I am rapidly moving towards having NO debt. I pay off my car in a few months. I have no mortgage, my credit cards are paid off (FINALLY!) and I pay cash for everything. At one time, I thought I wanted a mortgage, but I am perfectly content renting.
But in a weekend discussion with friends, I was told that is worse than having too much debt...that over time, my FICO score will plunge and I'll be in the same boat all over again...
I just tunneled out of more than $50,000 in medical debt that forced me into bankruptcy, and I emerged ticked off enough that I won't sign a contract, or commit to anything that will put me into debt.
To answer your question, Yes. Your credit score takes into consideration all different types of accounts. Mortage accounts, installment, and revolving accounts. Take me for example, I do not have any revolving accounts and it has brought my credit score down drastically.
from what I've gathered from this forum, no debt can have a serious impact on your scores. I can totally see why you would want to avoid any debt, but there may be a simple solution for you. perhaps opening a couple of cards, one prime, and maybe a merchant card like Target or a gas card or something. then if you have any monthly memberships, say to a movie club or other monthly recurring cost, have it paid by the prime card, then pay 90% of the bill every month. You will likely pay next to no interest and the activity will boost your scores. Use the Target card to buy pet food or milk or something every month (for example) and do the same thing. perhaps this would be a happy medium you could live with. thoughts anyone?
09/28/07 EQ 498 EX 537 TU 477 12/27/07 EQ 526 EX 562 TU 541 02/26/08 EQ 526 EX 589 TU 579 11/09/08 EQ 562 EX 648 TU 578
Thanks. It seems like one is caught between a rock and a hard place. If you owe money....they badger you about it, or charge you high interest rates. If you don't..then you still get whacked over the head.
I have a Household Bank card...and an Orchard Bank card, both which I obtained after I filed bankruptcy to help rebuild my credit....at a whooping 29.5 percent interest. Efforts to get them to lower that interest rate since I've been a customer for eight years has been like trying to get President Bush to become a Democrat. Not happening. So I've paid them off, and have just let them go dormant, except to pay the annual fee.
I am so sick of finanical institutions I could just scream. It's why I've got the bulk of my cash stashed in a safety deposit box. Costs me $15 a month. No fees. I only put enough in my bank accounts to cover living expenses.
I just posted another Topic how I got dinged 22 points after having zero debt and trying to add a small amount to keep my UTIL at 1%. It backfired but will recover now that I found the culprit.
Financial Advisors promotes Debt Free but really I would want to keep my score good just in case so keeping some small balances on 2-3 cards may be fine. You can keep your other cards but once your paid off you can apply for some Prime Cards.
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.