Hello. European here, recently moved to the US from the UK. This post is longer than I hoped it would be, but I felt some clarification might be required.
The concept of "credit score" exists in the UK as well, of course, but I couldn't tell you what mine was if you held a gun to my head. I had a credit card for about 11 months over a decade ago (not by choice, banks required some credit history for a mortgage). I didn't have one before, nor since (until now). We bought a house in the UK using a mortgage, but we paid it off 3 years later. No "credit" or credit card since (again, until now)
We moved to the US and EVERYONE tells me we "need" a good credit score (whatever we had back in the UK doesn't count here, apparently)
My question is…do we?
We have no intention of borrowing money for anything at any point. Whatever we might need, we'll simply…pay for. We're what we call middle-class (strictly from a financial point of view). We'll probably buy a house or two at some point, but that/those will be mostly funded by the sale of our house in the UK, so we won't need a mortgage, as houses here are significantly cheaper.
Given the circumstances, do we actually NEED whatever is considered a "good" credit score for anything? Do I need to keep up this charade with the bank? (I got a $500 "prepaid" (it's called either secured or unsecured, I wasn't really listening) credit card, which I'm using to pay for coffee/petrol, only to then pay off the credit card using the bank account; this apparently helps with "building a credit history", which I've been doing for the past few weeks "just in case"; in short, we each deposited $500 and the bank gave us credit cards with a $500 limit)
I tried to explain this to a family member, but she's adamant that "you NEED it for jobs, don't ask, just do it". Sorry, what the…? What do jobs have to do with my credit score? (I am going to get a job at some point; until recently, I've been locked in a paperwork labyrinth only newcomers would be familiar with (ssn, address, phone, driving licence etc))
Are US companies somehow allowed to see your financial data? Would they check your credit score? I imagine mine would be 0…
I find this thing (buy something with your credit card; then login to the app and check whether it was paid off 3 days before "the deadline") extremely annoying.
To be clear, although we lived in the UK for 16 years, we were born in Eastern Europe and we both grew up in a culture where borrowing money says a lot about you (nothing good); you spend what you have and not a penny more.
So far, we've had one problem caused by not having a credit card; after landing, we were unable to rent a car (I obviously didn't bring my car here; even if the cost wasn't prohibitive, I imagine having the wheel on the other side would've caused a few issues). We solved that problem by buying one, but that took 3 trips to 3 car dealerships, until one of them accepted a bank transfer (which also took 2 days to "clear"; I sure hope Uber appreciated the $$$ we were forced to pay)
Should I expect further problems down the road if I don't take part in this "let's just pretend that you need the bank's money anyway" game?
Thank you.
Does my credit score (US) matter if I have no intention of borrowing money?
byu/ManowarUK inpersonalfinance
Posted by ManowarUK
11 Comments
Might affect your deposit for an apartment.
Jobs check your credit score as part of a background check. Some employers may revoke offers or mark it failed if your score is very low.
My employer for example has restricted covenants on carrying credit card debt while being employed.
The U.S is very reliant on credit scores. You might get approved for a credit line but with a high interest rate.
If you’re never going to rent or borrow or finance anything ever, then you don’t need it.
Most jobs aren’t going to need your credit score.
But generally speaking getting a good credit score will only help you living in the US. You might need it one day so you might as well participate.
The “game” isn’t as complicated as you make it seem, just spend your credit card as you would a debit card and basically get 2-5% off all your purchases. Set up auto pay so you dont have to manually pay your statement every month.
Some jobs will look at your credit history to look for things they dont like, most of the time its because you are handling money. But there have been lawsuits about companies not hiring people with bad credit.
Any kind of loan or rental will want to look at your credit.
If you have enough money, credit no longer matters. I think that starts when your sitting on like a mill.
It ends up being important for most americans, apartments, cars, house, store cards, rental cars, any kind of loan, some jobs, some services, some clubs (snooty), it ends up popping up in stupid place all over.
Its just about the worst system for the us, favors the lenders a ton. Also, if you do go down this route, do some reading online about the requirements to get your credit topped out.. some of it is weird, like they prefer you to have 7+ accounts (cards, loans), even if you never use them.
It’s better to have it and not need it, than need it and not have it.
Get a credit card for your everyday purchases (much safer than a debit/cash), and pay off the statement balance in full before the due date each. This is how you build credit for free.
I have a friend that thought he would never need to borrow money. He maxed out a $2k limit credit card and never paid it. 10 years later he wanted to buy a house. His score is cooked. He bought a truck with insane interest and eventually got it repossessed. I don’t think he’s going to buy a house anytime soon. I hope i never have to get a loan. I hate interest. I have an 815 score just in case.
Jobs do sometimes use credit score as a mark of trustworthiness and many companies have credit cards if for if you have to expense something which will still use your personal credit. It’s not strictly necessary, this sub has plenty of examples of people who haven’t, but credit is a very normal and expected financial tool in the states, and not having it does make things harder. Leveraging credit is a very normal financial tool in the states. I’ve said it before in this sub. It’s like a fire extinguisher. You don’t buy one hoping to use it, but you’ll be very thankful you have it.
>do we actually NEED whatever is considered a “good” credit score for anything?
No, but you will likely pay higher rates for services and deposits, may have difficulty getting a job (depending on the industry), and renting housing.
Everyone needs insurance, and in many states, companies can charge a higher rate to customers with poor scores.
That said, it’s just a barrier, not an impassable wall. If you’re fine with occasionally paying more for things in order to not have a credit card, go for it.
You don’t have to be in debt or spend money to use a credit card and build a decent score though, so I’m not sure why you wouldn’t if you’re planning to stay for any length of time.
I won’t buy anything with cash unless I absolutely have to. Credit card for everything utilizing 2% to 5% off purchases. Then i pay it off several times a month. Sometimes right away. I don’t keep a credit balance long at all. Never miss a payment, always pay in full, ask for credit increases to stay below 30% utilization.