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Title: Credit score scam
Source: [None]
URL Source: [None]
Published: May 20, 2012
Author: me
Post Date: 2012-05-20 10:33:21 by F.A. Hayek Fan
Keywords: None
Views: 346
Comments: 31

About four years ago my baby brother was laid off from his job and had trouble finding another one in his field, so he took the first job he could get and went from 70k a year down to about $11.00 an hour.

It took him about a year to find a job in his career field and get back up to his previous salary. In that year though he lost his house and got behind on all of his credit card bills to the point that he was forced to go to one of those consumer credit places in order to work out a payment plan. He did keep up on his two car payments though.

To make a long story short, he completely paid off all of the bills he was behind on about 18 months ago. In the meantime his wife finished up her degree and the two of them now make a combined income of about 130k a year. He got rid of his two credit cards as he paid them off. And here's the crux of his problem.

He recently tried purchasing a new (used) car. It cost 20k. They had 10k saved up. He was turned down. Even though he paid off all of his bills, had 50% of the cost of the vehicle, and has a combined income of about 130k, he was turned down due to a bad credit rating. He knew his credit rating was lower than it was but assumed that it had been climbing back up as he paid off his debt.

Nope. Come to find out that as long as he doesn't obtain and use a couple of credit cards on a regular basis his credit rating will not go up. According to "the experts" not even having a revolving loan at a bank will help. So basically this whole credit score industry is a scam to try and force people to get themselves hooked on credit cards.

So my brother said screw it and bought a 10k car with cash and is now taking the payments he would have made on the new car and putting in the savings account a long with other some other money and will save up until he has enough to pay cash.

Anyway, I'd hate to see what my credit rating is because I got rid of my cc's about ten years ago and pay cash for everything. The whole credit rating industry is a scam created to try and force people to get credit cards knowing that a certain percentage of them will be irresponsible or will rely on them in "emergency" situations in order to keep their heads above water.

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Begin Trace Mode for Comment # 31.

#5. To: F.A. Hayek Fan (#0)

Credit is more expensive than most people realize. Aside from interest fees that are charged the items purchased would likely be far less expensive if cash were required and credit unavailable.

I agree with your analysis that credit is practically "forced" upon people these days. It requires a little discipline to escape the credit system.

noone222  posted on  2012-05-20   15:35:42 ET  Reply   Untrace   Trace   Private Reply  

It requires a little discipline to escape the credit system.

Maybe at first, but having quit the credit thing ten or more years ago I find it second nature now. I have a debit card that is attached to my checking account and either use that or pay cash outright. I used to have a credit card and a revolving account with my credit union for my businesses, but since I sold them I don't even have that. I used to never buy a car that costs more than 10k but nowadays a nice 10k car has 100k+ miles on it so I'm going to up that amount to 15 or 20k in order to get a nice one with 30-50k.

I've been trying to get him (my brother) to get rid of those damned credit cards for years but it's like an addiction. I'm glad he broke it. I just hope he stays away from them.

F.A. Hayek Fan  posted on  2012-05-20   17:03:28 ET  Reply   Untrace   Trace   Private Reply  

There was a neat book in the last of the big "Whole Earth Catalogs" called "Drive It Till It Drops". The author advocated buying used cars costing no more than $1500 (in 1983 dollars - so about $3,000 now) and then putting nothing into it other than oil changes, minor repairs, and tires and then just driving it till it wouldn't go any further and then scrapping it to buy another. He claimed that in the long run it was a lot cheaper. Although I think having an older car without electronic ignition is advisable in the current political climate. No one can turn off your carburator by remote control or kill it with an EMP pulse.

Original_Intent  posted on  2012-05-20   18:20:10 ET  Reply   Untrace   Trace   Private Reply  

i like the idea of driving a car until it drops, but i like new cars. I dont like driving someone elses junk. who knows where the car's been or whats wrong with it. Only one time did i decide to buy a used car, after my previous one i'd bought new had nearly 500k miles on it (got my use out of that one!) so i bought this 4 year old car, and turns out it had MOLD inside of the ac system. i got so sick i ended up in the hospital. it was one of the most horrible experiences ive ever had. i had paid most of it in cash too. remember a year or so ago christine posted a similar story, they'd bought some used car and had some horrible problem with some substance permeating it.

screw all that. people claim that used junk is better? that is crazy. You know, we deserve nice things and regular new cars. That is how i grew up and i've never, nor will i, buy a used POS again. with a new car, its yours, and you know everything about it and it is clean and in good condition.

after my bad experience i learned everything there is to know about used car salesman and all the literal crimes and unethical tricks theat both new and used dealers commit against consumers. That is a very involved subject. For over 10 years now, I use edmunds.com which is a respected consumer site and i get the true dealer cost, of the car and each feature you want. you choose what you want, get the price. of course some profit for the seller is included. there is nothing wrong with marginal profit, no one runs a business for free. Then you figure in all rebates, incentives, etc. edmunds does not sell cars or broker cars at all. theyre simply a free informational site. then, i call the fleet manager on the phone, tell him how much he will get, (its always many thousands less than the phony 'sticker' price which anyone would be crazy to pay). I go down there and pick it up. if the fleet manager doesnt want the sale, there are 100 dealers within 20 minutes that will jump at the chance.

i have been very happy with that system and recommend it to all. An informed consumer is one which has the upper hand.

Artisan  posted on  2012-05-20   18:46:49 ET  Reply   Untrace   Trace   Private Reply  

Unless you're buying a Hyundai product, the dealer Certified vehicles have much better warranties than the brand new ones.

I've had excellent luck(?) with the certified program and am unwilling to take the depreciation hickey as soon as I drive off the lot.

And I do agree with you and FA about not wanting Mrs.L and me to look like we're fifteen minutes/miles away from homelessness.

Lod  posted on  2012-05-20   18:58:13 ET  Reply   Untrace   Trace   Private Reply  

I couldn't purchase all the stuff I find on the internet without a credit card.

As everyone's mentioned, the key is to pay the monthly balance in full.

Lod  posted on  2012-05-20   19:01:56 ET  Reply   Untrace   Trace   Private Reply  

I couldn't purchase all the stuff I find on the internet without a credit card.

Sure you can. A debit card is treated exactly as a credit card in online transactions. I don't even know if the merchant knows its a debit card.

F.A. Hayek Fan  posted on  2012-05-20   19:18:49 ET  Reply   Untrace   Trace   Private Reply  

Sure you can. A debit card is treated exactly as a credit card in online transactions.

I'll second that.

The only problem I've experienced with a debit card is renting an auto. One can pay for the rental by debit, but all the major agencies require the initial rental to be secured with a credit card. You can often rent a limo with cash.

Internet purchases, including plane tickets, by debit are no problem.

Buzzard, cc free since 2006.

Buzzard  posted on  2012-05-20   21:26:36 ET  Reply   Untrace   Trace   Private Reply  

in a nutshell, stolen from the NYTimes 2009, here's why I use credit cards -

If you use them responsibly though, credit cards can offer other advantages. They help build your credit, as long as you pay your bills on time. Some also offer rewards that you can use to get gifts, cash back or discounts for products, services and special events. They also provide more protection if someone steals your card or bank information. If you notice a fraudulent charge on your credit card account, you can call the card issuer, make a dispute claim, and the charge should be removed from your balance. But if thieves steal your debit card information and use it, it may take weeks for the bank to investigate your claim and replace the lost funds. In the meantime, you may have to deal with a dwindling bank balance or bounced checks.

Federal law also protects you if you need to dispute charges on a credit card, but not if you use a debit card or other forms of payment. If you paid cash or used a debit card, the retailer already has your money. So you have a lot less leverage, and there’s no guarantee you’ll get that money back. But if you pay for something with your credit card and aren’t happy with the purchase, your card issuer can legally withhold payment from the retailer until they resolve the dispute, and you won’t be charged.

Lod  posted on  2012-05-20   21:56:51 ET  Reply   Untrace   Trace   Private Reply  

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