Author Topic: Do you care about your credit score?  (Read 8886 times)

Franklin

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Do you care about your credit score?
« on: September 26, 2013, 09:10:30 AM »
Is there any reason for a Mustachian to care about his credit score?  I read articles about bolstering your credit score so that you can validate your credit worthiness.  If you have no need for credit then isn't it a worthless number?  I've also heard that job candidates are having credit checks done on them.  But if you have no plans of ever doing a job interview again then why would it matter?  What else is that score being used for that may be of value to a Mustachian?

iamlindoro

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Re: Do you care about your credit score?
« Reply #1 on: September 26, 2013, 09:19:26 AM »
Of course I care-- Even without revolving credit in use, you may still want the ability to take out a mortgage on an investment property.  Even MMM himself puts everything on a credit card and pays it off every month to take advantage of reward and rebate programs.  To do either of these and get the best benefits/mortgage rates, you need a solid credit score.

NinetyFour

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Re: Do you care about your credit score?
« Reply #2 on: September 26, 2013, 09:22:18 AM »
I think good credit scores can also lead to discounts on insurance policies.

throwerm72

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Re: Do you care about your credit score?
« Reply #3 on: September 26, 2013, 10:00:12 AM »
Good credit means lowers costs in many areas.
Like:
  • all sorts of insurance
  • deposits (like when establishing service with utility providers)
  • better CC offers (just don't carry a balance)


But I wouldn't focus much effort on really building and perfecting it. Have a few CCs and pay all your bills on time. I still wouldn't take out a car loan or unnecessarily use credit just to build it.

GuitarStv

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Re: Do you care about your credit score?
« Reply #4 on: September 26, 2013, 10:02:47 AM »
I have a credit card with a large limit that I have never been close to hitting, I own my car outright, and I have nearly paid off my house.  It might be nice to have at some point in the future if I desperately need a loan for something, but I don't really care too much about credit these days.

plantingourpennies

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Re: Do you care about your credit score?
« Reply #5 on: September 26, 2013, 10:14:06 AM »
It matters much less. If I needed a 50K loan right now it would be easier to go to friends, family and others instead of the bank.

On the other hand, I can't get insurance from my friends!

I don't think MMM used a mortgage for his latest house, but I assume he is getting insurance for it.

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Franklin

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Re: Do you care about your credit score?
« Reply #6 on: September 26, 2013, 10:17:12 AM »
I see all of your points.  But first of all, I too charge everything to Amex Blue and enjoy the cash back on things that I would have purchased anyway like groceries.  The other rewards only seem like a stimulus for more spending ("Look honey, I got this for half price!")  Also, if you pay off your credit card each month then who cares what interest rate a good credit score would have gotten you? 

I have no intention of ever having a mortgage again because I have other investment vehicles that don't require me to be a landlord - personal choice.

The insurance point is well taken if it is indeed accurate. 

I guess my overall point is that it seems like the only way to a good credit score is to spend and incur interest.  I'm not sure the benefits of a good credit score will overcome the cost of credit.

iamlindoro

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Re: Do you care about your credit score?
« Reply #7 on: September 26, 2013, 10:30:18 AM »
I guess my overall point is that it seems like the only way to a good credit score is to spend and incur interest.  I'm not sure the benefits of a good credit score will overcome the cost of credit.

Except that's not the case-- you don't need to carry a balance to get a good credit score.  Paying revolving credit off every month will still result in a good score.  There's no reason not to use the credit card company's benefits to your advantage (as you yourself do).

You yourself may not want to be a landlord, but it's a perfectly viable investment for some, and then having an excellent credit score will get you the best rates, and thus maximize your returns.

matchewed

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Re: Do you care about your credit score?
« Reply #8 on: September 26, 2013, 10:33:20 AM »
I see all of your points.  But first of all, I too charge everything to Amex Blue and enjoy the cash back on things that I would have purchased anyway like groceries.  The other rewards only seem like a stimulus for more spending ("Look honey, I got this for half price!")  Also, if you pay off your credit card each month then who cares what interest rate a good credit score would have gotten you? 

I have no intention of ever having a mortgage again because I have other investment vehicles that don't require me to be a landlord - personal choice.

The insurance point is well taken if it is indeed accurate. 

I guess my overall point is that it seems like the only way to a good credit score is to spend and incur interest.  I'm not sure the benefits of a good credit score will overcome the cost of credit.

So basically you may have asked the wrong question. Instead of asking do we care about our individual credit scores you really meant do you care about yours.

Some people will and some people won't given their goals and place in life.

footenote

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Re: Do you care about your credit score?
« Reply #9 on: September 26, 2013, 10:49:58 AM »
One more reason to care: if you are still working and may change jobs in the future, more and more employers are using credit checks as an employment screen.

I think that stinks, but it's reality: http://www.forbes.com/sites/chereenzaki/2012/03/16/want-a-job-raise-your-credit-score/

seattlecyclone

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Re: Do you care about your credit score?
« Reply #10 on: September 26, 2013, 11:08:12 AM »
More to the point, a bad credit score is a sign of a whole lot of problems (such as too much debt, late payments, etc.) that any Mustachian would work as hard as humanly possible to avoid.

hybrid

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Re: Do you care about your credit score?
« Reply #11 on: September 26, 2013, 11:12:47 AM »
I don't care about (knowing what) my credit score (is from day to day) for the following reasons:

1)  It's already good
2)  A few points either way is not likely to make much difference
3)  The last time I could not get credit was over half a life ago
4)  The last several times I have applied for a loan (home, rental home, car, etc.) the lender said "you qualify" within a minute of the conversation starting
5)  I have no debt except for two mortgages and a car payment, and two of those three are gone in the next three years

If you have a stash and are responsible with your money a credit score isn't a big deal unless you are just starting out IMO.  Once you are established it is for the most part irrelevant.  it's importanrt, but I haven't seen much in the way of tangible benefits by trying to tweak it.  My insurance agent was much more concerned about previous claims (or the lack thereof) and my overall age and health than my credit history when I purchased home, auto, and life.

Tyler

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Re: Do you care about your credit score?
« Reply #12 on: September 26, 2013, 11:50:11 AM »
Credit scores are often checked when you apply to rent a place.  So either renting or buying, it helps to have a good one to find a place to live.

A mustachian who is good with money for long enough should have no problem maintaining a good score. 

MrsPete

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Re: Do you care about your credit score?
« Reply #13 on: September 26, 2013, 01:20:36 PM »
Nope, don't care. 

A credit score just tells how well you pay your bills.  Aside from utilities, I really don't have any bills; that is, I don't have a mortgage or a car payment, and I intend never to carry those things again.  Thus, I don't need to prove my credit-worthiness.  I suppose you could argue that any of us could suffer a set-back or embark upon an at-this-moment unforeseen business venture that might involve a loan, and for that reason we'd want to be qualified to borrow . . . even if we never do it. 

I'd still say, I don't care.

Why?  Because the credit score is the wrong goal.  The goal should be financial stability.  If you're consistently spending less than you earn, squirreling away money for the future, investing in things that last . . . your credit score will automatically be good.  On the other hand, if you do some of the things that people attempt to "improve" your credit -- for example, strategically open certain credit accounts, use secured credit cards that offer no rewards -- you're chasing the wrong goal. 

An odd story:  Years ago when we bought /financed a car, the salesperson checked our credit and commented, "Wow, we don't see many of these."  He meant we had not a good credit score but a perfect credit score.  We felt kinda good about it, but a year or so later when we paid off our house, we were shocked to learn that our credit score DROPPED.  Yes, when we became more financially secure, when we no longer carried a mortgage, our score dropped.  Why?  Because you get "points" for having a variety of credit, and a mortgage "counts big" as compared to utilities, credit cards, etc.  The moral:  Don't lose sight of the fact that a credit score is not a mark of your financial stability.

If you're focused on the right goal -- financial stability -- your credit score will be high enough that it will give you no problems when it comes to job interviews, insurance, etc.   

Disclaimer:  I do think credit scores matter to young people who aren't yet established in the financial world.  They haven't had time yet to build up financial reserves.  Still, they should keep their eyes on the right goal. 

Eric

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Re: Do you care about your credit score?
« Reply #14 on: September 26, 2013, 01:24:47 PM »
Also, if you pay off your credit card each month then who cares what interest rate a good credit score would have gotten you? 

If you pay off your credit card each month, then you probably have a really good credit score.  They go hand in hand.

Spork

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Re: Do you care about your credit score?
« Reply #15 on: September 26, 2013, 01:27:07 PM »
What MrsPete said pretty much sums it up.

You should care if you have a terrible credit score... otherwise: nope.

It really doesn't take much to have a score that gets a decent loan rate or signifies a low risk.  All you really have to do is pay your bills over time.  People will offer you WAAAY more credit than you want/need. 

pachnik

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Re: Do you care about your credit score?
« Reply #16 on: September 26, 2013, 05:45:30 PM »
I have no idea what my credit score is.  I am assuming it is quite good. 

I always pay my bills a few days early and have a credit card where I pay the balance off completely at the end of the month 90% of the time.  I used to have a mortgage but I sold the apartment and share a rental home with my spouse now. 

Young people just starting out need to pay more attention to this than I do.  I don't plan on getting mortgage again or car payments for that matter. 

Undecided

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Re: Do you care about your credit score?
« Reply #17 on: September 26, 2013, 07:33:04 PM »
I feel the same way about it as about many other things---good enough is good enough, but good enough does matter. It's not just used for rates on loans, as others have pointed out. In my experience, pretty moderate use of credit, handled perfectly, yields a "good enough" score.

Nudelkopf

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Re: Do you care about your credit score?
« Reply #18 on: September 26, 2013, 08:06:03 PM »
I don't think that I have a credit score - I don't pay utilities, never had any bills in my name, and never owned a credit card. So no, I don't care.

nikki

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Re: Do you care about your credit score?
« Reply #19 on: September 26, 2013, 11:12:38 PM »
I don't care about MY credit score (because it's good, of course!), but finding out my boyfriend doesn't have any credit whatsoever bothered me. It seems like a problem that should be addressed, and he just doesn't care one bit. I don't see the relationship resulting in marriage, so really it's not even any of my business, but my gut reaction clearly is that credit is important.
« Last Edit: September 26, 2013, 11:15:02 PM by nikki »

captainawesome

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Re: Do you care about your credit score?
« Reply #20 on: October 03, 2013, 07:46:53 AM »
I would say I really don't care about it anymore, knowing that I have an 820+, I don't really care if it takes a drop for opening up a rewards credit card (or 3) every year to take advantage of miles and cash rewards.  I mean when you get above 750, does it really matter anyway?

If I were buying another house I would probably avoid churning credit cards for a while, but that's because I know the whole process is a real PITA.  My main goal these days is to live a financially responsible life and head towards ER, and while my credit score may increase as a result, its not a focal point in my daily activities.

oldtoyota

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Re: Do you care about your credit score?
« Reply #21 on: October 03, 2013, 09:47:33 AM »
I do because I am still working.

For others, here is how you can access your score for free. (Got the info from the Forbes article referenced above.)

"According the FTC, by law, “you have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, the only authorized source under federal law.”

Norrie

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Re: Do you care about your credit score?
« Reply #22 on: October 03, 2013, 10:01:49 AM »
We care about ours, but they are terrible. Dreadful, even.

During a seven year period of living in crisis (our daughter's lungs were failing), we fucked up everything that we possibly could. Our house was almost foreclosed upon, car was almost repo'd, every bill was late, medical bills went to collections, etc. The list goes on and on, but it was hard to really care at the time. We were barely functioning.

Three years ago our daughter's health stabilized somewhat, and we attacked debt with everything in us. We're completely debt-free now, aside from a mortgage that should be paid off within two years. No car payments, and all utilities, etc. are paid perfectly on time. But because we don't have credit cards or car payments, our credit has been extremely slow to rebuild. In fact, it's barely budged at all in over three years.

We want to have good credit scores, as once we get our current home paid off, we would like to buy my parents' house from them, but we'll need a mortgage to do so. It's in a perfect location, and would likely be where we'd spend the rest of our days.

Aside from having great scores to buy their house, we don't care too much. We won't ever get a car loan again, and we don't need credit cards. I'd love to have one to collect frequent flyer miles, as we travel a lot, but it's not a necessity.

But for now, yeah, we do care. Part of that may be wounded pride too, if I'm being really honest.

FunkyStickman

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Re: Do you care about your credit score?
« Reply #23 on: October 03, 2013, 11:31:06 AM »
I don't know, and don't care. Haven't used credit in years, not planning on it ever again.

I might look for fun, but not going to lose sleep over it.

 

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