Credit rating - does it matter now?

Parent Cafe
1

We’re now happily debt free and cannot see any reason why we would borrow money ever again. We’re nearing 60 and have adequate cash reserves. Do we need to care about our credit score? I’ve read that some insurance companies use credit scores to determine whether they’ll provide car and home insurance and how much they’ll charge. Is that correct and does it make much difference? Are there any other reasons to care about a credit score?

We’ve always had a good credit rating, but since we no longer borrow I suppose that might change. I’ve also recently been dealing with a disputed bill from a cable company for equipment they insist we have (it’s <$100, but I don’t owe it and refuse to pay.) Would an explanatory letter to the credit bureaus about the cable company’s error help? Thanks.

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Those are some good questions, Silpat. I will be curious to follow this thread to see what people say. As far as the insurance–maybe. It might be worth calling your insurance company to ask those questions. The insurance companies that I have used-USAA, Geico, Armed Forces…I don’t think they take your credit rating into account, and certainly wouldn’t change your rate based upon credit score if you are already with them. However, when I was calling for quotes from other companies, a few said they looked at credit scores.

Are you sure that you will never want a HELOC? Another credit card? We do the credit card sign up bonus shuffle, and get thousands of dollars yearly, just for signing up for and cancelling credit cards, but not everyone is interested in doing that. Personally, I love FREE MONEY, so why not? If the credit bureau is docking your score a lot just because of the cable company bill, might be worth shooting off a letter, just in case.

3

You can put a dispute letter into your credit bureau and they are supposed to send it out with an inquiry. Let me tell you how often that happens. Never. Creditors pull an electric report and don’t wait for the mail report (that will never, ever come).

Will one ding hurt? No, but you may never get cable again! You may have to put down a deposit for places like the electric company.

4

I also have heard credit scores are used for insurance pricing. We are in a similar situation, ie not needing credit. Also got in a dispute a few years back with the leasing company when we returned our leased vehicle. After much back and forthing and dealing with a collection agency we agreed to split the bill (my half was $400) and I paid it, only to find they left it as a bad mark on my credit report! I don’t think it hurt my score very much, and it was 6 years ago so I think it’s gone now and our score is pretty good. So, based on this experience my advice to you is to tell the cable company to go pound sand!

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I have excellent credit and think it’s important, but one dispute over a bill isn’t going to wreck your credit at your age.

Just protect yourself by using written correspondence with the cable company- and running free credit checks on yourself periodically so you nip the thing in the bud if it shows up on your credit report.

6

Thanks everyone. I checked our insurance company’s website and they do use credit rating as one factor, but I have decided not to worry about it. I didn’t want to call the company because it seems that any call to them ends up being treated as a claim even when it’s just for information.

I will send a letter to the credit bureaus, but first am sending letters to the state attorney general and the CFPB, and will copy the county commission who okay’d this cable outfit operating here. I’ve kept copies of everything and will continue to do so.

If we have to pay a deposit to a utility in a new location that’s not a big deal. As for cable, I don’t plan to ever do business with any cable company. Dh agreed tonight that we watch too little TV to make it, or any other TV service, worthwhile.

We canceled our HELOC last year and don’t plan on getting another one. The older we get the more assets we keep liquid, so I’m not concerned about needing to access a HELOC for some catastrophe. We each have just two credit cards that get paid off each month and I don’t care about juggling them.

NJRes, I hate that the leasing company screwed with your credit after you reached an agreement. I’m guessing that since the cable company already has some collections outfit calling me that the credit bureau has been informed.

From what I’ve read, quite a few people have been bullied by this company. I feel sorry for anyone who’s planning to buy a new home or otherwise is concerned about their credit and ends up being harassed for payment for equipment that was returned but the company lost track of or they got caught in some glitch in the company’s billing system conversion.

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If you have a dispute with a cable company, I believe it’s the state corporation commission (might have a different name in your state) that oversees them. File a complaint and enclose copies of all written documentation. I bet the cable company will back down. $100 is not going to be worth going to a hearing for them.

Keep your credit score as high as possible. None of us knows where life will take us. Heart transplant? Nursing care? Grand child with health problems?

8

Yep. Whenever returning equipment to anyone, always get an equipment receipt or other written acknowledgement from the company that you turned it in. If you can present that, it should be the end of the argument.

Even if you don’t anticipate needing your credit ever again, you still want to monitor it. And you sound like a great candidate for a credit freeze.

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Well, fwiw, I recently heard Dave Ramsey say that, since he uses no credit, he doesn’t care what his score is. Your insurance rating may include info about average bank balances over some period.

Btw, I’m not sure inquiry calls are treated as claims or dings. We have been told they do not. Maybe this varies by company or per state regs. But I’ve asked several times, while we had a number of calls about some changes. I was told only a claim is a claim. ymmv.

10

I couldn’t care less about my credit score. We own our home (no mortgage, paid off years ago), pay cash for cars and other similar purchases, have never had a second mortgage or paid one penny in interest charges on consumer debt, and have my credit histories “frozen” so can’t apply for new cards. I don’t have an interest in signing up for new credit cards; we have a personal Visa and Amex and my husband’s work MC (he owns his business) and that’s enough - no dept store cards.

I have no idea what the interest rates are on our cards as it’s totally irrelevant and I don’t monitor my score. I have a situation where a vitamin company claims I ordered their vitamins on a monthly basis (I didn’t) and they send letters that they are going after me for collections. I throw them in the trash. Let them. I’m confident my score would stand up to scrutiny. If it doesn’t then there is something horribly wrong with the system.

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@lookingforward :

[How one five-minute call to your insurance company can dog you for seven years](http://www.insure.com/general-insurance/phone-inquiries.html)

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I’m also a “victim” of a cable box that was returned that they now say we owe. It’s for my business, not me personally so I don’t really care what they say, it seems like a total scam.

I wouldn’t live my life worried about my credit rating. If you did want something there are ways to pull information without a score. We’re unexpectedly buying a new house, I really didn’t think a year ago that would even be an issue, so I’d say expect the unexpected. But it seems like such a game to get a good score since they don’t say specifically how they score individuals.

I believe it takes 7 years after you use your last bit of credit to lose a credit score.

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LM, I wonder how that works today. I see this on esurance/2014: “Not all insurers will take inquiries into account, and some state laws don’t allow it. For example, Texas recently outlawed auto and home insurers from canceling policies or raising premiums based solely on a customer inquiry.”

After D1 damaged a friend’s family car, about 1500, our rates did not rise. I do think it’s worth finding out for our own states. And I guess OP could make a blind call to some new insurer and ask questions about what contributes to the sort of personal rating that would keep rates low. I’d be interested to learn more.

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Me too, LF. I only posted it because CLUE is not something the insurance industry talks about a lot, and we should know about it anyway. I had never heard of it until a piece on NPR.

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I think there are excellent reasons to worry about your credit score. If you want to help your adult child buy a house. If you want to buy a new car. If you need to refinance your house for a health emergency.

My credit score is excellent–because I have a zero interest loan on my car that I’m repaying over time.

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I was also solidly in the camp of “not caring” as I did not need to borrow money (yet) and have no debt, except for a very small student loan. I changed my mind when I saw my younger sister fly home courtesy of a new credit card … twice in a couple of months while I paid 500 bucks. I applied to the same SW card and was … denied! Denied with a well paying job, plenty of cash, and no debt! WTF!

I checked and it turned out to be that the student loan had been transferred and that the former processor had misreported the payments. Given the small amounts due every month, I was sending in 3 payments at once in advance. Well, they logged in a delinquent 60 days payment twice. Despite being a trivial amount, it became a source of aggravation and was never resolved. Paying off the loan was no help neither!

The only manner to erase the bad news was to build a solid credit and that involved applying to a number of credit cards, borrow money I did not need and paying it off after a few months, and opening BS accounts such as Banana Republic. After a few months, the next step was to apply to the credit cards that give generous bonus a la Busdriver! By the way, Pizzagirl, with the amount of travel you do, some of those perks are pretty darn good, and the annual fees are paying for themselves via access to lounges and other upgrades. This year only, I saved several thousand dollars on travel with the bonus points and my spending that used to go unrewarded. I love to check sites of the “points guys” as I realized I missed out on a lot of opportunities in shuffling the elite cards. It works better when you do NOT need the credit cards! I am hardly a specialist but it does not require a Rhodes Scholar to figure out that signing up for “stuff” has its rewards, even if complicates one’s life a bit.

Admittedly, the earlier part was annoying (especially since it was wrong) as I learned that you cannot undo the negatives and that sending letters and calling people is a fool’s errand. Nobody cares to get it right! I spend little money at the start by buying the monitoring services but soon relied only on free services such as CreditKarma. It is not perfect (and used to be better) but it does its job. I got to the point where I understand what makes the scores change (it really does not matter for most people) and reached the point that I cannot get higher. The latter is fine but I look forward for the days I will need to buy a house or something really expensive.

I am also happy that I am somehow protected from possible abuses through the alerts. I am not crazy about having so much “open credit” but it really does not cost me anything (and actually makes me money with the rewards.)

For the parents here, I should mention that the “shared cards” I had well before high school --courtesy of my parents-- have been helpful as I now have many very old accounts that help to boost the scores.

All in all, I think it is something I should have paid MORE attention in the past as I learned that the most trivial negative will haunt you for a long time, and that resolving small issues is really not worth the time and aggravation.

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We have no debt, as we paid off our mortgages and never took out any other loans. Nonetheless, our credit scores are > 800, which is close enough to the max 840 for us.

We will be paying for H’s car by CC and paying off the balance immediately, so no financing. Do not anticipate needing to borrow in the foreseeable future.

S has a credit score in high 700s–it would he >800, but he likes to get CCs for the bonuses and close them before having to pay annual fees. Believe D had a good or excellent crefitvscore, despite no job or income (she was an authorized user on some of our CCs and has her own Costco AmEx.

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It does not appear that jobs and income play a role in the credit scores. It’s all about percentages of debt to debt capacity, length and variety of credit accounts and loans, inquiries, and a sprinkling of things only the gods know.

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I’ts pretty bizarre…ours has been slipping for about 5 years since we no longer have any debt with the paid off mortgage, we had an ancient credit card with a high limit that we hand’t used in years and years and had a zero balance get closed by a merchant in the middle of the bank panic of 2010 or whenever that was, we own and pay cash for our cars etc. etc. It’s slipped about 10 points…a point or two each year it feels like… it’s ironic that you get “dinged” for having a strong cash and asset position with very little debt, feels like it should be the opposite. I check it once a year and I don’t really care, but I do get amused by the utter silliness of the banking business.

20

Why not keep the good credit indications going by using a credit card and paying off the full bill within the grace period?