Shopping at Wally World Can Wreck Your Credit?

Apparently so according to Fox News!

The real problem seems to be the revised credit scoring system. In case you haven't been keeping up on this at all here briefly are some of the problems with today's credit scoring and why consumer advocates are concerned.

Apparently if you shop at a better store and then start shopping at a cheaper store your credit risk score could decline. The irony here is you are penalized for being thrifty.

I think most of us have heard of universal default, meaning that if even 1 creditor reports you in default in theory ALL of your credit card rates can be kicked into the much higher default rate. Doesn't even matter if the late payment was only a clerical error or a dispute.

Further, even a 20 point drop in your credit scores can put some into a higher risk category and it's becoming easier to lose 20 points quick. So in subtle ways it can cost you money before you realize there's a problem. Another thing many don't realize is if you don't use your card in a while (a year or two) companies may choose to cancel your creditline but in doing so your credit score can decline from the loss of that tradeline. So once again you are penalized for not racking up debt.

And you wonder why there is a credit crisis? IMO it's partly because the better credit risk customers are more in tune with the game and the suckers (if you will) who manage to rack up the ridiculous fees eventually quit trying to keep up with their payments and fall into default. The game is rigged. I have been saying so for years, only to be rebuked by some posters claiming deadbeats deserve what they get. But as is becoming evermore clear it's just not as simple as all that. The game is stacked and guess what? YOU just bailed out the creditors who engaged in predatory lending practices, you lucky you! and that just on the heels a few years back of Congress & Bush making bankruptcy "reforms" to "save our credit lending system." :headbang:

I guess my credit must not be good, going by this criteria. I only use a credit card for emergencies, which is maybe twice a year, and pay off the balance as soon as the bill comes in. I have never been late on a payment for anything, and have no debt other than my home, which we are working to pay off within the next year. I guess being prudent, thrifty, and responsible makes me a bad credit risk.

Tiger1 wrote:

I guess my credit must not be good, going by this criteria. I only use a credit card for emergencies, which is maybe twice a year, and pay off the balance as soon as the bill comes in. I have never been late on a payment for anything, and have no debt other than my home, which we are working to pay off within the next year. I guess being prudent, thrifty, and responsible makes me a bad credit risk.

Tiger,Not using your credit actually will lower your credit score,as does closing accounts you never use. If I were you,I'd use your credit cards monthly for necessities and pay them in full every month. Raising your credit score means lowering your interest rates in the event you seek a loan or a new mortgage.

Exactly Artie!

The game is rigged against the consumer but most people don't even understand the rules in the first place. All I can say is it is what it is. Play or pay.

I cancelled most of my credit cards 8 years ago. I just wasn't using them.

Not to be cruel but if you don't play (the game) you pay the price. That's how the rigged credit games goes!

I don't like that credit scores effect everyone to one extent or the other but it still does all the same even if you don't like it.

I do not see us ever having to obtain any type of credit in the future. We save, and THEN buy. Right now, every extra dollar is going to the principal on our house. We want to be TOTALLY debt free, and then take it from there.

Well since it effects your insurance rates (home, auto, life) and if you need to buy a home again or refinance it will just make it harder on you by not playing along. It also can effect employment opportunities and renting (should the situation arise).

Don't think you'll ever want another home loan? Perhaps not. But who knows what the next 10 years may bring. At the risk of sounding like Purdue a little bit if you don't have a good reason to live in Lake County, IN I would certainly live somewhere else! Homes in Michigan and NY are going for a song and Florida (my preference, of course) is not only affordable but low heating bills is quite splendid.

Good point on the insurance rates,Mirage. I forgot about those.

Tiger1 wrote:

I do not see us ever having to obtain any type of credit in the future. We save, and THEN buy. Right now, every extra dollar is going to the principal on our house. We want to be TOTALLY debt free, and then take it from there.

You can make money by using a credit cards long as you pay it off every month.

I get 3% cash back on gas & restaurant purchases & 1% back on everything else using an American Express card or Discover card.
Every "big purchase" I make I use the American Express card.
Buy something for 5 grand, you get $50 back. Spend $500 on gas you get $15 back.

Actually I got a couple of free airline tickets from Amex rewards last year. It's far from worthless. And Discover works just fine for paying some utilities at a discount.

Or you could use PayPal as a credit card and get cash back plus interest on your deposits but it won't help your credit.

Mirage wrote:

Well since it effects your insurance rates (home, auto, life) and if you need to buy a home again or refinance it will just make it harder on you by not playing along. It also can effect employment opportunities and renting (should the situation arise).

Don't think you'll ever want another home loan? Perhaps not. But who knows what the next 10 years may bring. At the risk of sounding like Purdue a little bit if you don't have a good reason to live in Lake County, IN I would certainly live somewhere else! Homes in Michigan and NY are going for a song and Florida (my preference, of course) is not only affordable but low heating bills is quite splendid.

A farm in Iowa sounds good to me ! I will pay cash, though, or I will not even look. Hey !!! ANYTHING is possible. I paid off my 1st house all by myself, as a single Mom with 3 kids!

I, generally, have no use for credit. As for the car insurance, I only pay $24 a month.

That $24 a month might wind up costing you if you're under insured.

As for moving, god forbid something happen but you can't seriously tell me that if your home burned down you'd rebuild or buy in Hammond, can you? So then you're either buying or renting. Or else you'll be buying much less in a home with cash.

I forget where but someone recently discussed how unfair the system is because it compared 2 people with one paying cash only for everything but earning twice as much ending up the poorer of the two over time. It's not right really, but it's how the math works out.

Mirage wrote:

That $24 a month might wind up costing you if you're under insured.

As for moving, god forbid something happen but you can't seriously tell me that if your home burned down you'd rebuild or buy in Hammond, can you? So then you're either buying or renting. Or else you'll be buying much less in a home with cash.

I forget where but someone recently discussed how unfair the system is because it compared 2 people with one paying cash only for everything but earning twice as much ending up the poorer of the two over time. It's not right really, but it's how the math works out.

I could not rebuild, as the lot is too small, by ordinance. I would buy another house in Hammond, close to this one, as long as my youngest was still going to HHS.

I would buy another house in Hammond, close to this one

Forget that! Just take the money and run dear.

I think there's gotta be a better public school district somewhere that's a better place to live.

Mirage wrote:

I would buy another house in Hammond, close to this one

Forget that! Just take the money and run dear.

I think there's gotta be a better public school district somewhere that's a better place to live.

I would consider relocating ONLY if my daughter has graduated high school. The SCH is horrible, but she is doing EXCELLANT !

I love how people say credit cards are bad.

They are only bad if you never pay them off every month, otherwise they are nice to have just in case

I have a credit card that I do not even know what the limit is, because I only use it to buy groceries, pay bills, and every so often buy something for the house, but when the bill comes, I pay it off in full. No balance.

mike3775 wrote:

I love how people say credit cards are bad.

They are only bad if you never pay them off every month, otherwise they are nice to have just in case

I have a credit card that I do not even know what the limit is, because I only use it to buy groceries, pay bills, and every so often buy something for the house, but when the bill comes, I pay it off in full. No balance.

The rare occaisions I have used mine, I also pay off the balance as soon as the bill comes in.

Seems to me like even paying them off every month can be viewed as bad. Some companies want to offer better deals to people who carry a balance once in a while.