Credit experts - credit rating question

[ON D BIT]

oh, i understand. That actually makes a lot of sense. But how would they know my income?

credit limit is generally based on past credit use, score, income, and savings.

 

[sikklightning04]

Well 2 obiously. But i have no debt, im only 19. I paid my lightning off, all i pay for is my gas, insurance, upkeep, food, clothes, misc. Instead of using my debit card, i use my Dividend Citi cards and earn 1% back on all reg. items and 3% on gas. So i put my paychecks in my checking account, pay into my savings, when my card gets maxed, i pay it IN FULL, and still keep a decent savings, decent checking and a card with a ZERO balance.

Any flaws in that system?

 

[sikklightning04]

credit limit is generally based on past credit use, score, income, and savings.

This is partially the reason i max my credit card on purpose, i want to show them i have money to pay them and to raise my credit line, thus having good credit.

 

[sikklightning04]

I just callled my credit card company and got the numbers for the 3 main people that do free credit reports.

Here are their phone numbers:

Transunion: 1-877-322-8228
Experion: 1-888-397-8742
Equifax: 1-800-685-1111

 

[ImShakn]

first off the landlord that would rather sign the 730 with 10k in debt with no savings and 2k income before the 0(no score) with zero debt and 2k income with 10k in savings is just plain stupid!

The person that has the 730 with 10k in debt and 2k income has established a payment history (that's what I am looking for...no late pays in the last 3 years) while the 0(no score) with zero debt and 2k income is an unknown and very risky. Savings is unimportant when it comes to renting. A pattern of steady payments shows more than $10k in a savings account that could come from anywhere.

2nd to create a fico score you need to carry a monthly debt regardless of if you pay it off each month! now as i said before i was the one they could not get. never buying anything if i could not pay for it. paying everything off at the end of the month. for 6 years it worked great. and it still got me! was it worth the 10k in interest i am now paying?

How do you carry a monthly debt if you pay it off each month?

Your FICO score does not come from carrying a balance. I have mortgages on 2 homes and I have 2 cars that are financed (both at 0%), but I do not carry a balance on a credit card for more than 2 months and yet my FICO score is in the upper 700s. I do have debt (mortgages and car notes) however my assets exceed my liabilities. It's not difficult to do if you can control your spending and don't live beyond your means.

I'm still curious as to how you ended up with $10k in interest by paying off everything at the end of the month. Sounds to me like you had other things going on (lost a job and had no savings?) that caused you to run up a large credit bill.

 

[SuperG]

In the very beginning, your credit score goes up, but as time goes on (and that's usually measured in years) it actually gets harder to obtain credit because your history basically had stopped. Eventhough you owe nothing and have saved, it sometimes can be difficult to obtain a new line of credit.

Years ago, prior to buying my second house, I had no debts and my credit score sucked, eventhough I had no outstanding debts. So over a 6-month period I got a cash loan from a credit union for $1000, paid it off in 1 month, then got a $4000 loan and paid it in 2 months, then a $10000 loan and paid it off in 3 months. After that, I had no problems with credit. Since then I have kept 1 credit card and whenever I buy something I use the store's X-months interest free plan and pay it off in time...

 

[NyteByte]

you are lending 100k for a young couple to purchase thier first home. who would you lend your money to?

1. they bring home 4k a month. owe 35k on thier cars. have 25k credit card debt. savings/checking accounts 200-4k on a weekly basis. have a credit score of 690.

2. they bring home 3k a month. have no debt. savings/checking accounts have 40k and increase every month. have zero credit.

I'd lend money to #1. They won't be able to afford the mortgage payments and I'll eventually foreclose on their home netting myself a free house. :-D

 

[ON D BIT]

The person that has the 730 with 10k in debt and 2k income has established a payment history (that's what I am looking for...no late pays in the last 3 years) while the 0(no score) with zero debt and 2k income is an unknown and very risky. Savings is unimportant when it comes to renting. A pattern of steady payments shows more than $10k in a savings account that could come from anywhere.

How do you carry a monthly debt if you pay it off each month?

Your FICO score does not come from carrying a balance. I have mortgages on 2 homes and I have 2 cars that are financed (both at 0%), but I do not carry a balance on a credit card for more than 2 months and yet my FICO score is in the upper 700s. I do have debt (mortgages and car notes) however my assets exceed my liabilities. It's not difficult to do if you can control your spending and don't live beyond your means.

I'm still curious as to how you ended up with $10k in interest by paying off everything at the end of the month. Sounds to me like you had other things going on (lost a job and had no savings?) that caused you to run up a large credit bill.

you dont believe a steady payment history has been established if they have a nice savings? is that not what savings is? spending less than you make and making steady payments to yourself. plus the bonus of having the cash to cover future expenses when a bad month appears or an emeregancy comes about. cash will always be better the credit!:bash:

to build credit one must have debt. the balance is carried regardless of how long it last! if you have no debt history you will have no fico score.

generally debt is a symptom of living beyond ones means. but i will make it easy. does take home pay cover the payments on both houses, cars, food, utilities, insurance(health, life, long term care), retirement, entertainment, and emergancy fund savings every month? its retorical so dont answer. the point is if you need the rent check every month to balance your budget you are living beyond your means.
thousands of people go broke every year, because thier investment cost more than they could cover!


i purchased a second car. made all the payments my credit stayed sky high and pretty soon i was financing my life through credit. sold that car, paid off my first car, then purchased a house. currently paying off the cards is slow go. been paying interest on the cards for 4 years and still have a long way to go. just went cash only plan, best way for anyone to cut the crap on expenses. no more entertainment, eating out, books, music or even special food like steak or salmon.

 

[YesterdayAgain]

OK, so time to weed out all the generally worthless advice in this...

Good credit is a nice thing to have in life, but it also gets a lot of stupid people in trouble. If you have a good gameplan, know what to do and what not to do, then you'll be fine. I have two credit building accounts and I maintain about a $600 balance between the two. If a few hundred dollars in debt worries you, then you probably suck at life and need to worry about getting a real job.

Good credit affects a lot of things from mortgages, car loans, insurance rates, cell phone plans, etc. Can you get by in life by having no credit? Sure. Is it easier to just not be a stupid idiot a live a more convenient life? Absolutely.

 

[Stanley]

you dont believe a steady payment history has been established if they have a nice savings? is that not what savings is? spending less than you make and making steady payments to yourself. plus the bonus of having the cash to cover future expenses when a bad month appears or an emeregancy comes about. cash will always be better the credit!:bash:

to build credit one must have debt. the balance is carried regardless of how long it last! if you have no debt history you will have no fico score.

generally debt is a symptom of living beyond ones means. but i will make it easy. does take home pay cover the payments on both houses, cars, food, utilities, insurance(health, life, long term care), retirement, entertainment, and emergancy fund savings every month? its retorical so dont answer. the point is if you need the rent check every month to balance your budget you are living beyond your means.
thousands of people go broke every year, because thier investment cost more than they could cover!


i purchased a second car. made all the payments my credit stayed sky high and pretty soon i was financing my life through credit. sold that car, paid off my first car, then purchased a house. currently paying off the cards is slow go. been paying interest on the cards for 4 years and still have a long way to go. just went cash only plan, best way for anyone to cut the crap on expenses. no more entertainment, eating out, books, music or even special food like steak or salmon.

Do you listen to Dave Ramsey on the radio? Sounds like what he tells people to do.

 

[Naste50]

Debt is NOT always bad. Here's an example: Monster companies take on debt to afford new capital equipment costs. That same equipment that they owe money on is making money (it's an investment). My father's printing company is rather large and he has been building it for 35+ years. It started as a tiny print shop with 3 employees to an $11 million/year revenue full service commercial printing company. He did it with debt. He always invested in his business. It has grown and grown and he is rather well off. My point is this: If you are paying less interest than inflation, then financing is great. If the interest is manageable and you are using borrowed $ in an effort to make more $, then that is called INVESTMENT. High interest debt...that just sucks. Get rid of that shit. Having debt is not always bad. High interest is bad. Debt means you have something to show for it. If you don't have something to show for your debt, then you are just retarded and spend like an idiot. Either that, or you have had some misfortune. I hope that covers all the bases. Did I miss something?

 

[ON D BIT]

OK, so time to weed out all the generally worthless advice in this...

Good credit is a nice thing to have in life, but it also gets a lot of stupid people in trouble. If you have a good gameplan, know what to do and what not to do, then you'll be fine. I have two credit building accounts and I maintain about a $600 balance between the two. If a few hundred dollars in debt worries you, then you probably suck at life and need to worry about getting a real job.

600 bucks is not the problem. its the belief that you can pay for something you can not afford. first its a date with your girlfriend. then its a trip to the lake with friends. then its the new notebook(computer) you must have. then its the car with a price to good to pass up. etc etc!
its a facade. they lure you in with no interest, no fees, and plenty of credit myths. the banks are just like vegas. the house wins. the house will always win. play long enough with the snake and you will get bit. there is a reason the tallest building in the city are all run by creditors. the reason is this. the borrower is slave to the lender! credit was created to make the bank wealthy! not you.:beer:

 

[ImShakn]

600 bucks is not the problem. its the belief that you can pay for something you can not afford. first its a date with your girlfriend. then its a trip to the lake with friends. then its the new notebook(computer) you must have. then its the car with a price to good to pass up. etc etc!
its a facade. they lure you in with no interest, no fees, and plenty of credit myths. the banks are just like vegas. the house wins. the house will always win. play long enough with the snake and you will get bit. there is a reason the tallest building in the city are all run by creditors. the reason is this. the borrower is slave to the lender! credit was created to make the bank wealthy! not you.:beer:

You have pointed out the pitfalls of credit without pointing out how people with discipline manage their debt.

To play the game successfully, you need discipline. Anyone can do it, but you have to resist the urge to charge anything that you can't pay off at the end of the month. Once you start carrying a balance on a card, then you are in a downward spiral and headed for trouble. I can pay for both of my cars at any time, however why should I pay cash for my cars when someone is willing to loan me the money for free (0% interest)? The money that I would have used to buy the cars is in an investment that is earning > 10% return. That means that my money is making more money for me.

Yes, credit is designed to make money for the bank. The same is true for everything that you buy. When you buy a gallon of milk, the store, distributor, and farmer are all making money off of you. Do you have any idea how many people received money due to you buying a car? Unless you have a way to be self-sufficient, you are going to be making others wealthy.

 

[ON D BIT]

You have pointed out the pitfalls of credit without pointing out how people with discipline manage their debt.

To play the game successfully, you need discipline. Anyone can do it, but you have to resist the urge to charge anything that you can't pay off at the end of the month.

this will be my last post in this thread. i will say again. people are smart. people know how to add. people know how to find a better deal. what you and many do not realize is "life happens"! people change jobs(downsizing is a popular word these days). people get sick(a friends sister was in an auto accident $100k and climbing). things happen and the ins coverage they thought they had does not help(katrina). if you simply pay with credit to pay things off at the end of the month you will eventually lose! the credit industustry is built strictly on this reasoning alone. the house will win. its only a matter of time(life)!

i will not even mention the fact that people spend more money when they pay with credit than paying with cash.


go ahead say it will not happen to me. i am stronger, better, smarter than that. play with the fire! as the bank laughs rakes in billions of dollars from those just like you and me.

 

[YesterdayAgain]

Or you could just carry a small balance like I do, not be a moron, and also have money on the side for "rainy days." Man I rule at life.

 

[ImShakn]

this will be my last post in this thread. i will say again. people are smart. people know how to add. people know how to find a better deal. what you and many do not realize is "life happens"! people change jobs(downsizing is a popular word these days). people get sick(a friends sister was in an auto accident $100k and climbing). things happen and the ins coverage they thought they had does not help(katrina). if you simply pay with credit to pay things off at the end of the month you will eventually lose! the credit industustry is built strictly on this reasoning alone. the house will win. its only a matter of time(life)!

i will not even mention the fact that people spend more money when they pay with credit than paying with cash.


go ahead say it will not happen to me. i am stronger, better, smarter than that. play with the fire! as the bank laughs rakes in billions of dollars from those just like you and me.

Maybe you are just saying that I am of above-average intelligence (which I highly doubt) since I know how to manage my affairs. I have enough savings and investments to last ~2 years if I quit my job tomorrow (including paying my debts/obligations) and since my assets exceed my liabilities, I have the opportunity to liquidate them to comfortably extend the amount of time I am out of work. I also have insurance policies that take care of my family's illnesses or injuries.

Spending more money with credit may or may not be true. Am I paying more for my houses than if I had paid cash? yes, significantly more. Am I paying more for my cars with 0% interest? No, though it frees up that cash for me to invest and make more money. Am I paying more for the items that I charge everyday and pay off at the end of the month? No, however I am receiving cash back from the credit company for a % of my purchases.

You have some slight truth to your ramblings, however you already have established credit and are pointing these kids to the extreme. The kids that are asking the questions need to know how credit affects their daily lives. The fact is that with no credit history, you are affected much worse than if you have bad credit. You can be turned down for jobs, turned down for apartments, required to put down higher deposits on apartments and utilities, insurance premiums are higher, you will have to pay cash for a home or car, and you may not even be able to open a checking account at a reputable bank.

There is some very good advice in this thread and the kids need to pay attention to your posts to simply learn what happens when they let their credit get out of hand. They just need to take your "credit is da debil" advice with a grain of salt.

 

[Stanley]

Debt is NOT always bad. Here's an example: Monster companies take on debt to afford new capital equipment costs. That same equipment that they owe money on is making money (it's an investment). My father's printing company is rather large and he has been building it for 35+ years. It started as a tiny print shop with 3 employees to an $11 million/year revenue full service commercial printing company. He did it with debt. He always invested in his business. It has grown and grown and he is rather well off. My point is this: If you are paying less interest than inflation, then financing is great. If the interest is manageable and you are using borrowed $ in an effort to make more $, then that is called INVESTMENT. High interest debt...that just sucks. Get rid of that shit. Having debt is not always bad. High interest is bad. Debt means you have something to show for it. If you don't have something to show for your debt, then you are just retarded and spend like an idiot. Either that, or you have had some misfortune. I hope that covers all the bases. Did I miss something?

That works if the business does good. If you rack up debt with your business and then business gets bad then you are in trouble. It doesn't sound like he took on a lot of debt all at once, but a little at a time which would seem to be a lot safer.