So right now I have an 811 credit score, which is pretty cool and get me some good rates and stuff, and I also have 6 lines of credit with pending credit that I could accept today and have access to over 50k in credit money.
But here is the catch, I’m debt free, I hate using credit cards and I don’t want to use them. So I’m at this cross roads of, do i close all my credit cards and then become on of those Dave Ramsey folks that don’t have credit or do I keep it open and use the one bill method and maintain something that I don’t think I’ll use again.
So if you are watching this video, I’ve made videos like this before, where I talk out load and you guys get to see how I made decisions. I did when I was considering paying off my debt and then boom I paid it off. ( so use common sense as you watch this video and don’t be a dummy and start closing accounts if you’ll be buying a home soon )
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Lets Talk about the Benefits of having a credit Score
The only way to maintain a crerdit score is to borrow money
And the only benefit to having a credit score is to borrow money
It creates this cycle
The Strategy I Use to not find myself overspending on a credit card is the One Bill Method:
I use automatic bills
Automatic payments
And avoid using the card for anything else
On top of that here are common benefits:
You get points/miles
Better interest rates for when you borrow money
Theirs less friction ( Job, Apartment and mortgage )
Here are the Draw Backs
When you play stupid games you win stupid prizes and most people get finessed with credit cards
Cons:
Most people Overspend ( between 10-20% extra because of the lack of pain receptors activated in the brain ) quick test, when was the last time you looked at a receipt for gas, groceries or drive through
A lot of Intererest Payments ( a lot of people say they pay every month but a lot of people don’t )
What is a Zero Credit Score
Its when you stop reporting any activity to the FICO people
And they don’t have a way to gauge you based on borrowing money
Beucase you no longer borrow money and that has some consequences but not really
Consequences
Insurance Premiums may be higher ( negotiate, no credit is not the same as bad credit )
Electric company ask for a bigger deposit ( not crazy deal)
A landlord may not rent to you ( other landlords exist )
Youre unlikly to get a mortgage ( that’s a lie )
No cell phone plan sometimes
How do you get a Zero Credit Score
Usually happens after closing all your accounts and paying off your debt
And 1 year goes by without any reporting
What is my decision as I stand here today
I think my one bill method works best
But I think I also need to make sure, I cant even think about using the cards
So one bill method in combination with cutting them
Why?
It removes frictions in a world where this is needed
For write not it feels like the most rational thing to do
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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.
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