Credit Rating

[A-37]

Went to close the deal on a 2017 Honda Accord Touring model yesterday.

Had planned to take advantage of the Honda Financial Services $1000 military rebate with a .9% loan.

Not so fast! My credit rating came back as "No information". The sales manager asked if I had paid off any loans, mortgages, etc. within the past few years. I said, "No, I don't own anyone a dime."

Too bad. HFS would not make the loan without a clean credit rating.

Solution: Get a certified check for the total amount. The dealer honored the $1000 military report. Nice guys.

Now I have to figure out how to establish a credit rating without buying another house!

Exact car:

2017 Honda Accord sedan - Photo Gallery | Car and Driver

 

[bigwheelzip]

I had the same thing happen when my husband and I bought Honda motorcycles. Hubby got disgusted and told the finance officer to put both bikes on his loan. When the manager saw the paper work with both bikes in hubbys name, he overrode the finance officer and put it back on me.

One option, since you have the cash, might have been to take whatever interest rate was offered as long as there is no pre-payment penalty, and paid it off immediately.

Enjoy the new wheels.

 

[kwselke]

You're are military and should be eligible for USAA. Apply for one of their Visa cards. Use the card for a few purchases each month, and pay the balance in full each month. It is convenient, the card has no annual fee, and you will have credit reported.

 

[LVSteve]

Just shows what a nonsense the credit rating system has become.

I bought my first house in the US last year and got a 0% note on my fiance's SUV. Judging by the huge number of credit card and loan solicitations in my mailbox my credit rating is going up vertically and about to engage warp drive for the Andromeda galaxy.....and yet I owe a several shed loads of money.

 

[DWalt]

My Chase card offers free credit ratings and credit reports any time you want. Credit Karma does also. You might sign up to Credit Karma and see what their reports say about you - or if you even have a credit rating. I check Credit Karma a couple of times each year just out of curiosity as I very seldom use credit to buy anything except for my credit cards.

 

[ChattanoogaPhil]

Get a credit card and use it.

We have no loans, auto, mortgage or otherwise. The only thing we have are credit cards (we put about everything on them) that we pay off every month. Discover has a portal to FICO for viewing. Our FICO score stays above 800 which is high enough for any auto loan deal. They bounce around five or ten points from month to month which I have no idea why. Though it irritates the wife when mine is higher.

Yes, having no loans or recent loan history negatively impacts the score, and it does ours. But still... no need for a loan for a decent score. As long as you're not a deadbeat on your other bills... credit card should be fine absent loan activity.

 

[DWalt]

Same for me. The only items on my credit score are a few credit cards, but even so, my rating has consistently been in the low 800 range. I don't quite understand.

 

[chief38]

Kind of counter-intuitive but a man who owes tens of thousands of dollars and pays the minimum amount each month has a better credit rating than a multi millionaire who buys everything for cash and has no credit cards.

Unfortunately, that is how our world works these days - so like some have mentioned, get a credit card like Visa, use it (but don't abuse it) and pay the charges off in full so you don't encounter absorbent interest charges. You will soon have an excellent credit rating.

I always pay my monthly balance in full and never charge more than I can afford to pay at the months end but I DO get cash back on purchases at the end of the year with Costco's Citi Visa card. They give you 4% back on Gasoline, 3% on Restaurants, 2% on Costco purchases and 1% on the rest. Lets say you average 2.5% and charge 40,000 per year you would get back 1,000.00 CASH from them at the years end. Works for me

 

[A-37]

I have a USAA Visa card and pay it off every month. I also have a Sam's Club MasterCard with a monthly balance of around $1500. Everything's paid off before it's due.

My credit rating should be solid gold.

 

[Tom S.]

Kind of counter-intuitive but a man who owes tens of thousands of dollars and pays the minimum amount each month has a better credit rating than a multi millionaire who buys everything for cash and has no credit cards.

You are correct, but let's explore this a little further. There are far more people out there paying minimum amounts on credit cards than there are millionaires, and that's what banks are looking for, people who make minimum payments. As for the millionaire, where did his millions come from? Well, he's a banker....

 

[Jessie]

Yes, it's a strange world we live in. You have to owe money to be able to borrow money.
If you're clean with no debts and have been out of debt for a while, you have no recent history and you're now a risk.
Go figure

 

[kwselke]

I have a USAA Visa card and pay it off every month. I also have a Sam's Club MasterCard with a monthly balance of around $1500. Everything's paid off before it's due.

My credit rating should be solid gold.

You have a credit rating then. They just did not want to honor the low rate deal and were using smoke and mirrors. Pull your credit report from one of the three agencies and see what it says. It's free to do it once a year.

 

[Lee's Landing Billy]

I had the same thing happen when my husband and I bought Honda motorcycles. Hubby got disgusted and told the finance officer to put both bikes on his loan. When the manager saw the paper work with both bikes in hubbys name, he overrode the finance officer and put it back on me.

One option, since you have the cash, might have been to take whatever interest rate was offered as long as there is no pre-payment penalty, and paid it off immediately.

Enjoy the new wheels.

Zip, I did this last week!!!!!

 

[bigwheelzip]

Zip, I did this last week!!!!!

I'm just guessing at it's effectiveness in establishing a loan payment history for the ratings bureaus.

It's such a stupid game, but I think Honda's financial arm scores people more harshly than others to get another pound of flesh. When the manager of the motorcycle dealership (whom my husband had already bought several bikes from) was able to override finance and give the low rate, made it smell fishy.

 

[kwselke]

Year's ago I was buying a Ford F-150 and the salesman was going on about 1.8% financing available from Ford Motor Credit. I do not like monthly payments, but was getting 2.5% on my money market account, which loaned money to FMC. I was going to pay cash, but thought I could make a couple of bucks by borrowing $10,000 on the truck for three years. So I sit down and the salesman presented the paperwork. The monthly payment did not reflect the 1.8% rate. I said this payment is not right. I pulled my calculator out of my briefcase, punched a few buttons, and said this is the correct payment. The salesman said, well not everyone qualifies for the discount financing. He scoots off to the finance manager. The two of them come back with corrected paperwork and the finance manager said... you have very good credit. Smoke and mirrors.

 

[Onomea]

I heard about the free credit rating reports about a year ago asked asked for mine. I was surprised mine wasn't perfect, because, like many of you, I have no debt, and pay all my cards off at the end of the month and always have.

I, too, learned that the issue was that I was not borrowing money from anyone.

I remember 35-40 years ago being astounded when, as a grad student who didn't have two nickels to rub together, some bank sent me an offer for a Visa card with a $2K credit limit... I remember thinking, "These yahoos are crazy," as I tossed the offer.

But, ya know? They aren't crazy. They are immoral. They get weak people in debt and then squeeze 'em for profit.

 

[ChattanoogaPhil]

I have a USAA Visa card and pay it off every month. I also have a Sam's Club MasterCard with a monthly balance of around $1500. Everything's paid off before it's due.

My credit rating should be solid gold.

If the CCs are in your name and SS then there's more to the story somewhere... somehow.

Nevertheless... one lesson here is to know your credit worthiness prior to applying for a loan. Actually, it's something to keep eye on regardless. That's one thing I like about Discover card is that you can check your FICO score anytime.

 

[richardw]

You're are military and should be eligible for USAA. Apply for one of their Visa cards. Use the card for a few purchases each month, and pay the balance in full each month. It is convenient, the card has no annual fee, and you will have credit reported.

Yes, this is the way to go. USAA is a good source for vets.

 

[old bear]

Like so many of you, I don't have any outstanding debt. With the exception of the normal monthly operating expenses. When I had to take over writing these monthly checks I was surprised how much money it took.

I have Discover and American Express cards. Both offer free FICO scores. I prefer the Discover card, excellent service, if needed, and the 5% cash back is great. I pay my credit card balance off each month.

 

[kwselke]

The promo rate deals are usually limited in number, and if the retailer does not think they need to use it to make the sale they can play many games.

 

[LMWIS]

My stay at home wife (income=$0) financed a new Ford. The application reflected no monthly income, had no co signer, yet they still gave her the car.

Equity in the house, and some Canadian version of a 401k type investments yes, but no actual cash flow.

Credit companies do some pretty odd stuff...,

 

[jdh]

30% of your score is based on credit utilization. Too low a percentage is as bad or worse than too much. While paying your balance in full every month may keep you from paying interest it does not help bump up your score.

While a perfect score is 850, a friend who has been in the loan generation business for decades once told me the highest score he has ever seen was 839.

 

[Krell1]

30% of your score is based on credit utilization. Too low a percentage is as bad or worse than too much. While paying your balance in full every month may keep you from paying interest it does not help bump up your score.

While a perfect score is 850, a friend who has been in the loan generation business for decades once told me the highest score he has ever seen was 839.

Perfect is not 850. My daughter and I both leased new cars at the same dealer on the same day. They ran our credit ratings and mine came in at 830, hers surprisingly was 875! She never lets me forget that fact.

 

[LoboGunLeather]

No mortgage to pay. No car payments to make. No outstanding debts.

Learned some years back how easy it is to use the Visa card for most routine daily expenses, then write one check per month to pay it off (instead of a dozen or more checks for groceries, gas, etc). This keeps my FICO score flying high, should I ever want to finance anything again.

 

[hoc9sw]

Yes, it's a strange world we live in. You have to owe money to be able to borrow money.
If you're clean with no debts and have been out of debt for a while, you have no recent history and you're now a risk.
Go figure

And this is where problems arise. The system is not looking to see if you have what we really would think of as "debts", meaning a mortgage, a personal loan, anything medium to long term. The system is looking at how well you pay your bills.

I have credit cards, but I pay the full due balance on every one each month. In a sense they are loaning me money for a few days, and I am paying it back. I have a very good FICO score. I don't have any "debts" as in something my Executor will have to sort out, beyond what was on the prior month's credit card. And because I still check to be sure I will have enough to cover all those bills in the bank, I am simply using a different vehicle to move my cash.

 

[robvious]

I hate the "games" they play with the auto loans... the look on the child asking me "what kind of monthly payment can you live with?" and my reply is "more than you make a year" is special... I am fortunate to have friends that are pretty far up in the dealer networks... along with some friends up there in corporate at my brand of choice... I do not buy vehicles often but when I do they know I won't put up with any of the usual stuff... just give me a price and if it is fair we are done... if not... I walk...

 

[NYlakesider]

No mortgage to pay. No car payments to make. No outstanding debts.

Learned some years back how easy it is to use the Visa card for most routine daily expenses, then write one check per month to pay it off (instead of a dozen or more checks for groceries, gas, etc). This keeps my FICO score flying high, should I ever want to finance anything again.

Have 2 credit cars I use for most anything I can. Pay it off in full each month and the credit card company is paying you to use their card. Note I said Credit Card, I refuse to have a debit card

You said write a check, I just call the 800# answer a few questions to verify identity and pay the CC that way. Two less checks to write!

 

[vytoland]

Now I have to figure out how to establish a credit rating without buying another [/url]

get a credit card that offers "cash back" and use it for most purchases...finance that new car with dealer/manufacturing program...receive additional discount on car purchase....then pay off finance balance after a few payments...

that's what we just did last week when we bought a new car.....

 

[ChattanoogaPhil]

Have 2 credit cars I use for most anything I can. Pay it off in full each month and the credit card company is paying you to use their card. \

Yes, they do!

We've ended up with a couple more cards due to cash back deals. For example, Sam's Club MasterCard is 5% on all gasoline purchases at any gas station, not just Sam's fuel. We thought that was pretty good so we go it just for gas. Discover has a lot of 5% cash back but it rotates the type of purchases that qualify every three months or so. It all adds up.

 

[jsfricks]

I have a Capital One cash back card. Use it for purchases every now and then and then go online and pay it off every month. Everything you buy with it gives you cash back and I have mine applied to my bill. I've been doing that for years. Then download the app Credit Karma which is free to check your credit rating. I just checked mine and it's 832. The best is 850. I've never paid any interest to Capital One. But they have paid me over a $1000 over the years.