Why worry over a credit score

[Anonymous]

You should not stress over a credit score. Im not saying not pay your bills etc, because at some point most of us will buy a house and car. However, its a number that states how well you manage debt. You can be a week early on all your bills, however, if you have managed your debt poorly, your score will be low. Ive had high credit card balances before and my score was in the 680s. Paid off the balance and within 2 months it was in the 740s. I have no balance on any credit card, but for some unknown reason my score went down 5 points last month from 782 to 777. Go figure. Best advice is to live on cash, save 10-20% per paycheck on savings etc and use that for emergencies etc.

[Anonymous]

I think you answered your own question early on in your post, because no doubt at some point just about everyone will want to borrow money for some sort of loan in their life, thus making their credit scores important.

[xaximus]

I have been in your shoes so I do know what you mean. Normally, I would agree with all of your advise but I do differ on the "live on cash". I follow a more "live within your means" approach. If I have the cash, I'll spend it, if I don't, I wont. Credits to me are a safety net in some ways. Just like money, spend what you can, and save the rest.

Example - I currently have a 401k with full matching that I contribute as much as I can too, I get paid bi-weekly - I cover all my expenses in one check while the second I try to save as much as I can out of. I think that's a good way to live and save $. It's what works for me and I would recommend it for anyone else that can do that.

[arkane]

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@xaximus wrote:
I have been in your shoes so I do know what you mean. Normally, I would agree with all of your advise but I do differ on the "live on cash". I follow a more "live within your means" approach. If I have the cash, I'll spend it, if I don't, I wont. Credits to me are a safety net in some ways. Just like money, spend what you can, and save the rest.

Example - I currently have a 401k with full matching that I contribute as much as I can too, I get paid bi-weekly - I cover all my expenses in one check while the second I try to save as much as I can out of. I think that's a good way to live and save $. It's what works for me and I would recommend it for anyone else that can do that.

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Are you my lost twin? I do the exact same thing lol.

OP nstead of "live on cash", I think we should change it to "live on credit 100% backed by cash". I'm literally losing money if I pay cash since my cards give me anywhere from 2-10% to 50% cash back if there are special promotions. As long as I always PIF I come out net positive by using credit.

[Anonymous]

Above posts are correct, budgeting and sticking to it is the key. If you live above your means and use credit to fund that life style, things can and will get ugly. If you live below your means, being able to put away savings aside, credit can be used to reduce the cost of living with rewards as well as earn extra interest by floating their money through grace periods and 0% offers.

[Brian_Earl_Spilner]

A credit score is only important when you're applying for something. I would think that a home or auto purchase would be planned out enough in advance that scores can be temporarily maximized for those apps. That being said, I don't think it's a bad thing to keep your score as high as it needs to be to get the best rates. In an emergency the rate differences between a 680 and a 740 score on a loan could cost you thousands.

[iv]

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@Brian_Earl_Spilner wrote:

A credit score is only important when you're applying for something.

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...or when your insurance company runs a CBIS score during a regular renewal.

...or an existing lender pulls a score for an account review.

It's not just times that you choose to apply for something that your scores can be used to evaluate you in a way that could end up costing you money.

I'm certainly not saying that everyone should micro-manage their reports/scores at all times! (I don't...)

But being aware of the things that could cause major swings in scoring is a good idea - say you take advantage of a NPSL card to charge way over the limit on a purchase (to get the points/cashback, of course!).  That's fine... but strongly consider paying that off before the statement closes.  Waiting until the due date might give you a tiny bit of float benefit, but at the cost of a reduced score visible to any existing insurers/lenders who may happen to pull a report/score during that month.

Years ago, those lenders might only have pulled on your request, or at wide (perhaps yearly) intervals.  Today, with so many lenders offering monthly "free scores" to consumers... Remember that the lender is then also seeing that monthly "free score".

[arkane]

OT but the thread title remind me of this:

https://www.youtube.com/watch?v=d-diB65scQU

[xaximus]

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@arkane wrote:

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@xaximus wrote:
I have been in your shoes so I do know what you mean. Normally, I would agree with all of your advise but I do differ on the "live on cash". I follow a more "live within your means" approach. If I have the cash, I'll spend it, if I don't, I wont. Credits to me are a safety net in some ways. Just like money, spend what you can, and save the rest.

Example - I currently have a 401k with full matching that I contribute as much as I can too, I get paid bi-weekly - I cover all my expenses in one check while the second I try to save as much as I can out of. I think that's a good way to live and save $. It's what works for me and I would recommend it for anyone else that can do that.

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Are you my lost twin? I do the exact same thing lol.

OP nstead of "live on cash", I think we should change it to "live on credit 100% backed by cash". I'm literally losing money if I pay cash since my cards give me anywhere from 2-10% to 50% cash back if there are special promotions. As long as I always PIF I come out net positive by using credit.

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My e-twin!! 

Completely agree - live on credit that you can pay and have the cash for. Credit is just an extension that has to be financed by the cash you have. Live within your means is the best line for everyone.