0.00% Loan Interest Rate

[Texas Proud]

Sorry, I must be missing something. You said that you were paying 0% so I don't know how you were paying interest and got a rebate.

It was the fine print.... it was 0% IF you made all payments when due...but 17% if you missed a payment... from the time you signed the papers... (the salesman doesn't bring this up and even when I read the docs I did not see it).. so for their accounting, they treated it like a 17% loan and when you paid off your principal balance they credited your account with the accrued interest for the years it was outstanding...

 

[MichaelB]

Darned if I know - they've got teams of actuaries on staff whose job it is to make those kinds of decisions.

But there are people out there who live credit-free, and who have FICO scores of 0. Presumeably, they own cars, and thus, they have to insure those cars. Somehow, they're finding people to insure them, so obviously it can be done. We're not talking hypothetical here - this is already happening out there, in the real world. Insurance companies see people with 0 scores all the time, and know how to handle them. Do they turn away customers with no FICO scores, just because they don't know how to impute that into their formulas? Have you ever known an insurance company to turn away profit?

People with no credit rating have fewer options. A FICO score of "0" is never a reason to approve but can be a reason to reject. It's not worth paying market rate interest just to build a credit score, but if there is an opportunity for a preferred rate or a small loan it might make sense.

 

[Beryl]

I could reply with saying the quoted text above is chapter-and-verse from the Dave Ramsey playbook.

...

Having said all that, in most cases I strongly disagree with the concept of taking out loans just to improve your credit score, especially if you're already in the 760+ range where you pretty much qualify as top-tier regardless of whether you're at 765 or 810.

That Ramsey quote probably applies to some but I don't think it applies to the majority of us with higher ratings. Any score over 760 doesn't matter and I don't see it as bragging since it just reflects keeping your financial promises! Everyone I know w/high FICOs live very modest lifestyles and are not very wealthy.

I'd not carried any debt (CCs used for cash-back and paid in full monthly) except a mortgage (paid off last year) since 1990. The dealership asked me to promise to wait the 60 days to pay off that auto-loan stating that they knew what would happen as soon as I received the payment book. I paid all but about $10 the first month to minimize the interest but GMAC then zeroed out the loan! I called the dealership to explain that I hated that they lost out on the $1000 back from GMAC but I didn't break my verbal promise to them. Oh well.

 

[Texas Proud]

Darned if I know - they've got teams of actuaries on staff whose job it is to make those kinds of decisions.

But there are people out there who live credit-free, and who have FICO scores of 0. Presumeably, they own cars, and thus, they have to insure those cars. Somehow, they're finding people to insure them, so obviously it can be done. We're not talking hypothetical here - this is already happening out there, in the real world. Insurance companies see people with 0 scores all the time, and know how to handle them. Do they turn away customers with no FICO scores, just because they don't know how to impute that into their formulas? Have you ever known an insurance company to turn away profit?

I would doubt that there are very many people with a 0 score... you would have to work at it to get there...

NO credit card use at all.. and from what I can see that is for your whole life as they still have accounts listed on me that I have not used in 20 years...

Basically the only way I can see you having a 0 score is to never ever have debt of any kind in your life....


As for employement, we do a full background check, not just credit score... but we have not hired a few people due to low scores and will not hire more in the future....

 

[73ss454]

It was the fine print.... it was 0% IF you made all payments when due...but 17% if you missed a payment... from the time you signed the papers... (the salesman doesn't bring this up and even when I read the docs I did not see it).. so for their accounting, they treated it like a 17% loan and when you paid off your principal balance they credited your account with the accrued interest for the years it was outstanding...

That's a new twist to an old scam. They used to just hope you were late on one payment and they charged you back to payment #1 all the interest. Now they collect it up front, CUTE!

 

[73ss454]

I checked my score about 2 years ago and it was 829. Although I don't care that much about my credit score at this time in my life I don't want it to go too low. Even home owners and car insurance check your score and charge accordingly now.

 

[ziggy29]

That's a new twist to an old scam. They used to just hope you were late on one payment and they charged you back to payment #1 all the interest. Now they collect it up front, CUTE!

It's not really new. It sounds no different than all the people carrying large CC balances at 15% who subsidize those of us with 2% cash back cards who pay in full each month.

 

[Chuckanut]

Several years ago, I also was offered a 0% loan by Toyota. I took it. I walked into the the dealership after lunch and an hour later drove out with a new car without giving them a penny. My first payment was not due for 6 weeks! They were true to their word. They took the final price, divided it by 36 and that was the monthly payment. No gags, no strings, nothing but a great deal.

 

[Chuckanut]

For the record, I rejected all of the dealer 'packs' which add to the price of the car. Also, at that time a one year T-Bill was about 4%. I figure the 0% loan allowed me to earn another $1200 in interest over the life of the loan. Could I have got a better deal elsewhere? Maybe, but I doubt if I would have save much more than $1200 and the time involved would have been substantially more than one hour.

 

[FinanceDude]

I checked my score about 2 years ago and it was 829. Although I don't care that much about my credit score at this time in my life I don't want it to go too low. Even home owners and car insurance check your score and charge accordingly now.

Which is the opposite of what Dave Ramsey wants. He said his score is probably 0, since he has been a cash buyer for many years.

 

[73ss454]

Which is the opposite of what Dave Ramsey wants. He said his score is probably 0, since he has been a cash buyer for many years.

I don't have as much money as Dave.

 

[FinanceDude]

I don't have as much money as Dave.

I wonder if he is as rich as Clark Howard?

 

[73ss454]

I'll bet Clark has a higher credit score than Dave.

 

[FANOFJESUS]

Dave just built a new house worth about 5 million but I am guessing Clark is not in a shack either. I am a fan of both of these guys. I think they are doing a lot of great work for our country.

 

[ChiliPepr]

Which is the opposite of what Dave Ramsey wants. He said his score is probably 0, since he has been a cash buyer for many years.

Don't know how he can do that since there is no such thing is a "0 credit score". the FICO scores go from 300 to 850.

Now, it is possible you could not have a credit score, but that would mean you never had a cell phone, cable bill, electric bill, mortgage, credit card, or any other kind of bill.

A credit score is made up of:
35% Payment history (This includes paying your phone bill)
30% Credit Utilization (Have you used credit)
15% how long have you used credit wisely
10% types of credit used
10% recent searches of credit score


Assuming you have had ever used any form of credit, you have a credit score.

I completely disagree with Dave Ramsey stating that a good credit score requires you to stay in debt. You can have an excellent credit score and not be in debt at all.

 

[MichaelB]

Don't know how he can do that since there is no such thing is a "0 credit score". the FICO scores go from 300 to 850.

Now, it is possible you could not have a credit score, but that would mean you never had a cell phone, cable bill, electric bill, mortgage, credit card, or any other kind of bill.

A credit score is made up of:
35% Payment history (This includes paying your phone bill)
30% Credit Utilization (Have you used credit)
15% how long have you used credit wisely
10% types of credit used
10% recent searches of credit score


Assuming you have had ever used any form of credit, you have a credit score.

I completely disagree with Dave Ramsey stating that a good credit score requires you to stay in debt. You can have an excellent credit score and not be in debt at all.

I think "0" is not intended to be taken literally. You can have a "no credit score". Paying bills alone is not enough to provide one with a high rating. There is absolutely no way to achieve a high credit score without having a documented history of borrowing and repaying money.

 

[ChiliPepr]

I think "0" is not intended to be taken literally. You can have a "no credit score". Paying bills alone is not enough to provide one with a high rating. There is absolutely no way to achieve a high credit score without having a documented history of borrowing and repaying money.

Ok, but you only need a credit score if you want to borrow money... if you never want to borrow money a credit score does not matter. If you do need to borrow money and pay it pack you will have a high credit score.

A credit score is a gauge of how well you handle credit. If you never need credit, you don't need a score.

 

[REWahoo]

Ok, but you only need a credit score if you want to borrow money... if you never want to borrow money a credit score does not matter. If you do need to borrow money and pay it pack you will have a high credit score.

A credit score is a gauge of how well you handle credit. If you never need credit, you don't need a score.

Not entirely accurate.

Credit scores are also used by the insurance industry:

Some insurance companies also use credit report information, along with other factors, to help predict your likelihood of filing an insurance claim and the amount of the claim. They may consider these factors when they decide whether to grant you insurance and the amount of the premium they charge. The credit scores insurance companies use sometimes are called “insurance scores” or “credit-based insurance scores.”

Credit or Insurance? Your Credit Score Helps Determine What You’ll Pay

 

[MichaelB]

Ok, but you only need a credit score if you want to borrow money... if you never want to borrow money a credit score does not matter. If you do need to borrow money and pay it pack you will have a high credit score.

From earlier in this thread

That would be good if credit scores were only used for going into debt these days. If you ever want to rent a home, if you purchase auto insurance, if you want a j*b that requires a background check (including credit history), all of these can be negatively impacted by a "zero" credit score.

It sucks and I don't like that credit scores are used for more than obtaining credit, but it is what it is and striving for a "zero" credit score may not be such a good idea.

A credit score is a gauge of how well you handle credit. If you never need credit, you don't need a score.

The credit score is really a prediction of the likelihood that a borrower will default on a payment. As for needing the rating, see above.

 

[Beryl]

A credit score is a gauge of how well you handle credit. If you never need credit, you don't need a score.

It has already been stated that credit scores ARE used by employers.

Even if employees were like Dave Ramsey (zero credit rating), they'd get one after getting hired on to my Megacorp's business unit. It was Megacorp's rating that enabled them to obtain a corporate credit card but the liability was then on the employees. Failure to pay on time can cause them to lose their cards and their jobs since travel using a business credit card was mandatory.

I hired hundreds of people when I worked at Megacorp and never referred to credit scores in my decisions. However, employees who didn't pay their corporate CCs on time tended to be high maintenance, the worse performers, and/or had the most issues which interfered with business. Managers are notified when they miss payments and after while, we had to address it up the line. Therefore, I fully understand why credit cards are used for hiring decisions these days.

 

[Chuckanut]

I have heard that some employers also check applicants' credit scores to make sure they don't hire somebody who may be vulnerable to selling company secrets for a quick buck.

 

[frank]

exactly who is usaa and how do you find them. I live in iowa and have never heard of a car buying service. You can go into a car dealership and talk all you want but you can't beat a professional at his own business.

 

[REWahoo]

exactly who is usaa and how do you find them.

USAA.com

To become a member you need to have served in the military. You may also be eligible if one of your parents served.

Pentagon Federal Credit Union also offers the same car buying service. Anyone may become a member.

penfed.org

 

[ChiliPepr]

I did misspeak a bit... Yes, your credit score is used for other things than just borrowing money.... But, If you never borrow money and pay all your bills on time your credit score should be high enough that it will not negatively effect you when you get insurance or a job or anything like that.

At last check I have a credit score over 800. I do have a mortgage and a credit card, But, it has been over 10 years since I carried a balance on any credit card, or had any type of a loan (car, installment, store...)

I would be very interested in hearing of a situation where someone did not get a job or had to pay for higher insurance because of a low credit score, where the low score was only due to lack of credit history.

 

[Texas Proud]

I did misspeak a bit... Yes, your credit score is used for other things than just borrowing money.... But, If you never borrow money and pay all your bills on time your credit score should be high enough that it will not negatively effect you when you get insurance or a job or anything like that.

At last check I have a credit score over 800. I do have a mortgage and a credit card, But, it has been over 10 years since I carried a balance on any credit card, or had any type of a loan (car, installment, store...)

I would be very interested in hearing of a situation where someone did not get a job or had to pay for higher insurance because of a low credit score, where the low score was only due to lack of credit history.

You also might be assuming that you need to 'carry a balance' on a credit card for it to be considered credit.... this is false.. when you use a CC you are borrowing money right then... you might pay it back when you get the bill and not pay any interest, but you DID borrow money...