I don't usually post this sort of stuff, but I suspect that this might be of interest to readers of this weblog, What Happens When You Need a Loan but You Don't Have Any Credit?:

I don't own a credit card. Never needed one. By the time I was old enough to carry plastic, the convenience of the card had been cleaved from the possible dangers of credit. The debit/ATM card allowed me to buy goods without holding cash, and did it without exposing me, particularly as a teenager, to the temptations of credit. As I got older, I had the money to live within my means, and so I did so. I figured this meant I had a good credit score. It wasn't until a few years ago, when I tried to open a Banana Republic credit card to get a few bucks off some fall purchases, that I realized it meant I had no credit score. Not a bad credit score. No credit score.

Then I tried to buy a house.

Without a credit score, Fannie Mae and Freddie Mac wouldn't hold my loan. That meant most big banks wouldn't loan to me at particularly favorable terms, as they'd have to carry the loan themselves. My other option was going through the Federal Housing Administration, which meant that the banks would require that I pay extra for private mortgage insurance.

I talked to another GNXPer recently who didn't have a credit card. Until last year I didn't have one either. My theory was that I lived within my means, have few expenses, was healthy, etc. etc. I know plenty of people like me, young, intelligent and not too interested in signalling with positional goods and such, who didn't get caught up in the real estate craze, and so made a calculation that there was no need for credit (at least for the time being).

And then you run into issues like above. At some point you may need credit, and you're a "credit ghost." I actually wasn't a credit ghost because I had had credit cards in college (when my cash flow was a little more unpredictable, if you get my drift), and for some reason two of the accounts remained open (though with no activity in nearly 10 years). I found this out after checking my credit score after hearing about this problem in early 2008.

There are many ways your credit score is calculated. Here are three variables:

1) the amount of credit you have access to matters (i.e., add up your credit lines)
2) the amount of utilization of that credit matters (i.e., how much of your lines are you drawing on)
3) the length of time you've had an account matters

So one easy way for people who don't live beyond their means to increase their credit score is apply for a card every 6 months and barely use them (but enough so that they won't close the account for lack of use). A problem with compulsive spenders is that if they have more cards, they spend more. But for people who shy away from credit this isn't an issue (presumably), so this is an easy way to increase your credit score. The reason to apply every 6 months is that if you apply for too much credit at the same time you get a bunch of "inquiries" and that drops your score, and you might simply get rejected because it seems like you're hard up for money and so a bad risk.

Labels: Personal

Darwin Catholic has a post about his growing family library. Over the past 5 years the number of books in my "library" has been growing a steady but constant rate. But there are definite patterns in terms of how my collection has been piling up. I tend to keep technical books, but trade in non-technical books after one or two readings. Initially this meant I had a lot of programming related books (still have 'em), but over the past few years I've been depending on online supplements like Safari Library. Now my technical books tend to be more oriented toward science, the collected papers of Motoo Kimura or W.D. Hamilton, or D.S. Falconer's Introduction of Quantitative Genetics. My non-technical books I often take to the used book store and try to trade them in for more technical books. For example, recently I exchanged Future of Freedom & Lust in Translation for Scientific Reasoning: The Bayesian Approach. The result is over time my small library has a larger and larger proportion of books on genetics & mathematics and a constantly changing cast of works of history, sociology, psychology, etc. The rule of thumb that works for me is that I tend to retain books with a high load of contingent theoretical information, and am casual about trading in those works which are dense on loosely related fact. Across the sample space of facts I have rather good recall and I don't usually refer back to the original works from which I derived those facts because it is usually quicker to go to the internet and look up an isolated datum for confirmation then to rummage through the index of a book where it might be found. In contrast, theoretical constructs are harder to retrieve on the web in a fully fleshed out form without a lot of effort,¹ and quite often without regular usage I forget how to implement the detail of technical methods. I still remember the general outline of my course on the Peasants' War of 1525 as well as my linear algebra classes, but in the former case individual errors in recall don't result in the collapse of the whole structure of knowledge. In the latter case I've had to revisit linear algebra texts for details because small errors compound so as to make my recall close in worthless in many cases in implementation.

1 - A lot of the introductions to models on Wikipedia & elsewhere seem a bit simple. Then, when you go to papers there is the implicit assumption of a lot of background detail. So it seems to me that there is a space on the web for mid-level formalism and theory which is often missing, and can be most easily found in textbooks which you wouldn't normally find in your local public library.

Labels: Personal