I rent and am newly debt free. Do I need to maintain debt in order to keep my high credit score of 755?
- mldjayLv 51 decade agoFavorite Answer
If you don't keep borrowing your FICO score will eventually go away. Which isn't a problem because then you will have cash to buy things. If you have savings, why do you need a high score to buy things? Use the cash. As for getting a mortgage, you would need to go to a lender that does manually underwriting that actually looks at your salary, rental history, etc. Credit unions and home town banks will usually do manually underwriting.
This website will break down what is in your FICO score: http://www.fico.org/WhatsInYourScore.aspx
I suggest you read The Total Money Makeover by Ramsey for why you should stay debt free and use cash instead of credit.
- Tom's MomLv 41 decade ago
Yes, you have to keep borrowing & repaying to keep a high credit score. HOWEVER, you DO NOT need a high credit score to buy a house. You need to go to a mortgage broker that will do MANUAL UNDERWRITING. This means that they will actually check whether you paid your rent & utilities on time. Those things basically become credit references for you. If you have been paying those things on time for 2 yrs or more, you can get a conventional or FHA loan at a good rate. You are DEBT-FREE! Don't go back in the hole just to keep your credit score high! My personal goal is to be 100% debt-free (house incl.) & have NO credit score b/c I will have been debt-free for a long time. You are kicking butt! Just save for the big things you need (car, medical emergencies, etc.) & NEVER go back into debt. If you do take a mortgage, pay it off quickly. Then you won't care about your credit, b/c anything worth buying can be bought with cash. I have not borrowed since 2002. I buy cars, appliances, airline tickets, etc...with CASH(or RARELY a debit card). Besides, when you go into a furniture or appliance store w/ a stack of 100s you can get a much better deal. It makes the salesman suddenly remember where they stored the display model that they will sell for 1/2 price! :)
If you want more details on my general money/credit philosophy, you can get a copy of Dave Ramsey's "Total Money Makeover". (I think the new addition is discounted on his website or you can get the old one at a library).
Live debt-free! I can't wait until I can join you!Source(s): www.daveramsey.com
- lizzgeorgeLv 41 decade ago
No, you don't need debt to have, build, or maintain credit. Your score won't change when you pay off your debt (unless it goes up a bit due to point number 3 below). Credit scores are based on the following:
1. A credit history--the longer the better.
2. Access to credit--the higher your credit limit, the better.
3. Low debt to credit limit ratio--never carry a balance of over 50% of your credit limit.
There are other factors, but these are the biggies. What it means to you:
Don't close any credit card accounts just because you've paid them off; especially keep your oldest card open, even if you never use it again. Otherwise, enjoy being debt free!
- 1 decade ago
Your credit score is based on your ability to pay debt you have a good score which can save you money in the long run as in when you need to use credit ...But to keep good credit and make it better you need to retain a couple of credit cards but do not use them to create debt rather use them to create a enhanced credit rating write to me at email@example.com and I will explain further the ideas behind it all and how it works
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- thedavecorpLv 61 decade ago
Credit score is computed as a ratio of how much you have borrowed vs how much you CAN borrow, AND how well you pay(ed) off said debt. So the less you borrow and the more you can borrow, and the more punctual you are with payments, the better your score will be.Source(s): Series 7, Series 63 licenses. And a bank manager also told me.