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What good is credit rating if self employed?

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maxpi

Junior Member
I am in California. I am behind in credit card payments. I am also transitioning from working to self employment/retirement. I have heard that self employed people do not have good credit right off. Is there any real reason that I should worry about my rating at this point? If I want to travel I can use a secured Visa, for one example I talked to a broker, he said that a BK might harm my ability to get licensed but not a credit problem. I am expecting to make a lot more $ in the new career and not really need to borrow. I do intend to pay all the creditors but I am wondering what the value of future credit rating is, I need to know that for the negotiations.
 


justalayman

Senior Member
It's not that self-employment negatively impacts your credit rating. With no history to support any level of income, a creditor sees this as a "red flag" so to speak. There is no way to make a determination as to how much one should extend credit without that history.

Because of this your credit rating is even more important. That is the only thing a future creditor has to use to support your claim of credit worthiness.

Not sure what type of license you are speaking of so I cannot address that at all.

If you file BK and have no provable income history how will you get any credit granted to you.
 

maxpi

Junior Member
What I am saying is "do I need good credit at all". I am thinking I can go without a loan for the rest of my life. I have a house, my income is now, and will be, fine in the future most likely. I just am wondering basically what is the value of a good credit rating if you don't need to borrow and what is the problem of a bad credit rating if you don't need to borrow, what difference will it make and how much importance should I place on it during the payoff negotiations.
justalayman said:
It's not that self-employment negatively impacts your credit rating. With no history to support any level of income, a creditor sees this as a "red flag" so to speak. There is no way to make a determination as to how much one should extend credit without that history.

Because of this your credit rating is even more important. That is the only thing a future creditor has to use to support your claim of credit worthiness.

Not sure what type of license you are speaking of so I cannot address that at all.

If you file BK and have no provable income history how will you get any credit granted to you.
 

justalayman

Senior Member
If you never have to borrow money, never apply for a job that checks your credit, never want to mortgage a house etc. who cares what your credit rating is.

Do you think Bill Gates needs to worry about his credit rating,......obviously not.

If you never have to depend on anybody for anything for the rest of your life....it makes no difference.. Be forwarned though.. your credit rating seeps into decisions in your life that many people never suspect.
 

maxpi

Junior Member
Yes. It is those areas the the credit rating can seep into that I want to be made aware of by somebody that knows. I am really probably never going to have a permanent job, temp jobs would be better for me at my age, more attainable anyhow. I don't think temp agencies are checking much background. I don't anticipate needing a loan either, and basically, my past experience is that you can establish credit in about 4 years. That used to be true, maybe with the new laws it is not so easy. At any rate, I am trying to find out the hidden costs of a bad credit rating before I negotiate further tomorrow"
justalayman said:
If you never have to borrow money, never apply for a job that checks your credit, never want to mortgage a house etc. who cares what your credit rating is.

Do you think Bill Gates needs to worry about his credit rating,......obviously not.

If you never have to depend on anybody for anything for the rest of your life....it makes no difference.. Be forwarned though.. your credit rating seeps into decisions in your life that many people never suspect.
 

Ladynred

Senior Member
I just am wondering basically what is the value of a good credit rating if you don't need to borrow
Lets see - car insurance companies use your credit to decide whether or not to insure you and if they will they may up your rates if you have bad credit.

Banks- frequently check credit history now just to open up a deposit account or checking and many do so if you want a DEBIT card.

If you own your own home and don't ever need to rent, then you won't have to worry about finding an apartment - most complexes and commercially run places pull credit to decide if they'll rent to you.

There are more and more areas where credit is being checked for the stupidest things, but it IS happening, those are just the few I can think of right off.
 

maxpi

Junior Member
Thanks, that is helpful and informative. Ok, I can keep with the same car insurance I have been with for 20 years, no problem there, same goes for the credit union, and I have inactive accounts at other places as well, at this point it does not seem imperative to have a good credit rating, a good idea maybe but not an utter necessity. I have rented a car before without a credit card actually, I just negotiated a deal with a small agency, everybody wants to do business whether in the absolutely no-brainer usual manner or negotiated, they want the business.
Ladynred said:
Lets see - car insurance companies use your credit to decide whether or not to insure you and if they will they may up your rates if you have bad credit.

Banks- frequently check credit history now just to open up a deposit account or checking and many do so if you want a DEBIT card.

If you own your own home and don't ever need to rent, then you won't have to worry about finding an apartment - most complexes and commercially run places pull credit to decide if they'll rent to you.

There are more and more areas where credit is being checked for the stupidest things, but it IS happening, those are just the few I can think of right off.
 

Leinalani

Member
Also, some temp agencies actually do credit checks along with background criminal and driving abstracts. This is due to the increase in temps being hired by financial institutions even on a temp basis. Having a better credit score opens more doors in the employment field, even temporarily.
 

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