Thanks Mint.com

It happened to me about two weeks ago with Citi. I got the card in college when they gave you a free pizza if you filled out a form for a credit card. I used it a few times and always paid it off every month. Since I started my career, I haven’t had a need to us it and I got a letter saying that it was being closed.

Lots of credit tracking comaines want their credit scores to be influential in the lending market so that they too can charge money for it. But each credit traking company has different standards and sources for their score. The FICO score has been used for decades and is biased towards scoring you well if you have lots of debt and poorly if you have no debt. Your ability to pay is not really considered. They want a long continuous payment history. In other words you have to pay for a long time to get them to score you well for credit.

And while large companies almost never suffer from poor credit practices, your FICO score and credit rating agencies can hold small infractions against you for 7-10 years. The myth about 3-5 years almost never holds true.

It seems that an outstanding credit history is only good to receive a loan because the banks will rape you on the interest rates. Bank of America and Chase and all other banks in the U.S. are increasing credit card interest rates to 23% to customers with excellent credit for no reason at all. I could get a better interest rate from a loan shark.

The biggest purchase you will make in your life is a house. So if you are single; I would advise you to move back in with your parents and put away $1,500 every month in your savings account. That $1,500 is a monthly house payment, or mine at least. After 5 years you will have $90,000 saved up, 10 years $180,000.

It will take you 30 years to pay off $180,000 if you get the loan form a bank. In those 30 years you will pay an additional $260,000 to interest.

Loan $180,000 + Interest $260,000 = $540,000.

Thats a lot of loot.

If you have plenty of cash, there’s no need to improve your credit score. Credit scores only matter if you need to borrow money. Also just paying your utilities and other bills on time can raise your score.

My fiance has never had a credit card, but just paid all her bills/utilities on time. During college I thought it would be great to get a head start on my credit score with a few credit cards, I paid them all on time etc. etc. (Of course I paid hundreds in interest during times when emergencies happened and I could only pay the minimum.) Turns out my fiance’s score is 760, while mine is 745. But now we’re credit card free and excited to start our marriage debt free.

Keep saving your cash and stay away from loans if you don’t need them.

Anyone else find it interesting that this article is provided by experian??

Unless you are independently wealthy, and can afford to purchase a home without causing your personal asset base to be over 30% tied into real estate, then buying in cash would result in an un-diversified personal portfolio, and put you more at risk.

“buying anything that is 500k on margin is called over-leveraged” – this doesn’t make any sense unless you know how much of the purchase is actually leveraged. If your down payment is $0, then I agree.