Author Topic: Are credit scores for suckers?  (Read 5168 times)

Honest Abe

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Are credit scores for suckers?
« on: March 17, 2013, 06:33:20 AM »
**Disclaimer** This post is meant to be an observation, not a judgement on everyone who likes to follow their credit scores.

I was recently talking to a colleague at work, who is a financial disaster area. I know he saves $0 in spite of making $90k/yr and only puts $100/month into his tax-deferred account.

The other day we had a conversation about how he pays $12/mo to have his credit score monitored (which he thought was "worth it," I explained to him there were like 5 ways to get this for free) and he proceeded to brag about how his score has improved over the years. (at one point he had charged off/gone delinquent on several loans.)

Then I realized... many people who are fixated on this metric either: a) watch too much Suze Orman or b) aren't saving enough money and therefore use credit score as some kind of yard stick for financial success. Other than the one or two times you'll legitimately need it to get a mortgage, I can't think of why this number matters.

I get the feeling that this is as much of a marketing ploy as anything else. (Doesn't Suze Orman get paid by FICO?) The reality is even if your credit sucks, if you have a boat-load of cash saved up then you'll still find a bank who will give you a loan.

Cash is king, however right now most people in the country don't seem to think so. The new mantra is "credit score is king."

End rant... just curious to see what your thoughts are.


arebelspy

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Re: Are credit scores for suckers?
« Reply #1 on: March 17, 2013, 09:36:35 AM »
As a real estate investor locking up bank loans for rates in the 4% while other investors I talk to are lamenting how tight the credit markets are (aka they can't qualify because their credit scores suck), I don't think they're solely for suckers.  ;)

Credit scores aren't that complicated.  Pay your bills.  No need to monitor, besides checking the free reports once/year, no need to try and raise it, etc.

Pay your bills.

Then you'll have a good credit score, and it will pay you back in real money via lower interest rates.
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Rural

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Re: Are credit scores for suckers?
« Reply #2 on: March 17, 2013, 09:48:02 AM »
I think it varies. I said earlier I wasn't interested in becoming a landlord, and I'm still leery of that, but I'm seeing houses in the town nearest here regularly selling for $10-$15K. I may change my mind. Of course, at those prices, I may pay cash, too.

But there are other advantages to a good credit score, including rewards credit cards. I'd say obsessing over credit scores is for suckers.

arebelspy

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Re: Are credit scores for suckers?
« Reply #3 on: March 17, 2013, 10:07:04 AM »
Of course, at those prices, I may pay cash, too.

At that price, you'll have to pay cash; no one will loan on an amount that small (at least a traditional mortgage, you could get a personal loan or something, but that's different).
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justchristine

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Re: Are credit scores for suckers?
« Reply #4 on: March 17, 2013, 02:22:47 PM »
In some states, credit scores can be used by insurance companies when they determine their rates.  So depending on where you live, a bad credit score could cost you more to get car or homeowner's insurance.

Rural

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Re: Are credit scores for suckers?
« Reply #5 on: March 17, 2013, 03:16:27 PM »
Of course, at those prices, I may pay cash, too.

At that price, you'll have to pay cash; no one will loan on an amount that small (at least a traditional mortgage, you could get a personal loan or something, but that's different).

That depends where you live. The local bank (and the credit union) knows the local market and does do mortgage loans on similar amounts, though I can't personally attest to one under $25K off the top of my head. But I'd still lean toward paying cash.

For what it's worth, I've had a mortgage with a national bank and won't do it again. The local bank I have now has been much easier to work with. (I have a land loan in this case, not a mortgage, but that's because there was no house, not because of the amount.) At any rate, I wouldn't think the nationals would bother with such a low loan, even at $25K.

Zikoris

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Re: Are credit scores for suckers?
« Reply #6 on: March 17, 2013, 05:27:05 PM »
I used to work for a company in the financial industry that required a credit check for all employees as part of the hiring process. My current apartment? Another credit check. Utility hookup? Yep, another credit check, and my good credit saved me from having to make a several hundred dollar deposit to get electricity hooked up. Hell, I even needed a credit check the first time I signed a cell phone contract.

I don't have a car or own a home, but have been told having a good credit score lowers insurance on those as well.

Seeing how easy it is to get and maintain a good score without paying a cent in any kind of interest or fees, and all the benefits you get as a result, I'm quite surprised when people choose to blow it off.

Paul der Krake

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Re: Are credit scores for suckers?
« Reply #7 on: March 17, 2013, 05:50:08 PM »
I played the dumb foreigner when getting my first appartment lease. "Oh I just moved here, I don't have an SSN yet! But look I have money and I dress well!" Fully intend on doing this for as long as possible. The idea of a landlord keeping my SSN in a Word document on his computer at the mercy of the first virus... *shivers*

gooki

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Re: Are credit scores for suckers?
« Reply #8 on: March 18, 2013, 01:13:34 AM »
I find the obsession strange. And yes I full expect some people use their score as a measure of success.

mm31

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Re: Are credit scores for suckers?
« Reply #9 on: March 18, 2013, 02:13:30 AM »
It's a little disturbing how much a good credit score can affect your employment, your mortgage rate, etc. I scan my credit reports every year (for free) for inconsistencies to make sure that nothing will make my score go down.

Suze Orman et al, make people feel like a good credit score is as cash, but it's clearly not.

Kierun

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Re: Are credit scores for suckers?
« Reply #10 on: March 18, 2013, 02:51:01 AM »
Depending on where you are in life, a credit score can have signifcant impacts on your life. 

Employment, home loans, insurance premiums, high interest rates, etc.  It's unfortunate but that is the way much of the US operates.

KatieSSS

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Re: Are credit scores for suckers?
« Reply #11 on: April 03, 2013, 09:11:43 AM »
Just got a free credit report and score from my bank (Wells Fargo), which is offering this to its customers until April 15th. Of course, they wanted to schedule me an appointment with a banker, no doubt to go over how opening another credit card would improve my credit score. No thanks. But it was interesting to see my credit score, which is a solid 747. I'm not planning on getting a mortgage soon, but it was fun to find out what my score actual is. I do a free credit check with Experian, Equifax, and TransUnion every year, so I know I don't have any odd things show up on my credit report that shouldn't be there. For now, that's all I'm concerned about. The credit score is something I'll look at again if I consider getting a mortgage. I found out my score this time because it was free AND I was curious!