Living on a Budget, Saving Money/credit cards

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Question
So I am a strong believer in never using credit. But I've come to realize when I want to buy an apartment, new car, or a home that I would need credit to prove I am "Financially Responsible". I think it's ridiculous that you need credit to prove financial responsibility. But anyway. I was wondering if I got a credit card then shredded it so I would never be tempted to use it, would my credit score build up? Could I buy an apartment, home, or new car without the actual card itself?

Answer
Great question. The short answer is that it would probably help your score very little because you would not be going into debt with it.  The FICO score is a I love debt score.  35% is your debt history, 30% is your debt levels, 15% is your debt length, 10% is type of debt and 10% is your amount of new debt. As you can see by the break down of the most important is your history to pay and how much debt you have now.  The whole system is basically a marketing ploy to make us think we have to have banks products, debt. If  you are performing well with you debt, paying it on time, have the right levels and keep in debt, we will reward you with a high score and the ability to get more debt! If I gave you a million dollars your FICO score would not go up at all.    Your best bet is to go to a bank with brains, a small local one, and make them check your financial records to see that you have been responsible with your money,(that is what banks use to do when your wanted a loan) and you need to save a large portion of the cost of what you want to buy (the full portion is the best route). If you do that you will be far ahead of most people, because you will have little debt.  Another scary option is if you did get a card is to put things on it that you normally pay every month. MAKE SURE YOU PAY IT EVERY MONTH!!!!!  It is inferior to the first option.  The first option not only is financially superior it also builds character.  Trust me you dont have to have everything now like the world makes you thing.  

Living on a Budget, Saving Money

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Tim West

Expertise

Budgeting, credit, collections, basic insurance and investing. Small business budgeting basic will and estate planning.

Experience

Financial coach since 2009. Help coach people in personal and small business financces.

Education/Credentials
Head of financial ministries at Grace Fellowship of Augusta,Dave Ramsey Certified financial counselor and 20 years of doing it my self.

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