Does having NO debt hurt your FICO score?

[Anonymous]

Take out an personal loan
Amount/length/period is up to you and your FICO needs..

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@Anonymous wrote:

cras tu and experian actually told me i need installment loan to help my scores. i paid off my car in 2004 and don't need to buy another and do not need a loan. what do you think of that?

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[Anonymous]

i'm going to buy a new tv and couch.  do you think it's better to take a loan rather than use credit card?

God forbid i pay cash.  lol

[Anonymous]

Don't misunderstand me.

Take out the personal loan. put the $ in savings, set it to auto pay.

[Boswd]

Well you have to ask yourself are you happier and more financially secure now with no debt or when you sinking in  debt?

Dont  mix up having No credit and no credit history with being debt free.   You can absolutly still build credit and still be debt free.

I wouldn't take on debt such as a loan or such just for FICO'S sake and debt sakes . To me that's just silly.   You have to do what best for you, your family and your future.  

But as others have pointed out  the scoring model does take into account your credit history, and if it was shaky in the past then you should build it back up.   You don't have to go to the extremes as others have suggested but what I would do is get yourself a credit card or two and use it wisely.  Hopefully past woes experience will prevail in how you use them.   Small items once a month, such as gas, groceries  etc.  things you can get and need every month but will pay in full or keep a very small balance.   Stay away from store cards.  For one the interest rates on them is ususally astronomical and plus you can get in the habit of buying items you don't need or wouldn't have bought under normal circumstances and can tend to lead to overshopping.   So stay away from those like the plauge.   A gas card is always good.   You need gas.

So get into a couple of credit cards (again use wisely)  save your money, open up a high interest yielding savings account such as Ing or Citibank, tons out there.   Invest your money in some mutal funds.     I would keep up what you are doing.    Don't fall too much into the FICO trap that many fall into.  The thinking I must keep having debt so my score will be good.   Well what good is a good score if you knee deep in debt.    You can do both, saving money and still play the FICO game.

You just got out of debt why get back in it.   Debt free is always better.

[Anonymous]

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Boswd wrote:

Dont  mix up having No credit and no credit history with being debt free.   You can absolutly still build credit and still be debt free.

I wouldn't take on debt such as a loan or such just for FICO'S sake and debt sakes . To me that's just silly.   You have to do what best for you, your family and your future.  

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Exactly as Boswd wrote. I was in bad debt before- didn't have to file Bk thank God. However, because of what I went through- I will NEVER get caught up in the wrap of living above my means. I will "use the cards to play the game"- pay off the Heloc and my student loans, and then whatever money we have left over will invest.

Trust me- I have absolutely no intention of charging up my card. None one iota.

[Anonymous]

thanks tim.  excellent idea. it's a crazy world out there.

[Anonymous]

Having some debt is good.  Having too much open credit lines is bad and may give the appearance you can go on a buying spree at anytime.  The obvious key factors are paying     on-time and over time.  Too many have the expectation of having a larger than life FICO after a few years. 

There are calculators on some sites that you can compare the cost of a mortgage to renting.  Overall I have seen it is best having mortgage.  Come on now, enjoy all the tax benefits you can.

 If you still want to rent buy a property, rent it out, and have someone pay your mortgage for you. Or do you feel better hiding your money under the mattress

As for you emerging from bankruptcy. Is it understood seven years have past and the bankruptcy has fallen off your credit report or what's the time-frame?  It is somewhat confusing what you mean in signing a contract and medical debt.  Was it a promissory note you signed for the medical debt?

[haulingthescoreup]

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@Anonymous wrote:

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.

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I can almost hear your teeth grinding from here, with those horrible interest rates, but have you thought about it like this? If you pay your cards off every month, it doesn't matter what the rate is. It could be set at Tony Soprano levels, complete with enforcers, but if you don't have to pay it, then thpppppth. As long as you don't have to pay them, then you win, they lose.

Those cards are just your builder-uppers. You'll be able to have a happy scissors party with them one day, when you've got a nice 8% rate and laugh in their faces. I admire what you've done to get so far! good luck

[haulingthescoreup]

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@Anonymous wrote:

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.

Me again--if you've got employment income, think about opening a Roth IRA for that extra cash you have. Even if you put it in something boring like a money market account, you'll be getting around 5%/ year, and the money is yours. If you hang on to it until retirement age, you won't have to pay a penny of taxes on what it's earned, and if you hit a tight place, you can pull all of it out except for any earnings and use it without a penalty. It makes for a great emergency savings account.

You might be able to start one through a local credit union, and after a while, get a better credit card through them. There are decent face-to-face financial institutions out there, like CU's--might as well find one and get them on your side. hard to go naked in this world