not in debt and being punished for it

[Anonymous]

When I was very poor I couldn't get credit or help of any kind. I learned to penny pinch, set priorities, and do without. Over the years I have built my career and my life without credit. Currently I am a home owner, I have my own vehicle, I pay my bills on time. I used the lost notion of saving and trading up. For example, we lived in a cheap, cramped apartment to save money for a cheap, cramped trailer on a small plop of land. We continued to penny pinch and save until we could afford to sell the trailer and land and use our savings to buy a house. Nothing fancy, not even a garage. As the years have gone on we've added to the house and property and upgraded as we could afford. The place is a lot nicer now than when we first bought it. All of this was done without credit.

I don't want credit. I've gone this long without it and I think have reaped some good benefits. What bothers me is that being responsible sometimes hurts us. I couldn't rent a car on a vacation because I didn't have a credit card. No biggie, more of an inconveinace than anything else. When I went to buy a cell phone, Sprint refused to sell one to me because my credit score was too low. I wasn't going to beg someone to take my money, so I got a cell phone through AT&T.  My latest house insurance bill said that I didn't qualify for the optimal rate because my credit score was too low. I got a copy of my credit report and was told that I have no score. The letter said someting like "my creditors" don't know where I live and therefor they can't calculate a credit score for me. I should inform "my creditors" of the change in my address. "My creditors" don't exist because I don't owe any money.

Shouldn't people who save before they buy actually have a higher score than those with less discipline? How do I remedy the situation without getting credit?

Thanks.

[llecs]

Unfortunately, there's nothing you can do, other than to get credit.

I was in a similar situation in that I blew my credit during college and goofed up my reports. I paid everything, and I decided to wise up and knew those baddies would fall off in time. Well, fast forward about 7 years. DW and I had no credit accounts, except for a car note (19.9% interest) and had a couple remaining baddies pushing at 7 yrs, and did indeed fall off within the year. But I had a super low score. A big source to the low score was a lack of credit.

DW and I had no problems not using credit. We did have higher insurance rates because of the low credit but was no big deal. We did have challenges renting a car without credit, but developed relationships with nearby managers and always managed to pay in cash without any issue. We never had a problem with cell phones, but we also are a reseller. We always managed to get buy without credit.

The challenge came when we decided to look into buying a home. With no credit, and a low score, we knew that our only option is to pay cash for a home. Living in the DC area, we didn't have $300-$500k plus saved to buy a house. We knew that we also needed to buy another car in the future and didn't have the money for that either. And to complicate things, a vendor of our required that we use a CC for certain transactions for $2-$3k in any given day, and our debit card couldn't handle that, then. So, we had no choice but to get some CCs.

FICO doesn't know that you are saving. It has no clue that you have money in the bank. In fact, FICO cannot discern from an 18 yo entering the credit world vs a millionaire someone in their 40s entering the credit world. You lack the score because you lack the history to show accountability. I'd recommend getting a CC or two. You don't have to have any debt. Pay in full each month, but building up that history is key.

[Dave_S]

Remember: FICO is an "I LOVE DEBT" score. FICO is not designed to show how financally smart you are with money. You can be broke with a great FICO score, or be a multi-millionaire with a horrible FICO score. You credit report shows your history, FICO shows how profitable you are likely to be over the next 2-3 years to a large lender.

[takeshi74]

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@Anonymous wrote:

How do I remedy the situation without getting credit?

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Nope.  How can one build credit without credit?  Responsibility with cash and responsibility with credit are two entirely different things.

Keep the situations you listed in mind when you are deciding that you don't want any credit.  You might also want to read up on how credit scoring works so you understand what factors are taken into consideration.  Scoring doesn't consider any of the responsibility you've had over the years without credit.

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@Anonymous wrote:

How do I remedy the situation without getting credit?

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You don't unless you can single-handedly overhaul the entire credit industry.  It will probably be more effective to learn the game and play it.

[MidnightVoice]

I have no debt except a mortgage, but I have plenty of credit.  I PIF every month, my score is around 790, and I get lots of assorted reward points.  I have also received a lot of interest free credit for things like replacing my computer and replacing my air conditioner.

Even if rewards and interest free loans don't tempt you, you can get a credit card and use it pay regular monthly bills, and PIF every month.  Or do what I do, and make my charitable donations from a credit card.

All of which works for me.  I don't spend more with a CC than with cash, I don't change what I buy with a CC, and most of my cards are annual fee free