guy who payed off all his stuff in 2008 would then a have a "no score" credit profile. He would probably have to wait 10 years from closing everything to get that.

Not true. The article even quotes FICO on this.

The quote was correct but that has nothing to do with guy's situation. He has plenty of accounts open for 6 months that were reporting. Just because you close something or pay something off does not mean it gets removed from your credit report. Positive information can stay for 10 years. If you spent the last 30 years paying off a mortage, and the last five paying an auto loan. Do you think you won't have a credit score a few years after paying them off? Off course you will. The guy is a Dave Ramsey want a be.

Incorrect. All of his accounts were closed for over 6 months. Closed accounts don't continue to be reported on monthly even though they will be on his reports for 7 to 10 years. I think that is where you are confused.

I will put it another way for you, you don't need open accounts to have a credit score.

Sure you do. (Within the last 6 months anyway). I work in credit and have seen no scores like this many times. The article is right about that.

The payment history on a closed account will not be ignored by the FICO credit score, says FICO's principal scientist Frederic Huynh. You need to have an account open for 6months that reports to have a history. You think if you stop paying your credit cards, and the cards are closed, you will have no score profile in 6 months? No.

Keep in mind that having no score is not a good thing. If you have a score, what Huynh is saying is correct. I'm not exactly sure about the particulars of your scenario, so I can't answer to that. By stop paying do you mean stop paying when you have a balance? If so, that will continued to be reported on for a while. If it's paid off and closed, it won't.

 

[parasaurolophus]

The rewards are so diluted now, they aren't even worth it. Find me a good reward card and I will switch. I was getting 5% back on groceries, gas, hotel all year before Chase cut these drastically. Now, I get 5% in one quarter and 5% in another quarter on groceries. All purchases are 1% back now. Chase is doing a huge circle jerk on all its customers.

My wife and I have absolutely killed the southwest card. Very simple.

I get a card, she gets a card. We own a rental property so we qualify for a business card. The card goes in my name with my rapid rewards number assigned to it. So thats three cards. We got the cards last january. I got 50k points, she got 50k points, I got another 50k points for business card. Spend another 10k and voila, southwest companion pass. Now every time I fly southwest, I can bring my wife for free.

We have flown every month since we got it and sometimes twice per month. We use the 150k points we have to book my flights(you can use your points to book somebody else's flight), then add my wife for free. By the time it is all said and done we will have flown 13 times for free for both of us and then 10 times where my wife is free.

This cost us 500 bucks in annual fees. That is 36 free round trip tickets.

 

[Sarnoff]

I applaud the folks getting out of debt but not really sure I understand the focus with going off the credit score grid. In terms of an optimal financial position, I would think you want zero debt and a great credit score. Just pay for certain things with credit and pay it off each month.

why use credit at all?

You get a lot of free things paying with credit card then paying off each month.

Paying with cash for majority of things is just wasted opportunity to getting free stuff and not practical in many instances.

Partly true, but nothing is free. The credit card company has swindled their way into getting 4% of every transaction. So you may get 1% back or whatever, but the credit card companies have added 4% to the cost of the goods.

I suppose but unless the business offers a discount for paying cash that doesn't really matter.

Unfortunately, credit card companies have successfully stopped businesses from offering cash discounts.

How's that?

Credit card companies for decades banned the use of cash discounts through contracts with vendors. Congress stopped that practiced, but did mandate that merchants could not add a surcharge for credit cards. Credit Card companies work hard to twist arms through laws and contracts and other practices to keep the price of cash and credit the same. They were largely successfully in creating that as a standard business practice, although some of their old practices are no longer legal.

Many gas stations in my area quote two prices for gas per gallon... like CASH PRICE: $3.70/gal. CREDIT PRICE: $3.76/gal.

 

[jon_mx]

I applaud the folks getting out of debt but not really sure I understand the focus with going off the credit score grid. In terms of an optimal financial position, I would think you want zero debt and a great credit score. Just pay for certain things with credit and pay it off each month.

why use credit at all?

You get a lot of free things paying with credit card then paying off each month.

Paying with cash for majority of things is just wasted opportunity to getting free stuff and not practical in many instances.

Partly true, but nothing is free. The credit card company has swindled their way into getting 4% of every transaction. So you may get 1% back or whatever, but the credit card companies have added 4% to the cost of the goods.

I suppose but unless the business offers a discount for paying cash that doesn't really matter.

Unfortunately, credit card companies have successfully stopped businesses from offering cash discounts.

How's that?

Credit card companies for decades banned the use of cash discounts through contracts with vendors. Congress stopped that practiced, but did mandate that merchants could not add a surcharge for credit cards. Credit Card companies work hard to twist arms through laws and contracts and other practices to keep the price of cash and credit the same. They were largely successfully in creating that as a standard business practice, although some of their old practices are no longer legal.

Many gas stations in my area quote two prices for gas per gallon... like CASH PRICE: $3.70/gal. CREDIT PRICE: $3.76/gal.

If the price is quoted, they can not add a surcharge for credit card. They have to give that price to all customers regardless of payment method.. It is legal to quote a cash price and a credit price. Stupid, but the way it is.

 

[The General]

If the price is quoted, they can not add a surcharge for credit card. They have to give that price to all customers regardless of payment method.. It is legal to quote a cash price and a credit price. Stupid, but the way it is.

Not understanding this. Are you just saying they can't make it more expensive when using a card but can discount for people paying cash?

 

[Patriotsfatboy1]

I think people need a little self control. If you can't afford it, don't buy it.

I use my AMEX all the time and pay it off every month. I have a car loan because it costs me .99% and the cash I would use to buy it outright makes me more than that.

I have a mortgage on a house that I can easily afford, but I have no other debt.

Credit cards are not the problem. Personal accountability is the problem.

 

[mr roboto]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

Higher demand tends to drive prices up.

Higher consumption (for consumer goods especially) leads to mass production, competition, market segmentation and standardized production. Efficiencies and competition lead to better pricing. Look at the price curve for a new product at the early adopter stage vs mass adoption.

 

[Baloney Sandwich]

I think people need a little self control. If you can't afford it, don't buy it.

I use my AMEX all the time and pay it off every month. I have a car loan because it costs me .99% and the cash I would use to buy it outright makes me more than that.

I have a mortgage on a house that I can easily afford, but I have no other debt.

Credit cards are not the problem. Personal

accountability is the problem.

Most people enter the work world with little to no understanding on how to properly handle their finances. There should really be a required course in high school and then a follow up course for those that go to college focused on it. Most young kids learn only for their parents who are often setting really bad examples. Of course, many will take the course and still make bad mistakes but it would at least give people some knowledge to make smart choices.

 

[jon_mx]

I still haven't seen any benefit for not using credit cards other than it may be too tempting for people to run balances.

Obviously you are not married. That is not a minor thing.

 

[Dragons]

If the price is quoted, they can not add a surcharge for credit card. They have to give that price to all customers regardless of payment method.. It is legal to quote a cash price and a credit price. Stupid, but the way it is.

Not understanding this. Are you just saying they can't make it more expensive when using a card but can discount for people paying cash?

Yes, exactly. In a way it's just semantics, but it's an important distinction when it comes to marketing. The advertised price is the credit card price. You can also advertise discounts for paying cash, but think of how cluttered a Target ad would look with both prices listed.

 

[jon_mx]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

Higher demand tends to drive prices up.

Higher consumption (for consumer goods especially) leads to mass production, competition, market segmentation and standardized production. Efficiencies and competition lead to better pricing. Look at the price curve for a new product at the early adopter stage vs mass adoption.

Are you suggesting that credit card have made a difference on whether items are mass produced or hand made or weather companies have standardized their process? Credit cards may be responsible for a 5-10% increase in consumption, which probably acts more on increasing demand and driving prices up moreso than being on such a scale to drive mass production and efficiencies.

 

[Patriotsfatboy1]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

Higher demand tends to drive prices up.

Higher consumption (for consumer goods especially) leads to mass production, competition, market segmentation and standardized production. Efficiencies and competition lead to better pricing. Look at the price curve for a new product at the early adopter stage vs mass adoption.

Are you suggesting that credit card have made a difference on whether items are mass produced or hand made or weather companies have standardized their process? Credit cards may be responsible for a 5-10% increase in consumption, which probably acts more on increasing demand and driving prices up moreso than being on such a scale to drive mass production and efficiencies.

How do I pay by cash online?

 

[jon_mx]

As for businesses charging more, sure they do. It may not be directly tied to credit card fees, but those fees are definitely tied into their cost of doing business and affects their product/service costs.

How do you factor in lower prices due to higher consumption because of the readily available consumer credit?

Higher demand tends to drive prices up.

Higher consumption (for consumer goods especially) leads to mass production, competition, market segmentation and standardized production. Efficiencies and competition lead to better pricing. Look at the price curve for a new product at the early adopter stage vs mass adoption.

Are you suggesting that credit card have made a difference on whether items are mass produced or hand made or weather companies have standardized their process? Credit cards may be responsible for a 5-10% increase in consumption, which probably acts more on increasing demand and driving prices up moreso than being on such a scale to drive mass production and efficiencies.

How do I pay by cash online?

Scan it.

 

[Osaurus]

Bitcoins will revolutionize how we buy things