Daily Kos

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  •  bad (none / 0)

    I think it's bad to never run a balance.  I had a ton of credit card debt a few years back and paid it all off, and swore off credit cards.  Used a debit card ever since.  My credit rating was in the 790-800 range.

    Then I applied for a mortgage.  It was all find until the last two weeks, where the credit ratings started reporting "no score" because I hadn't had enough recent credit activity.

    Basically, I got penalized for being a responsible consumer.  The mortgage almost completely fell through, and it was my first home.  We ended up getting it cleared up, but I had to pay a higher interest rate on my mortgage.

    I don't think it was just that I wasn't using credit cards.  I think you actually have to carry a balance.  You play a timing game.  You can't use a credit card and then pay it off the next day - you have to basically wait a month.  If you time it perfectly you might avoid finance charges, but I doubt it.

    tunesmith's latest song: My Favorite Clown

    by tunesmith on Tue Mar 08, 2005 at 01:08:36 PM PDT

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    •  Better to establish and maintain your credit (none / 1)

      by taking out small bank loans and repaying them regularly than by using credit cards, I think. Maybe you could set up a personal line of credit. I know cards are convenient, but their costs are heavy. I've used credit cards for many, many years; have paid them off every month; and have never paid a dime of interest to the credit card company. Just pay the full bill every month about seven days before the due date.

      by Gingerella on Tue Mar 08, 2005 at 01:21:49 PM PDT

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    •  that's the Trap (none / 0)

      they say they want you to be responsible, but then you can't get credit if you are. When I  had a good job $5,000 in the bank and no bills and all I could qualify for was a $500 limit bank card, and since I paid it every month, I never qualified for a credit increase.

      When I left my job to go to law school I had no income and started carrying a balance and suddenly they replaced that card with one with a $25,000 limit and someone else sent me a $10,000 card.   Due to a catastrophic illness on my GF's part (who was living with me at the time ) neither of us were able to work and those balances got higher, Leading to MORE unsolicted credit cards coming in the mail;  they couldn't give them to me fast enough.

      The dirty secret is Credit Card Companies HATE responsible consumers who pay their balances off every month.   They've even tried to add extra fees on  to those  who do because they call them "dead headers" since they generate no profit for the CC company

      Knowledge is power Power Corrupts Study Hard Be Evil

      by Magorn on Tue Mar 08, 2005 at 01:25:20 PM PDT

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      •  Well, despite the fact (none / 0)

        that I pay off my credit card bills every month, the credit card companies still keep increasing my credit limit. Go figure. Anyway, when I was starting out, I established credit with by setting up a personal line of credit at my credit union, then with a car loan, and so on. I didn't base it on credit cards.

        by Gingerella on Tue Mar 08, 2005 at 01:40:01 PM PDT

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      •  I`m doing my best to lose them money (none / 0)

        We spend 5 8 g's a month, and most of it goes on the card.  I pay in full, and take the three to four weeks free loan.  To hell with them!

        Knut

        by Knut Wicksell on Tue Mar 08, 2005 at 01:53:03 PM PDT

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        •  That's the Way to do it (none / 0)

          and whenever possible Charge big purchases and glom up as many reward points as possible.  Then pay Cash at the end of the month.  My incredibly frugal parents (never so much as bought a car on credit)  used to have a lot of fun charging things like college tuitions for the six of us, and then paying cash at the end of the month and flying somewhere nice with the reward points....drove the credit people crazy.

          Knowledge is power Power Corrupts Study Hard Be Evil

          by Magorn on Tue Mar 08, 2005 at 02:11:43 PM PDT

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    •  the problem is (none / 0)

      credit scoring systems are not transparent.  So people can only guess at how they might raise their score.  The FTC website has some general information on credit scoring here.

      One paragraph is emphasized: "To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It's likely to take some time to improve your score significantly."

      I'm not sure you're right about having to carry a balance.  In general, increasing your debt load will lower your score.

      by m maddog on Tue Mar 08, 2005 at 01:37:55 PM PDT

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    •  similar (none / 0)

      I used to be able to pay off fairly high balances so I ran them, then went back to school and afterwards couldn't find steady work for three years - so I'm in debt up to my eyeballs and the credit card companies harrass me constantly. Not only do they charge late fees, higher interest rates, and over limit fees which I wouldn't have without the late fees & higher interest rates, they verbally abuse me on the phone. I don't know if I will ever be able to pay these people. So my advice is screw them, don't run a debt, because you never know when your circumstances will change.

      by bluebird of happiness on Tue Mar 08, 2005 at 01:40:24 PM PDT

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      •  Have you talked to (none / 0)

        one of those non-profit credit counseling outfits? They might be able to get the card companies off your back and work out a reasonable payment schedule for you. Make sure you check around and get a legitimate credit counseling organization though.

        by Gingerella on Tue Mar 08, 2005 at 01:47:11 PM PDT

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        •  good point (none / 0)

          I tried them before when I was still unemployed and they said they couldn't help me, but now I'm working again.

          by bluebird of happiness on Tue Mar 08, 2005 at 02:12:18 PM PDT

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        •  CCCS - DON'T DO IT (none / 0)

          I cannot stress this enough. As someone who formerly worked for a Collection agency, Consumer Credit Counseling Services are a stain on your credit worse than Bankruptcy. While they tout that they are not for profit they're still pulling in a hefty income.

          What most people do not relize is that these people have no legal standing to negotiate your debts for you, they're not doing anything that you couldn't do for yourself. Another thing to keep in mind is that many of these 'credit counseling' agencies are owned by the major credit providers.

          It is just one more way for them to eek out every last time from you they can, and screw your credit for many many years to come in the process.

          When I crap, I always refer to it as "taking a Bush". - Underground Pirate of Crooks and Liars.

          by Disillusioned on Tue Mar 08, 2005 at 02:43:35 PM PDT

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      •  Try (none / 0)

        moneymanagement.org

        How can we get over it when people died for the right to vote? -- John Lewis

        by furryjester on Tue Mar 08, 2005 at 02:18:24 PM PDT

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      •  I was in the Same boat- things are better now (none / 1)

        (see above) and it was BAD for me, but there really was nothing I could do since I was living off student loans and neither me or my Fiancée could work (she was sick, I was in Clinic) and she had a six year old son to raise.  I'd been juggling the cards before then paying about double the minimum payment but never really getting anywhere.   When that happened I went from juggling to crashing.  For about six months they called constantly and it made me feel sick every time they did.  I seriously contemplated a Ch. 7 (still am sort of)especially since I could do the paperwork all myself (you can too they aren't especially hard to fill out, and most jurisdictions have the forms online).  Well after six months they simply stopped calling, basically just went away.  The one with  the smallest balance got a judgment in a state I no longer live in, but that's it.  I pulled my credit report because my current job has a security clearance requirement (for a banking job ironically enough)  and was amazed to find that most of those companies had simply charged off the balances internally and closed the accounts.   In 5 or so years I'm told they'll drop off the report never to be heard from again.

        Knowledge is power Power Corrupts Study Hard Be Evil

        by Magorn on Tue Mar 08, 2005 at 02:20:51 PM PDT

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    •  Borrow for something specific (none / 0)

      Like a car, or maybe furniture, and pay it back as soon as possible. That will establish credit.

      Pay your credit card when you get the bill, by the due date.  That way you avoid any finance charges.  The problem with credit cards is that the minute you don't pay off in full by the due date, every single new charge, as well as all your old charges, are subject to the interest rates, which may be as high as 18% or maybe even more.  From that point on, you start to accumulate late and finance charges that can eventually be more than the goods you have charged. This is a trap.  Don't run a balance, and above all, don't just pay the minimum.

      The same is true of banks.  They used to cover the occasional overdraft as a courtesy.  Not any more.  They charge you $10 for an overdraft, then start charging $5 a day or something like that.  They can just take your money now.  You have to be VERY careful to watch your balance.  Cash advances on a credit card are also a scam, as there are very high charges.

      John McCain--he's not who you think he is.

      by Mimikatz on Tue Mar 08, 2005 at 02:59:51 PM PDT

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