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Credit!

In the US people sometimes 'swear' by their credit rating. What is the huff and puff about if you have a bad rating? How do you feel about credit? Does your country have a strong credit or cash system?

Credit

In the US, your credit rating is extremely important. Even if you don't carry credit card debt, you need a good rating for a lot of things.

For example, if you want to buy a car, unless you plan to pay cash, you will want a good credit rating. Your credit rating will have a direct result on the interest rate you get. The better the rating, the lower the rate. This past August, I purchased a new vehicle. While negotiating, the guy a number of times inquired about my credit. I assured him I had excellent credit. He didn't seem to really believe me. I don't know, does he think a single women can't have good credit. I say that because when I used to purchase vehicles with my husband with me, this question was never asked or only asked once and then not brought up again. Then when we had finalized the deal he went to start the paper work. He came back all impressed and said "Wow, you really do have good credit, you are on what we call sign and drive away." It really did make it easier.

Also, you need credit in the US to buy a house. With the cost of houses, not many people (if any) can afford to pay cash for a house. Again, your credit rating will have an effect on your ability to get a mortage and also on what rate you will get. If you have bad credit, your interest rate will be higher than if you have good credit.

I don't carry credit card debt, but I use my credit card. For example, I had a set amount of money I could spend on Christmas. It was in my savings. I charged all of my purchases and then when the bill arrived, I took the money from savings to pay off the credit card. Also, I would use the card in an emergency if I didn't have the money and my furnace needed to be replaced for example. Also, when making hotel reservations you need a credit card to guaranty the room for late arrival or they will give it to someone else if you don't check in by a certain time.

Of course, I am told that when you never keep a balance on your credit card you credit rating isn't as high as if you don't pay it off each month. Apparently, this is because they don't know what you will do regarding payment if money is tight and you can't afford to pay it off. For now, that isn't a concern for me because I have had periods of time where I did carry credit card debt. In the future, though, this might be an issue for me. I don't plan to carry credit card debt again in the future, if I can avoid it. So, I will have to see.

One more thing, I also remember before I owned my house, landlords sometimes would run a credit check before renting an apartment to me. So, without a doubt, having a good credit rating makes life easier at least in the US.

Credit! History & Civil Business Politics

I don't own any credit cards anymore. Most of what you can do with a credit card you can now do with a debit card -- directly takes cash from your bank account instead of racking up bills. I prefer to carry it, because it requires a PIN or password to use it, and I don't have to have a lot of cash in my pocket. So car rentals, hotel stays, etc. can be reserved and paid for with a debit card.

A credit rating, as tena pointed out, is essential in the U.S. -- and if you ain't got it, it's really hard to get anything.

Roz

Credit

For those of you who may have read my blog entries lately, you know that I have been doing some research on getting my credit re-established. I made some stupid mistakes earlier in life, and they have been haunting me ever since. Here are some steps I found which can help in rebuilding one's credit, and I thought I would share them here. Unfortunately, these are directed at US consumers, but the concepts may exist in other countries, so they may still prove useful.

1) Opt Out - What? Yes, I didn't know about this either, and was shocked when I found it. Ever wonder why you keep getting all this pre-approved offers for credit cards in the mail? It's because by default, every US consumer that has some line of credit, has been automatically opted-in to receive them. And even though you may tear them up as soon as you get them, keep in mind that these creditors are performing 'pulls' on your credit reports to grant you these offers. A 'pull' means that they are retrieving your credit report or doing an inquiry on it. If you end up with a lot of these pulls, it can adversely affect your credit. Here is a link to the Credit Reporting Opt-Out site for US consumers. Do yourselves a favor and opt-out permanently:

https://www.optoutprescreen.com/?rf=t

2)Get copies of your credit reports from the Big 3 (Experian, Equifax and TransUnion) and correct ALL incorrect personal information. Why? Because there may be 'tradelines' associated with the incorrect information. Making sure you have all correct info on your reports is key to making corrections in credit later on. Rule of thumb is to only have current personal information on your report. Get rid of all the old addresses, names, telephone numbers, and driver license numbers.

3) Dispute, dispute, dispute. If you have any negative tradelines, dispute them with the individual Credit Reporting Agencies. You may ask "Isn't it illegal to dispute something that is mine?" Not at all. Know your rights. Place the burden of proof on the Agencies. If they verify, fine. If they can't verify (and they usually have 30 days to do so), then they are obligated to remove the item. Initial disputes should be done as "Not Mine". That way they have to prove without a doubt that the debt belongs to you. And, if you've done steps 1 and 2, you may be surprised that there may have been tradelines reported that were linked to the incorrect or old information. Now the chances of them being removed are increased.

4) Send goodwill letters. If you have had problems in the past with late payments, and you still have open lines of credit with these creditors, don't be afraid to send them a letter asking them to update those late payments. Creditors are allowed 'goodwill adjustments' at their discretion, and especially if you are still a valued customer, and you explain why you may have been late, etc, they may update the tradeline in a positive way.

5) Pay for deletion. If you had collections or chargeoffs in the past (like I do) and they have been verified and validated, then a pay for deletion may be in order. This is where you write a letter to the creditor or credit agency and ask them to delete the tradeline if you pay in full. Usually they will do anything to get their money, and will agree to this. Make sure to send these letters Certified Mail with Return Receipt Requested. This way if they go back on their word, you have the proof of their agreement.

6) Keep current lines of credit at low utilization. Low utilization is usually consider below 50% of the line of credit. Do this especially if you are getting ready to apply for a new loan in the near future. The difference in your scores from 75% to 40% utilization could be as much as 60-70 points!

Even if you have excellent credit or poor credit like me, following these steps can greatly improve your credit merit, and help you along in getting approved for loans.

Credit

I had no credit when I bought my first car. I have four car loans paid off early on my credit. The one credit card I had got me into trouble. Your credit can be established without credit cards. I have student loans all consolidated and all paid on time. Credit cards also add to the amount of open accounts in your name which works against you. I already found out that I pre qualify for a house and I don't have a credit rating based on credit cards. How did people get loans to buy houses before credit cards if they are necessary? The actual fact of the matter is that for over eighty percent of credit card users, there credit card record works against them and not for them. That means that most people with credit cards would be better off without them both rating wise and money wise. Its a myth that you have to have a credit card just in case. My debit card is the only thing I have, and the fail safe is the five percent of my paycheck that goes into savings every two weeks. If there is an emergency and I over draw my checking, it gets automatically taken out of my savings. Problem solved.

Credit!

Thanks for the information Xander. I just opted out permanently. If I want or need another credit card, I can contact the bank of my choice automatically. I hate getting all that information sent to me.

I am tempted to opt my son out for the next 5 years too. I wonder if that would be wrong of me to do without his knowledge.

Another reason to opt out has to do with self control. Too many people look at credit cards as a permission to shop. These preapproved cards come in the mail, they apply, receive and charge. Soon they are in trouble. Without the card offers in the mail, they never would have applied on their own.

I also agree you don't need credit cards to get good credit, but I think it does help to establish it sooner and help to re-establish it sooner. However, it is a risky way to do it. One must really exercise self control and pay the balance off and not over charge. You can do this be opening a low line of credit and insisting the bank NOT raise the limit automatically.

Credit!

Chances are, if he goes to college then he will receive many offers for credit cards anyways. So, opting him out is not a bad idea for him in my opinion. He may thank you for doing it later. I know I received many credit card offers in the mail. In fact, that is how I got my first set of cards, which I am now paying dearly for 8 years later. Credit cards are evil, but everyone should at least have one, to show creditors that they can be trusted with credit. Plus credit cards differ from loans (auto or home) as they are different types of credit (installment vs revolving).

Credit! Politics Business Civil & History

Problem is my son is 24 now. So, he may thank me later, but is it morally right (forget legal) for me to do it?

Heck, I am his mother, forget morals...It is my job to protect him.