Discussion: Do We Need Credit To Survive?

Do you believe we need credit to survive? After the events over the last 3-4 years my assumption is that many have been forced to reduce or increase the reliance on credit depending on individual situations.

I am a bit torn on the answer to this question since I totally think it’s possible to not rely on credit to survive. But you need to be creative and good credit is king.

But then you’d have to have quite a bit of luck as you need it to rent or buy a home. Buying a car? Credit check. Car Insurance? Soft hit (minor credit check). Utilities turned on? Credit check. Let’s not forget the almighty credit check for certain jobs.

What are your thoughts? Do you need credit to survive in today’s economy? Be sure to tweet and facebook your responses when you reply in the comments.

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Anonymous

We do not need credit to survive. I prefer to use credit because of it’s perks. I love no foreign transaction fees, 0 fraud liability, mortgages, home equity lines of credit, student loans and auto loans and etcetera ecetera. It’s hard to imagine a life without credit but if I did things would be drastically different. I can assure you the costs of goods an services would be more in line with wages.. this could be a very good thing
http://www.oltrelogo.com/service_video.php service video

Very interesting many thanks .I persume your readers would likely want more reviews along these lines continue the great effort.
http://www.victory-by-design.com/askyourcoach victorybydesign

@Ross

1. If you have a down payment 10% or more, a good rent history, and have paid your basic utilities on time for some time, you will be able to get a mortgage. Of course, the higher the down payment, the simpler the process.
*Your credit score is a reflection of how much debt you have that they think is appropriate, how often you pay your debt payments on time,and how often you are trying/acquiring new debt obligations
*Please take into consideration. Is it in your best interest to borrow money, create a bill, reduce your ability to save for your goals in order to buy a house?
*Or you could use the same resources and save cash during that same time-frame that you would use to "build your credit" to save for a larger down payment

2. I was an employer for a very large fortune 500 company for many years and the primary thing we looked for was stability, and discipline in a credit score.
*I can honestly say (even though I am biased), that a person who had no credit score, but used his resources wisely by saving and planning was a far more impressive candidate. It screams discipline.

3. I have helped many of clients who were losing their homes due to foreclosure, short sales, and near bankruptcy. They all were able to get an apartment by presenting a few months of rent up front . There are not many landlords that will walk away from a large up front payment. While these individuals and couples were renting, they cleaned up the mess they were/are in.

Credit has evolved over time to become a symbol of "you have arrived" in your financial life. What I find most interesting is that the vast majority of people want to "get out of debt", but only to relieve some temporary stressers in their life. Once the stress has diminished, we will typically revert back to our base habits that got us in the situation in the first place.

It is important to understand that getting debt free and living debt free are different. Everyone knows that in order to get out of debt, you pay off your debts. The difference is that living debt free also means taking care of your wants and needs with cash. That means you vacation regularly, you go to nice restaurants, you golf, you go to sporting events, you live a fun life! You just do it with the money you earn and not try to borrow your way to happiness.

Ahmad Davis
ahmaddavis@victory-by-design.com
http://www.paydaynextday.com.au/faq.html PaydayNextday

Interesting post. I really like to appreciate your efforts for initiating the discussion about credit needs. Thanks for posting.
fightingfrugal

Survive. That's an interesting word choice. No, I don't think credit is necessary for survival. i'd say that credit is more useful, than necessary. Having credit can make obtaining things you want or need easier or more convenient but you can (and many do) live without it.
http://greatcreditscore.org ross

I would say that it depends on your goals. It's possible to just use cash and your debit card, and you can get by just fine in most instances. But if you want to buy a house you need credit (unless you can just pay for it cash , employers will often check your credit these days before hiring you, also landlords almost always will check credit.
It's getting harder and harder because companies use it as a risk indicator. If your credit is bad, they might feel like they shouldn't do business with you.
But the good news is that it's not as hard as people think to turn bad credit around.
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victorybydesign

Great question.

The short answer is that you do not need credit to survive or thrive. A credit score or a credit check can be offset with cash. I have not personally borrowed at all in 12 years. I have not suffered during this time frame at all by my standards. I am married with 4 kids. Here are a few extras we have enjoyed without the use of credit.
1. Disneyworld 3 times
2. 5 Cruises (1 more coming in June)
3. Bought 8 different automobiles
4. Gave 20+% of our AGI to our local church
5. Rent cars regularly
6. and more

The major difference is that we plan for small to large expenses and save accordingly. One thing I tell my clients is that I yet to have a salesperson refuse my cash, I make a reasonable offer, they accept my cash.

Another interesting component of living debt free is that I tend to make better buying decisions resulting in greater savings on my larger purchases.d

The greatest challenges came earlier in the process when I used a considerable amount of money to pay off my debts. I had to say no to a lot of fun during those first couple of years. Now we have more fun, more often, than most of our friends who thought we were going crazy during the early periods.

My name is Ahmad Davis and I am a Certified Financial Coach. I can help you walk the path of a debt free life as well. Call 703-232-4659 for a free consultation.