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Old 08-02-2008, 07:57 PM
 
Location: CNJ/NYC
1,240 posts, read 3,641,445 times
Reputation: 408

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Quote:
Originally Posted by GLS View Post
The fact that you have "never had a credit card in your life" is one indication of your life philosophy to avoid getting in debt. To a lender you certainly project a low risk of over-extending yourself.
However, without a credit card ever there is hardly a good way to know how this prospect treats debt obligations once he takes them on, making him actually a big risk. The back taxes don't instill confidence either. Credit card accounts are something a bank wants to see because it tells them a whole lot more than lack of a credit using history.
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Old 08-03-2008, 11:30 AM
GLS
 
1,985 posts, read 4,738,900 times
Reputation: 2406
Quote:
Originally Posted by TwiloMike View Post
However, without a credit card ever there is hardly a good way to know how this prospect treats debt obligations once he takes them on, making him actually a big risk. The back taxes don't instill confidence either. Credit card accounts are something a bank wants to see because it tells them a whole lot more than lack of a credit using history.
You missed the overall context of his situation, and the st5ruggle to accumulate equity in a trailer on a small lot. You also didn't mention that I acknowledged that we needed more information. The lack of credit card use is only one piece of the puzzle.

However, I know the prejudices of our banking system from experience, since I have not used credit cards for some time and have a FICO score of ZERO. However, I do not agree that the lack of use makes you a "big risk". It just makes you very unusual. I own one home and purchased an apartment in February. The lender was stunned that my FICO was ZERO (supposedly I fell off the credit radar), but I was able to demonstrate that equity, employment and zero debt load made me a better risk than someone with twenty credit cards and a habit of putting their daily Starbucks cup of coffee on a credit card.

After filling the car with gas the other day, I stood in line behind a woman who paid for a pack of cigarettes and some candy (total $4.85) with a credit card. I think I'll take a risk on someone like Rickers than the woman who probably doesn't know what cash looks like anymore. No offense, I agree with you that we have mutated away from a "pay-as-you-go" system. However, you do it your way, and I'll do it mine.
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Old 08-03-2008, 11:39 AM
 
Location: Charlotte, NC
2,193 posts, read 4,447,602 times
Reputation: 1072
Just because someone pays for cigarettes and candy with a credit card doesnt mean they arent paying their bills. How do you know it was a credit card and not debit card? How do you know she doesnt accumulate miles on her card and uses it for that reason. Or she just didn't happen to have cash on her? I use my credit card for groceries, two dollar candy bar, fast food, etc. But I always pay it off every month. I personally like using the convenience of using a card rather than going to the bank for cash.
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Old 08-03-2008, 11:42 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,093,116 times
Reputation: 1007
I always pay with credit cards when I'm out....
I rather pay it off at the end of the month, then have someone steal my credit card info.

Gas stations are notorious for credit card fraud. Can you imagine if you were paying with your debit card? They will actually steal the funds from your account!

I worked at BofA for about 3yrs, and I learned my lesson by watching how these things occur to others.
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Old 08-03-2008, 12:09 PM
 
2,836 posts, read 3,004,907 times
Reputation: 1399
The rule of thumb is never charge any purchase of less than $100.00 dollars; and then not unless you actually have the money in the bank to pay it at the end of the billing cycle. Except in case of emergency, a credit card should never be used as an easy way to make yourself a loan.
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Old 08-03-2008, 03:35 PM
 
Location: Greenville County, SC
275 posts, read 1,545,014 times
Reputation: 193
Quote:
Originally Posted by Wendell Phillips View Post
The rule of thumb is never charge any purchase of less than $100.00 dollars; and then not unless you actually have the money in the bank to pay it at the end of the billing cycle. Except in case of emergency, a credit card should never be used as an easy way to make yourself a loan.
Wendell Phillips;

Who's rule of thumb are you referencing? I make purchases all the time with my credit card that are under $10 and pay them off every month. I also get airline miles and have saved about $5K in airfare alone this year using miles to book flights. About 25% of the miles came from credit card purchases, and the rest from paid flights.

Credit cards used wisely are a good thing!!
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Old 08-03-2008, 05:44 PM
 
Location: Cary, NC
1,036 posts, read 3,627,137 times
Reputation: 503
Quote:
Originally Posted by Wendell Phillips View Post
The rule of thumb is never charge any purchase of less than $100.00 dollars; and then not unless you actually have the money in the bank to pay it at the end of the billing cycle. Except in case of emergency, a credit card should never be used as an easy way to make yourself a loan.


Paying off your balance at the end of the billing cycle, except in case of emergencies, is a good rule.

However not charging anythimg less than $100? Whose rule is that, the store owners that have to pay a CC transaction fee?

It might be a drag to the gas station that has to pay a fee on your $4 purchase, but it does not affect your credit or financial situation at all. There is no difference in a $5 or a $500 charge if its paid off... and if you can get rewards points and save the hassle of carrying cash, why not?

I don't even carry a wallet... just a business card holder with my drivers license and AMEX in it. At most I have an emergency $40 on me for those places that do not take credit cards.
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Old 08-03-2008, 05:48 PM
 
Location: CNJ/NYC
1,240 posts, read 3,641,445 times
Reputation: 408
Quote:
Originally Posted by GLS View Post
You missed the overall context of his situation, and the st5ruggle to accumulate equity in a trailer on a small lot. You also didn't mention that I acknowledged that we needed more information. The lack of credit card use is only one piece of the puzzle.
I wrote nothing about equity because I didn't care to get into that part of the discussion. It is irrelevant to what I wrote. I commented specifically about how a bank views someone without a credit card history because, as a mortgage banker, I am very familiar with how underwriters react to such prospects.

Quote:
However, I know the prejudices of our banking system from experience, since I have not used credit cards for some time and have a FICO score of ZERO.
There is no such thing as a ZERO FICO score. N/A is possible.

Quote:
However, I do not agree that the lack of use makes you a "big risk".
If you don't have a credit history for the bank to review, why do you think this doesn't make you a big risk? Compare yourself to someone who has shown a lengthy history of paying credit debts on time. Who, in your opinion, is a bigger risk, someone with a credit history that can be reviewed or someone with none? In today's market many lenders will not lend to someone with an N/A FICO.

Quote:
It just makes you very unusual.
You can call it whatever you want. When it comes to an institution that must evaluate your credit history in order to determine if you're too risky to lend to, having no credit history makes you a risky proposition.

Quote:
I own one home and purchased an apartment in February. The lender was stunned that my FICO was ZERO (supposedly I fell off the credit radar), but I was able to demonstrate that equity, employment and zero debt load made me a better risk than someone with twenty credit cards and a habit of putting their daily Starbucks cup of coffee on a credit card.
Alternate credit is a possibility, sure. You certainly didn't demonstrate that you're a better risk than someone who charges everything and pays their bills on time.

Quote:
After filling the car with gas the other day, I stood in line behind a woman who paid for a pack of cigarettes and some candy (total $4.85) with a credit card. I think I'll take a risk on someone like Rickers than the woman who probably doesn't know what cash looks like anymore.
On what basis do you flatter yourself so? You're free to be full of yourself for any reason, however subjective and silly, that you wish, of course.

Quote:
No offense, I agree with you that we have mutated away from a "pay-as-you-go" system. However, you do it your way, and I'll do it mine.
In my world, the world of lending, you are a bigger risk that the woman at the gas station (provided she doesn't overextend her credit lines and pays on time).
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Old 08-03-2008, 06:14 PM
GLS
 
1,985 posts, read 4,738,900 times
Reputation: 2406
Quote:
Originally Posted by TwiloMike View Post
I wrote nothing about equity because I didn't care to get into that part of the discussion. It is irrelevant to what I wrote. I commented specifically about how a bank views someone without a credit card history because, as a mortgage banker, I am very familiar with how underwriters react to such prospects.

There is no such thing as a ZERO FICO score. N/A is possible.

If you don't have a credit history for the bank to review, why do you think this doesn't make you a big risk? Compare yourself to someone who has shown a lengthy history of paying credit debts on time. Who, in your opinion, is a bigger risk, someone with a credit history that can be reviewed or someone with none? In today's market many lenders will not lend to someone with an N/A FICO.

You can call it whatever you want. When it comes to an institution that must evaluate your credit history in order to determine if you're too risky to lend to, having no credit history makes you a risky proposition.

Alternate credit is a possibility, sure. You certainly didn't demonstrate that you're a better risk than someone who charges everything and pays their bills on time.

On what basis do you flatter yourself so? You're free to be full of yourself for any reason, however subjective and silly, that you wish, of course.

In my world, the world of lending, you are a bigger risk that the woman at the gas station (provided she doesn't overextend her credit lines and pays on time).
I'm sorry. I didn't know you were one of those "expert" mortgage bankers that helped all of us understand the world of credit. Your collective expertise and advice has created quite a successful housing market and credit environment, hasn't it?

As for my being "full of myself", I am successful enough I don't need to waste my time arguing with you.
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Old 08-03-2008, 07:22 PM
 
Location: CNJ/NYC
1,240 posts, read 3,641,445 times
Reputation: 408
Quote:
Originally Posted by GLS View Post
I'm sorry. I didn't know you were one of those "expert" mortgage bankers that helped all of us understand the world of credit.
Would your comment have been been different had you known I'm a mortgage banker? You made a statement which I know to be false. I corrected you. Your condescending attitude notwithstanding, I explained that from the bank's side, for a borrower to have no credit history is definitely less optimal than having a solid and active credit history. Now, while this may not jive with your self-perception as the paragon borrower, it's really too bad because you're not the one who gets to determine your risk status: the bank does. While you could have learned something and admitted that you may have been incorrect, you chose to get defensive, fully consistent with being full of yourself. Whatever.

Quote:
Your collective expertise and advice has created quite a successful housing market and credit environment, hasn't it?
Oh, you got me! You're cordially invited to get over yourself.

Quote:
As for my being "full of myself", I am successful enough I don't need to waste my time arguing with you.
No worries. I'll be only too happy to never hear from you again.
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