The importance of credit history...

[javi415]

Listen to Charlie kids, again see sig

[TexasTerp]

Coming from someone with a 543 credit score - trust me, it's helpful to have good credit under any circumstance. I destroyed my credit back in undergrad (long story - best friend died) and I've been struggling to build it back.

I'm 26 with just under 300k in liquidity and ~25k left on my original 120K in loans from school (B.M. and M.M.). As a freelance web designer and opera singer, I would kill to have a good credit score. I'm lucky enough to make plenty but I've seriously had to restructure how I spend my income over the last couple years. I probably won't get a credit card again but having the ability to buy a house (instead of wasting money renting) at a low rate would be great, sadly I won't even have that option till I'm 30.

[801coppertop]

I thing having good credit is a great thing, its like finishing college you don't have to do it to make money, but if you do it definitely increases your chances of making bank. Also i work at an AT&T store, we run credit checks on customers, if you have bad credit you pay an extra line deposit, why would that be a good thing? It means your not reliable, so you pay a fee to make sure you wont skip out. Im definitely not advocating taking out a 20k LOC to buy stuff for a car that has no where near the value to cover a 20k collateral. But i do think having a good credit score is a great thing, and something to be happy about.

[delatlanta1281]

Without good credit, most good jobs are out of reach

[Restoman]

From what I see most of the younger guys out here looking to create their own credit history are pointed down a rocky road of bad credit. We all have urges to buy crazy shit, trust me. People getting into debt to create history just seems absurd. I actually took the FPU course twice and helped teach it once. It's a good mantra to live by for most people. I call it AA for people with money problems. People need structure especially when they don't see good examples set around them.

Delatlanta?? What good jobs are you speaking of? Accounting and purchasing jobs?

[z31maniac]

Why does it matter what their credit score is when it comes to hiring? Just because a person has a lower score, it makes them a horrible person?

Because HR people are the worst form of life on the planet.

Or it could be, they are questioning the responsibility of someone who can't even get it together to go online/mail/call-in and make a payment? Hell you can set up everything to draft automatically now, so you don't even have to remember!


Still want to hire the guy with a 580 credit score and high debt into a position handling cash all day? Or into a management position when he can't even manage his own finances?

[z31maniac]

From what I see most of the younger guys out here looking to create their own credit history are pointed down a rocky road of bad credit. We all have urges to buy crazy shit, trust me. People getting into debt to create history just seems absurd. I actually took the FPU course twice and helped teach it once. It's a good mantra to live by for most people. I call it AA for people with money problems. People need structure especially when they don't see good examples set around them.

Delatlanta?? What good jobs are you speaking of? Accounting and purchasing jobs?

That's when you do something like this:

1. You have the cash to buy that new TV you want.
2. Wait for Best Buy to have a 0% financing for 6 months special.
3. Buy TV with card, use cash to pay over 6 months.

You just earned credit history, didn't pay any interest and paid with cash on hand.

All it takes is a bit of discipline.

[Ryan Stewart]

I brought 60% down to the table at our last closing and had 3 lenders competing to loan to me. We own our beach house outright and are about 5 years from being payed off on our townhome. All 4 cars owned outright no other debt.

So you were living outside of your means? Borrowing money! Shame on you!

Why does it matter what their credit score is when it comes to hiring? Just because a person has a lower score, it makes them a horrible person?

Depending on the job you could be a risk. For example might not want to give someone who has a horrific history access to a safe or an expense account.

That's when you do something like this:

1. You have the cash to buy that new TV you want.
2. Wait for Best Buy to have a 0% financing for 6 months special.
3. Buy TV with card, use cash to pay over 6 months.

You just earned credit history, didn't pay any interest and paid with cash on hand.

All it takes is a bit of discipline.

Plus you get use of that money during the period instead of best buy. Most people dont realize this but companies game shit like this to make a bit more money with, what they call, working capital.

[Charlie]

From what I see most of the younger guys out here looking to create their own credit history are pointed down a rocky road of bad credit. We all have urges to buy crazy shit, trust me. People getting into debt to create history just seems absurd. I actually took the FPU course twice and helped teach it once. It's a good mantra to live by for most people. I call it AA for people with money problems. People need structure especially when they don't see good examples set around them.

HAHAHAHA, I knew you were a ramsey cult member. "How to balance a checkbook for five year olds". That shit is as bad as AA.

-Charlie

[Charlie]

That's when you do something like this:

1. You have the cash to buy that new TV you want.
2. Wait for Best Buy to have a 0% financing for 6 months special.
3. Buy TV with card, use cash to pay over 6 months.

You just earned credit history, didn't pay any interest and paid with cash on hand.

All it takes is a bit of discipline.

Bingo. I have a number of store cards for this very reason. pretty much every major chain does 0% for 6-12 months on anything "high ticket", aka 250-300 and up. That's free money right there. They'd be horrible to use for "normal" purchases (something like a 26.99% APR or some nonsense), but for their specials, break it out. Places like sears love to load up additional discounts and bonus points too. I knocked an extra 20% off my countertops just by using sears' card at the Great indoors when I redid the kitchen. Think they threw in 36 months at 0% as well. Sure they're trying to snare people into overspending, don't be dumb and you get a great deal.

-Charlie

[bimmerteck]

So you were living outside of your means? Borrowing money! Shame on you!

I never said I couldn't have paid cash for the town home. ;) I choose to leave a sum in another investment which is yielding more than the interest on the town home. Living beyond your means is borrowing money you don't have. (generally for things you don't need)

I'm not against borrowing money, only borrowing money for frivolous things. I.E. cars, electronics, dinner out, ect.

[TexasTerp]

So you were living outside of your means? Borrowing money! Shame on you!

Borrowing on a home loan in general isn't "living outside your means" it's actually very responsible. It becomes a problem and really "living outside your means" when you don't put a 25% (preferrably more) down payment and borrow on a loan you can't afford. When buying a house it actually hurts you to buy it outright! (counter-intuitive I know). Revolving debt with a low interest rate , like a home loan, is very beneficial - as long as your payments are ~15-30% or your monthly income. Any more or less means you are either well outside your means or simply not paying enough each month. You also have to account for what you expect to be making in 10-15 years, expect the low and adjust accordingly. People lose jobs all the time.

I never said I couldn't have paid cash for the town home. ;) I choose to leave a sum in another investment which is yielding more than the interest on the town home. Living beyond your means is borrowing money you don't have. (generally for things you don't need)

I'm not against borrowing money, only borrowing money for frivolous things. I.E. cars, electronics, dinner out, ect.

This, re-investing the difference after down payment is a very smart idea, something with a low-moderate return but guaranteed growth is always a good, safe plan (mutual funds for instance).

[z31maniac]

Borrowing on a home loan in general isn't "living outside your means" it's actually very responsible. It becomes a problem and really "living outside your means" when you don't put a 25% (preferrably more) down payment and borrow on a loan you can't afford. When buying a house it actually hurts you to buy it outright! (counter-intuitive I know). Revolving debt with a low interest rate , like a home loan, is very beneficial - as long as your payments are ~15-30% or your monthly income. Any more or less means you are either well outside your means or simply not paying enough each month. You also have to account for what you expect to be making in 10-15 years, expect the low and adjust accordingly. People lose jobs all the time.

Sarcasm > you

[StrokedSix]

I am 26 with $50k in savings/investments and a decent job. I always bought everything in cash, so I have no credit history. I keep getting rejected from every major credit card, so I got a card with a credit union in which I gave them $600 for a $500 limit card which I use once or twice a month on small purchases. It is creating credit history for me, but I still have insufficient credit history to get a major credit card.

Any tips on other ways to build credit without paying for it?

[TexasTerp]

Sarcasm > you

yes, yes it is. I failed.