Question about maintaining credit score

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peterwantstosave
Posts: 519
Joined: Fri Nov 24, 2017 7:28 pm

Question about maintaining credit score

Post by peterwantstosave »

Hi, there,

Wondering if anyone has suggestions for how to maintain a credit score, without using credit cards or a mortgage? I tend to spend too much on credit cards, and so debit cards work better for me. House is completely paid off.

Would like to keep a credit score in case I ever need it though.

Secured Share Loan with long duration is the best solution I've found so far. Any experience with it?

I've had success with Dave Ramsey's program, (baby step 7) but do want to keep a credit score more than I want to adhere to his dogma.

Ideas?

Thanks, Peter
Happy at Fidelity: FNILX/FXAIX/BSPIX
Johm221122
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Re: Question about maintaining credit score

Post by Johm221122 »

Do you have a safe deposit box at a bank? Put the credit card in there and use it for one automatic payment
cshell2
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Re: Question about maintaining credit score

Post by cshell2 »

Just put one or two auto payments on the credit card and set it up to pay in full automatically every month.
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slippinsurlies
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Re: Question about maintaining credit score

Post by slippinsurlies »

Some more info would be helpful. What's your current credit score? How many credit cards do you have? What's your oldest credit card, and how old is it?

Regardless, here are three ideas that come to mind...

Plan A) Cancel all your credit cards except for one. Keep the oldest one you have, which also has a $0 annual fee. Put the credit card in a drawer and stop thinking about it. Turn on auto-payment to the remaining credit card from your checking account. Put a reminder on your phone so that once per year, you take out that credit card, buy yourself a coffee, and then put the card back in the drawer.

Plan B) Cancel all your credit cards except for one. Keep the oldest one you have, which also has a $0 annual fee. Put the credit card in a drawer and stop thinking about it. Turn on auto-payment to the remaining credit card from your checking account. Take out a monthly subscription to something so cheap that the chance of you being unable to afford it is near zero. My wife does this with her $5.99 per month Peacock TV subscription. It builds her credit record, and she gets to watch Saturday Night Live. Win-win.

Plan C) If Plan A or B is too much to handle safely, just cancel all your credit cards. Your credit score isn't worth ruining your financial future. Just kill the opportunity for misuse and move on with your happy life.
“Don’t do something. Just stand there.” -Jack Bogle
Topic Author
peterwantstosave
Posts: 519
Joined: Fri Nov 24, 2017 7:28 pm

Re: Question about maintaining credit score

Post by peterwantstosave »

Thanks all. I’ll think about it.

Some more info

I’m 40. Closed all my cards for the first time in 2017. I’ve opened and closed approximately 35 cards in my lifetime. Oldest was closed in ‘17. Closed the one card I had opened earlier this year (Amex BCE) today. I didn’t do anything crazy, but found myself just overspending. By hundreds, rather than thousands.

None are open now, but I sorta keep wandering back towards them and opening and closing them. Twice this year. Want to nip it in the bud.

Net Worth is approaching $500K. I keep saving and investing with simplicity, Boglehead style. Just wanting to be sure I take every necessary step toward $1M in the next decade.
Happy at Fidelity: FNILX/FXAIX/BSPIX
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slippinsurlies
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Re: Question about maintaining credit score

Post by slippinsurlies »

peterwantstosave wrote: Sun Jul 07, 2024 9:44 pm Net Worth is approaching $500K. I keep saving and investing with simplicity, Boglehead style. Just wanting to be sure I take every necessary step toward $1M in the next decade.
Credit cards are absolutely not a “necessary step” to financial success. Pull the trigger on Plan C, if you ask me.
“Don’t do something. Just stand there.” -Jack Bogle
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grabiner
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Re: Question about maintaining credit score

Post by grabiner »

The main reason you will want a credit score is to qualify for loans. Are you planning to ever buy a home with a mortgage, or a car with a loan? If not, your score won't matter (although in some states, you may pay more for auto insurance if you have poor or no credit).

Even if you could buy a home for cash, the ability to take out a loan may save you a very large amount. If the only way to pay cash is to sell taxable stock for a large capital gain, or to make a withdrawal from your IRA/401(K) and pay tax and penalty, you'll be better off with a mortgage. (You can withdraw $10K penalty-free from a traditional or Roth IRA for a first-time home purchase, and any of your own contributions from a Roth IRA, but that isn't likely to be enough to pay cash for a home.)
Wiki David Grabiner
Topic Author
peterwantstosave
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Re: Question about maintaining credit score

Post by peterwantstosave »

thanks all,

I applied and was approved for a Fidelity Rewards Visa this morning. $1,000 credit line, but I think that might actually be good. I wish the card was with Fidelity rather than Elan, but everything else, CMA/Retirement/403b/Brokerage is at Fidelity, so at least I will get to see it all on one screen.

In gratitude, Peter
Happy at Fidelity: FNILX/FXAIX/BSPIX
Mike Scott
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Re: Question about maintaining credit score

Post by Mike Scott »

Set it up to pay your utilities or something and then do one of the "credit card" tricks. Freeze it in a block of ice. Give it to someone you trust to hold it for you. Safe deposit box. Anything that keeps you from having easy access. Don't carry it with you.
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wwhan
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Re: Question about maintaining credit score

Post by wwhan »

Having automatic bill payments & autopay balance on the credit card is the best way to improve credit score. Also keeping the oldest card helps. Having a low percentage balance of the creidt limit helps also.

Just keep a an image copy of the card, front and back and then shred the card. Only use the image for entering the autopayment utilities accounts.

Credit Score Ingredients;

............ Payment history, Your history of paying bills on time

............ Amount of debt, Your total amount of outstanding debt

............ Length of credit history, How long you've had credit

............ Amount of new credit, Amount of credit you've recently obtained or applied for

............ Credit mix, What types of credit you're using

Credit score can affect insurance rates.

https://www.nerdwallet.com/article/insu ... ance-rates

https://www.cnbc.com/select/credit-scor ... insurance/
Topic Author
peterwantstosave
Posts: 519
Joined: Fri Nov 24, 2017 7:28 pm

Re: Question about maintaining credit score

Post by peterwantstosave »

thanks so much for these details!

P
Happy at Fidelity: FNILX/FXAIX/BSPIX
LookinAround
Posts: 983
Joined: Tue Mar 27, 2018 5:41 am

Re: Question about maintaining credit score

Post by LookinAround »

peterwantstosave wrote: Sun Jul 07, 2024 9:06 pm Hi, there,

Wondering if anyone has suggestions for how to maintain a credit score, without using credit cards or a mortgage? I tend to spend too much on credit cards, and so debit cards work better for me. House is completely paid off.

Would like to keep a credit score in case I ever need it though.

Secured Share Loan with long duration is the best solution I've found so far. Any experience with it?

I've had success with Dave Ramsey's program, (baby step 7) but do want to keep a credit score more than I want to adhere to his dogma.

Ideas?

Thanks, Peter
Pre-paid credit cards will limit your spending while helping with a credit score. You should find much online. Here's just one article I pulled up
5 Prepaid Cards That Build Credit (2024)
MBB_Boy
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Re: Question about maintaining credit score

Post by MBB_Boy »

grabiner wrote: Sun Jul 07, 2024 11:03 pm The main reason you will want a credit score is to qualify for loans. Are you planning to ever buy a home with a mortgage, or a car with a loan? If not, your score won't matter (although in some states, you may pay more for auto insurance if you have poor or no credit).

Even if you could buy a home for cash, the ability to take out a loan may save you a very large amount. If the only way to pay cash is to sell taxable stock for a large capital gain, or to make a withdrawal from your IRA/401(K) and pay tax and penalty, you'll be better off with a mortgage. (You can withdraw $10K penalty-free from a traditional or Roth IRA for a first-time home purchase, and any of your own contributions from a Roth IRA, but that isn't likely to be enough to pay cash for a home.)
OP could also use manual underwriting, offered by plenty of places including the largest lender in the country, Quicken (Rocket)
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whodidntante
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Re: Question about maintaining credit score

Post by whodidntante »

Just keep hanging out here. After a few years, you'll ask if you can retire with two million dollars. The answer will somehow be no, but at least you'll have two million dollars.
Topic Author
peterwantstosave
Posts: 519
Joined: Fri Nov 24, 2017 7:28 pm

Re: Question about maintaining credit score

Post by peterwantstosave »

Thanks all, and whodidntante, your response made me actually LOL. I hope to have that problem soon.

I appreciate this group very much.

FWIW, everything I can move is now at Fidelity. Some notes to remember for myself and in case they are helpful to anyone reading:

(CMA/Emergency Fund/Retirement (Roth & Trad)/403b/HSA/Taxable Brokerage/Fidelity Rewards Visa ($1,000 CL)).

CMA and Emergency Fund are each FDIC insured (Citibank is the Program Bank for both).

- Retirement (Roth & Trad), HSA and Taxable Brokerage are 100% Fidelity Zero Large Cap Idx (FNILX).
(I chose FNILX to catch any pennies, even though dividends are set to reinvest. When I was using Fidelity 500 (FXAIX) a couple pennies showed up and Fidelity said there was nothing they could do to reinvest them, because FXAIX share price was too high).

-In taxable brokerage, I do actually also have some secondary Tbills I bought to pay for property and income taxes for next year, they mature around the time I'll need them. I also have next year's IRA and HSA money earmarked in Tbills, so it's ready to go.

- 403b is 100% Fidelity 500 (FXAIX). Automatic from paycheck
- Workplace Retirement is 100% IShares 500 Index (BSPIX) -- Automatic from paycheck, as close as I could get to Fidelity 500 Idx. A shame it's not through Fidelity. ;-)
- And I have a bit of physical cash in wallet, too.

Hoping consolidation brings simplicity, repeatability and growth.

Thanks, Peter
Last edited by peterwantstosave on Wed Jul 10, 2024 7:06 am, edited 3 times in total.
Happy at Fidelity: FNILX/FXAIX/BSPIX
Nelly0
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Re: Question about maintaining credit score

Post by Nelly0 »

whodidntante wrote: Mon Jul 08, 2024 9:18 pm Just keep hanging out here. After a few years, you'll ask if you can retire with two million dollars. The answer will somehow be no, but at least you'll have two million dollars.
This is the right answer :sharebeer
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