Confused about credit

[Anonymous]

I was raised by a father who was much older than my mother, having lived through the Depression, and he stressed to me and my sisters that we should never buy anything unless we had cash to pay for it, except for our homes. This stuck with me over the years, and now it seems that my homeowners' insurance rates are being raised after I have lived in this home for 14 years, paying down my mortgage to less than $6,000, because of a "lack of credit history". I paid cash for my car (used) and never have been a big spender. I have had a couple of credit cards in the past, but they were for specific items, such as a special type of mattress, and after I paid off the item, making my payments early, as I always do, I closed the account (I only need to sleep on one mattress).

I've always heard that people should pay off credit cards and not be in debt, but now it seems that I am being penalized for actually doing this. So I have quite a few questions:

1. I hate to be in debt and don't like having credit cards, but since this is seems to be necessary, can anyone advise me how to get over the fear and dread my father instilled in me when it comes to possessing a credit card or a line of credit?

2. I don't know that much about credit cards except that people I knew had ones that charged them fees whether they used them or not. Can anyone tell me if there are credit cards that do not charge fees if you don't use them?

3. Is there a specific minimum amount of debt the credit agencies, etc., desire that an individual have? Since paying early or on time is seen as a negative, I presume that there must be a minimum amount that is seen as being positive.

4. Does it seem as illogical to anyone else as it does to me that after owning my home for 14 years and making all my mortgage payments early and/or on time that now it has been decided I have no credit history? Is this common?

5. Some accounts on my report are those of my ex-husband, and a customer service rep. at one of the credit agencies told me there is no way to get my ex-husbands accounts off my report, even though he had those sole and separate before we even met and I had no knowledge of his activity as far as those accounts (although none are negative). Is this true? Are accounts he had before we met always going to show up on my report? To me, this seems unreasonable.

I would appreciate anyone's help because I really am extremely ignorant when it comes to debt and credit, although I am already in my 40s. I just have so little experience with it.

Thank you in advance.

[Anonymous]

I'm always a little amazed when people confuse credit with debt. What's so scary about getting a Shell card and using it to fill up your car once a month? Credit is nothing to fear - it's MISUSE of credit that gets people in hot water.

I don't disagree with your father's philosophy- in his day, cash was king. However, in today's wotld, that doesn't always work to your advantage.

Personally, instead of focusing on your credit - sounds like that could be remedied easily enough - I would be on the phone to State Farm - Corporate office - and tell them what a load of bunk this is. Point our how long you've been a loyal customer, always paid your premiums, etc., and tell them to lower your rates else. If they say no, I'd call some one else.

[Anonymous]

1. Well. I worry about debt. Here's what you can do. Open a bank account and keep only the amount of money that you have in your credit limit. Just leave it there. Then use your credit cards as you would, but only spend what you have in that bank account. Each month pay off the credit card from that account IN FULL. Don't carry a balance. Replenish that bank account and begin charging again. You only really need to charge 1 item each month to make history. If you are worried, just charge gas, or food, something small.

2. There are many cards that advertise no fees. Citi, Bank of America, Chase, Amex, Discover, actually most other places have no fee cards too! Just about anywhere you look should offer no fee cards.

3. Pay in full each month. Amount you charge is not very important right now. Less is better.

4. Yes it makes some sense. You only have 1 type of payment history. Scoring models like to see how you handle different types of credit. You do not show any other information. The tempting revolving credit area is where you actually show control is completely missing from your credit reports.

5. You can dispute them as not yours. However if they are not negative they might be helping you. Are they open or closed accounts? If closed they will come off after 10 years unless you dispute them as not yours. If open you can still dispute them as not yours. Just be sure they are not helping your credit history.

The best thing for you to do is start building credit history. That means using some credit. I would apply for 3 or 4 credit cards and start charging 1 item each month or so on each of them. You can pay them off early online if you like so you won't miss a payment. That will build credit fast over the next 6 to 12 months. It will take time. You might even get hooked on the easy and safety of carrying plastic instead of cash. I charge virtually everything! I hate cash. Cash is dirty, it falls out of my wallet, it is bulky to carry and change weighs down your pockets. Plastic is simple and fast. And if you loose it, no worries.

[Anonymous]

(homeowners' insurance rates are being raised after I have lived in this home for 14 years, paying down my mortgage to less than $6,000, because of a "lack of credit history".)

Yes. Tell me about it too. My car insurance rates went up because I applied for new credit cards and stuff. Many years of perfect credit history and they tell me this. I called other insurance companies.

I would agree too, call them and COMPLAIN! Also call around from year to year to see if other insurance companies offer lower insurance. Things change all the time.