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I used to care, back when I thought it meant something, and I have always had a fairly high score. In recent years I have been extricating myself from the credit economy. Since then I have more money than ever.
So when I was looking at large real estate tracts for sale I became curious about my score. When i checked I was delighted to see that I no longer have a score. Because I don't use bank credit I am simply rated un-scoreable. 
I could not be happier. I don't want a number from the same industry that puts out LIBOR scores and other works of fiction. What about you? Do you value your credit scores?

What's wrong with a credit score?  For the people that rely on credit, I think it is a good/effective system.  When I got my first job, I couldn't afford to pay cash for a reliable vehicle to get there.  Thanks to the credit score system, I was able to get a reliable vehicle because the bank trusted me with the money due to the transactions I had with previous people.  And my credit score was only based on having credit cards that I paid off every month.  I personally think it has benefited me a lot.

The economy also benefits from it by matching riskiness w/ interest rates & not loaning money to people that have had issues paying it back in the past.

Not at all. I don't use a SSN so I don't have a credit score either.

Nothing wrong with it, I just don't want one.

I wouldn't mind being in a financial state where I wouldn't have to rely on one.  Once I have the equity of a house, I could be there.  But to be honest, as long as credit card rewards exist, I'll have one regardless if I need it or not.  Although if someone is offering product X for 3-5% less using bitcoins/cash, I'd choose that option over credit card rewards.

What are the negative ramifications of being un-score-able ?

I'm extremely fortunate, in that my wife and I are double-income-no-kids, and each have top-rated credit scores. I grew up in a culture of fiscal responsibility, mostly because of a family banking-industry history, so it is with a large degree of naivety that I make this honest inquiry.

My guess: No loans 4 u.

Pretty much.  Nobody will loan to you, or if they will interest will be 20-250% per year.

I quit caring about my credit score after I ran up 80k in credit card debts and filed for chapter 7, several years back.

I'll start to value it again in, oh, about 4 years now.  Sadly, I'm no Donald Trump.  Can't manage to get people to give me millions to declare bankruptcy again in a couple years.

I have never heard of someone 'not having a score'.  If you have no credit, your score is shit.

Actually, my score would probably be better, even w/ the bankruptcy.  I still have my payed off student loans, establishing a long line of credit history!

I like your answer.

I gradually quit caring, just like I'm gradually paying off some credit-card debt that has piled up during student years. The goal is to be debt-free. Even this paying-off can be thought off as a form of investment - the ROI being decrease in monthly interest payments.
Not sure if I'll ever make it to owning a home, but since I didn't grow up in the US, I'm not that obsessed with home ownership as a measure of success or happiness. Renting has some advantages, and I pay for these. I am free to move as I please, and I have more time and less worries than someone tied up in mortgages, property taxes, maintenance, insurance, and other aspects of home ownership.
I can save for a car cash-down when I need one, but living in a city I'm totally fine walking, biking, using public transit, and renting a car for weekend getaways and such. Again, more time and less worries.
Finally, I try to live in countries with universal health care.

All in all, I don't need to borrow money at interest, and it's hard to imagine a scenario where I would need to.

Once I bought my house, I stopped caring. But, I've not bought (nor plan to) buy anything else on credit.

I barely even knew such a thing existed until I tried to invest a small amount of money in zopa.co.uk (a p2p loans market) and wasn't allowed to because Equifax had no information on me. I found it bizarre that I would need a credit score if I am the one doing the LENDING but apparently that is the way of our byzantine financial system.

Never mind Equifax, I do value my bitcoin-otc rating and actively try to improve it.  :)

I don't value my credit score as much as I used to. Now I just want to get out of debt and be a free man, no obligation to work for anyone. Since I'd rather participate in a more mutual p2p system with many competing scores, I ought to get more involved in bitcoin-otc and the like.

Fight Club used to be my favorite movie for a long time. Now, the ending explosions feel dated and pointless; we can instead use something better and drive the corrupt banking industry out of business.

The only way I'd care about my credit score is if every time it got really bad I got a bailout from the government.  ;D

I just think it is sort of a sucker score. My understanding is that if you always pay your debts you will have a decent credit score. But the dream customer not only pays, he/she also is prone to getting into debt. Being debt averse (arguably being responsible) will limit your score.
As far as not being able to get credit, so far this has not been a problem. I know the rating agencies say you must have a score. Just like the credit card companies say you need a card. They will say "How will you rent a car?".  ::)
If I wanted a score I could get it back quickly. Last time I had one the banks were ridiculous in their offers to me. The amounts they said I could borrow were way too much money. Someone has to be the grown-up and the banks are not up for that task.

I have a great credit score which seems to help with economic transactions.  Unfortunately I am still treated like a scammer in the Bitcoin community.  Wahhhhhhh.

My past 3 years tax returns have been under $10k and discover still offers me $25k @7% once a month.

Of course they do. Banking is a zero-risk business. They make more or less, but won't end up kicked out in the street or in jail. Some of their customers inevitably will, though, simply because, at any given moment, available money supply does not include future interest yet.

What if they make a lot less, and not all the other banks are going under at once? Discover on its own is not "too big to fail". Lower risk than without any safety net, but not zero.

And then what? Those who make decisions walk away with all the bonuses and golden parachutes. Zero risk, in the sense that they inevitably get something from the game, at the expense of workers and customers who inevitably get screwed (fraction of them, that is). But we stray from the topic.

That's correct, and many parents "start their kids off on the right foot" by adding kids to their own debt accounts. For "the best" score, you want to utilize credit regularly, but not "over-utilize." If you have 3 cards you can put $10k each on, and care about your credit score, it's best to "diversify" your debt instead of maxing one out because it has a marginally better interest rate. I learned that from maxing out 0% APR credit cards, only to find the offers dried up even when I had almost nothing on the xx% cards and my credit score dropped from around 800 to the mid 600s. This eventually corrected after paying off the credit card when the promotional rate expired.

They also don't credit your score when you pay bills on time (rather, I assume these companies don't report it to the credit agencies), but if you slip up and miss a payment, you'll sure get a huge penalty.

There are flaws, for sure, but it's a mutually-beneficial system, I think. They offer you boatloads of cash because they trust you. There's pretty much just a "no trust" and "trust" threshold. If lenders don't trust you, you're unlikely to get anything substantial. If lenders trust you, you'll get more than you might be able to pay off, because they assume you're responsible and intelligent enough to self-limit yourself as necessary. Basically, they treat you like a reasonable human being with a basic set of ethics. It's very difficult to distinguish between someone who's penniless as a result of tough luck and someone who either has no intent to pay back, or is "overly-optimistic" - so, the idea is that loans should go to people who have a lot of money, already, and steady income, but need more money to expand. Of course, banks hide the "I don't trust you" statement with numbers to pretend it's a purely objective decision (and some loan officers really do base their decision entirely on what the computer spits out) so they don't have to deal with suggesting to an individual that they appear to be unethical, have too high of expectations for themselves, or are just asking for more than they're worth.

I could care less about my credit score in the monetary system we have with fiat money.

A number of years ago, when I was an almost starving grad student, I called the bank and asked if I could increase my wife’s credit card limit to $800 so I could pay tuition without having to drive a half hour to where the bank was to pick up cash.  The lady ran a credit check on both my wife and I and the only thing that either of us had was that one little card (that we paid off in full each month).

She then asked me several questions.  Do you have a car and if you do, what are the monthly payments and amount you owe?  What is your monthly rent?  Do you have any student loans?  Hospital bills (she knew we had two small children)?
 
I owned two cars, bought them used and paid cash.  Had a mortgage (with a really low interest rate from a private lender outside the banking system). Neither of us ever took a student loan (if I couldn’t afford school, I dropped out for a semester).  No medical bills (we did home births with a midwife – paid cash).

Finally she said  “How do you have two cars, a house, no loans, and yet are invisible in the banking system?”

I explained “To get a credit score, you need to borrow money from the banks. If you borrow money you pay interest. Paying out interest is losing money.   If you have to borrow money, you can sometimes find it cheaper outside of the banking system.  Therefore a higher credit score just shows that you are losing money to the banks.”

She paused for a little while and then said “I have never thought of it that way, but you are right.”

She increased my credit card limit to $2500.

Haha @Bees Brothers. I guess a bad credit score is your reward for being responsible. This from the same industry that rates junk bonds as AAA.

Get a credit card.  Pay your balances in full, monthly, then there are NO FEES.  Free credit score.

Free low credit score. Banks do not want you if you pay off with no fees. That's the thing, a high score means you will borrow more than you can pay off and will go into debt. The credit business is about getting you in debt, not lending you money.

Having a non-existance (bad) score didn't seem to hurt at all.  They still did what I wanted.

A few years later when I went to get a "real" mortgage, they were concerned that I didn't have any credit history other than that little card.  The private mortgage wasn't reported, but the lender did write a letter saying that I always paid on time and usually paid extra.  Having lowered the loan a bit (impressive when your a starving student) plus all the improvements I did, the appraisal showed significant equity.  They gave me the loan.

Again showing that the scores aren't that important.

A few years later (after getting a full time job - but still a grad student) I got a loan for a 2nd house, still with only 2 accounts in my credit history (neither with any late payments).  No problem getting that loan.

Bottom line, if a person seems credible and low risk, they will be happy to lend you money and receive your interest payments.

I have not had the same experience.

Somewhat related= I took a closer look at 80 acers of forest up north. The owner is fine with financing up to 60k as a private investment. That's almost the total price and more than I need. I told him of my opinion of credit scores and he was even more eager to business.  ;)
'm thinking about creating a wolf sanctuary with the land. We just got a crazy law to hunt wolves. Sad, as they are about the most non-threatening animal in th forest.

Not having a credit score = a lot less options in common financial markets.

Clever???

 ::)

That is what I was told, but that is not what I see happening. Anyway my banker told me that if you have no score they rate you at about a 660. So I suppose I effectively still have a score. He then went on to say that they know me and would work with me, score or not. One may not be able to get that kind of co-operation from a big national bank, but I choose a small local bank after looking into their lending practices and their risk exposure. I feel like the only money I'm missing out on is the money no one should be offering me in the first place.
Besides, I choose not to participate in "common financial markets". I don't think they know what the hell they are doing anymore. As evidence I point to fact that they have broken the whole world.

 With inflation it can be very tempting.

Just an update. It has been hard, but I am still maintaining my un-scoreable status. I am looking at buying some more land on the Ice Age trail and found a seller who values cash a lot more than credit scores. I am more convinced than ever that I do not need one. 

Yes, I value my credit score quite a bit.  Leverage is a great tool to enhance wealth if used responsibly.  I have a 0% loan for 18 months, something cash cannot do.  Same with margin accounts, goodluck shorting something with no credit score.  Not to mention certain jobs take into account your credit score in order to be hired.  Cash and credit are not mutually exclusive, you can and should have both.  The problem is not credit, it's the management of credit that gets people in trouble.

My credit score went to hell due to a dispute with Verizon.

End of the dot.com era, 2001, I had one month left on my cell phone contract. I had a $500 deposit.
Out of a job because my dot.com went dot.bomb, I called Verizon and told them I would not be renewing my contract.

They said fine. I asked if my last month could be deducted from the deposit. She said sure, she'd set that up, I'd get my deposit back less the last month's fee. Great.

Several months went by, I still had not reveived the check, but I received my last bill showing a negative balance equal to $500 less my last months pay.

Then I got a call from a bill collector. He wanted to collect for my last month. I told him what was up, and he said that wasn't his concern, he wasn't verizon - he was just paid to collect, I had to talk to them.

So I called them, told them what was up, and they said "We don't work that way, by not paying your last bill you forfeit the $500 and you still owe us the last month."

For years, every few months I'd get a call from a bill collector and the amount they claimed I owed kept going up. I kept telling them to have Verizon take me to court so a judge could see how absurd it was, but of course Verizon never did that. Instead they kept reporting my alleged debt to the credit unions, and fucked over my credit.

I don't really care what banks think, I have as much credit as I'd ever need within my circle. If I buy a house, I have family that would even take a loan in their name because they know I'm good for my word and money.

I value mine because I want to buy a house some day, and that's the only thing I plan on going into debt for.  Sure, if you save up a shit ton of money, you can probably buy a house in cash some day, but you're actually probably better off paying the mortgage, especially if you're buying at today's interest rates.  If you can do better investing in the stock market whatever the percentage you're paying on a mortgage, then you're better off with a mortgage than without one.  If you can't, you're better off just paying off a house as quickly as possible.  I feel like I could do better in the stock market and the mortgage interest rates would have to go up substantially for that to change.

I don't think credit extends to outside your home country really, right? Say I live in the US and wanted to buy a house in Canada

Actually, it looks like it does.  I just looked up FICO scores, which is what the credit scoring system is in the US, and there is also a Canadian site for TransUnion, one of the credit scoring agencies.  Given that they have a Canadian site, I'd say that it's likely that the FICO scoring system also exists in Canada.

Even with my bad credit as a result of being unemployed for six months and the dispute with Verizon, I was able to buy a house - but I had to do it through a credit union, regular banks wouldn't touch me.

I have two more payments and it is paid off, never having missed a payment.

i find this thread interesting as debt is not something that bitcoin addresses alot.
in particular I see people talking about trust. but in my experience its not trust these days thats the problem; its the ability to repay. its gambling; typically we gamble for a reward and the risk can be sometimes be.to loose everything. typically we are not equipped to assess the risk:reward payoff.

debt is running the world. its in our minds and has been, including in religion.

just because we choose to ignore leverage doesnt mean it doesnt effect us. are house prices effected by it? are markets distorted by it putting.those who avoid.it at a competitive disadvantage?

theres a book 'debt: the first 5000 years' I think... if you think its bad now just be thankful theres less.selling.of daughters these days.

question: what was the monetry value of pirates reputation before the problems, how much was taken vs this and how does this ratio compare to a typical credit.ratio rating?

Congrats on almost having paid off your home.  Out of curiosity, what interest rate did you have to pay for the mortgage?

Keep in mind, we always think of credit scores as something personal to us, but the fact is that the system was designed for the creditors_ to help them_ do more profitable lending.  It's a way to brand the cattle.  From their point of view it's quite logical.

12% fixed.
Yes, that's high, but I really had no option.

I probably could have gotten lower from bank if Verizon hadn't screwed me over, but I don't have the assets needed to sue them.

My opinion on the whole credit rating thing is that it's all a big scam, there is no recourse when the customer is f***ed over like I was, nothing I could do. It's basically legal extortion - you either bow before corporate America when there's a payment dispute and pay them or they screw up your credit rating.

What's funny is how much Verizon could have made off of me by now had they simply done the right thing. I don't get it.

Over a matter of $60 (last bill) when I had a $500 deposit - they lost me as a customer for life, and by now I've spent several thousand dollars with their competition that they could have had.

What's a credit score? I don't use credit cards :D the only time I ever got into trouble was when I managed to somehow trigger the overdraft because the transactions hadn't all got through, that's when I started learning about Bitcoin which doesn't let you spend more than you have.

You just need to know how to play the game.  Credit cards can give you cash back, miles, discounts, travel insurance, rental car insurance, 0% loans, extended warranties, theft protection, etc. etc.  That's just some of the few reasons why credit cards can be better than cash.  Yes, they have outrageous fees and high interest rates if you don't pay them off every month but that's why I say you need to know how to play the game.  As long as you have some self control and financial discipline, credit can be used very much to your advantage.   

Sounds rough. In the UK you could take them to small claims (after amassing plenty of correspondence showing you tried to avoid it - this is often key to winning favour from the judge/magistrate) for the princely sum of £80... maybe its gone up now I dunno. Provided the contract doesn't say they can do that (does it?) and/or you have evidence of what the rep said. You wouldn't need legal representation, they aren't gonna waste their time hiring some hot shot lawyer - they are probably likely to settle if you start making serious noises about going to court. If you do go to court they probably wont even bother showing.

You can find plenty of examples of the legal system failing, but they are all anecodatal. On the whole it works for stuff like this. worth a shot if you want to save your credit rating.

Sorry to hear about that, it sounds like you got a really raw deal here.  I agree, it is a scam, it really should be easier to get redress in cases like this, but invariably, at least in the United States, the party with the most money can drag things out long enough to make it not worth the hassle of suing them.

Goooo credit unions :)

If you need credit from time to time a credit score is a good thing. Because no matter who you take the credit from - if they don't know you they want need some kind of reference. Credit is only undesirable if used to too much, just like other things.

Many business owners face a liquidity shortage from time to time or need to make larger investments. If there was no credit score their number of potential lenders would be much smaller than when you have credit scores. So I guess for business owners a credit score is more important and therefore more valuable than for other people.

Im trying to find a new apt, and trust me, no no/low credit score sucks

Sorry for the necro thread post but I thought this was relevant.

Americans In Debt: 35 Percent Have Unpaid Bills Reported To Collection Agencies
 - http://huffingtonpost.com/2014/07/29/americans-in-debt_n_5629137.html

Poverty Is Profitable: 1 out of 3 US Consumers in Debt Collection
 - http://huffingtonpost.com/peter-van-buren/poverty-is-profitable-1-debt_b_5630444.html

Oftentimes the debtor gets reported, but then the next time they go to the bank to get a car loan or something like they they are told they need to pay off the debt owed before the bank could even consider lending to them.   So this "leverage" that the lenders have seems to do a decent job of recovering a fair amount of previously bad-debt.  When even that doesn't get the debtor to pay up, once in collections there are often threats of it going to court to get a judgement (which can result in "enforced judgement" that includes garnished wages, attachment of assets, liens on property and bank levys).

Does Bitcoin provide a relief from this for many?   A freelancer receiving Bitcoin income probably isn't worried about garnishment of wages or a bank levy even.

Also, a borrower with bad credit in the fiat world might still find lenders on BTCjam or BitLendingClub.  It's like a second identity since the fiat world uses one trust system and the peer-to-peer economy uses another.

Thoughts?

I like credit because otherwise I would need to sell my bitcoins and other reserve stuffs I have, and I can get more with them than I would pay in interests.
Also excesive credit to buy consumer goods is bad, because it will inflationate all the prices and create bubbles, and will make too easy to people lose control over their finances., but credit to open business is really good and necessary.

Sadly, I have no credit(either in fiat or in the bitcoin world  :( :( ) because the people that give credit don't consider the Prime Dice signature program as an income source, neither a bitcoin address as warranty of payment :(

Debt collection generally isn't as harsh as the media reports it. Rarely, it involves phone calls, but almost never anything beyond that. Generally, it's just a letter sent every month or few.

I think it was earlier in this thread I may've gone on a rant about 0% credit cards. I ended up getting myself in a bit of trouble with some of them because they approve someone and have them sign a contract BEFORE they give the credit limit. In a lot of instances, I was getting garbage cards with $400 or so limits which weren't worth my time to keep up with, so I'd throw them in a drawer and never activate them. I ended up with a couple cards in "default" because they charged me some membership fee after a year I refused to pay, which then accumulated interest and late fees on monthly, which ended up with derogatory remarks on my score. A quick physical letter explaining the situation and why it's a fat load of nonsense solved it.

In many cases, where the debt's under ~$300, a credit card company or other lender will actually completely wipe the debt (even if it's legitimately accumulated), sometimes even without customer input. It's simply too small to be worth hassling the person over and burning bridges. The media sometimes does these goofy stories on someone forgetting what their co-pay was and coming up $20 short at the dentist's office, where the debt gets handed over to some obnoxious assholes who call the person up all hours of the day and at work - and it just doesn't normally happen, if at all.

I'm straying far from your question, though. BTCJam and others do generally completely overlook all this relatively great (compared to some guy giving his story and an OTC trust link) data, and when I did lending, I did, for a very short span of time, try pushing credit checks through the agencies. It can actually be done where the potential BTC lender doesn't need any government ID (SSN, home address, etc), but where the loan applicant can give that information to a trusted, major (corporate) third party which basically pulls the credit report and then sends it to the potential lender, where all the lender sees is the credit report rather than any really identifying information. I think I really put people off when I pushed it because I didn't know about these third-party agencies... people didn't seem too enthusiastic about handing their SSN over to me, so I don't have much practical experience to share on that.  :D -But I don't see any reason not to allow potential lendees this option if they don't have collateral or in-community reputation. Lending is basically just discovering information, compiling it, then assessing it, so any information's good information from the lender's point of view (and hopefully from the lendee's point of view).

I'm kind of torn on this because some people should be given another chance (or maybe they were wronged, or just didn't want to bother with these credit agencies if something negative's on their score), but at the same time, there's really no reason for lenders to be passing up on this kind of information, especially when the lendee and lender are often so far away from each other with really minimal information available. The BTC lending market's kind of "data isolated" right now because most neither push or pull data from existing credit agencies. Idunno what all's involved, but I suppose there's nothing preventing a fourth major credit agency from popping up which deals more in peer-to-peer issues, maybe specializing in crypto lending, and there may not be laws preventing it from doing something radical like pulling trust data from Bitcointalk or BTCJam to factor into its score. :D

As I think about it, I care a great deal for my credit score. Not because I want the score or because I require credit, but because my solid credit score keeps me flying under the .gov radar by labelling me as a compliant tax donkey.
Camouflage bitches.

A tricky question not sure if I value a credit score to the extent that you need it to get loans and what not for your house I guess yes, but afterwards unless you need a large loan for some reason or another such as predicting a massive rally in Bitcoin
Although I do like gts476 Camouflage argument lols

I haven't checked in months, but I think I have been able to maintain my "un-scorable" position. For me it is a sort of protest to not participate in the credit market. So many people take on credit without ever doing the math or understanding the crappy terms they are obligating themselves to. They seem to just be interested in getting what they want now.

Just look at the payday loan places. Their adds say things like "your money, to do the things you want, is waiting for you!" WTF? It's not your money, you are signing a preposterously expensive contract that will put you further under water. I prefer to save and wait. When I do buy, there is no B.S. Just a price and a bag of cash that is far less than some financed arrangement that take years to play out.

As far as I'm concerned, cash is king and credit is the court jester.

Some people can get fixed-rate mortgages at as low of rates as 4% for 30-years right now, which is roughly in line with "normal" annual inflation (it's been worryingly low, lately). Since land can be leased to farmers at a rate to more than cover property taxes (at least in MI this year), I'd argue it's a pretty damn good time for people with near-perfect credit to consider buying a diverse collection of cheap land near suburbs (preferably around growing factories) on credit as a mid- to long-term investment. No mountain of risk with leasing houses and which is still somewhat fungible, where you can sell parcels which've appreciated in value as needed. OTOH, a good number of banks, even, are assuming another housing crisis is imminent, but so long as the land is "fundamentally" cheap (where its value is more in utility than location or other luxury), I can't imagine it'd be nearly as much an impact, and certainly a housing bubble pop doesn't mean the value of land and houses goes down EVERYWHERE. Idunno... I'd be looking into it intensely if I thought I could get a mortgage like that.

-But yeah - in general, taking an unnecessary loan for consumer/luxury goods is a terrible idea, and even mortgages are extremely risky if all you're doing is, say, buying a house to live in where the market can easily and rapidly swing out of your favor and basically turn the place into a debtor's prison, which it seems like every generation learns too late. Business loans are maybe okay in certain circumstances, and even credit cards have major benefits if you truly know you won't get trapped, but I definitely prefer having cash on me rather than relying on debit and especially credit. Everything's just so much more quick, intuitive, and simple. I'd love it if I could pay my bills in cash -- like if I could just hand cash to the fellow filling my propane tank up, that'd be fantastic, rather than sometimes remembering to write a check when I get the mail and throw the invoice in The Drawer. -But at the same time, I don't like holding much cash just because of the theft/loss risk. Though, maybe we're not too many years off from the propane guy just printing the delivery note with a QR code, so I can just bring it inside and scan it with my phone to pay... God, that'd be so wonderful!

Good stuff Kluge! I do see the positive role of credit in the economy. My issue is more about the way it is currently pushed as a virtue to be in debt.

Unless you like living as a debt slave, it doesn't matter in my opinion.  I dont finance cars, computers, tv's like some people like to, you end up paying way more in the long run.  Stay ahead of your finances and live within your means.

Credit score still important to people who want to buy a home for investment.

I wouldn't say I don't value my credit score as there is always going to be a time when my credit score will be important however I would not say that I am as concerned as I used to be about my credit score. I am always careful and tend not to spend money where it is not needed so I know there will not be a huge problem with my credit score.

How much an individual values his or her own credit score really does not matter. What is important is how much a specific lender values a customer's credit score that is trying to take out a loan. Unfortunately most lenders put a lot of weight on a borrower's credit score and credit report.

It depends what you want or need to do with your score. As for me my credit score has always been pretty good. Though I wouldn’t say I spend a lot to gain good credit score. Better consult your bank regarding credit scores. They are usually helpful in telling you exactly what you can do to build or repair in order to get a card or loan.

Many lenders use credit reports from the agencies (which are much more detailed than just a number), then use their own scoring system.

Unfortunately, some of the time (especially with credit card companies), they use the most idiotic, infuriating method humanly possible, where they offer loans, benefits, interest rates, and credit lines based on your LOWEST-scoring portion of your credit report. -So you could have otherwise perfect credit - say a house and car on loan, then three credit cards, and because you only have five (which seems like too many to me) credit accounts open or maybe only a five year history on your longest-running credit card (my credit score was devastated a couple years ago when a bank bought a credit card debt on my name for 14 years from another bank, which credit agencies then considered a new account which really sucked because my second-oldest account is only three years old), they'll try to insist (and since this is generally automated, give as a non-negotiable option) you're either ineligible entirely or that you need to pay a higher interest rate with more restrictions and a reduced line of credit.

It'd be nice for consumers if more lenders reintroduced human judgment rather than relying on algorithms and automated contract generators, but that's just not going to happen. As an aside, one of the best things you can do for your kid's future finances (and your own if you're enough of a doormat to co-sign for them when they're an adult), only because we have these stupid automated systems, is to add them to a couple or few (or ten+ if you're feeling really generous) credit cards, leave them on them until you die, and never tell them about it (though they'll see in the credit report, I suppose). You can screw them over that way, too, though - but it also gives them a lot of options for manipulating which debt "they" hold once they reach adulthood. They can drop their name off certain cards so they achieve ideal numbers for credit utilization, accounts open, as well as drop any cards which may otherwise be keeping their score from being ideal. For example, if something happens like in my case, where my debt was sold, they can just drop that card from their name entirely (assuming they have many other similarly-aged accounts) to increase the average age of their accounts, which would probably be favorable.

I found the credit rating to be absolutely useless to me beyond when I bought 2 new cars within a week of each other about 6 years ago.  The credit score helped me get 0% APR on both vehicles but I was going to pay cash for both vehicles anyways.

I don't find my 800+ score to be much help in buying investment housing.  I'm still limited by income - which when you're self employed can be a real pain.  I can show $1 million equity in a house and I still can't get a loan for $300k - stupid system.

Your credit score essentially was able to save you money. By getting 0% APR on your loan, you were able to put the money you would have spent on paying cash in the bank, and could have earned interest on those funds. The money you earned from interest would be what your credit rating/report was worth to you for those two transactions.

I for one would like to be able to have the option of going into debt.  I see people who pay their bills regularly and having trouble taking out loans.  Maybe because of school debt and mistakes in the past but when their car is paid off and they have a good job, you would think there would be more trust given or atleast a way to appeal.  I don't know my score either and it has been a pain to figure out what it is.  It's like I'm not in the system which is sort of confusing.  At the same time I'm not looking to acquire debt so it isn't something I give much thought at the moment.

I think banks need to have automated scoring methods because of the massive amounts of regulations that exist today. These regulations are nothing new and have been around for a long time. If a certain policy were to affect a particular group negatively more then others, then the bank could be accused and sued for discrimination. Even legitimate business decisions can be "discriminatory" so banks must be as automated as possible when making lending decisions to avoid these kinds of accusations.

I agree, if too much leeway is given to loan officers and underwriters then the bank could easily be accused of discrimination even if it was not intentional.

I always read about this thing, but it must be an american issue. Never heard it here in Continental Europe.

Here you get loans equal to the securities, incomes or people vouching for you, equal. And I think that is how credits should work.

Why in gods name should you be PUNISHED for not using your CC and paying off things early??

Point taken. Anyone have on-hand studies on whether or not automated lending has actually statistically reduced the amount of discrimination in lending by race, sex, etc? I don't think I've ever even seen it discussed.

I make sure that I am not late on credit card payments.
Have not bothered to check my credit score, though.

Not true at all.  At one point I wrote credit software for 5 years and I can tell you that I know EXACTLY how every action affects your score.  Borrowing and paying off every month will get you a very high score.

So how much did that $500 that you never paid cost you (even if it was a mistake)?

I don't value it a whole lot, but it is nice to have better scores.

Plus, you often have to use a credit card anyway, for most things, so it is better if you own one.

I don't use mine often, however.

Those fees and interest rates... (Not that I can't pay back my bills quickly)

credit to buy stuff(cars/computers/shiba dogs/etc): bad and will only inflationate the prices

credit to open a business: good. Or only people that already have money will have a chance to get money.


I value my credit because I don't want to be cut off from the second type of credit

This is correct. I use my card and pay it off each month in full so it is a zero interst loan with 1-2% cash back and in March this year it was 849/850.

Debt on cards is at too high a rate.

Credit scores are just a measure of trust much like the trust ratings buyers and sellers in this forum use. If you want to borrow significant amounts of money without collateral, you need a means of proving you are trustworthy. Credit scores may not be perfect, but they do help lenders manage risk.

I agree, they are a sort of measure of trust, only thing is the laws are written so that the lenders have no risk whatsoever.  If you default on a loan, the only thing guaranteed is that the lender will get something out of you, and probably ruin your credit score for years to come in the process.

True, but when you borrow money you assume the responsibility and risk for that money. That's just the way it is, and probably the way it should be.

Yeah but take a hypothetical mortgage foreclosure situation:

A 150k mortgage goes into foreclosure after 10 years.  At an interest rate of 4.5%, you've already paid the bank over 90k back.  Yet the laws still allow them to take the house completely, ruin you financially, and leave you with nothing.  They now have the house, and you have nothing, just out 90k.  So in essence, banks have no risk when lending.

That's not very common though. In the recent housing crisis in the US, most foreclosures were fairly new loans, and banks lost a lot of money because the houses ended up being worth less than the loans.

The other thing is that in your scenario, that interest does rightly belong to the bank. The bank doesn't have to loan you money, they only do so because they are promised interest. They wouldn't loan you money if they knew they'd only get 60% of it back (90k out of 150k), because they are losing not only the 60k you don't pay back, but also inflation and the time-value of that money.

They want most people pay on time, so they will have a low risk income, but also want people that sometimes delay the payments, so they can charge more interests and gain with taxes.

I know some people that work in risk management for banks.

Maybe the attitude varies from bank to bank, or from country to country, or depends on the trust on the economy

This is not true. If there is enough money to pay off the loan then any excess funds are given to the borrower. You also fail to account for the fact that most of the 90k is interest and not really paid back to the bank but rather additional amounts owed by the borrower.

Continuing the above discussion, it's really all about doing what you agree to do. If you agree to pay back borrowed money with interest, then you need to do exactly that. The law is written to require that your end of the bargain be upheld, and that is how it should be. In the end, you have to take responsibility for signing on the dotted line.

^Do not quote me on this in reference to terms and conditions. Legally, I did "agree" to Apple's terms and conditions but I do not consent to any 40+ page legalese document to use a freaking phone.

You're in for a nasty surprise when iTunes revokes your use privileges when you try using it to manufacture chemical weapons.

I wish I could be in the same position as you where it wasn't important to me, but the truth is I have things/loans/etc that depend on this score so I need to maintain it.

I had the same concerns. After I gave bank credit the finger my financial situation got better. Now I have offers of private credit from people and even my bank has told me they would loan me money anyway. I told them "no thanks". The hard part is trying to keep my credit "Un-scorable". If they found out how trustworthy I am they would jack my rating up. I don't believe in their scores and don't want to participate in them. When I say that at the bank... they ask me if I want a loan.  :-\

Credit score has little value if you don't plan on borrowing money from bank.

True the only times the credit score is really needed is when you get a mortgage on the house or on a car.
The rest of the time a credit score is not very important.

If you get to an age when you can pay off ALL your debts....or have a way to do so I did below

or can eventually say your visa bill gets low enough a modest car loan line of credit

then get to a point where you can pay off your house....and swing a home equity line of credit


do this

Get a Home Equity Loan ..even if it costs you some coin as your catastrophic emergency fund to draw on
at 30k for my house and 3.99% APR ....well sure beats a credit card for those emergences..may cost you 1.5k
up front to secure such (or not some legit banks have deals..I'd go thru a professional commercial bank) but
worth it for piece of mind imho.

Get a Green of Gold American Express card ($50 usd green card a year $75 gold card) If you get the gold
card they have as a perk the equiv of AAA car service club (that also costs $85 a year) so I call it a draw.

The reason for the amex card is in an 'emergency' I can put on 10k or more ..then I have like 40 days or
some such to pay ..you HAVE TO PAY with the above cards or face them being taken away or paying some
high interest rates like 28% or some such....but that is the purpose of these cards..that is why they
call them 'privilege cards' the $$$ are made on he merchant 3-4% not 1-2% like accounts that let you
carry a balance

anyway it is better to drop the 10K on the card in an emergency and then go to bank and take out
the old home equity loan you have setup already then when you have time the $$$ needed from the home equity loan and
pay 3.99% then have a Visa with a cc balance and pay 19% more or less...You can use such cards
to get out of debt with your current cards..me cut up my 2 visa cards paid them down ..used this card
to get out of debt in 2 years on the visa stuff w/o danger of using a cc card (the amex) too much
because it always had to be paid off each month

anyway I still use the amex cc all the time ..but don't get caught in the revolving balance trap and
that you can't get caught up at 19% cc interest/fees...my only card is the gold amex card (23 years)
only cost is the $85/year and that includes the equiv of the AAA road plan I used to have instead...
the amex card makes its money off the merchant

last point this is what applies to credit score..NO I don't care about it

Also the credit card score agencies etc like

Transunion and Experian and Equifax (sp?)  the top 3..the main one used on house/car loans/ cc cards etc
.lock them all out with a security lock..best decision I ever made ...no one wants my credit info to steal now too hard
.IF YOU call them up they will allow you to put a PERM SECURITY CODE on these major credit score agencies
for like $15 I think ....That means NO ONE  can see your credit score..or send you spam
or take a loan out in your name etc via Identity theft with any hope ..if they have to get
a credit scrore etc to get said loan..new cc card or whatever..impossible your credit rating is locked up
to way for scammers to get info to make a fake cc or loan in your name

so if you need to buy a car or something that needs a credit score ..you call them
(may have to google the 800 numbers) and give code and they can ..usually standard
take your security lock off your info ....usually standard 30days and then it goes back
on.if I remember this is $5 to take it off for 30 days then it goes back on is standard setup

So no spam no people trying to get you to buy cars or get the newest cc etc because
when they try to get your credit score to spam you or rip you off it is locked

anyway my 2c worth the above works really well....getting out of debt is equiv
of dropping that 2nd part time job...helps a lot your piece of mind and with the
above you are covered in any emergency w/o getting ripped off...with the added
benefit is it is always in the back of your mind on the amex card it has a limit..so
if i need that new car or whatever I go to the bank ..get the old home equity
line of credit $$$ needed in cash and pay them off month to month at 3.99% interest

as an example I have 7500 usd on my home equity loan..the interest is about $25
the amount applied towards principal (loan) is around $25 the min you can pay
is $50 on such a monthly payment plan

I pay if off in 2 months ...I"m down $50 in cost

Hope it helps but NO...credit scores mean little ..except as a basis to block info
so you are not bothered once the 'real world' finds out you have no debt...thus
the credit score security locks...once out of debt you are pretty careful in that
you don't want to go thru the pain in the ass of paying 19% cc cards off again!

IF you still have debt on a visa...cut it up ..get the amex card that at least
you know you can't float over the limit forever w/o consequences or it gets
taken away (only gold and green amex thou .not the other amex new cc)

lot easier to pay that visa card down to 0 after you cut it up ..if you are
not adding to it any emergency..need a simple emergency fund don't have
your house paid off? get to a point where you can get an auto loan...for say 5k
and just pay it back in full in say the next month..main thing is you have the
line of credit now for 5K....(or a car.....that hopefully you can pay down
to have the extra as equity fall back)

well hope it helps it got me out of 10k of cc debt on 2 visa cards once I
did this after cutting up the visa cards and just using the amex card
and the car loan line of credit quick for emergencies (cataract surgery
for a hit to an eye ....2.5k not on the visa on the car loan equity thingy)

anyway just saw the does your credit score matter question here
in the above cases you could care less what your credit score is
because w/o debt it is gonna be like 840 to 900 excellent anyway
esp with a paid off visa/car loan /house and legit gold amex card!

so no credit score don't mean squat if you manage to get out of debt!
or at least have a backup cash plan outside of just a 19% cc option.

good luck

Searing

Thanks I was wondering what a security lock was and looked it up good stuff from 2007 nice, and I agree with you that taking a Home Equity loan is way better than a Visa for pinch borrowing, that or perhaps a line of credit if you can get a good rate.

As long as its paid off its fine otherwise they take the house but it's a calculated risk.
Courts have held that a bank may freeze a HELOC in instances where a home's value decreases substantially, which is deemed by courts as a 50% reduction in value.

With the credit cards as long as it doesn't mess with my Bitcoins that's fine with me :)
Although I guess a rewards card that gives cash or something is best

I'm a Mustachian and a fan of responsible credit card use: they can help you raise your credit score, they offer purchase and consumer protections you can’t get anywhere else, plus they automatically track your purchases and provide healthy amounts of cash-back rewards each year as well. Just be sure to use them in a Mustachian way.
http://www.mrmoneymustache.com/credit-cards/

That said I'm all for gaming the system :) (Teach them to put people into debt with the revolving balance trap)
I value my credit score in that I can get a bunch of promo offers and free money heh 8)
http://www.mrmoneymustache.com/2012/01/23/gaming-the-system-with-rewards-credit-cards/

And sometimes you can get a 3% rate a tad lower than the line of equity in a house for a year while combining a rewards system to it.

FROM MMM

Sometime around 2006, when interest rates were high and yet credit was still loose, Chase started sending me checks for my business card that could be used to pay any bill – and they were offering a 0% annual percentage rate. After reading the fine print, I saw that the conditions were favorable. So I used one of those checks to max out the card’s $50,000 credit limit, and used the proceeds to pay down a construction loan which had been charging  me 7%. This allowed me to pay the much better rate of Zero percent for one year instead. Meticulously noting the payment deadlines, I played it carefully and paid it off on time, saving several thousand dollars in interest.

Today, the credit card companies still send similar checks, but they now have much sneakier conditions like “0% APR for one year!” (except a fee of $10 or 3% of the balance, whichever is greater). Excuse me, but that’s a 3% APR, about the same as my existing home equity line of credit. Trying to mislead customers like that is a huge FAIL and should be illegal. So I now mutter a few swear words at the bank as I shuttle each of these offers from the  mailbox to the document shredder.

On cancelling credit cards
It will probably cause temporary dips to your credit rating, since you are triggering inquiries on your account. But by eventually cancelling any unneeded temporary cards, and being sure to keep your oldest card active, you should still end up with a continually increasing credit score. I don’t care about my own credit score in the short term, since I have no borrowing planned. In the long run, however, I do want to keep it up in the 800s in case I ever want financing on a future house or investment.
__

..getting out of debt is equiv
of dropping that 2nd part time job...

Amen to that debt is slavery in a sense that you will always be indebted to something until you pay it off completely.

Swords

am not using any credit score for now

just remember after you need it to get a house or car or whatever you can call up the big 3 credit score
agencies expeian transunion and equifax and have a security freeze put on them so that someone else
has to use that code to get info on your credit score before they can approve for a car loan or house
loan fraud etc.with say your stolen identity...it is worth the hassle just not to get all the junk mail...
if you have security freeze on your credit score...no one can spam you with offers etc

want to take out loan again ..unfreeze it and they ask you when would like to freeze it again
just give enough time for the auto dealer or house realtor or whatever to get a score you need
before you put the security freeze back on

helpful...my home 10yrs ago was burglarized but stuff was looked thru etc...even with that info
no way to use it because theives had no access to the security code to take off the credit
score security freezes..

my 2c worth
Searing

This is technically true, however most people do not have the resources to never have to borrow from the bank, especially during their earlier years (prior to turning 45ish). When people get older they will have to rely less on bank loans, but they still may need one in case of an emergency (unemployment, medical expenses among other things).

Medical expenses is too high because of government interference and rate rigging from insurance.

In any case, people need to save more and live within one mean.

yep older....had a student loan i paid off ..so when I got my house around 2000 after the dot com crash of stock market then pres Bush the jr...got us into IRAQ...EVERYONE
was telling me to get into stocks at that point...sorry ....so I looked around and figured screw it pay the house off from 2000...who is gonna give me the equiv of a 650/m raise (NET) would be closer to 1K raise in the next few years....paid if off in 7 years months before the stock crash /great recession

good thing I did or I'd of had to keep a 2nd job for the house payments...now no debt ..just house utils ...no cc debt (amex have to pay it off each month) so that $650
house payment is gone ...of course some of that goes into the house but I can use 'denial' on that heh :)

Searing

If you now have no debt, and no housing payment (expect for taxes and insurance) it would be advisable to invest more money into investments (be it stocks, bonds, traditional savings accounts, or other types of investments) so you can save for a "rainy day" and for retirement. You likely do not want to be working up until you die and when you do stop working you want to be able to live comfortably. This is likely the same advice that you would receive if you were to speak to any financial adviser or financial planner.

yeah I agree up to a point....am doing so now...but way back when on my previous choices... in my case deciding to get the house paid off was equiv to 1K raise in real $$$ at my payment net $$ of $650/m back between  (got house 2000) and 2004 when I decided to just go for it and pay off the house for the above equiv 'raise' so to speak..and paid
it all off nov 2007 by the by.

of course now I invest $$$ more in stocks/etc as you state above but as far as house improvements etc..I don't have to use the home equity loan to do so..it is just there
in case my chimney falls down or something else odd mainly because I also found that instead of 1000 usd or some such for home owners insurance...full boat no deductible
that was required I have because of the home loan and the bank etc.....I by changing it to 5K deductible save  around 250 usd per year or $750.....so I take this gamble with the knowledge
that I can if disaster strikes just 'eat it' and use the 'unused' catastrophic fund which is the purpose of my home equity loan..to make up that 5K should I need to...anyway my logic and another way to save if you like them odds

again this is what I did ...risks/rewards etc admittedly in my case in 20/20 hindsight it was the right choice with the economy tanking in fall 2007 (was it?)....saved me getting
a 2nd job that is for sure...anyway my choices for illustrative purposes/angles.

anyway my 2c worth

Searing

When you have no debt like this your credit score will likely suffer and it will be hard to get credit when you really need it. Even if you have sufficient assets today you never know what tomorrow will bring to you financially.

It is kind of a paradox of how the credit system work. Normally, people who have asset and no debt should have higher credit score.

I would give up my plans for world domination if I had to use that piece of fancy Cupertino garbage.