Credit report madness!!! Score might not be good afterall.

breenthumbJune 25, 2009

Behaviorkelton has a recent post about "no debt? bad credit rating?" asking this question.

"What if I do this?:

Use my credit card for all purchases, but pay it off at the end of every month.

Does that count as a "credit history"? "

No! That's exactly what I've done for years. Imagine my surprise today when our boat insurance renewal said "We did not give you our lowest possible premium due to the following information that we evaluated from your credit history:

1. You had no auto loans or leases reported opened within the last 10 years.

2. The average open date of all your reported loans and accounts was less than 20 years ago. (What???)

3. You have fewer than 2 open, satisfactory loans and accounts. "

We have one credit card account. DH and I each have our own cards (same #)and I pay it off monthly. Mortgage has been paid off for several years. We live within our means and anything and everything we might need or want goes on that one card. If I were to buy a brand new car, it would go on that card and get paid off because we get cash back and I really like the year end summary they send each year listing and breaking down charges.

You better believe I called the company to find out what's up. Answer: Insurance companies check credit reports to evaluate your likelyhood of submitting a claim. Evidently, because we have no loans (also no accident reports) we don't fall into their "norm" so instead of their best rate of $110. we get to pay $150. I've just begun digging into this.

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Your story has nothing to do with paying off the cards each month!

"3. You have fewer than 2 open, satisfactory loans and accounts. "
is one of the reasons you did not get the best rate.

You say "We have one credit card account".

You failed to meet the criterion of at least TWO accounts.

Paying off monthly is irrelevant.

    Bookmark   June 25, 2009 at 9:58PM
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That's exactly my point! The average is 4 per insurance rep but 2 might qualify. So we have to open more credit card accounts whether we want them or not. Can't wait to see what our credit score is.

    Bookmark   June 25, 2009 at 11:08PM
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And isn't that what he was asking?

    Bookmark   June 26, 2009 at 12:26AM
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If you think that is bad read about this guy. He is definitely to blame, but its easy to see how you can be affected in other ways if you aren't careful about keeping up with your bills.

When Your Credit Report Costs You a Job Offer
Employers Look at Job Seekers' Credit Histories to Determine Trustworthiness
June 26, 2009—

Jeffrey Slebodnick was hired last summer to work as an adjunct professor at a technical college.

He had a master's degree, excellent recommendations, and no criminal record.

"I was given four classes and I was excited to start the term," said Slebodnick, 47, from Perry, Mich. who teaches geography.

"But a week after I was offered the job I got a call asking if I had any student loans, which I did, and when I planned on paying them," he said.

Slebodnick says he was told he would not be allowed to start work at an ITT campus in Michigan, because a credit check revealed he had some $50,000 in outstanding student loans and had recently declared bankruptcy.

"He told me they wouldn't hire someone who defaults on student loans. It was a shocker to get that phone call and get those classes pulled from me."

A link that might be useful:

    Bookmark   June 26, 2009 at 3:58PM
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Hi breenthumb,

Rumour has it that there are other insurance companies. Granted, there are fewer than there used to be, as they, like most corporations, hate competition on their own level and will go to great lengths to get rid of competitors.

Some time ago I had a personal tax-deferred retirement account with a stockbrokerage, which had incurred no administration cost for years, as it had been grandfathered that way when that company took over another company.

When I came to the age where I had to reverse it from an account into which I paid in, into one into which I could no longer pay in, but must withdraw a certain percentage annually, which increases from about 7% at age 71 to 20% at age 90 and beyond, a problem arose. They said that there would be an annual administration fee, and my claim that it was a continuation/reversal of a fee-free account that I'd had with them for years fell on quite deaf ears.

So ... I did some checking with some other agencies, and came back to report that, since such and such a company and so and so company would agree to carry my account without an administration fee, I was considereing transferring my account ... they seemed to have a change of heart, for it appeared that they, too, could carry that account without an admin. fee. Which they've done for about 10 years, now: nice to have a little skill and effort save one well over $1,000., on occasion, right?

I didn't feel it necessary to include in my report the fact that I would be somewhat less inclined to use the other companies than the one that I had been with for years ... as Grandma used to say, "One should tell the truth ... but there's no reason that one should blab and tell all that one knows".

So ...

... if you don't, or haven't owed money for several recent years in several locations/circumstances ...

... they figure that your trustworthiness is suspect, do they?

As I've lived in over 20 locations in my 79 years (as I discovered when they asked over on KT in how many places one had lived), I've never owned a home ...

... so never had a mortgage.

As I live fairly frugally, I've had few loans. Which situation is aided by the fact that I tend to buy old cars and drive them into the ground, which usually takes 5 - 7 years ... which enables me to buy them for cash (having added a bit to emergency funds from time to time, and drawing on it to make those smallish purchases).

When I have substantial debt and must pay quite a lot of interest every month, it seems to me that, since much of our debt is usually non-deductible, if I have to pay $100. monthly in interest, and make $10.00 per hour, after-tax income ... that means that I work 10 hours/month for someone else, the holder of my loan(s).

I'd rather wait until I can afford to pay cash ... and pay myself, instead.

Learning how money works is an interesting hobby ... that pays well ... and I hope that you're developing increasing shrewdness at managiong your income and assets effectively: to benefit you rather than the other guys (with the exception of worthy charities).

Hope you're part way into a happy weekend.

One nice thing about retirement is ... that every day is weekend. A nice benefit of learning skillful management of money may well be/quite likely will be ... early retirement (at your choice, not because your company downsizes when you're about 50 ... leaving you out in the cold).

ole joyful

P.S. I could qualify, as I've had a Line of Credit, usually unused, for about 10 years, and have had a credit (actually "debt") card for several years, which I use infrequently. I recently took on another, which offered 1.9% on transferred balances for most of this year, figuring that I'd buy some stock using the original card, then transfer the balance, as the bank, which had usually charged me bank prime on my loans (fully secured), they recently said that prime was 3.5% ... but they needed a 1.5% surcharge, to total 5%. Now, however, they say that the interest on my Line of Credit will be 2.25% ... so I'll take that, instead of jockeying on credit cards - not a good idea to shift from one horse to another while crossing a stream, I figure.

Most cards charge full rate (often 18% on mainline cards: 28% or so on store-issued cards) from the date of the advance until it is paid in full, and I'd not be sure how long it would take to transfer to the second card.

o j

    Bookmark   June 27, 2009 at 7:33PM
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Right you are, OJ. There are several companies and I'll be checking their rates. Starting with my real insurance co. (who no longer covers boats, so they partnered with this one just for boat policies). I want to be sure they are not doing the same thing with all my other policies without sending the disclosure page. We have been with them for over 40 years and they've been really good the few times we had a claim so I'd hate to have to change. The credit card I use is also with them so they know all my payment history on policies and credit.

As far as paying interest, I always look at it as ultimately paying more--often much more-- for anything I buy. Why look for a good price then add to it by paying interest?

Hope you're having an enjoyable weekend as well.

    Bookmark   June 28, 2009 at 11:06AM
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"He told me they wouldn't hire someone who defaults on student loans. It was a shocker to get that phone call and get those classes pulled from me."
I'm shocked that he was shocked.

    Bookmark   June 28, 2009 at 7:49PM
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Hi again breenthumb,

There's something about your comment that drew my attention.

You say, "Starting with my real insurance co. (who no longer covers boats, ....", and my reaction is that a
"who" relates to a person, and a "which" to a thing ... and in my book, while corporations like to make noises about their warm and fuzzy concerns with customer service and all, their dealings follow policies, most of which relate to their bottom line.

Which make them, in my book, more a thing than a person - a "which", rather than a "who".

I'm not meaning to be critical of your message: I intend this an a comment/observation rather than a criticism ...

... but it seems to me that precision of language leads to precision of thought, and vice versa.

I've said to a number, over the years, that one of the major issues that affects how successful we are in life is our ability to communicate our thoughts/images as they are in our mind into someone else's mind, via ear (or eye, and other ways) as precisely as it was formed in ours, with as little misunderstanding as possible.

And the quicker and more effectively that we have proved ourselves capable of doing that has a major effect on our reputation with others.

May I add, even more so in these days when, rather than earlier by face to face contact or telephone, where other nuances are apparent, modern communication is increasingly be email and the like, where the nuances aren't apparent.

End of rant.

ole joyful

    Bookmark   June 28, 2009 at 10:33PM
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So our insurance co. ( which no longer covers boats) checked and no, we aren't being charged more and checking credit is not yet one of the ways they determine rates. But she had heard about that from other customers and assured me we would be notified beforehand if/when they do. Policy then would include the disclosure form too.

Five minute phone call to another company and we could drop our yearly boat policy cost from $150. to $94. for the same coverage.

But, from the conversations I had, it did sound like that credit check may become the norm for insurance companies. So I'm going to open more credit cards in an effort to appear "normal".

    Bookmark   July 10, 2009 at 9:40PM
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On the other hand it might work against me just because it's newly opened and looks like I need more credit. Just dunno.

    Bookmark   July 10, 2009 at 10:58PM
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