Topic: How much do you value your credit score? - page 5. (Read 10663 times)

A number of years ago, when I was an almost starving grad student, I called the bank and asked if I could increase my wife’s credit card limit to $800 so I could pay tuition without having to drive a half hour to where the bank was to pick up cash.  The lady ran a credit check on both my wife and I and the only thing that either of us had was that one little card (that we paid off in full each month).

She then asked me several questions.  Do you have a car and if you do, what are the monthly payments and amount you owe?  What is your monthly rent?  Do you have any student loans?  Hospital bills (she knew we had two small children)?
 
I owned two cars, bought them used and paid cash.  Had a mortgage (with a really low interest rate from a private lender outside the banking system). Neither of us ever took a student loan (if I couldn’t afford school, I dropped out for a semester).  No medical bills (we did home births with a midwife – paid cash).

Finally she said  “How do you have two cars, a house, no loans, and yet are invisible in the banking system?”

I explained “To get a credit score, you need to borrow money from the banks. If you borrow money you pay interest. Paying out interest is losing money.   If you have to borrow money, you can sometimes find it cheaper outside of the banking system.  Therefore a higher credit score just shows that you are losing money to the banks.”

She paused for a little while and then said “I have never thought of it that way, but you are right.”

She increased my credit card limit to $2500.

I could care less about my credit score in the monetary system we have with fiat money.

That's correct, and many parents "start their kids off on the right foot" by adding kids to their own debt accounts. For "the best" score, you want to utilize credit regularly, but not "over-utilize." If you have 3 cards you can put $10k each on, and care about your credit score, it's best to "diversify" your debt instead of maxing one out because it has a marginally better interest rate. I learned that from maxing out 0% APR credit cards, only to find the offers dried up even when I had almost nothing on the xx% cards and my credit score dropped from around 800 to the mid 600s. This eventually corrected after paying off the credit card when the promotional rate expired.

They also don't credit your score when you pay bills on time (rather, I assume these companies don't report it to the credit agencies), but if you slip up and miss a payment, you'll sure get a huge penalty.

There are flaws, for sure, but it's a mutually-beneficial system, I think. They offer you boatloads of cash because they trust you. There's pretty much just a "no trust" and "trust" threshold. If lenders don't trust you, you're unlikely to get anything substantial. If lenders trust you, you'll get more than you might be able to pay off, because they assume you're responsible and intelligent enough to self-limit yourself as necessary. Basically, they treat you like a reasonable human being with a basic set of ethics. It's very difficult to distinguish between someone who's penniless as a result of tough luck and someone who either has no intent to pay back, or is "overly-optimistic" - so, the idea is that loans should go to people who have a lot of money, already, and steady income, but need more money to expand. Of course, banks hide the "I don't trust you" statement with numbers to pretend it's a purely objective decision (and some loan officers really do base their decision entirely on what the computer spits out) so they don't have to deal with suggesting to an individual that they appear to be unethical, have too high of expectations for themselves, or are just asking for more than they're worth.

And then what? Those who make decisions walk away with all the bonuses and golden parachutes. Zero risk, in the sense that they inevitably get something from the game, at the expense of workers and customers who inevitably get screwed (fraction of them, that is). But we stray from the topic.

What if they make a lot less, and not all the other banks are going under at once? Discover on its own is not "too big to fail". Lower risk than without any safety net, but not zero.

Of course they do. Banking is a zero-risk business. They make more or less, but won't end up kicked out in the street or in jail. Some of their customers inevitably will, though, simply because, at any given moment, available money supply does not include future interest yet.

My past 3 years tax returns have been under $10k and discover still offers me $25k @7% once a month.

I have a great credit score which seems to help with economic transactions.  Unfortunately I am still treated like a scammer in the Bitcoin community.  Wahhhhhhh.

I just think it is sort of a sucker score. My understanding is that if you always pay your debts you will have a decent credit score. But the dream customer not only pays, he/she also is prone to getting into debt. Being debt averse (arguably being responsible) will limit your score.
As far as not being able to get credit, so far this has not been a problem. I know the rating agencies say you must have a score. Just like the credit card companies say you need a card. They will say "How will you rent a car?". 
If I wanted a score I could get it back quickly. Last time I had one the banks were ridiculous in their offers to me. The amounts they said I could borrow were way too much money. Someone has to be the grown-up and the banks are not up for that task.

The only way I'd care about my credit score is if every time it got really bad I got a bailout from the government. 

I don't value my credit score as much as I used to. Now I just want to get out of debt and be a free man, no obligation to work for anyone. Since I'd rather participate in a more mutual p2p system with many competing scores, I ought to get more involved in bitcoin-otc and the like.

Fight Club used to be my favorite movie for a long time. Now, the ending explosions feel dated and pointless; we can instead use something better and drive the corrupt banking industry out of business.

I barely even knew such a thing existed until I tried to invest a small amount of money in zopa.co.uk (a p2p loans market) and wasn't allowed to because Equifax had no information on me. I found it bizarre that I would need a credit score if I am the one doing the LENDING but apparently that is the way of our byzantine financial system.

Never mind Equifax, I do value my bitcoin-otc rating and actively try to improve it. 

Once I bought my house, I stopped caring. But, I've not bought (nor plan to) buy anything else on credit.

I like your answer.

I gradually quit caring, just like I'm gradually paying off some credit-card debt that has piled up during student years. The goal is to be debt-free. Even this paying-off can be thought off as a form of investment - the ROI being decrease in monthly interest payments.
Not sure if I'll ever make it to owning a home, but since I didn't grow up in the US, I'm not that obsessed with home ownership as a measure of success or happiness. Renting has some advantages, and I pay for these. I am free to move as I please, and I have more time and less worries than someone tied up in mortgages, property taxes, maintenance, insurance, and other aspects of home ownership.
I can save for a car cash-down when I need one, but living in a city I'm totally fine walking, biking, using public transit, and renting a car for weekend getaways and such. Again, more time and less worries.
Finally, I try to live in countries with universal health care.

All in all, I don't need to borrow money at interest, and it's hard to imagine a scenario where I would need to.

I quit caring about my credit score after I ran up 80k in credit card debts and filed for chapter 7, several years back.

I'll start to value it again in, oh, about 4 years now.  Sadly, I'm no Donald Trump.  Can't manage to get people to give me millions to declare bankruptcy again in a couple years.

I have never heard of someone 'not having a score'.  If you have no credit, your score is shit.

Actually, my score would probably be better, even w/ the bankruptcy.  I still have my payed off student loans, establishing a long line of credit history!

Pretty much.  Nobody will loan to you, or if they will interest will be 20-250% per year.

My guess: No loans 4 u.

What are the negative ramifications of being un-score-able ?

I'm extremely fortunate, in that my wife and I are double-income-no-kids, and each have top-rated credit scores. I grew up in a culture of fiscal responsibility, mostly because of a family banking-industry history, so it is with a large degree of naivety that I make this honest inquiry.

I wouldn't mind being in a financial state where I wouldn't have to rely on one.  Once I have the equity of a house, I could be there.  But to be honest, as long as credit card rewards exist, I'll have one regardless if I need it or not.  Although if someone is offering product X for 3-5% less using bitcoins/cash, I'd choose that option over credit card rewards.

Nothing wrong with it, I just don't want one.