Your Money_ The Missing Manual - J. D. Roth [79]
"I don't really like the idea of credit cards. I'm wary of them," Mike says. "I have a debit card with a MasterCard logo that I've been able to use anywhere I needed credit."
What about renting cars? Getting a hotel room? "I haven't had a problem," he says. When a rental car company asks for a credit card, he uses his debit card instead. They place a hold on his account for $300 to $500 in case something goes wrong, but they release the hold a few days after he returns the car. The situation is similar when he stays at a hotel. (For info about the holds that specific companies will place on your account, check their websites.)
And what about getting loans and a mortgage? "I haven't had problems getting loans," Mike says. "I have student loans, two car loans—one paid off, one current—through my credit union, and I have a mortgage through Wells Fargo. My credit union gave me their best rates both times." He wonders, though, if a lack of credit cards might have hurt the rate on his mortgage: "My mortgage rate was decent considering my age and other factors, but it could definitely have been better."
Mike has no regrets about being credit card free, and he doesn't feel like he's missing anything. "I haven't really had any issues from not having a credit card. I can't spend what I don't have, which is how I like to operate."
For a look at other folks who get by just fine without credit cards, check out this article from Money magazine: http://tinyurl.com/no-cards.
Your Credit Report
As you move through life, you leave a trail of transactions: You take out a mortgage, buy a new car, and use your credit cards. Every month, your creditors—the companies you owe money to—send info about your recent activities to a variety of credit reporting agencies (also called credit bureaus). Each agency collects this info into a file called a credit report.
This report is a history of how well you've managed your credit. It contains info about where you've lived, how much you've borrowed, and whether you tend to pay your bills on time. It also indicates whether you've ever filed for bankruptcy.
The credit bureaus—Equifax (www.equifax.com), Experian (www.experian.com), and TransUnion (www.transunion.com)—sell your credit report to other businesses so they can decide whether to lend you money, sell you insurance, rent you a place to live, or give you a job.
Credit reports may be boring, but they're vitally important because they're the basis of your credit score, which you'll learn all about starting on Your Credit Score. Because they can play such a huge role in your finances, you should do what you can to keep your credit strong. You should also check your report a couple of times a year to make sure there aren't any errors and to protect against identity theft. The next section explains how.
Note
According to a 2004 U.S. Public Interest Research Groups report, 79% of credit reports contain an error of some kind, and 25% contain serious errors.
Getting a Free Credit Report
Happily, you don't need to pay to see your credit report. The Fair Credit Reporting Act says that each of the major credit bureaus has to let you view your credit report for free once per year. They do this through AnnualCreditReport.com, a site set up specifically for requesting these reports. This is the official, government-approved, free credit report site.
If you want, you can get reports from all three companies at once. Or you can stagger your requests, pulling one report every 4 months from a different credit bureau. You can get your report by calling 1-877-322-8228, going to www.AnnualCreditReport.com, or filling out AnnualCreditReport.com's report request form (http://tinyurl.com/mailreq), and then mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Note
If you plan to check your report online, be wary of impostor sites. Be absolutely certain