Not sure debt free is a good thing !

Discussion in 'Bad Dog Cafe' started by 83siennateleguy, Aug 13, 2018.

  1. 83siennateleguy

    83siennateleguy Tele-Meister

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    I thought getting out of debt would be great . No car loans . House paid off. No credit cards. That's what we strive for right ?

    Long story short , after a credit check revealed that I didn't have the great credit score I used to have , turns out I should have stayed in debt. Who knew ?

    For the past 2 years I never bought anything , used a credit card or had a loan payment ( car payments, mortgage loan, any loans ) and it turns out that was a bad move. Yes I have no loans , etc. And I also don't have a payment history for lenders to look at which put a negative impact on my credit rating.

    It's hard to understand all this and was advised to obtain a credit card to improve my credit.

    So was it worth all those years of busting my tail to get to where I'm at as a home owner with no car payments, mortgage or credit debt if I can't have a great credit score ? I dropped almost 100 points by not being debt free over the past 2 years.

    What's wrong with this picture ?

    So I guess I have to go back in debt?
     
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  2. Billnchristy

    Billnchristy Tele-Afflicted

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    Get a card, use it for purchases and pay it off monthly.

    Get one with cash rewards and get paid to shop.
     
  3. optofonik

    optofonik Tele-Meister

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    Yup. I was advised to develope a “debt portfolio” if I wanted to get the best mortgage rate.

    My Nana who raised me and lived through the depression taught to me that that the only things you went into dept for were a car and a house. For everything else she said, “If you can’t afford to pay cash, you can’t afford it.” I rode motorcycles all my adult life and payed cash for all of them until after the mortgage conversation.

    “Debt portfolio”, wtf kind of nonsense is that?

    Or “go” off the grid. It’s stuff like this that drives people to do so.
     
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  4. 24 track

    24 track Doctor of Teleocity

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    the big pic is maintenace , you've achieved ground zero, so you have 2 options
    1) pay cash for everything
    2) get a no yearly annual fee credit card

    if you pay cash you slide off of the credit grid

    If you use your card once a month and pay it off before any credit charges acrue ( like the next day) you will have a positive credit score

    do not make major purchases on your card if you cant pay it off right away that way you always have a zero balance ,or you can do what i did order a card , then chop it up so I could not use it
     
  5. Togman

    Togman Tele-Afflicted

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    We had a similar situation to this 3-4 years ago.

    What we have done is take out a credit card for a well known tour operator whereby every time we use the card we gather points that we can redeem against a future vacation. We also pay off anything we spend on the card as soon as we use it. If I spend £50 on fuel for the car - I get onto the internet banking the same evening and transfer that amount to the card company.

    So we keep our good credit rating, never pay any interest and get money of future vacations. Win, win, win:)
     
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  6. SolidSteak

    SolidSteak Friend of Leo's

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    What do you need a great credit score for if everything is paid off? Are you applying for a loan or something?
     
  7. PingGuo

    PingGuo Tele-Holic Silver Supporter

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    I have one credit card that I use for revolving purchases, not for carrying debit. Car is payed off. And no mortgage.

    Credit score is high enough that can I finance something if needed. But other than that I see no need to have open credit.
     
  8. ES330

    ES330 TDPRI Member

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    If your house, car and everything else is paid off...
    What would be so expensive that you would need to go into debt for ??
     
  9. jhundt

    jhundt Doctor of Teleocity

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    you did not mention WHY you were concerned, other than to say "after a credit check revealed that I didn't have the great credit score I used to have , turns out I should have stayed in debt."

    Why are you concerned about your "credit score"?
     
  10. Preacher

    Preacher Friend of Leo's

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    Dealt with this when we moved to TX five years ago. Started looking for a loan originator and was told my score was "good". I said, "no my score should be great, I only have a small loan on one car and my house's value is much more than the small amount I owed on it."

    The loan officer said that revolving credit makes a difference and it shows you can pay bills on time. I asked about making a house and a car payment on time and she said they don't typically count those.

    So we got two credit cards, no sign up fee, with cash back. Used them for three months and paid them off every month and our scope increased around 100 points in three months. Made a huge difference on our interest rate on the new house.
     
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  11. thegeezer

    thegeezer Tele-Afflicted

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    What he said...That's what I do. Haven't had a loan on anything in at least a decade. I maintain a credit score of around 800 simply by using a credit card for certain purchases and paying the balance in full monthly.

    Besides, it's virtually impossible to travel without a card. Try flying somewhere or renting a car. And secondly, you never know when life may deal you a hand that requires the acquisition of debt. Like it or not, it might become necessary again at some point. It's best to keep the groundwork laid.
     
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  12. 24 track

    24 track Doctor of Teleocity

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    unfortunatly , these days you cant book a hotel room with out a creditcard, or rent a vehicle, this sucks huge!
     
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  13. 83siennateleguy

    83siennateleguy Tele-Meister

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    For those of you who question why I'm worried about my credit score if I have no bills , you obviously don't understand that sometime in the future if I live long enough , I'll eventually need credit . Maybe this should be a learning post for some of you.
     
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  14. rjtwangs

    rjtwangs Tele-Afflicted Silver Supporter

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    Yep, I think of myself as a fairly smart guy....I don't understand credit ratings at all!! And I've yet to find somebody that is capable enough to explain it to me. So I am also debt free, have no outstanding loans or debts. BUT, I have two credit cards, both give me 1.5% cash back and I keep them paid off/zero balance, but I use them very little. On Saturday I bought a Strymon power supply, paid with a credit card. Paid it off this morning. I use it like that, just to show Equifax and Trans-Union that I use the card responsibly and pay it off each month. That's what they want to see, that you use it sparingly and keep it paid off. Anyway that's what I was told to do by my bank manager and it works fine. My credit score even occasionally continues to go up!! Try it like that, your score will come back up.


    RJ

    ymmv...
     
    Last edited: Aug 13, 2018
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  15. Manual Slim

    Manual Slim Tele-Afflicted

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    If it’s obvious that people don’t understand then why not explain?
     
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  16. SolidSteak

    SolidSteak Friend of Leo's

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    Hmm... I thought I was asking a pretty innocuous question. I hope you didn't think I was attacking your judgement or anything.

    If you want good credit later in life I would definitely take the advice of people who suggest using a card infrequently and paying off in full.
     
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  17. Art VanDelay

    Art VanDelay Tele-Afflicted

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    Thanks, Keith Moon
     
  18. blowtorch

    blowtorch Telefied Ad Free Member

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    If you are debt free, and want and intend to remain that way, a credit score shouldn't mean squat to you. That's a measure that all those suckers have to worry about, not you
     
  19. bftfender

    bftfender Friend of Leo's

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    think of this..you won you are out of debt...credit is for borrowing purposes...you are in a great spot, same here shortly, we have 1 card for emergency and 1 work card for gas pump & online purchase purposes to avoid skimmers or fraud, use a card like cash and pay it off every month when the bills come, Your credit will continue to go up and all the sudden all kinds of offers just start coming. key is keep paying off things and not go in debt.
     
  20. thegreatshocka

    thegreatshocka Tele-Meister

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    Credit is the ultimate scam. If you have bad credit, you're charged more for the privilege of going into debt, but with good credit you're charged less for that privilege. The only way to accumulate a good credit score is to go into debt and pay it off steadily... and then your reward is being able to get more credit to more easily go into debt o_O

    Having said that, the easiest way to build up is like everyone else said: get a card, charge small basic stuff like gas, phone bill, groceries, etc, and then pay it off monthly. Do this for a couple of years and you should be good (750+). It also helps if you buy something large like a car or house and pay it off without missing payments.

    My parents got me a credit card at 16, which I've always paid on time and in full. The only reason I'm not at 850 is because I've never bought a house or a boat, and the credit limits on my two cards are ridiculous. Surprisingly this helps because my credit utilization stays low, percentage wise.
     
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