FICO score and its impact?

[CAMom]

This is a spin off of the money and credit card thread. I lifted a quote from there to spark my question...

 

I guess I'm going to be the odd man out here. We're followers of Dave Ramsey and have decided that all credit cards must go. We are closing all accounts as we pay them off. Dave says if you play with snakes you're going to get bit.

 

I'm a big fan of Dave, too, but I often wonder about his advice to cancel all of your cards. He also says his credit score is "0".

 

However, I thought that your credit (FICO) score affects much more than your ability to get new credit.:confused: I've been hearing that it can affect your ability to rent, get car insurance (at least affordably), and even get a job. Are these types of agencies really checking peoples' FICO scores and acting accordingly?

 

If so, Dave might not need a FICO score but the average American certainly would. We are debt free except the mortgage but I do keep our credit card open and use it on vacation (paying it off immediately with our vacation budget) to keep it active.

 

It's something I've been pondering for some time now. Any thoughts?

[Sharon in SC]

This is a spin off of the money and credit card thread. I lifted a quote from there to spark my question...

 

 

 

I'm a big fan of Dave, too, but I often wonder about his advice to cancel all of your cards. He also says his credit score is "0".

 

However, I thought that your credit (FICO) score affects much more than your ability to get new credit.:confused: I've been hearing that it can affect your ability to rent, get car insurance (at least affordably), and even get a job. Are these types of agencies really checking peoples' FICO scores and acting accordingly?

 

If so, Dave might not need a FICO score but the average American certainly would. We are debt free except the mortgage but I do keep our credit card open and use it on vacation (paying it off immediately with our vacation budget) to keep it active.

 

It's something I've been pondering for some time now. Any thoughts?

 

 

We are the type who use a credit card for everything and pay it off at the end of each and every month. We only use it for what we can afford that month. Our money sits in our interest bearing checking account longer and we have excellent credit. Obviously, for this to work, you have to be able to trust yourself with access to credit. :-)

[Scarlett]

This is a spin off of the money and credit card thread. I lifted a quote from there to spark my question...

 

 

 

I'm a big fan of Dave, too, but I often wonder about his advice to cancel all of your cards. He also says his credit score is "0".

 

However, I thought that your credit (FICO) score affects much more than your ability to get new credit.:confused: I've been hearing that it can affect your ability to rent, get car insurance (at least affordably), and even get a job. Are these types of agencies really checking peoples' FICO scores and acting accordingly?

 

If so, Dave might not need a FICO score but the average American certainly would. We are debt free except the mortgage but I do keep our credit card open and use it on vacation (paying it off immediately with our vacation budget) to keep it active.

 

It's something I've been pondering for some time now. Any thoughts?

 

It is true Dave Ramsey's life is much different from the average American. However, his point is valid...which is even with a zero FICO score a person can function just fine thank you very much. I think it will take more leg work to find an insurance company who will look at the FACTS of your life and not just a score....but it can be done.

 

I dream about being debt free....

[Hillary in KS]

We have no debt, and our bank told us we would have problems getting a loan because we're not currently making payments on anything.

 

The fact that our credit score is sky-high means nothing to them. The fact that we paid off any loans we've ever taken out on time and with ZERO problems means nothing. Because we're not paying on anything *currently,* it was a problem for them.

 

However we've found out that if we look for lenders that do "manual underwriting," we have no problems. They are happy to lend to us because we've proven ourselves to be low-risk and reliable. A computer doesn't see that, but a person does.

 

ETA: If you are looking for insurance, and your score is an issue, ask if they do manual underwriting. I would think that no debt (you would still have a credit history, I think) and years of safe driving would speak louder than your actual score.

Edited December 18, 2008 by Hillary in KS
Forgot a point

[Scarlett]

We have no debt, and our bank told us we would have problems getting a loan because we're not currently making payments on anything.

 

The fact that our credit score is sky-high means nothing to them. The fact that we paid off any loans we've ever taken out on time and with ZERO problems means nothing. Because we're not paying on anything *currently,* it was a problem for them.

 

However we've found out that if we look for lenders that do "manual underwriting," we have no problems. They are happy to lend to us because we've proven ourselves to be low-risk and reliable. A computer doesn't see that, but a person does.

 

ETA: If you are looking for insurance, and your score is an issue, ask if they do manual underwriting. I would think that no debt (you would still have a credit history, I think) and years of safe driving would speak louder than your actual score.

 

 

Exactly. Well said.

[OnTheBrink]

Insurance companies vary. I was with Country Companies for a few years and they told me I had high rates due to my credit score. Well, when I bought my Scion, I got a quote from another company, Erie Insurance, and they looked at driving record, not credit score. I am paying literally HALF what I was paying with Country. And, get this, with my Scion, I have full coverage plus I added some additional insurance for other things. With CC, I had only liability for a 10 year old van, no additional coverage for anything.

 

So, moral of the story: shop around for insurance!

[Retired]

I would base my decision about credit card with each individual.

I have 5 credit cards and a credit score of 820.

 

I only use my Visa. The others were just at the store promotion for percentage off. I usually just close them. The credit report will not the customer closed so it may affect your score for a little while but anyone looking at your report will know its not because of default.

 

I guess with debit cards you can survive without credit card now but I know in the past before the debit card you had to have a credit card to: rent a car, get a hotel room, etc.

 

I guess if you can't control your habits its better not to have a credit card.

 

I know some business check credit scores for hiring purpose. Just wonder if you have 0 credit would it hurt your in the job market

[lighthouseacademy]

Yes, it is true that without a good credit score it can be more difficult to get good insurance, get a cell phone if you want and need one, find an apartment if you need one (not impossible but quite a bit more difficult), get utilities without having to pay a deposit (which might not be a problem financially, but to me I hate the idea of paying a company $200 to sit on for a year to make sure I pay my bill when I ALWAYS do), or secure a job (again, this depends on the company. My dh was offered a job, but the company wouldn't finalize it until they pulled his credit rating because he was given a corporate card and they were paying for our move, etc). So, I do believe it is important to maintain credit history and a credit card, but I don't think you need to use it if you want to go cash only. By all means- get out of debt though!