A Question to Ponder

[TheBajan]

Regarding the issue of building credit;

Presume you have made the decision to never use credit again. No credit cards, no car loans, no mortgage, no 90 day same-as-cash purchases, NADA.

In your opinion, is it still important to check your credit reports? Is it still important to 'build' a good FICO score? Why or why not?

I'm interested in anyone's perspective on this regardless of whether you choose to use credit again or have sworn it off completely.

[ccmisery]

Probably only one thing comes to mind, car insurance, much of it is driven by your credit score, those who have bad credit tend to pay more for car insurance.

Also good to still check your credit reports for free once a year, that is just in case someone steals your identity.

I have not sworn off credit 100%, but until banks start paying interest rates on CDs, savings accounts and etc that they charge for APR on credit cards, I will not be using credit cards again and if I get one it will be for traveling expenses only.

[despritfreya]

As cc states above, it is important to check the report 1/year (and its free so why not). If you are living off the grid then the credit score is not relevant. What is relevant is identity theft. Checking the CR to make sure the information on it is yours is important and - trust me on this - I have been there done that as it relates to ID theft perpetrated by a crime ring.

Personally I could care less what my credit score is. I do not carry balances on the credit cards nor do I owe $$ on a car. The only thing I have financed is my home. The credit score may or may not be important for insurance rates but I have found that shopping around for the best rate is the way to go.

Des.

[Pjmax]

My roommate has no idea what his score is, has never seen a credit report and could care less. His house is paid for, was his grandfather's, pays cash for cars usually about $2000, but he can do a lot of the repair work himself and manages to keep them going for a few years. He has a bank account, checks and debit card. He will buy things online, but still insists on paying bills by check and mailing them. If there is something he wants, he saves for it, or sells something. His car insurance is less than $50/mo. which is kind of unbelievable in NJ.

There are still people who live that way.

[pamkev]

I'm with Des don't really care what my credit score is. We do have a cc now only one with a 3000.00 limit and that is all I want. Having one makes it easier for travel and when we use it gets paid off right away. We only have our house payment and those darn student loans. We are paying extra on the student loans to get them out of our hair real quickly.

Pam

[ccmisery]

My roommate has no idea what his score is, has never seen a credit report and could care less. His house is paid for, was his grandfather's, pays cash for cars usually about $2000, but he can do a lot of the repair work himself and manages to keep them going for a few years. He has a bank account, checks and debit card. He will buy things online, but still insists on paying bills by check and mailing them. If there is something he wants, he saves for it, or sells something. His car insurance is less than $50/mo. which is kind of unbelievable in NJ.

There are still people who live that way.

I pay $250/month for 2 cars here, insurance is very expensive here. The only way to get it lower is to drive a low cost car, old model that's paid for in full, drop a lot of the coverage and lower the liabilities to the state minimums, but figuring 1 out of every 4 people here does not have car insurance it is quite risky. I had a 15 year old car last year, was paid off and the lowest I could get the insurance was $75/month. I think my credit score was the reason, was in the high 600's and I was told past 700 would give me better rates.

[spidge]

I have not sworn off credit, but rather plan to rebuild it. That does not mean that if I have $1,000 of monthly disposable income that I will go out and gain a large payment on something to do it. Baby steps and low balances I would think best to start, and having the funds to pay a charge off at any time for security sake.

I am glad you asked this as I am within a year (personal goal for early payoff) of a CH13 discharge and will have to look into how I can start effecting the score now.

Many of us have small deductibles on our insurance which causes our rates to be high. I will increase deductibles on my car and home insurance and have that amount ready for that purpose, and at the same time reducing the cost of the plans. Keep in mind the limits that your mortgage company and state may impose will effect your ability to change these. I will also increase the limits of liability as my net worth grows as I do not want to put the assets that I have worked so hard to gain at risk. Of course this is the goal that I will be shooting for. I look at it as adding to my monthly disposable income after discharge. If I save $100 per month between house and car ins. and add that savings to the trustee payment I am that much further ahead upon discharge.

Every situation is different and mileage will vary.

[Pjmax]

I pay $250/month for 2 cars here, insurance is very expensive here. The only way to get it lower is to drive a low cost car, old model that's paid for in full, drop a lot of the coverage and lower the liabilities to the state minimums, but figuring 1 out of every 4 people here does not have car insurance it is quite risky. I had a 15 year old car last year, was paid off and the lowest I could get the insurance was $75/month. I think my credit score was the reason, was in the high 600's and I was told past 700 would give me better rates.

Roomie and I have the exact same coverage, absolute lowest possible, max. deductibles, same company (I recently switched.) I have an 11-yr. old, paid off Escape. The only difference is; he has the homeowner's discount. I now pay $98/mo., down from $149. If I had health insurance, I could save another $25 on the required PIP. PIP without one's own HI is the largest component on my policy. Credit score is only a part of it.

[spidge]

roomie and i have the exact same coverage, absolute lowest possible, max. Deductibles, same company (i recently switched.) i have an 11-yr. Old, paid off escape. The only difference is; he has the homeowner's discount. I now pay $98/mo., down from $149. If i had health insurance, i could save another $25 on the required pip. Pip without one's own hi is the largest component on my policy. Credit score is only a part of it.

pip?????

[Pjmax]

pip?????

Personal Injury Protection, only required in some states, I think 17 or so, CA is not one of them to the best of my knowledge.

[TheBajan]

For me, I think Des pretty much summed up how I feel. I don't really care about my FICO and I don't intend to ever borrow money again. I know that FICO affects things like insurance rates but I'm not nearly concerned enough about that for it to be a driving force in re-building credit. However, identity theft can be a problem and particularly if the thieves use your identity for illegal activities. That is the only reason I put any thought into building my credit and keeping an eye on it. Thanks for the input.

[keepmine]

I' kinda neutral on the subject. I get my freebie evry year because, it is free.
I'm not hung up on disputing bk's and chargeoffs like you see on other sites. Heck, my bk was fairly earned! I'm not gonna lie and say it never happened.
I'd just say nothing is forever. Just beause you don't need/want credit now doesn't mean that'll last. Even if your home is paid for, one day you may need some expensive repairs. You may just say. "what the heck" I'm gonna buy the car I want as opposed to what I can pay cash for and will need an auto loan.
I just think, it's prudent to get a cc or two and show responsible use in the event life happens and you do need to borrow money.

[TheBajan]

Just beause you don't need/want credit now doesn't mean that'll last. Even if your home is paid for, one day you may need some expensive repairs. You may just say. "what the heck" I'm gonna buy the car I want as opposed to what I can pay cash for and will need an auto loan. I just think, it's prudent to get a cc or two and show responsible use in the event life happens and you do need to borrow money.

Keepmine,
I appreciate what you are saying. However, that sort of thinking is what got me into the mess I'm in. It really is possible to live without choosing to use credit when an emergency comes up. It really is possible to prepare for the unexpected.

When I was 21 years old my husband died in an auto accident leaving me as a single mother with 3 kids on a limited, fixed income (about $750 a month). I did not have credit. I did not live on welfare. I held a job and went to school full time and still managed to take care of us. Four years later when I re-married, I married into credit. We were very responsible with it and yet no matter how much we earned, we still outspent our income.

In my opinion, credit is a crutch that we get used to but we do not NEED. There are other options... we just have to look for them rather than turning to the plastic. Plastic is the easy way to make the "problem" go away, or to satisfy the "desire" for some new thing we simply must have. It's by no means the only solution and if you make the decision to never use it again, you will find other options that present themselves.

I realize that none of us knows what the future holds. I'm familiar with the adage that says "never say never". However, we all say never to certain things. Things like elicit drugs for example. Most of us would say "I'll never take elicit drugs". Or, for those of us overcoming an addiction to cigarettes, we may vow to never smoke again. An alcoholic understands that he/she must live without ever drinking again. Likewise, a diabetic knows the danger of too much processed sugars.

I think it's appropriate for someone who has gone through BK to face themselves and decide if borrowing money falls into the categories of "never will". I've always been responsible with our finances. More so than most people and yet here I am. I'm much more comfortable without credit than I ever have been with it. This is something I can safely say never about. It's the right decision for me. My husband will probably waiver and begin using credit when we are out of BK. He has always been more comfortable with credit. That's his decision. I hope he doesn't, but it's up to him.

Best wishes,
The Bajan

[RichM]

Roomie and I have the exact same coverage, absolute lowest possible, max. deductibles, same company (I recently switched.) I have an 11-yr. old, paid off Escape. The only difference is; he has the homeowner's discount. I now pay $98/mo., down from $149. If I had health insurance, I could save another $25 on the required PIP. PIP without one's own HI is the largest component on my policy. Credit score is only a part of it.

If you're a veteran (or the child or spouse of a veteran), check out USAA. I pay less than $50.00 a month for two cars, with no comp or collision, but high limits on liability, medical payments, PIP, etc.

-Richard

[IBroke]

Probably only one thing comes to mind, car insurance, much of it is driven by your credit score, those who have bad credit tend to pay more for car insurance.

Absolutely - and I feel that pain every month. Right now, I'm paying more for my 5 year old Lincoln than I did for my brand new $100K BMW M5 when my credit was spotless.