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  1. #41
    Join Date
    Jul. 15, 2006
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    VA
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    861

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    I am also going to dissent. I am pushing 40 and have no credit cards. Sometimes things get tight, but we have always managed to deal with it. I did have a credit card once, for all the reasons you list, but I was not disiplined enough to use it correctly and I only paid it off in full for the first few months (good intentions and all) I ended up spending a lot more in interest and it didn't really help my credit that much. The car loan that I got helped much more, but I did have to have a cosigner (Thanks Dad!) Since then I have gotten a mortgage, and a few more car loans and could get a personal loan if I really really had to.
    I agree that 2 friends weddings is not a good reason to dip into your savings account (your wedding yes, theirs no). I got marriend last year, my bridesmaids dresses cost $20 from H&M.
    Railgirl.blogspot.com



  2. #42
    Join Date
    Dec. 16, 2007
    Location
    Oklahoma
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    203

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    Please take Dave Ramsey with a grain of salt. Some of his ideas are great for getting out of debt, but saying that you don't need credit, well, it may work for some but not everyone.

    I'm a lending officer at a bank, and I wish I had a dollar for every time I had a customer say, "I follow Dave Ramsey so I don't have any credit." Well, why are you here then? Oh, you want to buy a car? Guess what, you have no credit, so you can't get approved for a car loan. Kinda defeats the purpose.

    Maybe my perspective is skewed, but I think good credit is one of the most valuable assets you can have. Means the difference between a 1.9% car loan and a 19% car loan.


    7 members found this post helpful.

  3. #43
    Join Date
    Jun. 12, 2007
    Location
    Westchester County, NY
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    I got my first credit card at 16 when I got my driver's license. My parents didn't want me stuck in need of a tow truck with no way to pay for it. They considered it irresponsible to not have a credit card on you and to have to rely on others in a pinch. Thankfully, they also taught me that it isn't a source of cash you don't have, just cash you don't have on you at the moment- so it gets paid off every month. I'm greatful that in my late 20's, I have a credit score of 780+ and am able to get good interest rates when I need something financed (car).



  4. #44
    Join Date
    Apr. 2, 2003
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    4,848

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    No objection to getting a credit card but I would do the following:

    1. Make sure that it is not a rewards card with an annual fee and a higher interest rate to pay for those rewards. Credit unions are a good place to start for this. No annual fee, low interest rate.

    2. Make sure the limit is something reasonable. $1000 or $2000. A hole you could dig out of if you really had to use the card for an EMERGENCY.

    3. You sit down with your husband and you decide what is an EMERGENCY and what is a failure to plan on your part that you will have to suck up and deal with the restricted budget to pay for. I generally consider this to be something like the down payment to get the hospital to operate on you if you're dying.

    4. Agree at what point a vet expense would become too much for you to afford and you will agree that the animal will be humanely destroyed if the cost exceeds that amount. OR you budget for major medical on all your animals to defray the cost. Our dog is insured for this reason. We have to front his costs but the insurance pays 90% back to us. It costs us $25/mo.

    5. Either you leave the card at home, or you agree that one of you will carry it and you will NEVER use it without talking to the other person.

    Recognize that some of the biggest emergencies, the folks don't take credit cards (tow yards come to mind frequently).



  5. #45
    Join Date
    Sep. 24, 2004
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    Piedmont Triad, North Carolina
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    2,358

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    I have "no annual fee" reward card(s) Every one of them has an associated reward. If it doesn't, I don't have it, much less use it. I check my credit every year through the free web site. All accounts say "paid as agreed" That's just saying that the bill was paid on time. The paying on time is what counts toward the credit score.

    Dave Ramsey ... His program is great. It's a tool to manage your spending life. I never heard him say credit is bad. He does say DEBT is bad. Debt is when you spend more than you can pay. A House mortgage is not Debt if you can pay it. You don't own the the house until you pay the mortgage.

    As for the interest rates ... pish .. I couldn't care less how high. All accounts are paid in full each month. Discipline has it's rewards = $$$
    Last edited by hosspuller; Feb. 19, 2013 at 11:52 AM. Reason: Ramsey comment.



  6. #46
    Join Date
    Dec. 16, 2007
    Location
    Oklahoma
    Posts
    203

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    The problem with a lower limit card is that it will negatively affect your credit if you max it out. Any time you owe more than 50% of the balance on a card your credit will take a very big hit. Even if you pay it off every month, its very easy to owe over 50% on these cards with a $500 or $1000 limit.

    Granted, you have to start somewhere. If your goal is to build your credit so you have those 700 or 800 scores, start with a $500 limit, which is probably all you're going to get at first, but try not to charge over $100 or so at a time. After a few months the credit card company will probably raise you're limit, which is a good thing for your credit score.

    Lenders like to see that you can responsibly handle larger credit lines without using the available credit.

    By the way, I've been a lending underwriter for over 15 years, so I know a little...


    1 members found this post helpful.

  7. #47
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    Apr. 2, 2003
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    Quote Originally Posted by DesignerLabel View Post
    The problem with a lower limit card is that it will negatively affect your credit if you max it out. Any time you owe more than 50% of the balance on a card your credit will take a very big hit. Even if you pay it off every month, its very easy to owe over 50% on these cards with a $500 or $1000 limit.

    Granted, you have to start somewhere. If your goal is to build your credit so you have those 700 or 800 scores, start with a $500 limit, which is probably all you're going to get at first, but try not to charge over $100 or so at a time. After a few months the credit card company will probably raise you're limit, which is a good thing for your credit score.

    Lenders like to see that you can responsibly handle larger credit lines without using the available credit.

    By the way, I've been a lending underwriter for over 15 years, so I know a little...
    If it's an emergency card, they shouldn't be charging anything to it on a regular basis, and the utilization won't matter.



  8. #48
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    Apr. 2, 2003
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    4,848

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    Quote Originally Posted by hosspuller View Post
    I have "no annual fee" reward card(s) Every one of them has an associated reward. If it doesn't, I don't have it, much less use it. I check my credit every year through the free web site. All accounts say "paid as agreed" That's just saying that the bill was paid on time. The paying on time is what counts toward the credit score.

    Dave Ramsey ... His program is great. It's a tool to manage your spending life. I never heard him say credit is bad. He does say DEBT is bad. Debt is when you spend more than you can pay. A House mortgage is not Debt if you can pay it. You don't own the the house until you pay the mortgage.

    As for the interest rates ... pish .. I couldn't care less how high. All accounts are paid in full each month. Discipline has it's rewards = $$$
    This person is specifically asking about credit cards for things they cannot pay for, so therefore, the interest rate WOULD matter since they are using this for expenses they can't pay off at the end of the month.



  9. #49
    Join Date
    May. 28, 2006
    Location
    Florida
    Posts
    3,156

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    Quote Originally Posted by Alterageous View Post
    This person is specifically asking about credit cards for things they cannot pay for, so therefore, the interest rate WOULD matter since they are using this for expenses they can't pay off at the end of the month.
    Well, yes and no....I wouldn't want to use the card intentionally for things we can't pay for (though sometimes life happens, understood) but more stuff that we COULD pay for, IF our cash was on us, not in an envelope at the house....hence an "emergency" that we pay off that same month. Also was interested in the opinions about using it for small things every month, such as groceries, or things I would pay for anyway, just to put it on the card, pay it off, and build that credit.


    1 members found this post helpful.

  10. #50
    Join Date
    May. 28, 2006
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    Florida
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    DesignerLabel, thanks for chiming in! Always like to hear advice straight from the horse's (or underwriter's) mouth One of my concerns before was that we got turned down on a car loan because of soft credit...will that rejection make it harder to be approved for a card?



  11. #51
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    Apr. 2, 2003
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    4,848

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    Quote Originally Posted by talkofthetown View Post
    Well, yes and no....I wouldn't want to use the card intentionally for things we can't pay for (though sometimes life happens, understood) but more stuff that we COULD pay for, IF our cash was on us, not in an envelope at the house....hence an "emergency" that we pay off that same month. Also was interested in the opinions about using it for small things every month, such as groceries, or things I would pay for anyway, just to put it on the card, pay it off, and build that credit.
    As an aside, credit cards build credit whether you use them or not. As long as they're open, they age, and the age is what builds your credit. Using them over a certain amount can ding you, but using it under that amount and paying it off does nothing for you in terms of your credit score.

    The only thing that really does is encourage the issuer not to close your card for inactivity. I have a card that has been open for 6+ years that I have never charged a single cent to. Still counts as a 6 year old account used responsibly on my credit report.



  12. #52
    Join Date
    Oct. 16, 2008
    Location
    Central Oklahoma
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    3,147

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    Quote Originally Posted by soloudinhere View Post
    As an aside, credit cards build credit whether you use them or not. As long as they're open, they age, and the age is what builds your credit. Using them over a certain amount can ding you, but using it under that amount and paying it off does nothing for you in terms of your credit score.

    The only thing that really does is encourage the issuer not to close your card for inactivity. I have a card that has been open for 6+ years that I have never charged a single cent to. Still counts as a 6 year old account used responsibly on my credit report.
    Ummm in short. NO. If you have multiple credit cards, even though you never use them, it will negatively impact you when you do need to qualify a loan, which is what all this is about: ways to build up credit so you can qualify a low interest loan.

    Folks, do NOT keep multiple credit cards just laying around: look rather bad on your part. Close and destroy them.



  13. #53
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    Sep. 24, 2004
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    Piedmont Triad, North Carolina
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    2,358

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    OP ... I use the cards for everything possible... groceries (3%), gas (5%) and everything else(2%)... Cash when a cash discount is offered. The rewards for using a CC for whatever is spent anyway add up to significant money.

    Would you like $120? 1% of $1,000 per month gets you that.

    PS: these are NOT debit cards. CC offer protections against fraud & product failure, a debit card doesn't have.



  14. #54
    Join Date
    Sep. 16, 1999
    Location
    Ohio: Charter Member - COTH Hockey Clique & COTH Buffy Clique
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    9,143

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    If you have multiple cards with no balance on them, any underwriter worth their salt WILL count that against you if you go for a mortgage. Why? Because you're an accident waiting to happen. Once you buy the house, you "need" furniture, drapes, new appliances, carpet, etc. YOU may not, but they can only play the statistics and that IS what tends to happen.

    I still say overspending at the grocery store by using your credit card (again, statistics/studies show it DOES happen) to get that 1% back isn't good math.

    Buying a car with debt isn't smart math either. Cars depreciate quickly. The newer the car, the lower the interest rate for a loan... but the faster the depreciation of value! Save up. Buy a car you can afford outright.
    ************
    "Of course it's hard. It's supposed to be hard. It's the Hard that makes it great."

    "Get up... Get out... Get Drunk. Repeat as needed." -- Spike



  15. #55
    Join Date
    Apr. 2, 2003
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    4,848

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    Quote Originally Posted by Gloria View Post
    Ummm in short. NO. If you have multiple credit cards, even though you never use them, it will negatively impact you when you do need to qualify a loan, which is what all this is about: ways to build up credit so you can qualify a low interest loan.

    Folks, do NOT keep multiple credit cards just laying around: look rather bad on your part. Close and destroy them.
    Negative, again. I have more than $65,000 in available credit. I have had ZERO problems getting a mortgage, car loans, etc and my credit score is over 800. Please play again soon.

    Closing an old credit account will tank your credit. NEVER close an unused account if it is your oldest account.

    The factors that determine a FICO score are as follows:
    1. Payment history (counts for roughly 35%). This is the record of on time payments.
    2. Amounts owed (30%) this is the amount of your available credit reported as used to your credit report.
    3. Length of Credit History (15%) Average age of ALL accounts on your credit report.
    4. New Credit (10%) new credit lines applied for (applying extensively damages your credit).
    5. Types of credit used (10%) creditors like to see a mix of revolving (credit card) debt and long term debt like car loans and mortgages.

    No idea where you're getting your information but closing unused accounts damages both #2 and #3 because the amounts owed are interpreted as amounts owed of percentage available (ie. $500 out of $2000 counts as 25% while $500 of $10,000 counts as only 5%), AND the account's age stops helping you.

    See FICO's response on whether closing an account will help your credit score, in which they tell you it will HURT your score:
    http://www.myfico.com/crediteducatio...and-score.aspx


    2 members found this post helpful.

  16. #56
    Join Date
    Oct. 16, 2008
    Location
    Central Oklahoma
    Posts
    3,147

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    soloudinhere, you seem an intelligent, responsible person, but please don't think that little list, or that little FAQ for the matter can fool someone who had made Finance her graduate study. If we could all manage our finance based on one simple FAQ, lives would be so much easier.

    If you don't think lenders look at how many credit cards you own, as well as all the loans you already have, if you think they look at your score alone, when processing your loan applications, you are fooling yourself. Score is nothing but a score.

    Yes, if you have a substantial income, more credit cards won't hurt you a bit, just like Bill Gates can have a hundred cards, and banks will still flock to his door begging him to borrow more money. The rest of us? not so much.

    To put a perspective, when I applied for the mortgage for my first property, my credit score was so high that they advised me not to include my husband in the process, that they tried to get me borrow another 200 on top of what I was planning to borrow, because I was already pre-approved for the total sum. I told them no. When I applied for my car loan, I told them I would accept only the lowest interest rate, and I told them what that was, and we haggled back and forth a bit before setting down a rate. How many credit cards did I have? Two, in total - on Discover and one VISA, which I used only at places that don't take Discover. I cancelled all my other credit cards, because the constant bombarding about getting more loans out of them were really annoying.



  17. #57
    Join Date
    Dec. 16, 2007
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    Oklahoma
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    203

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    Quote Originally Posted by Alterageous View Post
    If it's an emergency card, they shouldn't be charging anything to it on a regular basis, and the utilization won't matter.
    Sorry, I must not have been clear. My thread was about building credit, not having a card for emergencies. My apologies.



  18. #58
    Join Date
    Feb. 28, 2006
    Location
    The rocky part of KY
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    Now I do follow FPU to an extent, but I grew up in an era where a joint credit card or other debt built credit in the husband's name only and women were finding this out the hard way as they divorced or separated and were going out into the workforce for the first time, the housing market, reestablishing themselves as individuals after years of SAHMhood.

    Getting that cc in my name and using it to buy otherwise budgeted items got me started. Of course at that time there were no mag stripe readers and certainly no POS terminals, ATM kiosks were a specific stand alone structure. Debit cards were referred to as ATM cards and I remember standing in line at the ATM in the Mall to get cash to buy items, nowadays I'd use the POS at the merchant, much faster but still something one can abuse either by drawing out cash that needs to sit as part of the budget or using the POS to buy an unbudgeted item and access cash that needs to sit as part of the budget.

    To the OP, it takes discipline. You have to be on top of your expenses, you can certainly use the cc to write yourself an emergency loan that is above your budget but you have to be prepared to pay it back far more rapidly than the minimum payment otherwise it's quite easy to get behind. Look at all these people who think a payday loan is a viable budgeting tool - they're insane! A CC is far better. It's a tool of convenience and can be very valuable.

    I have a family member who was unable to pay for the repair of a car because she didn't have the funds, nor a cc. Instead she went to a low end car dealer and paid five times the cost of repairs for a used car, and rather too much for the interest on the loan for said car because she had no credit. She really got screwed because she was broke, and screwed worse because she had no credit history to speak of. As I said I got a good credit history by using the cc to pay for stuff I alread was going to buy and had budgeted -somewhat similar to those that rack up the rewards points intentionally.
    And one last time, you still must be disciplined in your use of the cc. Get it for the specific purpose of improving your credit, use it to pay for some thing you would already be paying for and have in the budget, and either pay it off in full every month or pay it off at some much higher rate than the minimum payment. Bear in mind that when you use the long term payment feature you are spending extra money for the privilege, money that could have been saved or used elsewhere in the budget.
    Courageous Weenie Eventer Wannabe
    Incredible Invisible


    2 members found this post helpful.

  19. #59
    Join Date
    May. 4, 2003
    Location
    Canada
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    14,527

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    Just know that it is really easy to get in over your head - just one little swipe at a time and it really adds up.... been there.

    Now I'm super careful of my spending and paying back patterns. I carefully check the due dates, since they seem to be giving less and less time to pay off the balance.

    I recommend not being persuaded to take a high fee/reward card at first.

    I have one now, but am very aware of how quick they can pull you under. I
    get a free trip to Switzerland every year to visit my daughter on the one I have now with the air points I can earn. But one missed payment and the benefits go pouff.

    A credit card is valuable insurance if you are travelling and have any troubles.
    Proud member of People Who Hate to Kill Wildlife clique



  20. #60
    Join Date
    Apr. 2, 2003
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    4,848

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    Quote Originally Posted by Gloria View Post
    soloudinhere, you seem an intelligent, responsible person, but please don't think that little list, or that little FAQ for the matter can fool someone who had made Finance her graduate study. If we could all manage our finance based on one simple FAQ, lives would be so much easier.

    If you don't think lenders look at how many credit cards you own, as well as all the loans you already have, if you think they look at your score alone, when processing your loan applications, you are fooling yourself. Score is nothing but a score.

    Yes, if you have a substantial income, more credit cards won't hurt you a bit, just like Bill Gates can have a hundred cards, and banks will still flock to his door begging him to borrow more money. The rest of us? not so much.

    To put a perspective, when I applied for the mortgage for my first property, my credit score was so high that they advised me not to include my husband in the process, that they tried to get me borrow another 200 on top of what I was planning to borrow, because I was already pre-approved for the total sum. I told them no. When I applied for my car loan, I told them I would accept only the lowest interest rate, and I told them what that was, and we haggled back and forth a bit before setting down a rate. How many credit cards did I have? Two, in total - on Discover and one VISA, which I used only at places that don't take Discover. I cancelled all my other credit cards, because the constant bombarding about getting more loans out of them were really annoying.
    I have never, ever heard of anyone being denied a loan for having too much credit.

    We just bought our fourth house, between the 2 of have at least $150k in open revolving credit, still no issues whatsoever getting a mortgage.

    Do I suggest this poster go it and get 10 credit cards? No. But for example, when you run business expenses through a card that reports on your personal report, you cannot afford to only have $10,000 in credit available. I know I am not unique in that situation.

    If underwriters regularly approve people for loans they can't afford, I have a tough time buying that they won't approve me because I might go buy furniture. I might also go buy a Mercedes, or perhaps take up sail boating with a boat loan.



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