Author Topic: Good/Bad credit in US  (Read 4659 times)

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megswsu

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Re: Good/Bad credit in US
« Reply #30 on: September 12, 2011, 04:33:19 PM »
In fact, I don't pay a yearly fee for any of our credit cards (some of which we've had for 30+ years), and since I always pay the balance in full each billing cycle, I never pay interest or late fees. 

This is true, but I would add one caution: several years ago I had a credit card company cancel my card because I had never paid any interest on it.  Since I wasn't profitable to them, they just canceled me.

The biggest issue I've ever had with a credit card company was trying to keep the amount you can use (credit limit) low on a card I wanted to use strictly for internet purchases.  That took several rounds of discussions with supervisors and threats of closing the card before they decided that yes, I could have a card with a $500 limit instead of the ridiculously high amount they wanted. 

Is there a reason you didn't want whatever high amount they were offering? I'm curious if you don't mind. I've always understood that you want a good ratio of what you owe vs how much the credit company has extended to you. For instance w/one of my credit cards I have a $16k limit, which is totally crazy. I think there have been a couple random times when we've made a big purchase that I've charged 10% of that amount (paying it off of course), but it lets lenders know that I'm not maxing myself out. I'd love to get the limits on DH's cards pushed up just so his ratio is lower, but not sure if they will b/c his BK still shows up even though it's been 6 years and a good record since. (not complaining as it's the price he/we have to pay for his earlier stupidity).
« Last Edit: September 12, 2011, 08:46:12 PM by megswsu »





shhh its me

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Re: Good/Bad credit in US
« Reply #31 on: September 12, 2011, 04:39:04 PM »
In fact, I don't pay a yearly fee for any of our credit cards (some of which we've had for 30+ years), and since I always pay the balance in full each billing cycle, I never pay interest or late fees. 

This is true, but I would add one caution: several years ago I had a credit card company cancel my card because I had never paid any interest on it.  Since I wasn't profitable to them, they just canceled me.

The biggest issue I've ever had with a credit card company was trying to keep the amount you can use (credit limit) low on a card I wanted to use strictly for internet purchases.  That took several rounds of discussions with supervisors and threats of closing the card before they decided that yes, I could have a card with a $500 limit instead of the ridiculously high amount they wanted. 

Is there a reason you didn't want whatever high amount they were offering? I'm curious if you don't mind. I've always understood that you want a good ratio of what you owe vs how much the credit company has extended to you. For instance w/one of my credit cards I have a $16k limit, which is totally crazy. I think there have been a couple random times when we've made a big purchase that I've charged 1% of that amount (paying it off of course), but it lets lenders know that I'm not maxing myself out. I'd love to get the limits on DH's cards pushed up just so his ratio is lower, but not sure if they will b/c his BK still shows up even though it's been 6 years and a good record since. (not complaining as it's the price he/we have to pay for his earlier stupidity).

I'm guessing PP wanted a card to be used on the internet with a low limit in case of fraud. sure credit card companies normally waive charges in cases of fraud but I wouldn't want to have to fight about 10-20 thousand dollars.  I think it's a just in case of fraud and just in case the credit company disputes the fraud.

CG

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Re: Good/Bad credit in US
« Reply #32 on: September 12, 2011, 09:48:12 PM »
The other thing is that having a large amount of unused credit can hurt you when getting a loan.  It's apparently a red flag to mortgage lenders, as they figure you'll probably run it up getting things for your new house.

Slartibartfast

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Re: Good/Bad credit in US
« Reply #33 on: September 12, 2011, 09:53:30 PM »
I actually had a weird situation like this.  We put almost everything on our credit card and pay it off each month.  A while back, I decided that since DH had gotten a new job (with a raise) and since having a higher ratio of available credit to used credit is better for your score, I wanted to get the credit limit on our card raised.  Not because we needed to use it, just to raise our credit scores and to give us some breathing room in case of an emergency.  We were using between 20-30% of the limit most of the time, and when I called we had just put a big charge on the card for some home repairs so we were closer to the 50% mark.

The credit card company rejected my request because we were using too much of our credit already  >:(  Oddly enough, a competing credit card company was MORE than happy to issue me a new card, with a limit significantly higher than the one we were already using, and it gives better cash back too!  So in the first company's effort to second-guess our spending habits, they now make almost nothing off us because we don't use that card except for places that don't accept our new card (AmEx).

shhh its me

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Re: Good/Bad credit in US
« Reply #34 on: September 12, 2011, 10:36:04 PM »
The other thing is that having a large amount of unused credit can hurt you when getting a loan.  It's apparently a red flag to mortgage lenders, as they figure you'll probably run it up getting things for your new house.

Any half way decent lender will tell you "you have too much availbale credit" you can close accounts or lower limits and get an adjusted credit report pretty quickly.  You can't gain a 24 month history in a short time.  (this wont help with a store credit card , then you have to close the account and wait till the score adjust on its own)  BTW everything that lowers your score is listed , but it does not say by how much so " too much open credit" may lower your points by 20 and closing all you accounts without a balance may lower your points by 200.   

girlysprite

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Re: Good/Bad credit in US
« Reply #35 on: September 13, 2011, 05:50:42 AM »
With the benefits and bonusses that creditcards give in the US I can see the sense of using them. Consumer protection is a good one. I must add that there are a bundle of laws and regulations where I live to handle that sort of thing, but it can be a bit trickier to get money back after having used a debitcard...I think.

And as for the risk to loan money to someone who didn't loan before; I guess it just depends on how you look at it. If someone applies for a loan, has a good job and income, a car, pays rent, and has no history of trouble paying back anything, you can generally assume that the person knows how to handle his/her money. A good conversation about the person's money managing will likely reveal any other problems. When a person had failed to pay back something in the past, there is actually an institution which keeps track of all that. Mortgage interest rates do not differ based on 'credit score'. But the amount that someone is allowed to loan can differ based on the perceived credit. And when people have trouble paying off their mortgage because their income actually did not support it, their advisor can also expect a visit & check.

kkl123

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Re: Good/Bad credit in US
« Reply #36 on: September 13, 2011, 01:32:27 PM »
Quote

The biggest issue I've ever had with a credit card company was trying to keep the amount you can use (credit limit) low on a card I wanted to use strictly for internet purchases.  That took several rounds of discussions with supervisors and threats of closing the card before they decided that yes, I could have a card with a $500 limit instead of the ridiculously high amount they wanted. 

Is there a reason you didn't want whatever high amount they were offering? I'm curious if you don't mind. I've always understood that you want a good ratio of what you owe vs how much the credit company has extended to you. For instance w/one of my credit cards I have a $16k limit, which is totally crazy. I think there have been a couple random times when we've made a big purchase that I've charged 10% of that amount (paying it off of course), but it lets lenders know that I'm not maxing myself out. I'd love to get the limits on DH's cards pushed up just so his ratio is lower, but not sure if they will b/c his BK still shows up even though it's been 6 years and a good record since. (not complaining as it's the price he/we have to pay for his earlier stupidity).

Yes, I have a lot of other cards, some with very high limits.  I wanted one particular card for internet purchases -- this was back in the days when there really weren't standards for how personal data needed to be kept.  It seemed sane to me that if I were to use a card on the net, I wanted to expose only one card to fraudulent use, and to keep it to a low credit limit.  If, heaven forfend, the card was forged and I was somehow held responsible (and that happened, too, in the early days of the net), I wanted my liability to be relatively low. 

That's also the card I use for my continuing subscriptions to things like Ottobre Woman.  It's easier not to have to remember to resubscribe every year when I only get two issues a year.  <g>

The credit utilization scores on the rest of the cards more than make up for having 20% of that $500 credit card limit utilized +/- often.

Cracea

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Re: Good/Bad credit in US
« Reply #37 on: September 13, 2011, 01:41:21 PM »
To my knowledge lack of a credit history will not effect employment or insurance ( insurance companies use a different scoring system then lenders)  Bad credit will effect these but not no credit.  * note there is a difference between having no credit and having a credit history no one has even looked at before , insurance , utilities companies, video rental stores all look at your credit. being 21+ and never having anyone even look is suspicious (unless you have recently immigrated come out of a comma/jail and some housewives/husbands with everything in their spouses name)

(Quote trimmed)

Sadly, it can.

A friend of mine came out of a 25 year marriage with no credit, but a great work history. The last 10-12 years of work were at a small casino. It took her a while, but was finally able to get a car loan (with outrageous rates). She was eventually able to get a store credit card as well.

A couple of years go by, and friend applies for a job at one of the big Las Vegas casinos. They really liked her, and it would have been better salary and great benefits. Then they called her and told her they would have loved to hire her, but she just didn't have enough credit history. Since then she's talked to coworkers with the same story.

She was raised to only buy what she could afford, not to rely on credit, and it's sad to see her punished for that ethic.

Momiitz

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Re: Good/Bad credit in US
« Reply #38 on: September 13, 2011, 04:01:21 PM »
I'm okay with others using credit cards if they want. For me I just don't want to deal with the hassle credit cards bring. The times I have used credit cards in the past, I had real trouble with the credit card companies shenanigans like changing the payment due date and having no customer service.

I'm not too worried about getting another loan because the only loan I may take out on the future will be a mortgage. You can get a mortgage without a fico score. You have to use a bank that will use manual underwriting instead of fico score underwriting. There are plenty of banks that still do this kind of lending. They physically look at your job history and rent payment history. If you have had the same job for two years and paid your rent early or on time for two years you are bankable for a mortgage.

I know I may pay more for car insurance (that won't last long, I'd switch companies) and some people get cash back (some debit cards offer cash back) but nothing feels as good as being debt free.


shhh its me

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Re: Good/Bad credit in US
« Reply #39 on: September 13, 2011, 06:13:28 PM »
With the benefits and bonusses that creditcards give in the US I can see the sense of using them. Consumer protection is a good one. I must add that there are a bundle of laws and regulations where I live to handle that sort of thing, but it can be a bit trickier to get money back after having used a debitcard...I think.

And as for the risk to loan money to someone who didn't loan before; I guess it just depends on how you look at it. If someone applies for a loan, has a good job and income, a car, pays rent, and has no history of trouble paying back anything, you can generally assume that the person knows how to handle his/her money. A good conversation about the person's money managing will likely reveal any other problems. When a person had failed to pay back something in the past, there is actually an institution which keeps track of all that. Mortgage interest rates do not differ based on 'credit score'. But the amount that someone is allowed to loan can differ based on the perceived credit. And when people have trouble paying off their mortgage because their income actually did not support it, their advisor can also expect a visit & check.

To the bolded but what would they have paid back, if not a credit card who is the first person that normaly leans money in the UK?   I think that's were the difference is coming in ......people saying have a credit card are speaking to people who don't have other debts.  Here I can use a car loan or rent as my reference to get a mortgage or a lease it's getting the car loan or first apartment people need credit for(that's normally a few credit cards or a cosigner) It's people without carloans and credit cards and no leases that have  the most trouble.  Also the interest on 1-3 credit cards with low balances is less then the added  intrest on a high risk car/home loan ( the requirement for home loan is 4 lines of credit with a good pay history 2 for 2 years and 2 for 1 year ) ** studnet loans can be used too but since they do not have to be start paying them back until well after graduation , they often are not "ripe" when someone applies for their first car loan/lease**