Understanding Credit

[PhilHill]

My nephew recently applied for a credit card. Like everyone starting out, he was denied because of no credit record. This puzzled him, so I foolishly attempted to explain the system to him.
"They won't give you credit because you don't have any record of getting credit." I said. "But how can I get a record of having credit if no one will give me credit" He asked. "You have to owe a lot of money to people" I told him,"Then you have good credit." "If you always pay your bills immediately, then they have no way of knowing if you'll pay your bills?" He asked, with a funny look on his face. "Yes" I said. "You only have good credit if your in debt." This resulted in a more confused look on his face. "So, if I incur a lot of debt by not paying for things right away, then I'll be a good credit risk?" He said. "Right" I said "You have to owe all kinds of debt before they know that you can be trusted with money."
He then walked away muttering to himself, but at least he understands the system now.

 

[Verne Bunsen]

It’s weird, huh? Almost like your credit score has more to do with creditors ability to make money off of you than with your ability to responsibly manage money. The more interest you are paying consistently to your creditors, the more they like you. Weird indeed. What a racket.

 

[mayfly]

yea - they keep on wanting to increase the credit limit on our cards because we keep paying them off 

I wonder - my wife and I paid off our mortgage years ago.  I wonder if we have a bad credit rating because of that ... :icon_scratch: :icon_thumright:

 

[PhilHill]

Surely you all don't think these good people have less than honorable intentions. Don't you watch their advertising? Their only concern is in bettering your life through their selfless service. :laughing7: :laughing7:

 

[BroccoliRob]

i dunno, bank of 'merica was more than happy to give a wide-eyed 18 year old Roberto a credit card with a $2k limit way back when. maybe things are diff now

 

[TBurst Std]

i dunno, bank of 'merica was more than happy to give a wide-eyed 18 year old Roberto a credit card with a $2k limit way back when. maybe things are diff now

Was that because the Branch Mgr was also your Ranch Mgr?

 

[Verne Bunsen]

i dunno, bank of 'merica was more than happy to give a wide-eyed 18 year old Roberto a credit card with a $2k limit way back when. maybe things are diff now

Was that because the Branch Mgr was also your Ranch Mgr?

 

[BroccoliRob]

That's good stuff, ranch, branch, brunch. wait, brunch? why do people combine break dancing with lunch?

anyway, the day i got my credit card i was struck by lightning. well, not exactly struck. i saw someone else get struck. on television. it didn't look that painful, they just fell over and wiggled around a bit. I think he also lost the ability to taste asparagus or something, but that's more of a blessing than a curse.

that was also the day i bought a leaf blower (with the credit card). i didn't need one but our neighbor carl just bought a new one and seemed pretty pleased with it so i bought a better one (pro tip: don't make frivolous purchases with your first credit card. or any credit card) to diminish his satisfaction. mine had straps so i could wear it like a big backpack while Carl had to carry his like a peasant. i waited until he used his one afternoon and waved when he looked over. he turned his off and went in side so it was totally worth the $800.

i also bought my first guitar that wasn't a gift from my 'rents (parents). it was a japanese Squier. loved it.