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credit rating actually means chump rating?
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Does a person's credit rating actually rate how much money a bank might be able to squeeze out of somebody?
After all, if a company tries to screw you, and you say "hell no, i won't be screwed" they dock your credit rating. But if you take out a loan, and pay it all back, complete with interest and processing fees and whatnot, your credit score goes up. If you're sometimes late, your score is still higher than if you did nothing.
I remember about five years ago I tried to figure all this out and it didn't make sense. A hospital tried to screw me out of $350. I refused to pay. So they docked my credit rating. When I complained to the credit reporting agency, they didn't care what I said. A similar thing happened about 20 years ago.
But when I think that "credit rating" actually means "chump rating", then it makes sense. I would not bend to their wickedness, so they dropped my credit rating.
I have not needed a credit rating since ... 2001. So I have no idea what my credit rating is now. But for the first time, I kinda hope it is low.
I think what ticks me off the most is that we now have to pay more for our auto insurance because we don't have a car loan. Stupid.
On the border of Zones 5 & 6 on the last 2 acres of what was once a large farm. Flat, flat and more flat!
The optimal situation is to have a good credit score and little or no debt.
Clearly, this is something set up to favor the interests of lenders. Clearly, it is not always fair or accurate. But people do not benefit in any direct way by having a low score. If one can go without borrowing for the forseeable future, great, the score becomes less important. But if someone applies for a job, wants to rent a place, buy a car without the full amount, or get insurance for their vehicle, then credit score might be relevant... there are commercial interactions besides borrowing that take into account the credit score, it is one form of reputation.
The hospital situation is a symptom of a bigger problem. The system is set up to favor the big guy. If Joe Public steals a candy bar from a shop, the police are called in and it is a criminal matter. People are immediately handcuffed and the criminal justice system goes all out to protect the shop. If a company tries to steal a dollar from every customer, that is pronounced a civil matter, we can't usually call the police, the government usually doesn't intervene (some attorney generals will, others simply say it is not their job) ... in that case, the victim has to go through litigation (an expensive hassle) and the big thief is often able to get away with it.
Not making loans or having any cards means everything you do is subject to risk. You do know your auto & home insurance's are calculated on your credit score. Now days your internet profiles and blogs are even figured into your lifestyle and rated.
Wm. Brookover~ Opinion's given at no extra charge
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I had a friend who tried, and tried to get a loan to buy a commercial fishing boat. No bank would talk to him. He went to a yacht mortgage broker, and explained that he had a great opportunity to buy an old fishing boat, and convert it into a luxury yacht. An hourr later, he walked out of the office with a check in hand.
I want a house (yacht) vs I need a farm (fishing boat). Banks feel more secure with 'desires' than they do with 'needs'.
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the very concepts of permaculture that attracted me, are the polar opposite of our debt and consumerism driven culture which are completely unsustainable.
I must say, its amazing how appealing and shiny a new form of slavery has been so cleverly marked to us eh?
If you stop borrowing money, because you have/make/own/win ten million dollars, your credit score will drop to zero within a couple years.
When mine hits zero, I will be a proud proud man.
Note that there is a big difference between "bad" credit, and no credit. Bad credit shows specific history of not making payments on time, or having a car repo'd, or a foreclosure on a house.
No credit, a literal score of zero, means they don't know what the hell you're up to. But whatever it is, it doesn't involve borrowing money. Drives them crazy I'm sure.
This is so deeply ingrained in the culture, and so intentionally pushed by the credit vultures, that many people are shocked when they find out what a "good credit score" really means.
A good friend of ours at church was bragging about how his banker had checked his credit score, because he wanted to borrow some money for a motorcycle, and the banker had commented that he'd never seen a credit score that high. He was PROUD of his high credit score, thinking this made him look astute and sophisticated with his money handling.
I felt obligated to point out that a very high credit score often means a very poor financial plan. Bigger house than you can easily afford, many credit cards, a long series of car loans, etc. He just looked dumbfounded when I told him a "great" FICO score is often a bad thing, and don't go bragging about it. It just means you like to borrow money. Scads and scads of millionaires have a FICO score of zero. He was incredulous, and I'm still not sure he is convinced.
This is NOT a sign of winning financially.
Finest regards,
troy
oes a person's credit rating actually rate how much money a bank might be able to squeeze out of somebody?"That's exactly what it means.
It took me a while to figure this out - when I could first get credit, I actually thought it meant that I was in good financial shape. Nope, what it meant was that I had gotten a high-interest department store credit card, and was thus willing to pay an extra percent above retail for the privilege. Who wouldn't want a customer like that? They were lining up in droves, begging me to accept their cards. If you doubt that civilized extortion is the name of the game, you've never dealt with a collection agency. You could be down to eating a single meal of top ramen every other day and living under a blue tarp, but according to them, your financial priority is paying for the credit card they gave you before you got laid off with no warning. For credit cards, it is all about threats, they have nothing else.
And the truth is, I did not need a credit rating even to buy a house. Private deals are always available. It is not necessarily true that your insurance costs are based on your credit rating - some states do not allow this. The job thing is a bit harder, but even that is not insurmountable. After all, a place I really wanted to work would not be that conformist.
If you want to live different, you can get by without a credit rating. You have to be more nimble and creative, but how is that a bad thing?
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It would collapse first but, no doubt about it, the world would be changed.
1. my projects
If you are going to be frugal, you might consider having your month's expenses earning you money in an interest bearing account, then using it to pay off the credit card balance monthly on time, and you have made money off the banks rather than the other way around. With the rebate cards you not only earn interest off the float, you get a portion of your purchases back. By using credit frugally, you have actually earned a little bit of money. But you have to be on top of the game and not carry a credit card balance over from one month to the next. It's pretty easy with automated payments.
Frugality is about using your resources such as credit and money in a wise manner. For me it is not about making choices that limit your options.
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My debit card works just fine for all the above. I just don't think the little bit of money I might earn by doing as you suggest is worth being caught up in the credit card system. YMMV, obviously.
"When there is no life in the soil it is just dirt."
"MagicDave"
NM Grower wrote:
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If you are going to be frugal, you might consider having your month's expenses earning you money in an interest bearing account, then using it to pay off the credit card balance monthly on time, and you have made money off the banks rather than the other way around.
Don't know if you've checked but finding an intrest bearing account that pays above .25% is gonna be hard to do. My credit union hasn't offered anything close to 1.0% in years. Even my last market acounts were bairly 3.25%. A true waste of time waiting 18 months on a silver certificate to earn pennies whne I could have just paid off the auto loan and saved $500.00 in interest.
A money market account which is fractional % as is the checking acount. I decided a few years back to take $1,000.00 and purchase 3 or 4 inexpensive firearms and resell them...netting me from 10 to 30% on each sale. While it isn't enough to retire on it does pay for my shooting activities.
My FFL license cost $90.00/3yrs doing 4 internet transfers pays for the license. Those transfers are from folks who make a purchase from an out of state dealer thru me.
Several times I paid on the principal of the house mgt. once 7k to save $21k in mgt interest.
Guys I worked with, we'll call them flock type people said I should have put the money in my 401k account. YEA Right.
bpb
Wm. Brookover~ Opinion's given at no extra charge
We all pays our money and takes our chances. For the kind of life they live and their future plans, funding the 401K could indeed make more sense. The conventional wisdom has worked for many people. But I've never wanted a conventional life, so conventional wisdom doesn't necessarily get me to where I want to be.
Yes it makes sense to avoid short-term interest payments on depreciating items whenever you can. My point is that for savvy investors, long-term debt can cost you less when compounding your investments.
I am not talking about investment in mutual funds with management fees, where you take all the risk and the management company gets a % of your money every year regardless if the fund is up or down.
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"When there is no life in the soil it is just dirt."
"MagicDave"
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Here in Canada our former Prime Minister John Chretien resisted and sabotaged the chartered banks attempts to get in on the subprime loan bandwagon that the US was involved in. The heads of most of our banks wanted his head. When the big meltdown came in 2008 Canada's banking system was barely affected. Mr. Chretien is now retired but he does regular speaking engagements where he crows like a rooster about what would have happened if the banks had their way and lent money to people who didn't have a prayer of paying back. During his reign Canada got rid of its national debt as well. I think the old guy has every right to crow as loud as he wants
. When asked why we were not sending any troops to Iraq Mr. Chretien growled in his broken English "Canada have plenty oil" dale hodgins wrote:
The only things I have ever used credit for are land purchases and for a work vehicle. It can also make good sense to borrow money for one's education. I can't imagine why anyone would borrow money to go on a vacation, to buy shoes or to eat at fancy restaurants. Yet that's how many people use credit, for instant gratification.
Here in Canada are former Prime Minister John Chretien resisted and sabotaged the chartered banks attempts to get in on the subprime loan bandwagon that the US was involved in. The heads of most of our banks wanted his head. When the big meltdown came in 2008 Canada's banking system was barely affected. Mr. Chretien is now retired but he does regular speaking engagements where he crows like a rooster about what would have happened if the banks had their way and lent money to people who didn't have a prayer of paying back. During his reign Canada got rid of its national debt as well. I think the old guy has every right to crow as loud as he wants
Community banking works very well. It is how banks should be regulated. No marginal lending.
"When there is no life in the soil it is just dirt."
"MagicDave"
Whenever I receive a check from a credit union they insist on charging five bucks to cash it. I take it to the customers branch to avoid a bounced check. I always charge the customers for this inconvenience and lecture them on how I always pass on any screwing that I receive due to their poor banking choice.
"When there is no life in the soil it is just dirt."
"MagicDave"
Jeanine Gurley wrote:
Dale, is that a U.S. community bank that charges this fee? I'm in Victoria British Columbia, Canada where a hot summer day is 75°FCanadian credit unions often charge a fee to nonmembers if they want to cash a check. When I receive checks from people I don't know, or if I just want the money now I go to their financial institution to cash it. That's when the fee kicks in. Most of my customers show up with cash since what I'm running is basically a glorified yard sale peddling building materials. But as time goes on I'm finding more and more people with only plastic and not a dime in their pocket. Whenever I see this I wonder how these people are ever able to seize a great deal when they see it. I always carry a couple hundred dollars just in case I see a great deal on the side of the road
paul wheaton wrote:
An odd thought occurred to me.
Does a person's credit rating actually rate how much money a bank might be able to squeeze out of somebody?
Of course they try and squeeze you, Its not called "contract" for nothing... Think constrictor. A credit rating is only important to a bank its your worst asset the lower the better. Never borrower nor lender be. Good advice.
This regulation-cramming is, directly, responsible for the mortgage crisis. It's funny how the government chose to pin the crisis on greedy Bankers (scapegoats!). Bankers have far greater intelligence and insight than to be blinded by greed.
I will use credit when I deem it necessary. I fully understand the choice I'm making and the risks. I use it sparingly and have a sound repayment plan established before we go to the bank or credit card for cash.
My opinion is: credit is a tool. The "evil" of credit can come from how a person chooses to use it. Same as a hammer, know how to use the tool before your start putting dents where you don't want them.
State chartered banks are not ruled by federal regulations. They are regulated by state charters and every state has a different set of rules. Some have adopted the federal rules many have not. Community banks generally speaking did not have problems when the housing bubble burst because they were over extended a la lending rules that preclude marginal lending. Not all states are the same in that respect but most have such regulations. My bank for instance never stopped providing mortgages to their customers and have not had any problems in fact have grown their assets without any bailout money. I suppose that defining what you mean by "community bank" might make a difference too. State chartered community banks cannot by regulation do business out of the state where they are chartered. That precludes any and all of that nonsense that went on and is still going on with the multinational banking practices.Mustang Breeze wrote:
I have worked with banking systems for over 10 years. People should understand exactly what happens to a Community Bank when they get their banking charter. They, basically, hand the keys to their decisions over to banking regulators. Regulators who do or do not understand credit choices outside the boundries of the government formula. And, yes, there is a government formula... one SO powerful it FORCES banks to make loans they knew were "bad" and ones that FORCE banks to turn down loans they know are "good." Banks who resist are arm-twisted with enormous fines and down-grades.
This regulation-cramming is, directly, responsible for the mortgage crisis. It's funny how the government chose to pin the crisis on greedy Bankers (scapegoats!). Bankers have far greater intelligence and insight than to be blinded by greed.
I will use credit when I deem it necessary. I fully understand the choice I'm making and the risks. I use it sparingly and have a sound repayment plan established before we go to the bank or credit card for cash.
My opinion is: credit is a tool. The "evil" of credit can come from how a person chooses to use it. Same as a hammer, know how to use the tool before your start putting dents where you don't want them.
"When there is no life in the soil it is just dirt."
"MagicDave"
I stepped off the bank-consumer treadmill years ago and wish i had done it way sooner.
One of my underlying foundation principles for an IC is: No connection of any kind (even 6 degrees) to Wall Street money.
I have seen and heard of too many good ICs have incredible problems and issues with financing, banks, loans etc. Why put it at risk this way? Why not a co-op, Timebank model and sweat equity? and slow... slow permie
There's a great new book...'sacred economics' by Charles Eisenstein.
You can read the text here (and contribute what you want, or read it for free, or go to Amazon)...
http://www.ascentofhumanity.com/text.php
Life is too important to take seriously.
I use my bank for a checking account that is free so I can have a debit card. I haven't had a credit card for at least 17 or 18 years. I cut them up and paid them off and adopted the "if I don't have the money in the bank I cannot afford it" principle. I do have an exception to that rule however. I am getting a personal loan to buy a truck that will not be there if I save up for it. I need it now not in three years.winsol3 wrote:
I think credit and loans are all about 'fast money'. Slow money is delayed gratification...and most can't wait - we want it NOW. We don't want to save up over time and pay cash (unless ur rich).
I stepped off the bank-consumer treadmill years ago and wish i had done it way sooner.
One of my underlying foundation principles for an IC is: No connection of any kind (even 6 degrees) to Wall Street money.
I have seen and heard of too many good ICs have incredible problems and issues with financing, banks, loans etc. Why put it at risk this way? Why not a co-op, Timebank model and sweat equity? and slow... slow permie
There's a great new book...'sacred economics' by Charles Eisenstein.
You can read the text here (and contribute what you want, or read it for free, or go to Amazon)...
http://www.ascentofhumanity.com/text.php
"When there is no life in the soil it is just dirt."
"MagicDave"
Dave Bennett wrote:
I haven't had a credit card for at least 17 or 18 years. I cut them up and paid them off and adopted the "if I don't have the money in the bank I cannot afford it" principle.
jacque g wrote:
My debit card works just fine for all the above. I just don't think the little bit of money I might earn by doing as you suggest is worth being caught up in the credit card system. YMMV, obviously.
Hi Dave/jacque g,
While I do agree with these ideas, there is one thing you might consider. Credit cards have much better fraud protection. With a credit card they are extending you credit and so your actual cash is safe and they are much more proactive in dealing with fraud. A debit card on the other hand is tied directly to your cash. In the event of fraud the money is gone/tied up until the bank returns it to you after investigation. Sometimes this happens quickly but sometimes you bounce checks or cannot make a needed payment as the cash you thought you had is not available. This can really hurt a person living paycheck to paycheck.
The key to credit usage much like any other potentially dangerous tool is personal discipline; you only charge what you can pay off. Same as the debit card but you have some cushion for emergencies when you are cash low.
If you do prefer debit cards I suggest opening a second account that you can keep a small balance in and transfer money to for larger purchases if necessary, that way should the card get hit with fraud your main working account (cash) is still safe.
Jeff
"Study books and observe nature. When the two don't agree, throw out the books" -William A Albrecht
"You cannot reason a man out of a position he has not reasoned himself into." - Benjamin Franklin
I have been a victim of identity theft not once but twice. Both times my bank gave me back all of my money and bank charges immediately. Fraud is just that, fraud and as long as that VISA logo is on that card THEY are responsible for any fraud tied to my account. I have no use for a credit card. I do have two different checking accounts though. One is only used for internet purchases and is only funded when I make a purchase. As for living from paycheck to paycheck? That has been going on in my life for over 10 years. My bank account getting hit by identity theft could be a problem but not bouncing checks. I never write checks. I stopped using checks at least 15 years ago. I only use my debit card or cash.Jeff Mathias wrote:
Hi Dave/jacque g,
While I do agree with these ideas, there is one thing you might consider. Credit cards have much better fraud protection. With a credit card they are extending you credit and so your actual cash is safe and they are much more proactive in dealing with fraud. A debit card on the other hand is tied directly to your cash. In the event of fraud the money is gone/tied up until the bank returns it to you after investigation. Sometimes this happens quickly but sometimes you bounce checks or cannot make a needed payment as the cash you thought you had is not available. This can really hurt a person living paycheck to paycheck.
The key to credit usage much like any other potentially dangerous tool is personal discipline; you only charge what you can pay off. Same as the debit card but you have some cushion for emergencies when you are cash low.
If you do prefer debit cards I suggest opening a second account that you can keep a small balance in and transfer money to for larger purchases if necessary, that way should the card get hit with fraud your main working account (cash) is still safe.
Jeff
"When there is no life in the soil it is just dirt."
"MagicDave"
The fraud protection on the Visa Debit card is exactly the same as on the Visa Credit card. You can read it on their website.
http://usa.visa.com/personal/using_visa/personal_finance/debit.html
HTH,
troy
I do this for amazon purchases. My local grocery store plays a gasoline game. You spend $50 in groceries or gift cards and you get .10 off a gallon of gas from their gas station. I purchase the gift cards and then when I get gas I usually have a minimum of .50 saved up and it's deducted per gallon. It's a gimmick, but hey, any discount on gas right now is a good thing.
Tami
Always put your eggs in one basket.........why would you carry two?
So I can't get a mortgage, which would be less than what I would spend on rent by about $200 a month, because of my debt-to-income ratio. How's that for logic? Because if you manage what pencils out as impossible to others then that means you're a risk. And because the poor can't be trusted, the poor must spend more to live. And why are we poor? Why do we have an impossible debt-to-income ratio? Because we're paying education loans...
I am going to have to get a high interest low balance credit card and build my credit worthiness. Since I have no needs and don't buy anything, I'm just going to have to charge groceries. Pay interest on groceries so I can get a mortgage. The world is insane...
Suki Leith wrote:What gets me is the debt-to-income ratio.
So I can't get a mortgage, which would be less than what I would spend on rent by about $200 a month, because of my debt-to-income ratio. How's that for logic? Because if you manage what pencils out as impossible to others then that means you're a risk. And because the poor can't be trusted, the poor must spend more to live. And why are we poor? Why do we have an impossible debt-to-income ratio? Because we're paying education loans...
I am going to have to get a high interest low balance credit card and build my credit worthiness. Since I have no needs and don't buy anything, I'm just going to have to charge groceries. Pay interest on groceries so I can get a mortgage. The world is insane...
If you pay the card in full each month you pay no interest usually.
If you pay the card in full each month you pay no interest usually.
Well I'll be. (I only used cards over a decade ago when I had a need and couldn't pay in full)
So I can build credit without paying any interest? That sounds un-American...
but I'll still have to shop at a store, since most markets deal in cash.
In fact, all of the few things I care to purchase are cash-based. 
Will such small purchases build my credit or just be seen as a joke?
i have absolutely NO idea what my credit rating is and i dont give a shit, if i cant pay for it with cash, then i will save up (all the while being robbed by the hidden inflation tax) until i can afford it
and for the smartest way of doing money, try to work in commodities if at all possible, such as gold and silver, as these cant be inflated, and as the value of the dollar falls, the value of commodity-based currency will stay the same and be worth more paper "money" as time goes on, to those in a state that requires gold/silver to be legal tender (such as UT) this is the method that i highly recommend, in fact when i move to UT to work the next property, thats all i plan to use...
Troy Rhodes wrote:The FICO score is an "I love debt" score (another Dave Ramsey reference). It says very little about winning financially. It says everything about how much you like to borrow money and pay it back.
If you stop borrowing money, because you have/make/own/win ten million dollars, your credit score will drop to zero within a couple years.
When mine hits zero, I will be a proud proud man.
Note that there is a big difference between "bad" credit, and no credit. Bad credit shows specific history of not making payments on time, or having a car repo'd, or a foreclosure on a house.
No credit, a literal score of zero, means they don't know what the hell you're up to. But whatever it is, it doesn't involve borrowing money. Drives them crazy I'm sure.
This is so deeply ingrained in the culture, and so intentionally pushed by the credit vultures, that many people are shocked when they find out what a "good credit score" really means.
A good friend of ours at church was bragging about how his banker had checked his credit score, because he wanted to borrow some money for a motorcycle, and the banker had commented that he'd never seen a credit score that high. He was PROUD of his high credit score, thinking this made him look astute and sophisticated with his money handling.
I felt obligated to point out that a very high credit score often means a very poor financial plan. Bigger house than you can easily afford, many credit cards, a long series of car loans, etc. He just looked dumbfounded when I told him a "great" FICO score is often a bad thing, and don't go bragging about it. It just means you like to borrow money. Scads and scads of millionaires have a FICO score of zero. He was incredulous, and I'm still not sure he is convinced.
This is NOT a sign of winning financially.
Finest regards,
troy
Heeheeheehee... My credit rating is under 200 out of 1000.... Guess they don't like it when you don't play their game by their rules...
"Have you ever had a dream, Neo, that you were so sure was real? What if you were unable to wake from that dream? How would you know the difference between the dream world and the real world?" --The Matrix
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