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Dave Ramsey will tell you the best way to deal with the credit reporting agencies is to not have a credit score at all. He'll say credit doesn't matter when you're always buying with cash. To that extent he is correct, but that isn't the whole story.

Dave will say if you have no credit scores, companies will use other methods for determining your financial health. I've found this isn't always true.

For instance, we have no mortgage. We used to have a mortgage but it is paid off. We can prove we own our house free-and-clear because that is on our deed/title. In the little box that says "lien holder" there is nothing. It is blank. Even with that piece of paper (when I can find it - ugh! got to get the files in shape), some companies will calculate SOME amount of mortgage against your net worth because they assume you just have a private, unrecorded debt (like from a family member or something.) Also, some companies will simply see no mortgage listed and stop right there. They won't ask any further questions and just assume you don't really own your home no matter what box you checked on the application.

With the crash of the economy and new banking regulations, many people are finding that a poor financial history will lock them out of being able to get even a basic checking or savings account.

Insurance companies - life, house and auto - may increase your premiums if you have a poor financial history. They'll point to studies that show that people who can't manage their money tend to have more frequent insurance claims.

Employment - there are all sorts of opportunities for employment that can suddenly become unavailable to you if you have a rocky financial past. Some retail stores won't even hire you as a cashier if you don't have a decent credit score! It isn't worth it for them to inquire further. They'll just deny your application and move on to the next prospect. Forget about working for banks, other financial institutions, at an insurance company, as a high-level sales person, and in any job where you need to be bonded. Say "bye-bye" to any hope for a security clearance, too.
 

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We are debt free, including house & vehicles. We do use credit cards regularly, one for gasoline,which earns points for free hotel rooms. I use another one for everything else I buy, so I can get points that can either be used on Amazon, or cashed in for gift cards. These both get paid in full each month. The cc statements display my credit score every month & it is quite good. I really didn't think the credit score would matter to me anymore, since I am not going to buy anything on credit long term. Also don't plan on getting another job, but we definitely do use insurance. Thanks for the info.
 

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Credit Score does matter if you are planning to rent apartment, and for your auto, home insurances, which you mentioned. However, I really don't care so much about, as I hope to never borrow $$ again. I am in the paying off debt mode now.
 

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Discussion Starter #4
Oh, I forgot about renting an apartment. We will be in that position - hopefully sometimes this year.
 

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We are debt free. I put everything I can on my rewards credit card and pay in full monthly. I want to keep our score way up where it is. The big reason is insurance. We so may transfer and need to rent until we buy. We also will be buying another investment property down the line somewhere.
 

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I hate to admit I have not really cared about our credit score. We are debt free and not planning to finance anything. I had heard the insurance thing recently somewhere else too so I guess I should look into this. I know when we bought our last new car our credit score was very high but that was almost 10 years ago. We did not use our credit card in so long that when I finally did they flagged it as suspicious and denied it. So I have been trying to use it some. Really, I just don't like the hassle of it, I would rather just pay cash or check and have it done. Maybe if I was getting a reward from a card it would be easier. If anyone would like to share the company name of the rewards card you use I would appreciate it....it would give me a starting point for research. I like the idea of the statement displaying the score every month, never heard of that. Wonder if many do?
 

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Discover gives rewards & displays the credit score. I have my cell phone automatically paid by my Discover, plus I use it for all groceries, etc. Since my pay is direct deposited, it is easier for me to use the card & pay it off each month. I actually have it set up to auto pay the full balance each month, so I never miss the due date.
 

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CL, if that is in Asia, please be careful showing paperwork with a FICO score. Not that they will mind it specially, but you might have a hard time explaining what it is. In Europe FICO scores are non-existant and I doubt Asia will be different as they seem to be even more on the saving side. While they apparently have an Asian office, I couldn't really find any links other than FICO itself, so I do think that if you move that way, you might not need a FICO score.
 

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Discussion Starter #10
CL, if that is in Asia, please be careful showing paperwork with a FICO score. ...
Negotiations with the Asia job are on-going. Nothing is final yet and these things go slowly. We probably wouldn't even move until 2017! The apartment rental would be another job in the US. At this point, they aren't offering enough so that is looking to be a no-go. Other job possibilities exist. We're just waiting for the right one to come along.
 

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Aside from the insurance premiums as mentioned, some utilities check your credit score prior to service.

It can also be helpful to have good credit even if you aren't planning on getting a loan for anything. I went to buy a new pickup for cash, but found if I got a loan for part of the cost, and kept it for 3 months, I would get a pretty hefty cash back/discount. With my credit, the interest rate was 0%. I got the 0% loan for the minimum amount required, got the discount, kept the loan for 3 months, and then paid it off. Having good credit also allowed me to have a credit limit on my card high enough to put the remainder of the balance on there, getting the 1% cash back, which I paid off a week later. If I had poor or no credit, the cost for the pickup would have been a couple of thousand more, even by ultimately paying cash.
 

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Aside from the insurance premiums as mentioned, some utilities check your credit score prior to service.
Thanks for that reminder. In our area we have to give the electricity company (unregulated by the state because they're a co-op) a deposit that they keep ... pretty much forever and they don't even pay interest on the money! The amount of the deposit is based on your credit score.
 

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Another question.....does anyone know about credit scores and married couples? Do my husband and I each have a credit score? Do you married couples each have a credit card in your own name for credit score reasons? Everything we have is in both our names.....except like IRA and 401K. We have one joint checking account. One credit card account. You all have me thinking now........
 

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Another question.....does anyone know about credit scores and married couples? Do my husband and I each have a credit score? Do you married couples each have a credit card in your own name for credit score reasons? Everything we have is in both our names.....except like IRA and 401K. We have one joint checking account. One credit card account. You all have me thinking now........
You each have your own credit score.

If you are both joint on a financial account (bank account, investments, credit cards) one person is "primary". The other spouse is either secondary with joint access or just an authorized user. MANY times I'm the one who opened a credit card or bank account and put my husband's name first just out of habit. Later when I have to talk to the financial institution about the account I HAVE TO GET PERMISSION FROM MY HUSBAND!!! Aaaarrrrgggghhhh! That is so aggravating!

My advice is to go through every financial account and make sure you BOTH have full access to deal with them. Call them and test it out. That may not change how they report to the credit reporting agencies, but it'll make your life easier in the long run.

Oh, and if you are married and your husband opens a credit card without your knowledge then runs away with his secretary after running up the card to the limit, yes, you can still be liable to pay the entire balance to the credit card company because they'll attach "joint assets". And they'll ruin your credit even though they wouldn't have previously given you positive reports on your credit report if he was paying the card in full. The whole system is rigged.
 
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Thanks to everyone here I stepped out of my comfort zone and applied for a cash back no fee credit card this morning. Did under hubbys name since I am the primary account holder on the one we have. If for some reason he gets denied I will try again under my name. I know it probably sounds silly that it is out of my comfort zone but I just prefer to buy something and pay for it right then out of the checking account or cash and be done with it. That being said I am willing to change my ways for cash back rewards and am now thinking of all the things I can run through the card to get more cash back. I did apply through the company we hold our other card through because we have been happy with them.

I was thinking back to the time my Grama applied for a mervyns store card probably 30 years ago now. She thought it would be handy to use for Christmas shopping. Well she was denied because she had no credit history. They had never charged a thing. Cash for their house, cash for cars. Now my granparents were not wealthy by any means but they grew up at a time that when you wanted something you saved up and paid cash for it. My grandmother never worked outside the home and my Grampa quit school at 14 and worked at a wood mill until he retired.Had my Grampa still been alive I am sure my Grama would not have applied for the card.....I think that was my mothers influence on her. My mom used cards but paid them off. Then there is my sister who does not have a credit card anymore because in her own words "she can not be trusted" . I do not know the extent to which she got herself into debt. It is interesting to me to look at the 3 generations in my family and the difference in credit card use.
 

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Very smart post, and one of my (few and small) gripes with Ramsey's method. Having NO credit score is different than having a low one, but makes life all the harder. I think back to when I was younger and looking to purchase my first 'real' car. I wanted to finance a used one, and had a good job and good income. But because I had NO credit, they insisted on a co-signer. I found a car at a different dealership that did not require it, but did not get the car I originally wanted due to lack of credit score (I was not about to ask my dad or anyone else to put their name on that dotted line for MY car).

Fast forward to now, when we buy gently used 3-ish yr. old cars with cash (despite having stellar credit scores), and it doesn't matter anymore in that example. But as pointed out, credit scores as used as indicators in areas where you aren't 'borrowing', which is why we choose to maintain healthy ones instead of aiming for NO score. Sure, life can go on without one, but it's a lot less hassle (and possibly cheaper) with a good one.

Dave always says a credit score is nothing more than showing you like to play kissy-face with the banks. That's true, to some extent, but it also is an indicator that you honor your responsibilities and have a reasonable handle on gauging what you can and can not afford to take on (money management). I tend to favor Suze Orman's advice over Dave's in this area, and we have our mortgage, plus a card I use and pay off immediately, without carrying a balance. As it is only used for things already budgeted for, this is so far working well, though I am admittedly rather new to it. If a big charge goes on it (our new range comes to mind), the money is already on its way from our online checking accounts to cover the charge. We simply don't charge what we don't have the money to cover that very minute, but I do get rewards on our purchases. I take the rewards as cash and apply it as extra to our mortgage each month.

Everyone's got to know themselves. If charging and debt are areas where you get into trouble quickly, than perhaps aiming for NO score is a better path for you. But if you're financially responsible and can use it without carrying balances, I think it's better to keep your score up.
 

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Credit scores are important. More employers are making judgement about things posted on facebook and credit scores.
I just had mine drop 80 points. There was an error where I thought I had paid on line at Christmas and didnt recieve bills thur the mail. The only thing I can figure is maybe the confirm didnt go through? I had the money and paid early? Well 2 months later I have late fees and A whole lot of confusion. I paid right away when I got a call but too late. Very upsetting because out credit score was near perfect. All over a stupid error. Be careful folks.
 

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This is not true in all cases. I rented an apartment with a zero score. I informed the leasing office up front that I didn't have a credit score. I ended up paying a slightly larger deposit, but I got the extra amount back after 6 months of paying my rent on time. The office advised me what they are looking for when checking credit is someone with poor credit. A zero score is not the same as a poor credit score. My advice to you is, if you find an apartment that won't work with you, just move along and find another one.

As for your home and auto insurance rates, it is true that there are many companies that do use credit-based rates, but there are also still companies (roughly 10% in the U.S.) that do not check your credit history. Paying a bit more for insurance rates won't be a problem if you have no debt payments. Even at that, your rates wouldn't be double what they normally are. You can expect to pay 10%-25% more.

Way to go on your efforts to pay off your debt!

Credit Score does matter if you are planning to rent apartment, and for your auto, home insurances, which you mentioned. However, I really don't care so much about, as I hope to never borrow $$ again. I am in the paying off debt mode now.
 

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Employers are looking for irresponsibility when they are pulling your credit history. A zero credit score is treated the same way as an excellent credit score. Just be up front and advise your employer if you have a zero credit score during the process because you don't believe in debt and prefer cash-flowing.
 

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You are misinformed. My brother is a police officer here where I live and as part of their background check, they pull their credit history. He has a zero score because he rents an apartment and has a paid for used vehicle. He has no credit cards and uses only a bank debit card. They advised him a zero credit score is treated just like an excellent credit score and both show responsibility as opposed to a poor credit score.

Credit scores are important. More employers are making judgement about things posted on facebook and credit scores.
I just had mine drop 80 points. There was an error where I thought I had paid on line at Christmas and didnt recieve bills thur the mail. The only thing I can figure is maybe the confirm didnt go through? I had the money and paid early? Well 2 months later I have late fees and A whole lot of confusion. I paid right away when I got a call but too late. Very upsetting because out credit score was near perfect. All over a stupid error. Be careful folks.
 
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