5 ms·

Even worse: paying off all your loans and having no credit cards is zero. It made getting a credit card more difficult. The lady at the credit union couldn't ge

Even worse: paying off all your loans and having no credit cards is zero. It made getting a credit card more difficult. The lady at the credit union couldn't get the system to auto-approve me for any credit limit because of it. > Around here, we like to say a credit score is just an “I love debt score.” Think about it. A credit score doesn’t reflect your salary increases, the amount of money in your savings account, or how well you budget each month. > If someone in your family was to pass away and leave you a million dollars, your credit score wouldn’t change one single point. Your net worth would skyrocket, but your credit score wouldn’t budge. Seems fishy, doesn’t it? > In other words, a credit score has nothing to do with how well you handle your money. But it does show how well you play around with debt. Your credit score is solely built on how much debt you have, what kind of debt you have, how long you’ve had it, and how you’ve paid on it. https://www.daveramsey.com/blog/what-is-a-fico-score https://www.daveramsey.com/blog/what-is-a-fico-score

TulliusCicero 7y ago
If you just treat your credit cards like debit cards, you can easily build a better credit score without really being 'in debt' or paying any interest. And in the US at least, there are also some other benefits, like better fraud protection and purchase/sign-ups bonuses.
- 4ad 7y ago
  Not if you can't get credit cards at all (because of zero credit rating).
  - astura 7y ago
    You just have to get a shitty secured card for a few months. This Amazon card is an example of a secured card.
    - asdff 7y ago
      Those require some cash that might not be so easy to free up for some people. When I was building my credit I had to put up $300 for my bank's secured card, and couldn't get that back until I fully closed that account which was reflected on my credit score of course (my bank did not transition secured cards to 'real' cards like some do). Most middle class and up people don't have to do this song and dance. Parents can add you as an authorized user on one of their cards, and you could build up a great score and a fat credit limit just in time for you to max it out during spring break in college.
      - vonmoltke 7y ago
        If you don't have the free cash to place a deposit on a secured credit card, you probably shouldn't be getting a credit card in the first place.
        maccard 7y ago
        Why not? A credit card with a small limit is potentially a 60 day interest free emergency loan. For example, your car breaks down and you need $500 to repair it, but you don't have $500 in cash. Assuming you can't borrow from friends/fsnily/work, your options are lines of credit, and I don't know of anywhere other than a payday loan that I can get that sort of amount of money. Meanwhile $500 would fit on most credit limits, you get between 30 and 60 days of interest free payments depending on timing, and the interest rate is substantially lower than a short term loan if you do ever so slightly overrun,_and_ your credit isn't tanked if you can't afford the large end payments. Seems like a win win to ne.
        JetSpiegel 7y ago
        > For example, your car breaks down and you need $500 to repair it, but you don't have $500 in cash. But you need to pay $300 for this line of credit! What's the point then?
        asdff 7y ago
        Something like 4 in 10 americans can't come up with $400 without selling something or going into debt, and a credit card is something everyone should have as it's more secure than debit and interest free if you don't spend more than you have and pay it off right away.
- Bjartr 7y ago
  I have an amex gold card for the similar purpose of it being a "charge" card and not a credit card. I can't carry a balance month to month, and that's how I want it.
delinka 7y ago
> > Your net worth would skyrocket, but your credit score wouldn’t budge. Seems fishy, doesn’t it? Not at all. 1) no one knows I inherited that money unless I tell them (ok, the bank and the IRS do - the bank can't announce it, the IRS doesn't announce it...) 2) my instant change in net worth does not affect my ability to handle my finances month-to-month
- nopriorarrests 7y ago
  >2) my instant change in net worth does not affect my ability to handle my finances month-to-month idk man, if I inherited 1M USD, it would definitely affect my ability to handle my 3K USD monthly expense.
  - delinka 7y ago
    Sure, you have the money to cover those expenses. But will you? Simply inheriting the money doesn't answer that question. Receiving the money speaks nothing about your ability to manage it correctly.
    - im3w1l 7y ago
      If you have money to cover it, can't they have it forcibly taken from you? So what is there for them to worry about?
      - delinka 7y ago
        Not until long after you’ve spent it on everything else.
  - sigstoat 7y ago
    plenty of lottery winners get bigger piles of cash, and would be very poor folks to loan money to.
kurtisc 7y ago
The credit score that an agency sells to you won't change, but that's just a tool for them to sell you things like Amazon are selling here, and doesn't reflect the way a lender will look at the credit history, your salary, and the value of anything the loan is secured against to decide whether or not to lend to you.

TulliusCicero 7y ago

If you just treat your credit cards like debit cards, you can easily build a better credit score without really being 'in debt' or paying any interest. And in the US at least, there are also some other benefits, like better fraud protection and purchase/sign-ups bonuses.

4ad 7y ago
Not if you can't get credit cards at all (because of zero credit rating).
- astura 7y ago
  You just have to get a shitty secured card for a few months. This Amazon card is an example of a secured card.
  - asdff 7y ago
    Those require some cash that might not be so easy to free up for some people. When I was building my credit I had to put up $300 for my bank's secured card, and couldn't get that back until I fully closed that account which was reflected on my credit score of course (my bank did not transition secured cards to 'real' cards like some do). Most middle class and up people don't have to do this song and dance. Parents can add you as an authorized user on one of their cards, and you could build up a great score and a fat credit limit just in time for you to max it out during spring break in college.
    - vonmoltke 7y ago
      If you don't have the free cash to place a deposit on a secured credit card, you probably shouldn't be getting a credit card in the first place.
      - maccard 7y ago
        Why not? A credit card with a small limit is potentially a 60 day interest free emergency loan. For example, your car breaks down and you need $500 to repair it, but you don't have $500 in cash. Assuming you can't borrow from friends/fsnily/work, your options are lines of credit, and I don't know of anywhere other than a payday loan that I can get that sort of amount of money. Meanwhile $500 would fit on most credit limits, you get between 30 and 60 days of interest free payments depending on timing, and the interest rate is substantially lower than a short term loan if you do ever so slightly overrun,_and_ your credit isn't tanked if you can't afford the large end payments. Seems like a win win to ne.
        JetSpiegel 7y ago
        > For example, your car breaks down and you need $500 to repair it, but you don't have $500 in cash. But you need to pay $300 for this line of credit! What's the point then?
      - asdff 7y ago
        Something like 4 in 10 americans can't come up with $400 without selling something or going into debt, and a credit card is something everyone should have as it's more secure than debit and interest free if you don't spend more than you have and pay it off right away.
Bjartr 7y ago
I have an amex gold card for the similar purpose of it being a "charge" card and not a credit card. I can't carry a balance month to month, and that's how I want it.

delinka 7y ago

> > Your net worth would skyrocket, but your credit score wouldn’t budge. Seems fishy, doesn’t it? Not at all. 1) no one knows I inherited that money unless I tell them (ok, the bank and the IRS do - the bank can't announce it, the IRS doesn't announce it...) 2) my instant change in net worth does not affect my ability to handle my finances month-to-month

nopriorarrests 7y ago
>2) my instant change in net worth does not affect my ability to handle my finances month-to-month idk man, if I inherited 1M USD, it would definitely affect my ability to handle my 3K USD monthly expense.
- delinka 7y ago
  Sure, you have the money to cover those expenses. But will you? Simply inheriting the money doesn't answer that question. Receiving the money speaks nothing about your ability to manage it correctly.
  - im3w1l 7y ago
    If you have money to cover it, can't they have it forcibly taken from you? So what is there for them to worry about?
    - delinka 7y ago
      Not until long after you’ve spent it on everything else.
- sigstoat 7y ago
  plenty of lottery winners get bigger piles of cash, and would be very poor folks to loan money to.

kurtisc 7y ago

The credit score that an agency sells to you won't change, but that's just a tool for them to sell you things like Amazon are selling here, and doesn't reflect the way a lender will look at the credit history, your salary, and the value of anything the loan is secured against to decide whether or not to lend to you.