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Advisor

Re: Credit cards for farm use

I got this cautious because I was forced to use guaranteed issue health insurance on myself for a couple of years, until i got my health act together a lot better...still a work in progress, but at least I am a "standard" issue person now.  Mike is "preferred," due to his careful attention to his weight and not being a smoker, etc.  He is about ideal on actuarial charts for life insurance, too.  (Don't you just HATE that about men?)

If I had missed a premium payment in that policy, they could have revoked coverage, and were not required by law to re-institute it.  I had to work like Hades to get the policy to start with, and only one carrier (BC/BS) did guaranteed issue in our state then, as far as I could  find out. 

I watched the mail like a hawk for the premium notice every month...one of those details that just made me nervous, since they did not do direct drafts from a bank account at that time.  Imagine if I had experienced a debilitating injury, and the payment had not gotten mailed...and who's more likely to miss a payment than someone with a health problem to start with????

Now, all of our insurance policies (except auto) draft monthly, but different ones come out of different accounts.  Not putting all my eggs in even one very big basket.  

All the routine services and utilities could stay up and running for years, I think, as long as someone thought to make a minimum payment on the credit card.   I will not go to paperless statements, sicne I think eventually Mike or the kid in charge of things in my absence would know to open one that arrives in the daily snail mail.  It's the best thing I can think of to do so far. 

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Advisor

Re: Credit cards for farm use

It was sort of funny to see that our scores were identical, since his was maybe two points higher than mine the last time we checked them, four or five years ago.  Both had dropped a few points, which sort of surprised me.

I was told  by the banker that they look at how you pay off what you owe, and if you do not really leave a balance anywhere, then you do not really owe anything; so, the more solvent you are, the less you are "repaying" and your score can drop somewhat.  So, screwy?!?! He was still very complimentary of our status...and, as I told him, the only reason a FICO score is worth anything at all is if you want to borrow someone else's money, which I hope not to need to do anymore anyway.   

It becomes far more abstract an issue than it is for a young person wanting to start off and buy a car, home, etc.  Glad not to be in that mode anymore. 

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Advisor

Re: Credit cards for farm use

It can depend.  I've heard the exact opposite, too.  I think it is pretty much one big racket, anyway. 

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Senior Contributor

Re: Credit cards for farm use

If a debt is paid and closed, then you have less credit available to use. Rewards those that keep changing money from one hand to another.

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Senior Contributor

Re: Credit cards for farm use

Well, a couple years before I paid off this card, I paid off and closed two other cards we used to finance some high deductible medical bills.  My score improved.  Strange but true. 

 

However, this last card, I paid off and have not closed but use it sparingly and pay off the balance each month.  My score dropped two points.

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Senior Contributor

Re: Credit cards for farm use

I've listened to several financial experts and each tells a different story.  One says that by leaving the card open with a high line of credit, it will prove your worthiness for credit.  Another says it leaves you vulnerable to loading it up with debt, thus lowering your credit worthiness.  Another says, that by closing your account, you lower your credit score due to lack of credit card activity.  Well, either way, in my opinion, it depends on how many cards one has and whether the sum total of credit line exceeds one's ability to pay.

 

Another thing, paying off a debt in time only indicates you are a responsible person managing your finances well.  You get nothing like an improved score, only honorable mention that says "paid on time".  But a tiny oversight, like losing a billing statement in the mail or by filing it in the wrong place while owing a total of $10.00 on the account and paying it one or two days past due, can haunt you for years to come in the form of an adverse credit report, creating a red flag on your score.

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Advisor

Re: Credit cards for farm use

It's been explained to me in various ways, none of which I think are totally correct.  As a ratio fo devt to available credit, which would mean that when you close a given card, you shorten your overall limit by that card's limit.  Remaining debt would thus yield a larger ratio against the remaining overall aggregate limit.

This  may explain why our scores dropped slightly, since I think I did close one card, and replaced it with one with a better rebate program.  That new one may have had a lower limit...it is not an issue when you pay it off monthly. 

It felt good to hear the banker say, "You have not got a penny of debt showing out there against either of your names."  I would rather have that and a few points under 850, than a slightly higher FICO score. 

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Advisor

Re: Credit cards for farm use

I have had cards with limits sufficient to buy a nice car for many years now, and rarely use more than a few thousand dollars a month, for business and personal purchases put together, including all the utilities, phone and satellite TV and Internet, etc.   We function very close to cashless much of the time.  

Did once buy an irrrigation unit on the card, just to get the nice rebate. 

Mike and I agreed years ago to pay off everything we owe every month, even if we had to take it out of savings to do so.  In this economy, none of the deposits can yield anywhere near what even our lowest-rate card charges. 

I have found that using a business card, with each family member carrying their own account number under it, allows me to better itemize purchases for the rental properties and arms in VA. Our son and one daughter mostly buy for things up there that are needed (for examplke, a load of rock for the farm path there this week).  The other daughter, Mike and I are virtually always buying for this place. 

This is so much easier than having to keep checks sent to them on time for emergency repairs, and balances for bank accounts straight, at a distance of 75 miles.  I need to sync a few more accounts to online bill paying to totally streamline this system, but as long as I can get a mailed statement, and can write a check to pay the part of the credit card bill for those enterprises, I am fine, at least for now.   

I think that using credit is fine for convenience.  As long as you can avoid abusing it, you will benefit, regardless of the FICO score issue. 

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Veteran Reader

Re: Credit cards for farm use

I just talked to a neighbor that paid one months' co-op bill with his credit card. Had no choice, he said. He lost the whole years' patronage with that one transaction, so check before you do anything with patronage acconts. Otherwise, doesn't take much to go through card statement and split farm and family use, but I'm alone.

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