credit problems

[Yank McCobb]

I agree and edited my post to clarify. Yes I did incur some debt, and yes, I currently do so on a monthly basis...although I prefer to think of it as using the credit card companies' free money. Either way, I think we are saying the same thing. Be responsible. And the best way to do that is through education.

 

[Crizz]

I love happy endings

Now, about G 0 J 3 T 5....

 

[dash8driver]

whats important is having a favorable history with debt management and low current debt obligations. that is, your history reflects that other companies have extended you some credit, you used it and paid everything on time.

at the time that you're trying to get more credit, having debt works against you. some of the yard sticks used is your debt to income ratio and also a debt to credit ratio. so at this point, the less debt you have, the better score you're going to have.

my credit score has gone up recently because of my debt to credit ratio has improved. the only things that have changed are my income and debt to credit ratio. my pay has gone down to help pay for executive bonuses. i have gotten more credit cards and/or my current cards raised my limits. i keep my balanaces low to nil, making my debt to credit ratio more favorable.

 

[huncowboy]

Tell me Crizz why are you so eager to build credit? To borrow more money and go deeper into debt?

There is nothing wrong with debt if the money was well spent and you were able to calculate your budget. Debt can get you an education or it can get you a cruise to Europe.

In your opinion who is ahead of the two? One who takes an education loan of $100,000 at the age of 18 so he might have a professional career at 24, or the other how works wherever for years to save up the same amount then gets the same degree at the age of 28?

Debt is not the problem. The problem is people who don't know how much to borrow or how to spend it. If you have a plan, and a plan B, debt will let you move faster in life. I you have no plan than don't touch it.

 

[psycho]

Um...yeah. Don't sweat it. Ruin your credit. Don't pay your bills - all of the responsible ones in the world will pay them for you. Heck, we pay 18%, what's 20% to cover folks who don't pay their bills. Oh yeah - good luck getting decent (or any) financing on anything with lates and closed accounts on your report. Join the ranks of financiall illiterate Americans who need it now, are clueless about money, suck off of responsible America, and cannot think or plan long term financially. (you will want to buy a house one day, right?) But what does that matter - you're flying a jet! It's what you always wanted to do!!!

AZT

PS: Been in the IP, Regional FO and CPT ranks - you can do it without killing your credit.

Don't forget to send mommy and daddy a thannk you note.

 

[Dangerkitty]

Yep. I am debt free, yet still have an extremely high credit score. I charge every little thing (as well as all the big things) on my credit cards, but pay in full every month. For years and years, my credit history shows me as "paid or paying as agreed". Yet, I have no debt. The cars are paid, the boat is paid, the toys are paid and the mortgage is paid. Yes, you must take on "obligations" in order to build your credit score, but you most certainly do NOT have to take on debt. In fact, that is how most people ruin their credit and often, their entire lives.

Like mentioned above, someone (as most Americans do) could accumulate massive debt while paying the bare minimum requred, and still be given additional credit to accumulate additional debt, simply because they have shown a history of paying. Yet their debt load continues to increase, they pay incredible finance charges, and creditors line up to extend more credit.

I, on the other hand, seek out the best reward cards that carry no annual fees, and pay in full every month. I get to use their money free of charge each month to purchase what I would purchase anyway...then get additional cash back for doing so. All the while, my credit score remains excellent and my debt load zero.

Like was also mentioned above, young people in their 20s, who have yet to develop good financial sense and experience, are the targets of these creditors. They will make tons of money off this demographic and by the time these 20-somethings are 30-somethings, they will be scrambling to remain above water.

So go ahead, take on debt. After all...how else are you going to "build your credit"?

BTW, Crizz...you are most certainly the exception, and I applaud you for being educated and responsible at your age. I know there are many like you, but unfortunately, I think you would agree that you are probably in a minority when you consider most Americans...and especially most younger people who have yet to acquire this education and skill of being financially responsible. Heck, many people NEVER acquire this responsibility, so perhaps I am being overly critical of younger people. But again, you are to be congratulated for being driven enough to succeed in this area.

One last edit....while I might have been overly simplistic in saying you don't have to take on debt to get a good credit score...obviously you have to take on some type of debt in order to repay it...even if it is only the credit card you pay in full every month. It is the accumulating debt that continues to increase due to finance charges and additional debt load that buries most people. And many of these people continue to "pay as agreed". So yes, you have to have an obligation to pay in order to do so, but you do not have to accumulate loads of debt.

With all due respect Yank you are still being duped. Studies have shown that people with Credit Cards spend on average 10-25% more than those that don't. Why? Becuase when you take out cash or you take out a debit card you feel the "pain" of giving that money away for a good or service. When you pay with a Credit Card you are just passing the pain on to another day and time.

You state that you have cards with the best rewards programs. Why do you think that these Credit Card companies have these reward programs? They don't do it out of the kindness of their hearts. Rewards programs are there for a reason. What you get for these "Rewards" you make up in increased spending.

Just my opinion. But I think you would be better off not using the cards and spending the cash instead.

 

[Dangerkitty]

I am still curious, however. How does one build a credit score with the absense of any debt repayment? If I never once had a loan. Never a credit card. What would my score be?

You addressed a specific flaw you saw in our commentary. The fact that you cannot improve a credit score by incuring debt.

I hold the exact oposite. You CANNOT increase a credit score with an absense of debt.

I think you have been talking to too many bankers who state you need to incur debt or get credit cards to "build" your credit score.

Like I said before history of payments is only a part of your credit score.

The bigger question is. Why are you so interested in having such a great credit score? To get a loan or are you worried about not getting that job or higher insurance rates becuase of a bad credit score. (Which you will NOT have from having no history of debt repayment or credit cards.)

Answer that and I will expound further.

 

[Dangerkitty]

There is nothing wrong with debt if the money was well spent and you were able to calculate your budget. Debt can get you an education or it can get you a cruise to Europe.

Here is a novel concept. How about not taking that trip to Europe until you can afford it. Credit might get you a trip to Europe but do you really want to have that vacation following you for the next couple of years becuase you could not afford it in the first place. How about saving up for the trip and paying for it in CASH!

In your opinion who is ahead of the two? One who takes an education loan of $100,000 at the age of 18 so he might have a professional career at 24, or the other how works wherever for years to save up the same amount then gets the same degree at the age of 28?

Minus going to to med school can you tell me why you need $100,000 for an education. If you can tell me what you need that $100,000 for in regards to an education and I can give you some dang good alternatives.

Debt is not the problem. The problem is people who don't know how much to borrow or how to spend it. If you have a plan, and a plan B, debt will let you move faster in life. I you have no plan than don't touch it.

Tell me then, what is your plan? And can you tell me why debt is not the problem? Do you have any debt?

 

[Dangerkitty]

Thank you for your reply. We can actually have a discussion if we treat one another with respect.

You make some excellent points. And I agree with almost all of them. You're right. Debt is a cancer. Money is too easily acessible for the masses.

My point was simply that without any positive credit history, you will have problems applying for any kind of other long term debt. Im sorry, but its unfeasable to pay cash for a house. And if you dont want to be raked over the coals on your huge investment, then you better have a good credit score. I have $50k in school loans and a $180k mortgage. At the age of 22 my score is 745. It has only gone up with the addition of long term debt. I qualified for the best rate possible when consolidating my school loans, as well as when applying for my first mortgage. I have debt. The majority of it has been unavoidable.

Given the choice of paying monthly rent or owning a house with a mortgage, I think the choice is clear. That debt is unavoidable and only solidifies your ability to be efficient with the money you borrow and ensures a low interest rate.

Many people pay for college as they go. Believe me, I worked my tail end off while in college and paid every cent I could to contribute to the cause. However, if given the choice of taking 5 6 or 7 years to complete the college/ratings/flight instructing hurdle like so many people do, I chose to take on some debt to help grease the wheel into a career many years before I would have had I not incured any debt. And as a result, my earning potential and net worth over that same time period will be vastly improved.

The term leverage comes to mind. Thats all I have to say about that.

Crizz,

I should have been more clear. I do have a mortgage. That besides one car payment that I will have paid off in less than six months is my only debt. However, I only favor a 15 year fixed rate mortgage. No ARMS, No interest only loans. Fixed rate 15 year loan of less if you can handle it.

 

[AZ Typed]

Don't forget to send mommy and daddy a thannk you note.

um...I don't get it?

 

[huncowboy]

Here is a novel concept. How about not taking that trip to Europe until you can afford it. Credit might get you a trip to Europe but do you really want to have that vacation following you for the next couple of years becuase you could not afford it in the first place. How about saving up for the trip and paying for it in CASH!

Minus going to to med school can you tell me why you need $100,000 for an education. If you can tell me what you need that $100,000 for in regards to an education and I can give you some dang good alternatives.

Tell me then, what is your plan? And can you tell me why debt is not the problem? Do you have any debt?

If you could comprehend you would see that mentioning Europe was a negative example not something I would put on a credit card... good example vs bad... nevermind.

100k, 50k or 20k. Was another example. Getting a MBA in accounting from an average university in FL is around 60k. We talk about debt in general not some exact numbers. If you don't have 60k it is just as far as 100k for med school. So how long does it take to save that up while flippin in BK?

I have debt, nothing major. It was worth for me to be able to change a career. Without that debt I would be rotting in an office pushing papers for over 2x the salary I get now as a CFI, and I would feel miserable for two more years. If I would have waited to save up another 20k to be able to do this debt free I would be able to start my private pilot training right around now.

Btw none of your business but since you asked my plan is to pay it off next year. But I wont wait to save $200k for ummmm 20 years to be able to buy a house if you don't mind.

What is your problem with getting debt for the right reasons? Sounds like you have missed a payment.

 

[Dangerkitty]

Btw none of your business but since you asked my plan is to pay it off next year. But I wont wait to save $200k for ummmm 20 years to be able to buy a house if you don't mind.

What is your problem with getting debt for the right reasons? Sounds like you have missed a payment.

Read my previous posts moron. I have already admitted to having a 15 year fixed rate mortgage at 5.6%. I never said that there was anything wrong with having a mortgage. I also have a car payment that will be paid off in less than 6 months.

If you also further read what I have stated I also made it clear that about 6 months ago I had my credit reviewed and I scored an 802. You dont get that kind of score with a missed payment.

Any other clever little jabs you got there Richard?

 

[dash8driver]

ok.. its time to get out the ruler already...

 

[FN FAL]

Read my previous posts moron. I have already admitted to having a 15 year fixed rate mortgage at 5.6%. I never said that there was anything wrong with having a mortgage. I also have a car payment that will be paid off in less than 6 months.

If you also further read what I have stated I also made it clear that about 6 months ago I had my credit reviewed and I scored an 802. You dont get that kind of score with a missed payment.

Any other clever little jabs you got there Richard?

I'm creeping ever so close to that light at the end of the "debt free" tunnel...and it's looking better all the time.

You're correct...don't use credit at McDonalds, don't use credit to buy clothes, gas for the car, sunglasses or vacations. You'll be compounding interest on those things long after they are gone or just memories in a photo album.

In the 80's I worked at one of the best factory jobs in town, starting pay was $36,000.00 a year. By my third year there, I had a loan on a Gold Wing, a new Celica, a brand new $59,000.00 home and the mag wheels and stereo I put on the Celica...and a loan for a home stereo system. Life was good...living the dream.

Budgeting was easy...on one payday, I paid these and on the other payday, I paid those. What was left over after paying the bills every two weeks? Barely enough money to put gas in the car so I could make it into work and just enough money to buy groceries. No kidding, I was down to having an "allowance".

The best part was, I couldn't afford to miss a payment, everything had to be paid on time. One missed payment would knock over my little financial house of cards. I remember having to make a list of every meal I was going to eat over the next two weeks. I had $40.00 bucks left after paying the bills and considering gas money...every pay period!

I made this list up, went to the grocery store and shopped with a calculator until I ran out of money. I Had to put this back, had to get the no-name brand of that, instead of name brand this. When I got done, I had enough money left over for a steak or a can of coffee...decisions, decisions. Went for the coffee...steak is good for one night and makes a great 5.00 turd, but coffee is a must have.

I know it's tough as regional pilot to make ends meet on 500.00 take home every two weeks...do the best you can and don't borrow money for things that you can eat, experience, or wear.

 

[Crizz]

With all due respect Yank you are still being duped. Studies have shown that people with Credit Cards spend on average 10-25% more than those that don't. Why? Becuase when you take out cash or you take out a debit card you feel the "pain" of giving that money away for a good or service. When you pay with a Credit Card you are just passing the pain on to another day and time.

You state that you have cards with the best rewards programs. Why do you think that these Credit Card companies have these reward programs? They don't do it out of the kindness of their hearts. Rewards programs are there for a reason. What you get for these "Rewards" you make up in increased spending.

Just my opinion. But I think you would be better off not using the cards and spending the cash instead.

I dont see how putting your grocery bill or gas or movie tickets on a card and paying off immediately is getting duped. The demographic that your logic (and your study) applies to is probably not the ones paying off their balances monthly.

 

[Crizz]

I think you have been talking to too many bankers who state you need to incur debt or get credit cards to "build" your credit score.

Like I said before history of payments is only a part of your credit score.

The bigger question is. Why are you so interested in having such a great credit score? To get a loan or are you worried about not getting that job or higher insurance rates becuase of a bad credit score. (Which you will NOT have from having no history of debt repayment or credit cards.)

Answer that and I will expound further.

You are really like talking to a marble slab.

How would I have ever qualified for a home mortgage at an extremely good rate if I would have never shown that I can make a car payment or pay my credit cards in a timely fashion?

If the mortgage was the first DEBT I EVER applied for, A) What would my credit score be, and B) How the heck is a bank going to give me a good rate if they have no idea how I am going to handle the debt.

If we really want to go down that road, then why did you take that car loan that is in a perpetual state of "almost being paid off" (like every other person out there). You are paying interest on a depreciating asset. Car loans are the worst kind of debt you can possibly have, aside from the afformentioned credit card debt for superfulous wants.

We both think the same way, but you are too darn hard headed to see it. And your intolerance for responsible debt (or obligation) and the management therein really clouds your perception of people.



Now, answer the exact question. How do you get a good credit score with the absense of any debt/repayment. Expound away.

 

[Dangerkitty]

You are really like talking to a marble slab.

How would I have ever qualified for a home mortgage at an extremely good rate if I would have never shown that I can make a car payment or pay my credit cards in a timely fashion?

If the mortgage was the first DEBT I EVER applied for, A) What would my credit score be, and B) How the heck is a bank going to give me a good rate if they have no idea how I am going to handle the debt.

If we really want to go down that road, then why did you take that car loan that is in a perpetual state of "almost being paid off" (like every other person out there). You are paying interest on a depreciating asset. Car loans are the worst kind of debt you can possibly have, aside from the afformentioned credit card debt for superfulous wants.

We both think the same way, but you are too darn hard headed to see it. And your intolerance for responsible debt (or obligation) and the management therein really clouds your perception of people.



Now, answer the exact question. How do you get a good credit score with the absense of any debt/repayment. Expound away.

Ok, first of all when you go to get a loan. Let's say you are going to get a home mortgage for $200K and you have never ever had a loan in the past.

The loan officer is going to want to see a few things. First of all they are going to want to see a current pay stub and a W-2. If you make enough money and if you have no debt ratio they will approve you for the loan at a competitive interest rate. If they do not then I suggest that you go and take your business elsewhere. (There are plenty of people and businesses out there that will trip over themselves to loan you money.) They will run your credit report to see if you have any thing that would preclude them from assuming you as a credit risk. However, since you have the amount of income to pay for the home and you have no other debts you will get the loan and at a good rate.

Remember, loan officers are in the business of loaning money. Why would they turn people (and good business) away just becuase they have never had a debt in the past when they are a perfectly good credit risk? Problem is you have fallen for the scam bankers and credit card companies like to hook you in on. They state that you HAVE to have a history of payments and debt repayment so that you can get loans in the future. That is the furthest thing from the truth.

As for the car loan goes I do things a little different from most people. I only buy USED cars that are 3-4 years old and have anywhere from 36000 to 48000 miles on them. That way the car has already depreciated anywhere from 50%-70%. Then I only buy a car that I can have paid off in no more than 18 months. The way I buy cars is that I let some other dolt pay for the depreciation. When I buy the car it has most of the depreciation taken out of it. That way I can buy a great used car and I dont take it in the shorts. I prefer going to and buying lease returns.

Have I answered your question to your liking?

 

[Dangerkitty]

I dont see how putting your grocery bill or gas or movie tickets on a card and paying off immediately is getting duped. The demographic that your logic (and your study) applies to is probably not the ones paying off their balances monthly.

It was an indepth study across all demographics. Remember, the 10%-25% was an average. Some people spend more and some people spend less. But the average does state that with a credit card and delayed "pain" most people tend to spend more than paying with cash.

 

[huncowboy]

Read my previous posts moron. I have already admitted to having a 15 year fixed rate mortgage at 5.6%. I never said that there was anything wrong with having a mortgage. I also have a car payment that will be paid off in less than 6 months.

If you also further read what I have stated I also made it clear that about 6 months ago I had my credit reviewed and I scored an 802. You dont get that kind of score with a missed payment.

Any other clever little jabs you got there Richard?

Who the f cares about your posts? You have just as much credit as anyone else here, using it the same way as anyone else here. Yet you keep your crusade about how bad debt is. What is your big point? Don't try to teach us about credit 101 moron.

 

[dingo222]

debt

I stayed at a Holiday Inn Express once..... and paid cash...no wait, i used my credit card to build credit............or was it debt???? Who the f cares. The man asked how having bad credit would look during an interview. He's not shopping for a mortgage.