Borrowing money to build credit.

[True Grit Farms]

It's a fact of life. Unlesss someone is buying a home with cash, they better have some cedit history. How many here paid cash for their home?

:wave:

 

[bbirder]

Fence,
You can't win that battle. You may have raised him to be conservative, but she wants a shiny new car, and she controls something that you can't compete with! ;-)
Let the boy learn.

 

[Caustic Burno]

I don't have a great credit score, but I own every damm thing I have. Bankers hate me. If we can't write a check, we don't buy it. Been down the other road, ain't been back in over 20 years. Screw banks.

Last time I borrowed was in 1981 when a mortgage company screwed me.
Had a house fire and they recalled the loan at 8% and offered to refinance at 16%. From then on it had been cash when I rebuilt the house we had depleted our savings to 200 bucks. I said never again if insurance was paying anyone it was me.

 

[greybeard]

I paid cash for mine as well CB--sold some stock I had held and grew for 40 years but that's what I had invested in it for.

 

[Rafter S]

USA runs on credit scores. Having no credit cards or loan history actually lowers your score, not sure by how much.

I haven't borrowed any money, or had a credit card in years. I don't know what my credit score is; probably zero. I haven't noticed it causing me any problems.

 

[TCRanch]

It's a fact of life. Unlesss someone is buying a home with cash, they better have some cedit history. How many here paid cash for their home?

:wave:

:wave: You'd be surprised. Maybe it's a generational thing.

 

[True Grit Farms]

It's a fact of life. Unlesss someone is buying a home with cash, they better have some cedit history. How many here paid cash for their home?

:wave:

:wave: You'd be surprised. Maybe it's a generational thing.

Hey now I'm not as old as Dun and CB.

 

[herofan]

When it comes time to buy a house and you go to the bank they draw up two columns, one to list what you own and the other to list what you owe including credit cards. The what you owe list weighs very heavy against the amount you can borrow. Better off going to bank with a bit of savings which shows your able to budget and save responsibly and have a clean slate on the debt side of things.

Ken

Apparently y'all have a better banking system than us.

That's how it worked when I borrowed for a house years ago. I didn't have any credit at all at the time. The bank, however, was more concerned that I had a job able to meet the payments, the prediction of me retaining the job was good, the fact that I had held the job for several years, the fact that i had savings, and the fact that i didn't owe anything. I didn't even have to have a down payment, down payments never made sense to me anyway.

 

[True Grit Farms]

Hero, I had to have 20% of the purchase price as a down payment also. Now it seems the banks are hard to work with and getting worse.

 

[JMJ Farms]

I've got both my truck and my wife's car financed at 1.9%. My house is financed at 3.75%. (I paid half down when I built it). That's where good credit scores really help. (Credit cards aka revolving credit make up approximately 1/3 of your credit score. Lenders want to see that you have available credit that you are not utilizing. Try to keep a current balance around 10-20% for best results and pay it every month) There's nothing wrong with paying as you go. Nothing wrong with borrowing as long you live within your means. I work hard and I like to enjoy a few things a life. But I do look forward to the day when hopefully I don't have to use banks anymore.

FWIW, we don't buy band new vehicles either. I prefer to let someone else have the first 15-20k miles. But that's just a personal choice.

 

[TCRanch]

:wave:

:wave: You'd be surprised. Maybe it's a generational thing.

Hey now I'm not as old as Dun and CB.

Ha! My husband is 14 years older (oh good Lord, 13.5; I stand corrected) so I qualify by association

 

[Ryder]

FWIW, we don't buy band new vehicles either. I prefer to let someone else have the first 15-20k miles. But that's just a personal choice.

Seems to me like a very wise personal choice.
Nothing wrong with a new vehicle if you have the money. But they seldom pay dividends.

 

[1982vett]

It's a fact of life. Unlesss someone is buying a home with cash, they better have some cedit history. How many here paid cash for their home?

Ding Ding Ding Ding......

 

[John SD]

I bought both my Hyundai and my Kubota tractor on 0% company financing. 3yrs on the car, and 5 yrs on the tractor. Paid the car off in 2 years, dropped full coverage insurance down to liabilty only which saves $200/yr.

While I am a Dave Ramsey fan and went through his FPU class this past spring. I will admit I don't bite on every single idea Dave sells. But ignore his advice at your peril. Keep in mind Dave's financial advice is pretty much geared toward the 9-5 wage earner crowd, not independent farmers/ranchers and main street small town business owners.

Not many farmers and ranchers and other small business owners could have gotten where they are today without using borrowed money as a tool. But debt is like a sharp knife. Used correctly it can be immensely helpful. Used incorrectly it can be dangerous or possibly fatal.

It's none of my business, but to buy or make excuses to buy a new car mostly just to enjoy the new car smell probably isn't the best way for a person to spend money. While I did purchase my Hyundai new, I don't anticipate every buying another new vehicle. Let the other guy take the hit on depreciation.

I also purchased the Kubota new. Spent most of a year looking for a good used tractor. Most any tractor I was interested in that seemed decent also had a premium price tag on it. So I have a new tractor with warranty, and a nice climate controlled cab which I could not be out in the field without at this point in my life with my health problems.

 

[Clodhopper]

Good post, John. I don't know anyone who was able to pay cash for everything unless they inherited large amounts from dad or grandpa. When you born po, the bank is a necessary evil.

If I would have scrimped and saved to buy property with cash, I would still be renting everything today. The bank let me buy ground at $1100-1400 per acre years ago. Saving for 15 years would have put me in the market at $5000+ ground. I can't afford that with owned ground now, and dang sure couldn't with a small pile of cash saved form working.

That being said, borrowing for the sake of borrowing doesn't seem like too good of an idea. Most people spend more than they need or can afford when borrowing.

 

[D2Cat]

Borrowing money to purchase something that increases in value is quite different then purchasing something that depreciates. To follow Dave Ramsey's thinking, as a guideline, anything with an engine depreciates.

 

[TexasBred]

In all my years and all the many loans I obtained over those years it never once crossed my mind that I was building credit. I just figured I got the money because I already had good credit and was able to prove that I could and would repay it.

 

[Caustic Burno]

In all my years and all the many loans I obtained over those years it never once crossed my mind that I was building credit. I just figured I got the money because I already had good credit and was able to prove that I could and would repay it.

The difference today it is a way of life with most Americans that end up in the later years in hock up to their eyeballs. We have went from a society of savers to pee poor money managers. Look at the reverse mortgage crap if you get there you are in trouble. I can't imagine going into retirement with a house note.
This phenomenon started with the S&L fubar and it has been good,bad or no credit come on down.

 

[backhoeboogie]

In all my years and all the many loans I obtained over those years it never once crossed my mind that I was building credit. I just figured I got the money because I already had good credit and was able to prove that I could and would repay it.

The difference today it is a way of life with most Americans that end up in the later years in hock up to their eyeballs. We have went from a society of savers to pee poor money managers. Look at the reverse mortgage crap if you get there you are in trouble. I can't imagine going into retirement with a house note.
This phenomenon started with the S&L fubar and it has been good,bad or no credit come on down.

I started out in life living paycheck to paycheck. That's not the way I wanted to live. It seems that some folks live like that their whole lives. I can't imagine it. I always did things like buying junk and rebuilding it. Sold it for profit later. I did buy way to many new pick ups in my life. Buying land was good to me. Every time.

 

[Dave]

I avoid buying things because I "want it" and buy things which I need. That said I have used credit to buy land, cattle, vehicles, and tractors. I wish I had bought more land when I was younger it is the one thing that really has made me money. I do buy new vehicles but I buy plain Jane models with no bells and whistles. And then I drive them until the wheels fall off. I know how they have been maintained from day one. Things I want like a new gun or boat I pay cash or I don't buy it. While I would prefer to pay cash for things I need it isn't always an option. What I do is make sure that I have a big enough down payment that if things do go bad I can sell it for enough to pay the bank. I would hate to lose my money but not nearly as much as losing out and still owing the bank money.