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Thread: Why Your Credit Score Doesn’t Matter

  1. #1

    Why Your Credit Score Doesn’t Matter



    These days everyone is concerned about their credit score. As credit continues to tighten up, lenders are requiring higher scores and credit bureaus aren’t giving out brownie points for being a real living, breathing, human being. And some pundits say don’t worry about it. Why?

    First, you have to understand what a credit score is. The problem is that the determination of the score is a trade secret. A company called Fair Isaac Corporation calculates the most commonly used FICO score. Generally, the elements of the score are known to be:

    35% — Payment History
    30% — Credit Utilization
    15% — Length of Credit History
    10% — Types of Credit Used
    10% — Recent use or inquiries for credit

    The credit score says two things about you. One, how you handle the debt you already have and two, how will you likely handle any new debt. Notice that nothing there considers what it would be like to be debt free.

    Second, you have to change your focus on credit. If you are looking to pay off your bills and be debt free or manage your debt without worry, the first thing you have to do is let go of any concern over what your credit score is or will be. That focus will only lead you back into more debt. Your mindset will always be on how much more debt you can get, not how to get out of debt. You don’t want more credit.

    Third, as you reduce the . . .

    http://moneyhealthcentral.com/why-yo...doesnt-matter/



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  3. #2
    mostly common sense. the main problem is that there are some things that are nearly impossible to acquire without some form of credit. for example, wanting to start up a small business generally will require a small business loan to acquire the necessary start up assets. another biggie is purchasing a house. it's really quite difficult to sock away 100k-200k to plunk down to straight up buy a home in cash.

  4. #3
    I dunno...

    I keep hearing the "You don't need credit/Your Credit score doesn't matter" from the Dave Ramsey crowd. Personally, I have to call foul on this.

    A few examples as starters:

    HOME PURCHASE: If you're planning on buying a house and DON'T have the $100,000 in cash to plunk down, you'll find out real fast why having zero credit history hurts.

    INSURANCE: As stupid as it sounds, insurance rates are not based at least in part on a person's credit score. If you have zero credit history, you're going to pay through the nose for your auto insurance, even if you ARE driving that "old beater" that Ramsey and friends recommend.

    SECURITY CLEARANCES: If you're in the military, government contracting, private security, or other "sensitive" jobs requiring a security clearance, having bad credit or a zero credit history is going to make it damn near impossible to get cleared for the job.


    Just a thought.

  5. #4
    Quote Originally Posted by VBRonPaulFan View Post
    mostly common sense. the main problem is that there are some things that are nearly impossible to acquire without some form of credit. for example, wanting to start up a small business generally will require a small business loan to acquire the necessary start up assets. another biggie is purchasing a house. it's really quite difficult to sock away 100k-200k to plunk down to straight up buy a home in cash.
    Easier then you think (but still hard, I certainly concede that point). With the current North American philosophy however, of kick your kids out at 18 years old and make them entirely indepedent BOGS THEM DOWN. I'm 22 and my brother is 20 and we rent a basement appartment. Our landlord is a very nice muslim family. But they have their 31 and 27 year old sons still living there and their (33 or so) year old daughter also lives there with HER 2 kids. This may seem a bit extreme, but I live in their basement and it really is not. Papa and Mama are saving their kids soooooo much money that they will be able to buy houses of their own without being enslaved to ludicrous debt/interest for 25 years.

    Case in point: The dad drives a 95' Toyota. The Son who is 27 has an all paid for Lexus. Generational progression through hard work and saving ALOT of money sticking together. I garuntee you that all 3 kids, definately the youngest son... will have a ballin' house nearly all paid for while most people his age will be still be paying the interest on their mortgage with very little of the principal paid for.

    It seems in North America (for the most part) you have two polar extremes. Either the kids are ludicrously coddled and live at home with little to no money coming in OR they are pushed out left to fend largely for themselves- both hugely counter productive.
    Last edited by Seraphim; 08-11-2010 at 11:19 AM.
    "Like an army falling, one by one by one" - Linkin Park

  6. #5
    Quote Originally Posted by KCIndy View Post
    I dunno...

    I keep hearing the "You don't need credit/Your Credit score doesn't matter" from the Dave Ramsey crowd. Personally, I have to call foul on this.

    A few examples as starters:

    HOME PURCHASE: If you're planning on buying a house and DON'T have the $100,000 in cash to plunk down, you'll find out real fast why having zero credit history hurts.

    INSURANCE: As stupid as it sounds, insurance rates are not based at least in part on a person's credit score. If you have zero credit history, you're going to pay through the nose for your auto insurance, even if you ARE driving that "old beater" that Ramsey and friends recommend.

    SECURITY CLEARANCES: If you're in the military, government contracting, private security, or other "sensitive" jobs requiring a security clearance, having bad credit or a zero credit history is going to make it damn near impossible to get cleared for the job.


    Just a thought.
    You raise valid points.

    Some people with bad credit get a security clearance after filing bankruptcy under 11 USC 525



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