Getting credit, avoiding debt - establishing a financial self

[akdiver 3]

akdiver, this:

Education is worth borrowing for, but please try to avoid student loans if you can.

Is what I was disagreeing with. Student loans usually have better interest rates than financing education by other means. Everything else seems spot on, especially the part about getting a marketable degree.

Why would you borrow money if you don't have to? In case it wasn't obvious the point was NOT against using student loans as a method of borrowing, but to avoid using ANY method of borrowing, if it is not really necessary. Edited May 4, 2007 by akdiver

[simple_male 1]

I can only ask the new comers not to use credit card that much. Use very minimum amount and pay it off within a month. Credit card debt is hurting many families in America.

[brtlmj 0]

All good advice. One thing that could be mentioned is the possibility of getting a secured credit card, especially if the USC spouse does not have a perfect credit history.

And here is something for those who want to avoid problems in the future: http://www.flixxy.com/financial-advice.htm

[akdiver 3]

Credit cards get a bad rap. People blame them because some people charge them up and pay the minimums. If not for credit cards, these same people would be going to pawn shops, getting payday loans, and other forms of expensive financing. Dumb people will continue to make dumb decisions, no matter how much you try to protect them.

Credit card companies also get a bad rap because they "prey" on dumbasses. While there are some instances of truly illegal practices, such as holding payments beyond the due date, so they can collect late fees, this is the rarity. It's not their fault if people are willing to pay high rates, go over their limits, pay late, or whatever. It is NOT their responsibility to control people's spending habits, or treat them like children, or whatever. It's just a case of people wanting to point fingers at everyone else but themselves.

That said, a little debt is not a bad thing. Some debt is very good, worth doing. I went into debt big time for a house and education, but these things have either appreciated in value, or has allowed ME to appreciate in value, and would not have been possible otherwise. Other debt is not great, but it's not horrible either. It can be perfectly reasonable, esp. if you can clearly pay the debt off, and it is well managed (think car payments). Going into some debt of course is just stupid, if it is over extending your finances. Most consumer debt falls into this category. But not all. Overall, even with a lot of debt, it can be "not bad" as long as you have the CASH FLOW to manage it. Of course, one wants to avoid debt, but doing this religiously, as if going into debt for any reason is some horrible offense against nature is just silly.

Even if you have no desire to go into debt, avoiding credit cards is just silly. Nothing says you can't pay them every month, they help build credit so that if one day, you need credit for some reason, you have it available, and also can provide some other benefits. I don't remember the last time I had to buy an airline ticket. Seems like I can always get free tickets, mostly due to a credit card that gives me miles. This year, I got two tickets, last year, I got four tickets (that I can remember), all with credit card granted airline miles. (:

Some facts (Federal Reserves 2001 Survey of Consumer Finances):

• In reality, most Americans owe nothing to credit card companies.
  
• Most households that carry balances owe $2,000 or less.
  
• Only about 1 in 20 American households owes $8,000 or more on credit cards.
  
• 23.8% of American households have no credit cards at all -- no bank cards, no retail cards, nothing.
  
• Another 31.2% of the households the Fed surveyed paid off their most recent credit card bills in full.
  
• So together, the households that owed nothing on credit cards equaled 55% of the total.
  
• Only 29% of households owe $1,000 or more on their cards.
  
• 21% owe $2,000 or more.
  
• 6% owe $8,000 or more.
  
• 4% owe $10,500 or more.
  
• 1% owe $21,400 or more.
  

That $8000/household cc debt figure you hear is quite misleading because it is an AVERAGE. What's the average wealth of you, 15 friends, and Bill Gates? $5 billion dollars? Obviously misleading.The MEDIAN is a far more useful value to look at, and for American households, the MEDIAN cc debt is around $1900 according to this research.

Fair Issac reports:

• About 48% of credit card holders owed less than $1,000
  
• About 10% of card holders had total card balances in excess of $10,000.
  
• More than half of all people with credit cards use less than 30% of their total credit card limit.
  
• Just over 1 in 8 people use 80% or more of their credit card limit.
  

Of course, there are "problems":

• More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis.
  
• 13% who owe that much have household incomes under $30,000.
  
• The percentage of disposable income used to pay debts is still near record highs.
  
• The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.
  

So what we're really seeing here is that lower-income people are trying to live beyond their incomes. That's just personal irresponsibility, not the fault of credit card companies. Don't blame them, blame the American worship of consumerism, and the belief that everyone should have everything, without regard to means, income, or merit.

Credit cards, and credit in general, is like anything else - yes, they can be abused, but they can also be used responsibly by millions of people. And some of us have had the fortunate (or unfortunate, depending on how you look at it) experience of doing both (:

Cheers!

AKDiver

[akdiver 3]

From user TWV706:

Credit reporting agencies such as Equifax, TransUnion, Northern Credit Bureaus and Equifax, only collect information from creditors about consumers’ financial experiences in Canada and is seperate from U.S. credit reporting agencies and vice versa. Despite this, financial institutions may be willing to recognize your earlier credit history outside Canada or vice versa if you ask them to do so. This may involve, for example, requesting a copy of your credit report from the credit-reporting agency in the other country and sitting down with a branch officer to discuss your credit or loan application.

In conclusion, I found that credit reports and profiles do not transfer from one country to the next. When moving to a new country, you will have to start from a no credit profile, therefore you may have to apply for a secured credit card to build a credit score, which I have located a site at http://www.consumerbadcreditguide.com that has secured and unsecured credit cards to start building credit.

Cheers!

AKDiver