To Pay Off or Not To Pay Off

[MrsPete]

Do you not understand the meaning of the word privileged?

And your children needed your help because?

Ah yes, no credit history. How do you think that would have gone had you not had a good credit history?

Yes, I understand the word, and growing up a poor in a farm family with too many kids and an alcoholic father who abandoned us, I know the word doesn't apply to my upbringing. I didn't start with any credit history -- on the day my husband and I got married, we had $200, one car and four jobs. As I said, we worked for everything we have.

Both of us put ourselves through college without help from our families, but we chose to pay for our children's educations. They could've done it on their own, but it was a choice we made.

Think what you will, but the reality is that my credit score means essentially nothing at this point in my life.

 

[DisneyTexan]

There are plenty of legitimate reasons why people (in general, not just you specifically) need to have good credit scores.

1. It allows you to connect utilities (gas, water, electric) without needing to hand over a cash deposit.

2. It allows you to rent an apartment that is owned by a large company.

3. It makes you a more attractive tenant to a private landlord, and makes it easier to secure a rental.

4. It makes you an attractive client for banks for all types of loans: car, business, personal.

5. If you happen to be a military member who needs a Secret Clearance, a good credit score is essential to obtaining/maintaining it.

6. If you are a private citizen (non military) working for a Government contractor or the DoD in some capacity, who holds a Top Secret Clearance, you need to maintain a high credit score and a pretty immaculate credit profile. Losing your TSC usually means losing your job.

7. Anyone who wants a job in an industry that involves a high level of trust (anyone who handles cash, works in the financial services industry, etc.) need to have a clean or nearly clean credit report in order to qualify for a job.

 

[tvguy]

Big disasters are never the result of one thing -- it's always a combination of several negatives happening at the same time.

Yes, easy credit /undeserved credit was one thing that got people in trouble at that time.
Other components included people buying "more house" than they could afford ... banks giving out subpar mortgages ... bank failures /bailouts ... older people being unable to retired as planned ... thus, jobs not opening up for young people ... more young people borrowing for school. Probably more, but the economy could've handled any one of these things; it was the combination of all of them coming together that caused the economic collapse.

But individuals ultimately have to take responsibility for their financial decisions. Just because you can, doesn't mean you should. I just watched too many people who got sunk because they took on too much debt for thinks they didn't need.

 

[ruadisneyfan2]

Just because you can, doesn't mean you should.

This is so true. I'm flabbergasted at home values these days and wondering how people are qualifying to buy at these crazy prices.
Houses on our street are selling for 5x what we paid for ours. This wouldn't happen if mortgage lenders would say, "Sorry Ms. Teacher and Mr. Policeman, you're not millionaires and you can't afford a home this expensive.

We bought in 1996 and realtors would have had us eating nothing but Ramen noodles for 10 years, trying to convince us to buy more than we could afford.

 

[tvguy]

This is so true. I'm flabbergasted at home values these days and wondering how people are qualifying to buy at these crazy prices.
Houses on our street are selling for 5x what we paid for ours. This wouldn't happen if mortgage lenders would say, "Sorry Ms. Teacher and Mr. Policeman, you're not millionaires and you can't afford a home this expensive.

We bought in 1996 and realtors would have had us eating nothing but Ramen noodles for 10 years, trying to convince us to buy more than we could afford.

Well, lenders were also under pressure from the Federal Government to be more liberal in offering loans.

 

[ruadisneyfan2]

Well, lenders were also under pressure from the Federal Government to be more liberal in offering loans.

Well, like you say, just because they can, doesn't mean they should. In the next few years we'll hear all the crying about people being under water and unable to refinance when better rates are available.

 

[MrsPete]

7. Anyone who wants a job in an industry that involves a high level of trust (anyone who handles cash, works in the financial services industry, etc.) need to have a clean or nearly clean credit report in order to qualify for a job.

Agree, but I'm retired -- no concerns about my credit score affecting my work.

For the record, my credit score is excellent. It just doesn't matter.

But individuals ultimately have to take responsibility for their financial decisions. Just because you can, doesn't mean you should. I just watched too many people who got sunk because they took on too much debt for thinks they didn't need.

Totally agree, but when I was a young adult /just buying my first house, people /magazine articles touted the line, "Buy as much house as you can as soon as you can." When my husband and I bought a simple house under our means, people kinda looked sideways at us.

 

[afan]

Think what you will, but the reality is that my credit score means essentially nothing at this point in my life.

Just because none of what @DLgal is talking about applies to you now because you are retired and own a house doesn't make it not valid. It was directed at you buy people in general as most people do actually need to be concerned about their credit score and helping it grow. That's why there's places on redit and elsewhere about doing exactly that. No reason to be dismmisive of it. It it no longer applies why say it doesn't matter? Why say anything at all as it takes away from the question the OP asked about paying off their loan?

 

[tvguy]

Just because none of what @DLgal is talking about applies to you now because you are retired and own a house doesn't make it not valid. It was directed at you buy people in general as most people do actually need to be concerned about their credit score and helping it grow. That's why there's places on redit and elsewhere about doing exactly that. No reason to be dismmisive of it. It it no longer applies why say it doesn't matter? Why say anything at all as it takes away from the question the OP asked about paying off their loan?

I don't agree. Like I said earlier, an industry has emerged to help people raise their credit scores. An industry that is making lots of money doing something people can do themselves for free. Here are the basics of a good credit score. Live within your income and pay your bills on time.
My son, DIL and daughter have no idea what their credit score are. They just know when they bought their houses that they qualified for the lowest mortgage rate offered.

 

[tvguy]

Well, like you say, just because they can, doesn't mean they should. In the next few years we'll hear all the crying about people being under water and unable to refinance when better rates are available.

Funny thing about many of those people in 2008, if you look how much rent those who were "underwater" would have paid over the time they were in their house, they were money ahead by buying.

 

[ruadisneyfan2]

Funny thing about many of those people in 2008, if you look how much rent those who were "underwater" would have paid over the time they were in their house, they were money ahead by buying.

Maybe but still there were so many who were in way over their heads and ended up in forclosure.

 

[DLgal]

Funny thing about many of those people in 2008, if you look how much rent those who were "underwater" would have paid over the time they were in their house, they were money ahead by buying.

You can never make general statements about the economics of renting vs buying. It is a different calculation in all areas.

 

[DLgal]

I don't agree. Like I said earlier, an industry has emerged to help people raise their credit scores. An industry that is making lots of money doing something people can do themselves for free. Here are the basics of a good credit score. Live within your income and pay your bills on time.
My son, DIL and daughter have no idea what their credit score are. They just know when they bought their houses that they qualified for the lowest mortgage rate offered.

What industry exists to solely help people raise their credit scores? I have no idea what you are talking about.

Credit scores are much more than just "paying your bills on time" and you are ignoring people who end up in debt due in no part to anything that was within their control. Many, many people end up in medical debt due to lousy insurance because of systematic failures in this area. People get sued. People go through nasty divorces and end up owing on debts they did not incur, and on and on. Credit is something that is easily built up but just as easily destroyed.

Anyone here talking about how they have good credit and always have GOT LUCKY as much as they "worked hard to pay off their bills and live within their means.

 

[tvguy]

What industry exists to solely help people raise their credit scores? I have no idea what you are talking about.

Credit scores are much more than just "paying your bills on time" and you are ignoring people who end up in debt due in no part to anything that was within their control. Many, many people end up in medical debt due to lousy insurance because of systematic failures in this area. People get sued. People go through nasty divorces and end up owing on debts they did not incur, and on and on. Credit is something that is easily built up but just as easily destroyed.

Anyone here talking about how they have good credit and always have GOT LUCKY as much as they "worked hard to pay off their ills and live within their means.

Well, there are commercials on TV every day for services that claim will raise your credit score. "Boost" comes to mind and their irritating commercials with the cow saying "boooooooooooooooooooooooooooost". There is also Rocket Money, and Credit Karma. Like I said, a whole industry of companies that will help your raise for credit score, for a fee.

Absolutely, there are things like medical expenses you can't control, although most health providers have payment options in place.
As for getting divorced, I would hope that financial situation gets sorted out by the court in the divorce decree. Same with getting sued.
Those however, I think are the exception to the majority of people with credit problems that are by their choice. Like my former neighbor, they have a mortgage, and two car payments, a boat payment, a 5th wheel trailer payment, and a payment on a big diesel pickup to pull the trailer. Their solution was to try and walk away from the house, and keep everything else. Unfortunately, the way their debt was structured. the mortgage had a provision allowing the lender to garnish the wife's wages and she made more than enough to cover that. And amazingly, all that other debt and they didn't qualify for bankruptcy. No idea how they finally resolved their situation other than they did sell the house.

 

[barkley]

This is so true. I'm flabbergasted at home values these days and wondering how people are qualifying to buy at these crazy prices.
Houses on our street are selling for 5x what we paid for ours. This wouldn't happen if mortgage lenders would say, "Sorry Ms. Teacher and Mr. Policeman, you're not millionaires and you can't afford a home this expensive.

We bought in 1996 and realtors would have had us eating nothing but Ramen noodles for 10 years, trying to convince us to buy more than we could afford.

sadly, i strongly suspect we will see a number of foreclosures where we live over the next few years. it's not the same situation we saw where we lived in the suburbs in the late 90's with people overpaying and signing up for adjustable rate and balloon payment loans that they were entirely unable to afford when they came due but the i think the result will be the same. here it's people who bought at insanely high prices with historically low mortgage rates BUT their desire to live ruraly didn't have them factor in the cost of commuting with historically high fuel prices let alone the unique costs of living and upkeep on rural property (either you plow the road or pay someone to do it-county won't, upkeep and repairs on water and sewage are on you, fire abatement is on you, weed board will issue an order of noxious abatement but the work/cost is on you....). it all adds up and then top it off with having to pay double, triple, quadruple the property taxes you saw the previous owner paying on the county records b/c you chose to pay that insane price and artificially drive up the value....all it takes it for the current inflationary trends to continue worsening, maybe some cutbacks at work/eliminated raises or bonuses due to recessionary trends and that house becomes a tumbling house of cards.

 

[barkley]

And amazingly, all that other debt and they didn't qualify for bankruptcy.

when congress overhauled the bankruptcy laws in 2005 it became much more difficult to qualify for liquidation.

 

[Ms Bibbidi]

Live debt free if you can.

 

[tvguy]

when congress overhauled the bankruptcy laws in 2005 it became much more difficult to qualify for liquidation.

In my neighbor's situation, that didn't apply.
In their minds, their marital debt was shared.
In reality, the wife was the only borrower on the mortgage and had a provision where the bank could garnish her wages, which they did when they stopped making payments. They were looking to walk away from the house.
The husband lost his job, and he was the only borrower on the toys (RV, Pickup, Jeep and Boat).
So the credit counselor and bankruptcy attorney said the only debts they COULD possibly liquidate were for the things they wanted to keep. They would not liquidate the house. They did end up getting the bank to do with a short sale on the house.

 

[barkley]

If you have no debt at all, after the credit history falls off your credit report, you have a thin fine and your credit score can plummet from the 800s to the 600s.

can only speak for myself but this has in no way been the case for us. we've been debt free for going on 10 years and our credit score never took a hit-it's currently in the mid to high 800's and has been that way consistently predating and following.

 

[DLgal]

can only speak for myself but this has in no way been the case for us. we've been debt free for going on 10 years and our credit score never took a hit-it's currently in the mid to high 800's and has been that way consistently predating and following.

Same. This is an old myth.