Credit.. why are we obsessed?

[Layla55]

I’ve been trying to build like most after BK. That is going pretty good. The thing is though I do not need large credit lines , I’m probably not alone on that either. I can’t pay that back! And I don’t want to carry balances till I’m dead. Give me a couple of baby limits and I’m good these days. Why do people want and brag about having large credit lines? Self worth? Beats me but I’m over it. Thoughts?

[skyoumans]

I know after what I have been through that I have learned a lesson or two. I plan on having a credit card when I get out of this to work on my credit...but I hope I’m done with credit cards in general. I’ve been down that path and it does not end well.

[sophieanne]

I think it’s a psychological thing. The higher the credit limit, the more the perception of success. It is strange...as it’s a risk of falling hard if something goes wrong and that high limit has been used

[despritfreya]

In reality, people are not too bright. They seem to think a credit score of 700 or higher means anything to anyone other than maybe a mortgage or car lender - maybe an insurance company. All you have to do is read the posts at myfico.com to figure that out. Many times I simply roll my eyes.

As to the use of credit, here again, people are not smart. Why anyone needs more than one or two credit cards is totally beyond my understanding. Why anyone would agree to pay the high interest that is charged for the use of such credit cards is beyond my understanding - all they are doing is lining the pockets of some corporate executive while throwing their hard earned money in the garbage.

I have three credit cards. I use one all the time. I use one just for on-line purchases. The third is only used for gas for my car so that I can keep detailed records of my driving (I drive a lot). I pay all three in full each month and I never, ever pay interest. In fact, just last night I cashed in my rewards for a $450.00 credit next month. Capital One pays ME for the use of the card.

I do not have a car payment - why. . . because I save like there is no tomorrow, don't buy something I cannot afford, and pay cash. I drive a Hyundai - not a BMW. The only thing I have ever financed is my home and even that payment was calculated 18 years ago not to be more than an average rent payment in my area.

Having credit is nice but not the answer to the worlds' problems. Most Americans do not understand how to handle credit. While not always possible, the smart way is to:

1. Never buy something you cannot pay cash for.
2. If you do use a credit card, pay it IN FULL before the end of the grace period.

If you find you have to finance a necessity (financing the purchase of that ring your girlfriend has been eyeing IS NOT a necessity), then pay off the bill as quickly as possible.

If people would follow these simple ideas then maybe they would learn to live life to its fullest and not obsess about how much credit they have and what their credit score is. Obsessing over credit is one of the things that gets people in financial trouble.

The above is my personal, not professional, opinion and has been the way I have lived my life long before I went to law school. I do recognize that things happen - businesses fail, people get sick, divorce takes control - that limit the ability to pay cash but, for those that do not have an intervening event, there is no reason to run up debt ergo, no reason to care about what the credit score is. I have no clue what mine is nor do I care.

Des.

[Carmella]

Good post despritfreya Thinking about it now. Part of my problem was store credit cards and the discounts or special sales which obviously are not a bargain if you buy more than you can afford. In the beginning I used it to my advantage, but then it got out of control. When the time comes to get credit since we "need" it in our society. I don't know if I will ever buy a different house, but probably a car--need the credit score. I was thinking of maybe two credit cards maybe my favorite store card (s) that I could really use towards my advantage and not credit cards for the stores I go to less often especially when the store card is also a mastercard to be used anywhere! I would also like a card (not another one just one of the two) to use if we travel. I am looking forward to some weekend trips or "one tank trips" in the future.

[shipo]

despritfreya, while I agree with many of your points, I decidedly disagree with others. I was one of those folks who had an "intervening event" (two small business failures) and am recently out of a Chapter 13, and as things stand now, I have basically zero credit; no surprise there. Given my wife and I would like to buy a comfortable town-home in the next year or two, we're going to need a decent credit history and reasonably high credit rating to get a mortgage which will not rape us financially.

To me, credit is a tool; use it wisely and it is to your advantage, misuse it to your detriment. I plan on using it, even though, like you, I have no need for it (other than for a mortgage).

[Layla55]

Thanks for all the replies.. interesting reads!

[Carmella]

One of my coworkers mentioned that their credit cards just lowered their credit limit. She couldn't understand why they would do that since she has good credit and her card wasn't maxed out, but now they have little available credit. I told her if she didn't max out the card don't worry about the limit since she wasn't using that much credit anyway.

[justbroke]

If the 2008-2012 recession is any indication, credit card companies will start to automatically lower credit lines that are not in use. It happens. For example, I have an Amazon Line of Credit for $10,000. They just lowered it to $1,000 in April. I never really use it, and nothing changed in my credit profile. A gasoline card, which has a $5,000 limit, was lowered to $500. Both companies claimed that I had "sufficient" credit and that it "shouldn't" impact me.

[Layla55]

Yeah... 2008 the beginning of financial problems . Home owner in Phoenix at that time 😬 watched the house plummet to just under what we owed . Went went to great lengths not to be a foreclosure, so we rented it out moved back here to home state of Ohio. Lived in an apartment for 5 years . I had no garage, no outdoor space, no good ole walled private backyard. Even had to walk my trash to a dumpster ! Oh the injustice😀 meanwhile people were in my nice big ranch . Anyway, cut to the chase , price crawled up we sold. Still ended up in a bk though . Tried our best to perfect our long good credit history.

[Carmella]

If the 2008-2012 recession is any indication, credit card companies will start to automatically lower credit lines that are not in use. It happens. For example, I have an Amazon Line of Credit for $10,000. They just lowered it to $1,000 in April. I never really use it, and nothing changed in my credit profile. A gasoline card, which has a $5,000 limit, was lowered to $500. Both companies claimed that I had "sufficient" credit and that it "shouldn't" impact me.

Not that you or most people need $10,000 on Amazon, but both cards still cut you drastically. I wonder if something like that happened to the lady at work. She and her family travel often I imagine they might charge a lot when out of the country for two weeks and if they were cut down to $1,000 I could see that making vacations difficult if they were using credit cards to their advantage and not keeping a high balance.

It's none of my business what they do, but outward appearances look like they live beyond their means since they have a lower income than me and my husband I can't imagine affording what they do even if we didn't have the BK payment. Then again one really doesn't know if people have a stash of money/inheritance, etc that they don't talk about.

[justbroke]

Not that you or most people need $10,000 on Amazon, but both cards still cut you drastically.

I don't need $10K at Amazon. I only ever used about $150 on that line and paid if off immediately. It was just sitting there and I'm sure, with the current economic climate, they didn't want me to go berserk and then not pay. I mean, I already see that some "business owner's" have obtained ridiculous loans through the various disaster programs with one "reality" star spent $1.5 of it on diamonds, a Rolls Royce, and other luxuries.

I get it. People will see the current crisis as an excuse for anything and everything. I read about people trying to use COVID-19 as an excuse not to "interact" with the police.

[sophieanne]

American Express dropped my limit in April but when I spoke to them...they put the limit back a week later. I have no intention of ever using the card again.

[NoMoney30]

The idea of credit and how its used and what its used for is idiotic in my opinion. We don't "need" credit. My husband is from Denmark and when he got here he was just amazed at our system and it boggles his mind. They do not have anything like this in Denmark and they get by just fine. You have 1 bank and 1 card...your debit card. If you want to buy something you don't have the cash for, your bank examines your income and if you can support the expense, they allow it. The bank pays all your bills for you and they "manage" your money. They tell you if what you want is feasible or not. If they say no, there is no going to another bank and trying to get credit there. You can either afford it or not.... they also don't have anything like bankruptcy. If you can't pay your bills, then the government either helps you financially or they figure out a new budget plan. I know my husband had a few instances where he needed a bit of extra cash one month and he just called the bank and asked if he could go a bit negative for a bit... sure no problem. He had a specific woman at the bank that handled his account. Its so much simpler there. I hate how we have intertwined our lives around this magic number that is always different depending on who you ask. I hate that you can manipulate your credit if you know how to do it. I hate that we have it as temptation and hell why are some of us on this board? Cause we lived past our means... I hate that my credit score is somehow indicative of how well I can drive a car....

Do I like having big limits on my cards? Yes ... I do. Not because I want to charge up thousands of dollars but just because of the way the damn algorithms work, you can generally impact your score better with a 5 dollar balance on a 10,000 card than 5 dollars on a 100 dollar card. I think for some people its also amusing and fun...almost like a hobby to see how many cards they can get or how big of a limit they can get... it's literally like a collector. Instead of collecting stamps...you're collecting credit limits.

My chapter 13 is a bit over a year old... my score is already at 700 again on one report and high 600's on the others. Only because some of my high limit cards didn't get closed automatically by the banks when I filed. I really don't give a crap about my credit anymore but I was able to get my insurance company to lower my rate again after they raised it last year when they saw I filed for BK. I think it was like 540 when I first filed. I only know what it is because my bank sends me monthly updates... I wish we could get out from under this crooked system but I know it will never change because it is just so interwoven in everything.

I even had a situation when I was in my 20's where someone else's student loan debt got slapped on to my credit file for a loan that they said had been taken out in 1992 (I was 15 at the time) and in my married name... I of course was not married when I was 15. But it didn't matter to them..it was my debt! Who cares how old I was, my credit says its my debt and that's all that matters. I had to hire an attorney to get them to research the matter and figure out why they thought this person's debt was my debt...it took almost a year and we asked them to provide proof of a loan application with my signature and they never did produce it. What ended up happening? They figured out that it was for a woman who had the same name as me (married name anyways) and a "similar" social security number. We found out that when they stuck it on my credit they did NOT validate anything except my name and fat fingered the social. They finally said ok sorry we can't validate this and sent it back to the originating company. So, we called the originating company after this happened...they had never heard of me and said huh what? We don't have any loans in your name.. you must be mistaken. Like WTF lol. I just went through a year of hell to get something off my credit and get the debt collector to stop trying to garnish my wages and you know nothing of this?!? I had to get the credit bureaus to put a special statement on my credit file that says nothing is to go on my credit before you validate every detail of the personal information. The fact that I actually had to have them add a statement like that.... just makes me sick that we base our entire lives on this imaginary numbering system.