Top 5 Credit Misconceptions

You're a wise man. I wish I would have learned that lesson earlier. My parents raised six children and only used credit when purchasing a home or an automobile. They only used a credit card when traveling. They also knew the difference between "I need" and "I want".

I think few users of credit pre-meditate that they will not pay their debts. It's just that credit cards are much too easy to abuse.

I would extend this man credit any day of the week... a role-model citizen indeed.

I agree with you 100%.  My situation is that I have always paid my bills on time.  I only charge on credit cards occasionally and pay them off immediately so I can try to boost my credit score.  A few years ago my credit score was 798 -- it is now 772.  Nothing has changed...it should have gone up if anything.  I don't understand how the system works but it is very frustrating indeed.  Plus nowadays everybody wants to know your credit score -- most annoyingly the insurance companies -- so they can use it as an excuse to raise your premiums.  I believe that they are considered "hard" inquiries, which are held against you and lower your credit scores.  But the consumer has no choice about these inquiries.  It's really a no-win situation designed, I believe, to keep credit scores as low as possible and keep consumers paying more to lenders and insurance companies in premiums.

 The math is against us and only legislation will change the measures by which our scores are calculated. You are in excellent financial condition, but the credit raters want to see history of payments to revolving credit or some type of loan. This in my opinion does not make anyone financially respondsible by paying monthly minimums. So until changes are made the only way to build your credit score would be to open an account and pay it off each month.

You said it all, And not only do they inquire at will but once they are on your credit report, Someone somewhere decided it shall remain 2 years. Why so long  its crazy who came up with 2 years i think 1 is fine.. Punish the working class.But our corporate Masters have us by the shorts.

So ministerpaul you want "legislation" changing the scoring formula that a private industry uses & are going to use the example of your own score not going up at justification? heee hawwww

Well thank you....for making the rest of us feel like dirt!  Mr...we own our home and lake property, your life sounds cushy enough, why the hell on you on the site?!

I am a strong believer in "no debt" because I will be paying for everything with cash in the future. I have a $1000 emergency fund which will get us through the next 1.5 years until we're debt-free except for the house. Our income will be very substantial at that point, since we will have no debt, and paying extra on our mortgage every month. Currently we're able to pay down $1800-$2200 a month on debt, due to working our debt snowball since last October. At the end of this month, we'll have paid down over $18,000 in debt in 6.5 months! After our debts are paid, we'll save for our 3-6 months emergency fund and then begin contributing 15% of our income towards retirement. Wake up people, debt is slavery! The bible states that the borrower is slave to the lender. We will finally have our freedom when our mortgage is paid off, and we'll never look back. We will be so strong in our monthly income and emergency fund, we will never have to use surety again. Dave Ramsey showed me the way, and you can achieve your freedom too!

I thought of Dave Ramsey as soon as I saw the $1000 emergency fund.  Started his program 2 years ago and still have some debt but being laid off did not become a crisis.  Thank you Dave.

Dang! I feel ya...wish I had your financial standing instead of being one of those people who 'need to carry an excess of credit cards to obtain additional credit debt.' :(  I am happy for you and yours...keep up the great work! :)

Why are you full of yourself to the point to not only explain your glorious 7-figure financial situation to those on CreditKarma who are mostly regular people looking for advice, but to also be trying to increase your credit rating from the "high 700's" to the 800 range? Sounds like you're living the dream already, what could an 800+ credit score give you that you can't already get credit for or just simply pay cash like you have everything else? 

I have found out that ppl with impecable credit actually get ASKED by some credit card company (not sure who it is or if it is a multitude of companies that do this,) but it's basically and elite credit card (that is actually...metal.  Yes, METAL...) and it's has a ridiculous cap on the spending limit allowing them to spend so much on the darn thing because the company has faith that those people will pay it back without fail.  In other words: you have to be invited by the company to be able to use the card so who knows...maybe that's what this guy is shooting for with the 800+ credit score... =p  still though,  i think instead of berating the poor guy, let's cheer him on because this is the kinda inspiration we need.  A real person who worked hard to get what he has.  I envy of course, but I know that if I work hard enough I can one day bask in the same glory.  Just saying =]

• I would add also if your situation is so perfect why do you even bother about your credit if you can get anything with cash. It doesn't make sense.just chill

I hope you used credit cards to pay of your 60k spend?

Larryaw, that is the whole design of our country - DEBT. They want you to owe because that is how they make money. Right now they don't make money off your wealth, so you are actually a bad prospect because the banks feel that you won't give them an opportunity to take advantage off them.

Have you ever noticed whenever you go to a department store (Target, Macy's, etc) everytime you check out, they want to push their credit cards on you by telling you that you could save 20% right now if you get their credit card. This is the problem they want us to be indebted for ever..

The funny thing is that in Asia, "owing" is perceived as shameful and during the recession Asians are able to buy everything because they don't carry any debt. So I would tell you be thankful that you don't have the need for credit and stay that way. Who cares about when the banks deem you if you don't need it. You own your house, you have money put away that's better than any loan or credit a bank could ever give you!

yes indeed ,is more easy to use credit card since you do not see the money , but is sad when you see the bill

Shame on you for being envious. They are on this site just like the rest of us... to better their situations and protect thier investments. It has NOTHING TO DO WITH YOU... Grow up and perhaps learn from them rather than be such a hater.

There's an easy way to fix this. Stop paying for so much in cash. Paying $60,000 in cash is silly when you can make the system work for you by using credit to pay for it. Pay for things with a credit card and then pay them off immediately. In fact, with online bill pay, you can pay immediately after you get home from making a purchase.

Also, carrying a few credit cards is not what puts people in dire straits. Maxing out one's credit cards buying things they can't afford and then paying the minimum balance forever is what does that.

so true! my negatives are no credit cards or mortage my home has been paid for a long time and this is a negative. paid off a home before this one. paid off numerous cars and credit cards, student loans and this is a bad thing??

When I got my 1st credit card I told my banker that I would be paying off my card within the week after my purchases in order to build a good credit score. She (my banker) advised me that, I should wait until after the bill comes out, then pay it off. The reason for this is that if I pay it off before the bill comes out, it registers as if I hadn't used the card at all, and you have to use your credit in order to prove your credit worthiness.

oh nice..i heard about mr ramsey..im 46..i have no debt..i also rent and dont own

your just a bs...  if you can pay anything with cash, you dont need a higher credit score... credit score are for people who's trying to get credit and lender base it on the score. thats why its called "credit score" duh???  you have everything except brains hahaha...

some ones jealous

Amen brother!

@CK Moderator - it about debt, not just the ability to pay back a loan.  They use it to determine the risk of how well you will pay a loan back, but the score is about everything related to a person's credit such as how  much you hve open, payment history and how ofter you close or open credit lines.  If you close an account, it causes a score to go down, not up (ex: I paid two mortgages off in one month - my score dropped almost 40pts.  Nothing else changed).  This entire scoring system is a joke to the consumer.  Its about another avenue to revenue for the credit reporting agencies and credit scoring companies.  

@gogreen1716: the thing about waiting is that the balance will be registered on your credit report, impacting your score.  If this balance is above 10 or 30% (depends on who you talk with) then it will negatively impact you score regardless if you pay the entire previous balance off.  Continue paying off the balance and keep the balance below 30% and your score should do fine - from what I learned.

I agree, in addition to that applying for a job? They too need credit scores, what does that have to do with my work experience/history. Unemployed without meand to pay your way in life. Sounds like a system designed for failure and a way to wipe out middle class.  

Well I will tell you what you are doing wrong. 1st! A credit card is not for you with the way you pay off everything immediatly. What you need is a prepaid card preferably an HSBC that reports to all credit scoring systems. On that you will pay your heating bills, taxes, food bills, gas bills, electric bills, anything that is a monthly bill. In fact you can take all past bills you have ever paid that are monthly and turn them in as they are never reported to credit scoring systems! That is up to you to do otherwise everyone would have pretty decent credit.  You also have no revolving credit thats your problem. your holding at 700 because technically your ok but in the eyes of lenders you may only have good credit because you have never done much with it. 2nd dont pay everything off on your unsecured credit card! lenders hate that pay off 75-85% of it let it ride for a few months paying on it each month this tells them your not worried bout money and you can buy other things. you may be losing a few bucks a month but "THEY" are making money which is all they want. then they give you more positive points. any other questions i would be ever more happy to help.

In a way, yes. Typically, when one says "soft inquiry", one is referring to the kind of report check that is done when a lender is pre-screening you for a credit offer (promotional inquiry), or a current lender is just "checking up" on your report. As you give CreditKarma permission to access your TransUnion report, this kind of inquiry is treated just as if you had requested the report directly from TransUnion (consumer inquiry). Both promotional inquiries and consumer inquiries DO NOT HARM your score in any way.

yup.

Yes.

when trying to lower the rate on a home  loan with your current mortage holder ,is this considered a 'hard" inquiry?

Reissued cards are based on the same credit line not account number. However, if you recognize the card number has changed. Check with the lender and make sure that the account open date is still the same. If they reported the card lost/stolen it should be the same.

Assuming it is your only card, or one of your only cards, then it could hurt your score greatly! However, if you already have 4 or 5 cards that have been open for much longer than this, then closing the card may not do any damage at all. It all depends on your unique situation in your credit reports. Unless you have way too much credit available, there is no harm in keeping a the credit card account open. I recommend using it once a month for a small purchase and paying the balance off by the end of the month in order to keep the account active.