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Credit cards-Does having them really help build credit? - 9/18/2008 12:04:40 PM
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redsgrl
Posts: 12
Joined: 4/25/2005
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Ok, so I'm hearing so much lately about "Feed the Pig" (how this generation is the most in debt generation since the great depression or something). The Feed the Pig commercials and website suggests cutting up those credit cards. I hear so much about getting rid of credit cards.
On the other hand, I have heard from people that having credit cards and keeping a "low" revolving balance on them help to build credit.
So, if we're being told to get rid of those credit cards on one hand but on the other side, they help us build our credit - what can I believe. I personally, would love to just cut every single one up that I have and pay them all off and close the accounts. My husband doesn't share that enthusiasm.
I must preface this with the fact that I know we're not supposed to be living off our credit cards and using them for willy nilly purchases. "IF you can't pay cash, don't buy it" (I'd like to say that I live by that motto all the time).
So confused...
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 1:23:09 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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Generally speaking, you're a bit better off to have a credit card that gets used periodically and shows a small balance now and again. It needs to be small relative to your income.
The idea is to demonstrate that you know how to manage credit. That's different than avoiding credit. From a statistical point of view, I as a banker would be suspicious of someone who never had a loan in their life and suddenly shows up wanting a credit card. I'd be wondering, "what's going on that this person suddenly needs money."
I'd be much more comfortable giving a loan to someone who has a 5-10 year track record of being able to manage a modest amount of debt.
If I had the loan on your car, I'd also feel a bit more comfortable knowing that if something bad happened you had access to a little bit of temporary cash if you needed it.
Generally speaking, yes you are slightly better off with a small credit card.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 1:32:58 PM
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Miss Giggles
Posts: 4268
Joined: 4/18/2005
From: MI
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Yes having a credit card does build up your score, and revolving loans such as autos do too. But you really only need 1 card.
Credit Cards and money are not evil. They are tools. Some people handle them well and some don't. Key is personal responsibility and its popular right now to play the victim.
So some people need to cut them up and some can do ok by keeping track of what they spend and paying it off at the end of the month.
< Message edited by Miss Giggles -- 9/18/2008 1:41:15 PM >
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 1:37:53 PM
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Mrs.Wifey
Posts: 5068
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From: The Gorgeous plains of Colorado
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They are a tool for building credit, and WILL help your credit if you play the "game" properly. You have to keep the balances on all cards below a certain percentage of your total credit available, and also below a certain percentage of your income.
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 1:41:16 PM
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laura...
Posts: 2842
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From: NE Ohio
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The more available credit you have the higher your credit score.
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This is what the Lord says: “Stop at the crossroads and look around. Ask for the old, godly way, and walk in it. Travel its path, and you will find rest for your souls. But you reply, ‘No, that’s not the road we want!’ Jer 6:16
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 2:03:58 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: laura...
The more available credit you have the higher your credit score.
Up to a point, of course. If you have too much available to you, that can hurt you as well.
Like everything else - moderation is key.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 3:28:03 PM
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kernsfamily
Posts: 1329
Joined: 4/26/2006
From: Dallas (originally Detroit)
Status: online
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quote:
I personally, would love to just cut every single one up that I have and pay them all off and close the accounts. My husband doesn't share that enthusiasm.
I did just that....didn't hurt my "Credit Score" at all. And that was 5-6 years ago..maybe 7 ....i forget now.
I have a mortgage (which, I can easily make the payments on......even 5 years ago when i was unemployed for 10 months...wasn't late for one payment).....and, have a good job history....
And, briefly had a car payment about a year and half ago...but, got that paid off pretty quick.
quote:
and WILL help your credit if you play the "game" properly.
and, make sure you keep up on all the paperwork and "fine print" they throw at you...those people are known to change "rules" of the "game" so much, it'll make your head spin....in a game of "gotcha"...
don't fall for the lie that credit cards are a NECESSITY...
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 5:36:40 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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They're not a necessity, but they sure can help in an emergency. I recommend that people have one as long as they can avoid using it. When I blew out a tire on a vacation once, it was handy to have the card. Not every tire place takes out of state checks, and I don't carry $1,200 in my pocket. I travel a lot, so I personally wouldn't be without one.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 5:52:37 PM
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kernsfamily
Posts: 1329
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From: Dallas (originally Detroit)
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quote:
Not every tire place takes out of state checks, and I don't carry $1,200 in my pocket.
true...
I use a debit card. Should have mentioned that....
Works just as good as a credit card....have never had a problem using it anywhere.....for anything....
good point.
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 5:59:29 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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I use both. FYI - some hotels and most car rental companies require a credit card and won't take debit cards. There's a minor issue of law that puts the car rental firm in a better priority position if something happens and you've rented a car on the credit card. I've run into this a couple of times now.
Sometimes the person at the counter won't realize that you've used a debit card, so you can get away with it occasionally. Other times they catch it and ask me to pony up with the credit card.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 6:09:05 PM
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kernsfamily
Posts: 1329
Joined: 4/26/2006
From: Dallas (originally Detroit)
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quote:
ORIGINAL: GroupW
I use both. FYI - some hotels and most car rental companies require a credit card and won't take debit cards. There's a minor issue of law that puts the car rental firm in a better priority position if something happens and you've rented a car on the credit card. I've run into this a couple of times now.
Sometimes the person at the counter won't realize that you've used a debit card, so you can get away with it occasionally. Other times they catch it and ask me to pony up with the credit card.
I stay in hotels...sometimes several times a month....no problem. Never has been an issue.
rental car companies? years ago they were very "timid" about debit cards....but, look at the new policies in the few years....most DO accept them....they figured out the hypocrisy of turning away a guy who has no credit card (but piles of money in the bank...with otherwise great credit), but renting to a guy who is up to his eyeballs in debt and close to bankruptcy (but happens to have a credit card that isn't maxxed out)....
I very rarely rent a car anyway....
That being said....I am going to be getting a credit card specifically for business travel ONLY. (not that I need one for personal use of any sort)....but, just to put charges on that (hotel stays at $300/night add up FAST), and not have it go on the debit card (one recent trip really stretched my account a bit..)....and pay it off in full when I get reimbursed after turning in expense reports.....(and cross my fingers I don't get burned somehow or another in the process!)
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 6:13:56 PM
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GroupW
Posts: 2911
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From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: kernsfamily
quote:
ORIGINAL: GroupW
I use both. FYI - some hotels and most car rental companies require a credit card and won't take debit cards. There's a minor issue of law that puts the car rental firm in a better priority position if something happens and you've rented a car on the credit card. I've run into this a couple of times now.
Sometimes the person at the counter won't realize that you've used a debit card, so you can get away with it occasionally. Other times they catch it and ask me to pony up with the credit card.
I stay in hotels...sometimes several times a month....no problem. Never has been an issue.
rental car companies? years ago they were very "timid" about debit cards....but, look at the new policies in the few years....most DO accept them....they figured out the hypocrisy of turning away a guy who has no credit card (but piles of money in the bank...with otherwise great credit), but renting to a guy who is up to his eyeballs in debt and close to bankruptcy (but happens to have a credit card that isn't maxxed out)....
I very rarely rent a car anyway....
That being said....I am going to be getting a credit card specifically for business travel ONLY. (not that I need one for personal use of any sort)....but, just to put charges on that (hotel stays at $300/night add up FAST), and not have it go on the debit card (one recent trip really stretched my account a bit..)....and pay it off in full when I get reimbursed after turning in expense reports.....(and cross my fingers I don't get burned somehow or another in the process!)
Last time I tried with the debit card & got spanked by the person behind the counter was a year ago. Haven't tried since then. Maybe I should check it out again. Did have a problem with a high end hotel in Hawaii not that long ago.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 6:50:12 PM
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Mrs.Wifey
Posts: 5068
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From: The Gorgeous plains of Colorado
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We use only debit cards and have never, not once, had a problem renting a car or getting a hotel room. The "Visa" logo is good for alot of things... The only time you could possibly have a problem is if your going to go over your transaction limit, but ours is somewhere around $2k so I doubt we would hit that all in one day barring any major problem. And even then, DH and I both carry one which then doubles our limit...
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RE: Credit cards-Does having them really help build cre... - 9/18/2008 9:25:41 PM
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Random
Posts: 1035
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From: Zipperhead
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You do not need to carry a balance on the card to demonstrate good credit. Having a card and charging on it and then paying it off immediately will have the same effect as carrying a balance. Credit card companies report your balance, not the amount of interest you pay, so as long as the statement closes with a balance, you are fine, even if you pay it off in full within the grace period.
As to debit cards, I never use them because even with the same "protections" the money is out of your account while the situation gets resolved. I am not saying no one should use debit cards, but I personally am not comfortable with that risk, especially for online purchases.
_____________________________
"That which has always been accepted by everyone, everywhere, is almost certain to be false." -- Valery
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 10:07:25 AM
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P31W
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I don't believe debit cards help your credit score?
My belief is that a major credit card with no annual fee and one that offers you some product protection and a percentage back or off your purchases is the way to go.
If used properly and if you pay it off in full each month it gives you both a good credit history and some money in your pocket.
For folks who have credit card phobias I would suggest a secured credit card. Those I believe "do" help your credit score.
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 2:31:51 PM
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kernsfamily
Posts: 1329
Joined: 4/26/2006
From: Dallas (originally Detroit)
Status: online
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quote:
I don't believe debit cards help your credit score?
I didn't say that they helped the "Almighty" credit score at all...
as I mentioned much earlier in the conversation.....we shredded and closed all of our credit cards several years ago (6 or 7...i forget)...with no noticeable affect to our "score" at all......
quote:
I never use them because even with the same "protections" the money is out of your account while the situation gets resolved.
ONCE we had an "issue" with something....an erroneous charge on our debit card account....that money was replaced IMMEDIATELY...very few questions asked...before the situation was resolved.....each bank handles those situations differently.
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 3:05:53 PM
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spitzu
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Yes, they helped ours a great deal and due to them and using them wisely, we were able to get a really good mortgage rate. We kept a close eye on our reports, and know for a fact it helped.
We used to be debit only, but I do way too much online buying with the business I started, and some of it is with companies I am not familiar enough with to trust them with my debit card number. So I use my credit card often and pay it often. Works for me.
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 3:47:20 PM
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Starbucks880
Posts: 154
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quote:
ORIGINAL: redsgrl
Ok, so I'm hearing so much lately about "Feed the Pig" (how this generation is the most in debt generation since the great depression or something). The Feed the Pig commercials and website suggests cutting up those credit cards. I hear so much about getting rid of credit cards.
On the other hand, I have heard from people that having credit cards and keeping a "low" revolving balance on them help to build credit.
So, if we're being told to get rid of those credit cards on one hand but on the other side, they help us build our credit - what can I believe. I personally, would love to just cut every single one up that I have and pay them all off and close the accounts. My husband doesn't share that enthusiasm.
I must preface this with the fact that I know we're not supposed to be living off our credit cards and using them for willy nilly purchases. "IF you can't pay cash, don't buy it" (I'd like to say that I live by that motto all the time).
So confused...
Well, I wouldn't cut up all the credit cards. Having credit does actually help you. you only need one or two cards and if you demonstrate that you are responsible with it, that is good. When it does hurt you is if you max them all out and open a ton of accounts under your name and don't pay it off or pay your bills late. If you are responsible with it, then you don't have to worry. But if I were you, I'd pay off the cards and close all but one or two of them. My husband and I have paid off all of our cards and now each have one card that we keep for emergencies. he is more of your attitude about credit. I will purchase with my card, but I make sure it is something I can realistically pay off that month----I have to really disipline myself since I have a 16,000 dollar limit, so it can be tempting to spend myself into big trouble. But credit cards are not the enemy.
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 8:29:41 PM
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MrsTracy72
Posts: 1800
Joined: 2/28/2007
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If you have alot of available credit then depending on your income, your credit score can go down. If you use alot of that credit and pay your payments on time, your credit can still go down. I had that problem because we had alot of debt, but paid every month and on time, but since it was so much, we were considered a risk.
We decided that we no longer wanted to have credit cards or debt so we have spent the last year and a half paying them down and have so far paid down half of our balances, closed out the accounts so we can't use them anymore and our credit scores have gone way up.
We will have one card in the future that we are going to put all of our monthly bills on and pay one monthly payment, but we are going to find a card with rewards that we can use and make the most of them.
The only time not having credit is a problem is if you have never had credit. That happened to a friend of mine. She never had need for a credit card and at the age of 45, wanted to get one and eventhough she never needed one, she had problems getting one. So how is that for being responsible? Live for 45 years not needing to use credit, then can't get it because you have no credit.
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RE: Credit cards-Does having them really help build cre... - 9/19/2008 8:34:23 PM
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Random
Posts: 1035
Joined: 4/18/2005
From: Zipperhead
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quote:
ORIGINAL: kernsfamily
ONCE we had an "issue" with something....an erroneous charge on our debit card account....that money was replaced IMMEDIATELY...very few questions asked...before the situation was resolved.....each bank handles those situations differently.
In my case, it took three weeks to put the money back. The retailer admitted fault immediately, it just took that long to process. It could have been quicker if I really pushed, but it was an incredible hassle. As I said, I understand the no credit card mentality, I just don't subscribe to it.
_____________________________
"That which has always been accepted by everyone, everywhere, is almost certain to be false." -- Valery
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RE: Credit cards-Does having them really help build cre... - 9/20/2008 1:34:55 PM
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3cappuccinosmom
Posts: 2515
Joined: 4/12/2005
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We were without credit cards for 5 years, and never once felt the need for them. We got a good mortgage, and were able to purchase everything we needed with a debit card. Most stores take debit cards, and many places just process them as "credit", no questions asked. As long as it's a Visa or Mastercard logo, I can't imagine having trouble with them.
As long as we had our mortgage, we had a credit score, and it was a good one. 6th months after our mortgage was paid off, though, we no longer had a score. 
However, since we've paid off our mortgage and are working on building up a business, dh really felt the need to have a good credit score because it simply makes for less of a hassle with what he's doing. We have *one* credit card, through a credit union. We do not carry a balance--it is paid in full, 3 weeks early, every month.
I never quite understood why people wanted or needed multiple credit cards. For me, that would be a sure way of missing something, falling late on a payment, forgetting to pay a bill...
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RE: Credit cards-Does having them really help build cre... - 9/20/2008 4:04:30 PM
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Sideways
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The only reason we have 2 cards is because our preferred card is American Express, and not everyone takes that. But we pay everything off every month and live within our means.
dH is strongly opposed to debit cards for security reasons, and credit cards have not been a problem for us.
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RE: Credit cards-Does having them really help build cre... - 9/20/2008 5:15:43 PM
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his_chosen
Posts: 1053
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We have one credit card. We use it as more of a convenience. We budget a certain amount for food, groceries, etc, and misc spending. Our credit card bill is about $1500/month. We pay it in full every month. We could use cash just as easily. However, we discovered that if dh has cash in his wallet he will spend it. If he pulled $20 out fo the bank, spent $10 for gas, the other $10 would be gone with no idea where it was spent. Now, every red cent is tracked.
When we applied for a mortgage, they looked at everything. Mostly, how much debt we had and our bill payment history. The fact that we don't carry a balance on our credit card had no effect.
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You have a choice. You can throw in the towel or you can use it to wipe the sweat off your face.
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