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Good/Bad credit in US

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girlysprite:
I have been following a discussion following an article about creditcards, and I saw some interesting points, but i wonder if they were correct.
The discussion started out with people who said that using creditcards usually was a bad idea. Even when it comes to emergencies, they have a savings account for that. If the emergency requires more, they rather try other venues first before creditcard. However, people replied that the side effect would be that these persons would have no dredit history, and that would work against them if they'd try to get a loan, buy a house (requiring a mortgage) or even rent a house (where credit history is also checked).

I wonder - is that true?

Where I live people always use debitcards. Creditcards are mostly only used when going out of the country or for online purchases. There are even lots of people who don't own one.

CG:
Yes, unfortunately it does.  It can also affect how much you pay for auto insurance, and if your credit is bad, it can affect getting some jobs.  Dave Ramsey, a man who has made a ton of money encouraging people to be debt-free, says that he couldn't rent an apartment in many places, even though he could buy the whole complex.

SamiHami:
Yes, but the point is that if you don't use credit, you don't need to worry about credit. Good credit for renting an apartment can be obtained by having a solid work history and by having a substantial amount of money in the bank--money that would have been thrown away on interest fees, rather than gaining interest as it should. It is a little harder to get that initial credit established, but it's far better than running up a bunch of debt. Using credit is like flushing money down the toilet.

Yvaine:

--- Quote from: SamiHami on September 09, 2011, 07:56:40 AM ---Yes, but the point is that if you don't use credit, you don't need to worry about credit. Good credit for renting an apartment can be obtained by having a solid work history and by having a substantial amount of money in the bank--money that would have been thrown away on interest fees, rather than gaining interest as it should. It is a little harder to get that initial credit established, but it's far better than running up a bunch of debt. Using credit is like flushing money down the toilet.

--- End quote ---

Unfortunately, that's not entirely true. A solid work history and money in the bank will be unsatisfactory to a lot of landlords; they'll want to see those credit reporting companies' ratings of you, and if you've got nothing on there, tough luck. And you'll also have trouble getting a mortgage if you decide to buy a house. I'm going through this right now--not enough history on my credit report. They don't just want to see proof that I have enough money for whatever it is, or that I've worked at the same job foreeeeever--they want a history of me making a lot of debt payments.

It would be nice if the system rewarded good decisions, but it really doesn't. It rewards a really arbitrary course of action. Not having any debt at all=penalized. Having credit cards but keeping the balance at 0=penalized. Bad credit=penalized. There's this magic "sweet spot" where you get rewarded. The system, IMO, is broken.

ETA: There are more details about all of this and how it works, but I need more coffee and I don't think I can explain them well at the moment.

lady_disdain:

--- Quote from: SamiHami on September 09, 2011, 07:56:40 AM ---Yes, but the point is that if you don't use credit, you don't need to worry about credit. Good credit for renting an apartment can be obtained by having a solid work history and by having a substantial amount of money in the bank--money that would have been thrown away on interest fees, rather than gaining interest as it should. It is a little harder to get that initial credit established, but it's far better than running up a bunch of debt. Using credit is like flushing money down the toilet.

--- End quote ---

In the US, do you pay interest if a credit card is paid off in full at the end of the month? I have heard this so often from Americans.

I only start paying interest if I do not pay my full bill at the due date, which I always do.

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