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This is NOT a rebuttal or a contradiction to the OP. I believe the OP is correct that FICO scores are very important in our society for most people. So it is smart to be aware of our scores and do reasonable things to keep them high.
However, I would question whether the whole concept of credit scores as practiced in the United States is actually a rational, logical, objective, and neutral way of judging people's creditworthiness. The specific things that are measured and the way they are weighted are designed, in my opinion, to keep people in debt. Not too much debt, of course, as the OP himself has cogently pointed out. Too much debt is a negative with the scores.
The whole idea of taking out small loans and paying them off without being late just in order to pump up a credit score is an absurdity to me. Young people often do this in order to establish a credit history, and I don't blame them. Sometimes we do absurd things because it's in our own best interest, but that doesn't make them less absurd.
I bought my first house in 1978, divorced, and sold the house six or seven years later. I then became a renter for about 17 or 18 years and finally bought another house, by which time the house payments for the first house were too old to still be a matter of record. I had large reserves, no debt, and had one single credit card which I paid off every month. Well, that one single credit card was not enough. They had to look at my history of years of on-time payments of my utility bills to fill in the gap, and yes, I got the loan. I told the loan officer that my lack of debt and large reserves were proof of good financial management. She said, well, that may be so but that's not the way they see things. Of course not; "they" would rather keep people in debt.
No, That is a reflection that you have borrowed (And repaid with LOTS of interest) often, and much in the past.
What IS rewarding to know, is that you have money and don't owe anybody anything!
Whoever said when you wisely use credit you do not have money? Good credit and the wise use of credit saves you alot of money overtime and allows you to actually enjoy a better life. I never intended to retire and skimp and fortuenately don;t have to. When I can save money paying cash I can;when i can save money using credit and it's easier I will.You want cash out flow as a reward then more power to you. I'll take cash reward everytime;knowing I have more cash from it.
But the ORIGINAL statement (Nice bait and switch BTW) did NOT say CARD...
IT concerned a high credit score.
Credit cards alone (Unless I guess you used an ungodly amount) are NOT enough for a high credit score.
Ergo: I am right, you need OTHER debt (And pay interest) to achieve the high credit score.
Oh, and as to your 'go to europe and take cash or credit cards...'
As I have siad previously, Debit cards have rendered credit cards unnecessary.
You may just may want to consider the legal recourse to any false charges especially out of the country between a debit and credit card. Also what a false charge on your checking balance can do while out of the country vs a false addition to your credit balance. Again whatever works for you.
Whoever said when you wisely use credit you do not have money? Good credit and the wise use of credit saves you alot of money overtime and allows you to actually enjoy a better life. I never intended to retire and skimp and fortuenately don;t have to. When I can save money paying cash I can;when i can save money using credit and it's easier I will.You want cash out flow as a reward then more power to you. I'll take cash reward everytime;knowing I have more cash from it.
Yeah and reward points with no carry over balance is awesome. I shop a lot with Amazon and their linking their Chase card points with your Amazon account is really a big plus as you can pay on Amazon with those points. Sorta like coupons as you are earning money without paying interest with convience and discounts.
But the ORIGINAL statement (Nice bait and switch BTW) did NOT say CARD...
IT concerned a high credit score.
Credit cards alone (Unless I guess you used an ungodly amount) are NOT enough for a high credit score.
Ergo: I am right, you need OTHER debt (And pay interest) to achieve the high credit score.
Oh, and as to your 'go to europe and take cash or credit cards...'
As I have siad previously, Debit cards have rendered credit cards unnecessary.
This is the link from the OP Any other discussion was a reaction to other folks please note the date of the original OP and how it was just bought back to life for whatever purpose not by me. The original OP is well over a year old and was discussed then. The link was provided and if folks had read the link they would have had clarification. It seems some folks reacted without reading the link then or now. It was and remains an article about the role of credit scores in your life and if folks believe that is insignificant to their lives, that is the way it should be as life is a personal path. However to translate that to everyone is sorta Nannyish.
The above is from the link. Your credit score can be one of your biggest assets in retirement and at a minimum you should shoot for a 760 but preferably an 800 or above which gives you some wiggle room. Higher credit means the best interest rates possible which frees up money for other things. If not yet retired it can free up money to be invested.
All that is said here is right from the link, so if you take issue it is with the link. Even if dated I am sure Yahoo would love to hear from you.
Quote:
Your credit score can be an important component of your financial planning. While it's possible to make it through life without ever taking out a loan, most people can't afford to buy a home or pay for college with cash. A good credit score can help you take on an affordable loan to tackle these large expenses. Your credit score can also be an important indicator of financial health. Here are three ways your credit score might be affecting your retirement readiness
The above is directly from the link and as you can READ I simply summarized the first paragraph of the link. So if you object to the link ok, Yahoo will understand. Frugality is great for the frugal but it isn't nor should it be everyones thing. Many got to where they are being responsible without being frugal. Frugal is relative to cash flow anyway.
Those of us who just don't like debt at all don't need to worry about our credit score. I am 66, and like many in my age bracket, my house is paid off. I have always paid cash for my cars and kept them a long time. I have one credit card with no annual fee and its balance is paid in full every month. Several years ago I put a freeze on all three credit bureaus in order to prevent identity theft. I will never need credit again, but if that prediction turns out to be wrong all I have to do is undo the freezes. I just read on the Personal Finance Forum about someone who checks her credit score every week! I had never heard of such a thing. I have never checked mine. The two times in my life I bought houses I guess the lender must have checked it for me.
I'm right there with you. No debt, CC paid in full each month.
Not everyone needs nor cares about their FICO score.
Your credit score can have a profound effect on the amount you have to pay not only for auto insurance, but for homeowners insurance also -- and perhaps on health and life insurance in the not-too-distant future.
It's controversial, to be sure, but it's a fact. The question now is how does it affect you?
Many insurance companies and some academics feel strongly that a mediocre or bad credit rating means you're a high risk. Many consumer advocates, state legislators, and state insurance regulators think not. The debate may go on for quite awhile because even the true believers admit they don't know why the two are related -- they just know they are.
And so, at least for now, it's a fait accompli.
Almost all auto insurers -- 92 of 100 polled in a recent survey by the research firm Conning & Co. -- and an increasing number of companies writing homeowners insurance are now using credit information to decide whether to issue a policy on your car and/or home. In some cases they also use it to set the premium. They also use their own underwriting guidelines, such as, in the case of homeowners insurance, the age of the house and the roof, prior losses, and the home's construction type.
So far, spokesmen at the trade associations for health and life underwriters say they don't know of any of their members use credit scoring in underwriting and pricing policies, but you may want to ask your health and life insurers if they do.
In 2006, almost 5,000 hospitals across the United States provided $31.2 billion in care they were never paid for. According to the American Hospital Association, the majority of that total came from taking care of charity cases or taking losses from assistance programs.
Think about your employer, the business you work for, or any company for that matter. With losses like that, how long would they stay in business? That's one reason why almost 20% of hospitals have begun checking patients' credit scores before they are admitted.
The question on patients' minds is whether they will be denied care if their credit score is too low.
According to Karen Godfrey, a revenue manager at Baptist Health South Florida, hospitals are looking at the scores like this:
Patients who have the highest scores will likely pay without being pressured. Therefore, the hospital won't have to commit its personnel to making phone calls and writing letters to pressure them, nor will they have to spend the money to turn over these people's slow payments to a collections agency.
Patients who have the lowest scores probably can't afford the care anyway. Therefore, the hospital won't commit its resources to chasing them down, either. It would be a futile effort.
Patients who have the scores in the middle are worth the chase. So for those patients, the hospital will commit personnel and energy to apply pressure to get bills paid.
Should Patients Be Concerned?
Organizations can't stay in business if they don't make enough money to support their mission. Therefore, as consumers, we should be able to understand why hospitals would begin looking at credit scores and financial information to help them slow down their income losses.
Consumer groups are concerned that hospitals will misuse the information by denying care or even reducing the amount of care a patient receives, such as discharging a patient early. They also point out that some hospitals might review a patient's potential for tapping home equity or lines of credit, then suggest the patient use those resources to make payments toward hospital bills.
So if car insurance, homeowners insurance, medical care etc are not part of your retirement plan you may not need to worry about your credit score as has been pointed out by several posters.
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