It drives me nuts.

[Remedios]

I used to think like that. Why would I need a good credit if i'm making a really good money, could buy a car every couple of years if I wanted to (and I did), even bought a house decade ago.
The answer is all the money I took out of savings could have better served me in investments, retirement, high yield savings etc. With a good credit, the interest would have been by far the less than what I "lost" by spending it.

I am probably paying too much for insurance, and I never even had a claim. Without a good credit, a simple thing like cell phone means spending money better served elsewhere. If you have enough discipline to save all that money, and are responsible enough to create emergency fund, I don't see why you think you'd behave irresponsibly with credit cards.

[Anonymous]

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wrote:
I paid off my car, and my score dropped. Yes, I know, a score is not a measure of financial success. It's a measure of how much I interact with banks and how my payment history is.

The thing is that I pay things off quickly. I bought the car in July and paid it off in January. Before that I bought a car in january and paid it off in December.

I wish FICO had a scoring model that worked for me.

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It is counter intuitive at times. But paying off quicker and paying less interest is often worth much more than the few points in score one loses for no longer having an installment account active. The FICO score is more for the lender. It shows how you can handle current debt. And odds of defaulting in the future. But it is helping them see you can handle loans because it adds to paid accounts as agrees. So it helps overall. FICOs go up and down a few points every month. If you have a good score those little drops and gains mean little. You still get approved for most loans you could want.

[Glen_M]

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wrote:
... I just don't know sheet about credit. What positives might a decent score bring to our lives?
...

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Credit scores are used to determine lots of things that don't obviously have to do with borrowing money. 

Insurance rates are a big one that I'm sure would impact practically anyone.  The rate you pay can be significantly influenced by your credit score, because the insurance companies accountants draw correlations between people with poor credit and the behaviors that will cost them money paying claims. The same can often be said for utilities and similar services, because a correlation can be drawn between people with poor credit and a higher probability of not paying monthly service charges or liklihood of damaging company equipment.

[arkane]

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wrote:
Thanks for that idea. Looking at my particular situation, I don't see any use that Mrs. AT7 and I would have for a decent credit score. Within a few short years, our house will be paid off. We own our cars outright, and have saved enough to buy more cars if we needed to. Literally, I just don't know sheet about credit. What positives might a decent score bring to our lives?

On edit: when we got married, Mrs. AT7 brought $40k of card, auto, and student debt into the marriage. We paid it off in 11 months. However, she owed $40k on a $55k income. She was in deep sheets. We did the Ramsey thing and paid it off.

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How about free money?

Bank of America has paid me probably around $2000 in cash back the 5 years I've had their credit card. Apart from $30 in foreign transaction fees because I stupidedly forgot they charged them, I never paid a penny in interest.

With the right combination of cards that's tailored to your spending habits, one could easily earn $200-300 in cash back every year.

[Anonymous]

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wrote:

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wrote:
Thanks for that idea. Looking at my particular situation, I don't see any use that Mrs. AT7 and I would have for a decent credit score. Within a few short years, our house will be paid off. We own our cars outright, and have saved enough to buy more cars if we needed to. Literally, I just don't know sheet about credit. What positives might a decent score bring to our lives?

On edit: when we got married, Mrs. AT7 brought $40k of card, auto, and student debt into the marriage. We paid it off in 11 months. However, she owed $40k on a $55k income. She was in deep sheets. We did the Ramsey thing and paid it off.

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How about free money?

Bank of America has paid me probably around $2000 in cash back the 5 years I've had their credit card. Apart from $30 in foreign transaction fees because I stupidedly forgot they charged them, I never paid a penny in interest.

With the right combination of cards that's tailored to your spending habits, one could easily earn $200-300 in cash back every year.

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One of the biggest reasons to have credit cards in today’s world. Free money just putting all bills you’d spend anyway on credit cards. For responsible people it’s throwing money away. And the more Alliant one is, the more cashback one can get. Richer people have higher monthly bills.

[Anonymous]

I have a friend who financed through USAA, and she chose to finance for 72 months. The credit expert on the phone advised her to pay it off in 3-4 years instead of 6, but never below 3 years. I am sure 2 years wouldn't hurt, but like some of the others here already said, the lenders are looking for history. That is one reason why I went for the 5 year loan on my car, because I want to build history even though I plan to pay it off in 3-4 years. I am absolutely positive without a shadow of a doubt that if you guys are able to handle your money that well that you could handle credit well. It is very similar in principle. If you have a phone bill that needs to be paid every month put it on the card and pay it off before the month ends. Hope you find what you need!

[arkane]

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wrote:

One of the biggest reasons to have credit cards in today’s world. Free money just putting all bills you’d spend anyway on credit cards. For responsible people it’s throwing money away. And the more Alliant one is, the more cashback one can get. Richer people have higher monthly bills.

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Ah yes thanks for bringing up this point. Indeed it's only true free money if you put whatever you were gonna spend anyway on the credit cards, and not spending for the sake of it or buying junk you don't need.

[Anonymous]

As other folks have mentioned....

* Insurance companies charge substantially higher premiums to people with bad credit scores.  You are almost certainly paying more for insurance on your cars and home than you need to.

* Interest rates on the loans you do get are much higher when you have bad scores.  As you describe it, you do take out loans (e.g. you mention two different car loans).  Although you may pay them off sooner than most people do, while you are paying on them you are paying more interest than you need to.

* Free money has been mentioned and it is important.  It can take the form of cash back on stuff you would buy anyway (great starting place).  A reasonable estimate would be 3% cashback.  That's $300 for every 10k the two of you spend.  If you mastered that you could generate more free money still, using some techniques that are a good fit for a retired couple.

*  Rental cars and hotel rooms are possible to get with no credit cards but they are much easier to reserve and pay for with credit cards.

*  Switching employers often involves credit checks.  Having a good score will make that easier.  So does switching cable providers, cell phone companies, etc.

*  The great unknown of the future -- this is the biggest reason to begin building a good credit score.  You may not be able to see the nature of the thing that may happen in ten years that will make you wish you had a good score.  That's why the future is unknown and why it is full of surprises, sometimes unpleasant ones.  If it is possible to painlessly prepare in a particular way for it, why not do that?

[arkane]

All great points CGID, and I will add one more:

* Increased financial flexibility due to the float nature of credit cards, especially important if most of your assets are illiquid. For example, most of my savings are in a high-yield savings account, and the rest in my brokerage account. There's no physical access to the HYS account, and the money in my brokerage account is tied up in various investments. If I had a sudden, unexpected large bill that needed to be paid immediately, I'd be kinda screwed if I didn't have a credit card with a high limit, since I can't easily move my money around.

[Kree]

Cards offer extended warrantees.

Car rental insurance.

Return support for lemon purchases.

Bonus points to reward programs.  Free hotel nights. Free flights. Exclusive concert tickets. Early concert tickets.

If you need to travel internationally, there are cards without foreign transaction fees. Often saving you money over getting physical currency exchanged. 

There are tollroads that no longer accept cash, although I guess OP never said he doesn't have debit.