KodiakArcher

Only if every payment is in on time. What most people fail to realize is that credit score is not just a reflection of if the creditor will get their money back, it's a reflection of the likelihood they will receive their payments on time.

I pay everything on my one credit card (for the airline miles) but no matter how high the balance, it gets paid off at the end of each month, no exceptions.

GMMAT

I was assuming that was a "given". It's part of the small print.

robbcayman

Why do you need a credit score?????????????????????????????

I bought a house with a better interest rate than prime without a credit score. There is a thing called manual underwriting and you actually getbetter mortgage interest rates than people with the highest FICO scores.

The logic is when they realize you have no other payments the chances of you defaulting are fairly slim. Compare it to a guy who has two car payments, carries a small balance on his credit cards, has a HELOC etc... If he loses his job the chances of him defaulting are great since he has so many financial obligations.

BTW, I now have a super high credit score because I pay early on my mortgage (high 700's) It doesn't really mean anything to me, because I am not going to borrow money.

I have two paid for newer cars, I take at least 2 big tropical vacations a year, hunt a lot, buy lots of gear and do it with cash. It can be done, butthe hardest part is getting out of debt then you can start building a net worth for yourself instead of lining the bank's pockets.

If you are a Christian, it says in the bible the borrower is slave to the lender. The bible mentions debt a lot and has many negative things to say about it. To each his own, but I sleep rather well at night. And if I were to lose my job I could literally spend a year looking for something else.

ranger56528

I am going to take my children to the bank when they turn 12 and take a loan out with their name on it to buy them each a ATV and then make 5-6 payments then pay it off(we havealso set up saving accounts for them,put 10 grand in each one when they were 1 yr old).doing this will set up a credit linefor them when they get older.My dad did this with me when I bought my 1st motorcycle/enduro bike....except no savings account.......
You also need to remember that employers(some) will look at your credit too whenapplying for a job to see if your a risky hireie....
Haveing good credit can be a big plus nowdays.....If your young(18-24) getting a cc with a 1000.00 credit limit can go a long way as long as you dont default on payments.

GMMAT

Too many variables to make such a broad statement. Income/debt. ratio is the key....along with a payment history. If a man has a solid repayment history.....he's PROVEN he's not a high risk by his prior actions.

There is nothing better......when you're applying for credit......than a strong payment history. It's FAR better to have paid for something over time.....and lived up to one's obligations....than it is to show no evidence of such (as in paying cash for everything).

I'm not sure about individual state's laws.....but in NC....a minor can't enter into a contract (like say....a credit agreement). I would say, as parents, the best thing we can do for our kids, credit-wise, is to have them borrow money from an institution (even if we have to co-sign) at an early age.....to teach them the value of such. Kudos to you guys who are doing this.

Here's another scenario to highlight something I mentioned, earlier. Let's say that new truck you want is $25K. You have the cash to pay for it......but you'd be pulling that cash from a place where it's earning 10% return on investment. The dealership or other lending institution is offering you a 5% interest rate. Do the math.

GRIZZLYMAN

I pay cash or use an Amex card. With the Amex card, I have to pay it off monthly, so there is no temptation to carry a balance forward.

dmen

Robbycam, you real name wouldn't be Dave Ramsey by any chance

BobCo19-65

Some people just don't like to owe. You can give them all the reasons in the world to borrow. But they just don't like to borrow.

robbcayman

Let's take your example of earning 10% while paying 5% on a vehicle. Sure you are paying less of an interest rate, but that money you are earning the 10% on is taxable income. So, 10% starts to look like 7% to me. Also, you are factoring in risk, especially if you lose your job.

What I have done is paid cash for all of my vehicles and I pay $500 into mutual funds each month. I am averaging 12% and every 6-8 years I tap into it and buy another car. So essentially I am doing what you are talking about, but my spread is larger because I am not paying a dealer/bank 5% interest.

Also, even if someone wants to check my credit score it isawesome. Just pay your house payment on time or early and you will have a high credit score. You don't need a credit card or a car payment to build good credit.

Obviously you have made a lifestyle choice of borrowing money, but I think it will slow down your true potential. I have just seen far too many people win with money who refuse to borrow it. My parents make a 6 figure income, but their net worth is really low due to car payments, credit cards etc...

The golden rule is not how much you make, but how much you keep.

PS: Yes Dave Ramsey inspired me 5 years ago and it has been the biggest blessing of my life. I used to think just like GMMAT.

dmen

I to am a fan of dave ramsey, it wasn't meant as an insult