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I followed this advice in my youth. Never applied for a credit card, never took out a loan, never bought anything I couldn't afford to drop cash on. I thought it would show I'm fiscally responsible because I'm not accruing debt.
Then I got an opportunity to work a govt job providing communications for the White House; basically, following the president around and ensuring he's able to communicate at press events, etc. I applied for the job and was told I was their #1 candidate...
...But they ran a credit check on me and was surprised when they got zero results. I proudly stated that I've never been in debt before, so my credit risk is zero. But according to them, zero credit history is shady as fuck. They said they couldn't tell how well I manage money because there's no history showing regular, on-time payments on credit cards, loans, etc.
They couldn't tell if I had trouble managing money or not. That made me a potential bribe risk. Someone could offer me tons of money to slip a bomb into the president's podium, or let a suspicious character into the White House, and if I'm hurting enough for money, they suspect I might be willing to do it.
Literally, my entire history of service in the govt had no bearing on my loyalty. Only my credit score. I lost that job opportunity because I was fiscally responsible.
I went out and got a credit card that same day. I now have an extremely high credit score, which I keep up by paying all my bills and utilities on credit, then paying off almost all of it at the end of the month. I think it's stupid that I need to put myself in debt, then pay my way out of it over time, spending even more money in the long run, just to prove I'm fiscally responsible. That should prove that I suck at managing money, not the other way around. But that's the broken system we have today.
I'm confused - you pay off almost all of your credit card and you're "spending even more money in the long run". Why not just pay off all of it? Surely if you were able to afford your bills with cash, you'd be able to pay off your credit card in full every month since the bills would be the same?
If you want good credit, you don't pay it all off. You need recurring payments over time. If I pay it all off at once, then my credit score doesn't go up much at all. But if there's a constant debt on my card and I'm never late in paying at least the minimum required each month, then my credit score skyrockets quickly.
This is why the system is garbage. You need to spend more money to show you're excellent at managing money. It's a dumb system that makes no sense.
I pay almost everything off because it minimizes the interest I have to pay while keeping a line of credit running on the card. But it's important to keep that line of credit active, or else your credit score stagnates.
I’ve got a high credit score and I’ve never not paid it off in full. It's only really ever went up over the years, with the occasional tiny 1-3 digit drop. I'd never pay interest I don't need to in exchange for a higher rating; they've got enough money.