Re: credit score and insurance

Posted by coshoo on July 20, 2017 at 15:16:26 from (65.101.149.33):

In Reply to: credit score and insurance posted by Geo-TH,In on July 20, 2017 at 12:57:45:

Yeah, its making less and less sense to be in the "never had a credit card, never will, and proud of it" crowd. Lets look at travel without a card: Can't book a flight on any of the discount websites without a card, so you'll pay full price for your ticket at the counter (which is the most expensive ticket, bar none, and you'll have to make an earlier trip to the airport to do it)- and be sure to take enough food and drink in your carry-on, because everything on the plane is card only. And the hotel (which you also won't be able to book at a low rate in advance) may take your cash, but will want a deposit against possible damage. I don't think car rental places will even deal in cash, period. And on and on it goes.

No credit, no (or low) credit score. As Geo pointed out, insurance cost is now based on credit score by some companies. Many property management companies are making credit score a part of the background check for renters- no (or low) score, "thanks for coming by, folks, but we have nothing for you." Of course, no or low score means you can't borrow money, but that's probably not a big factor for many in that group, because they don't borrow anyhow. But you never know when disaster might strike and you may need a loan to tide you over.

I realize that some in that group want to be "off the books" on their financial dealings. Ironically, having a "conventional" financial profile (with bank accounts, credit card transactions, etc.) might just make it easier to be off the books on some transactions. Being cash only, no credit or cards, is not the "norm" anymore, and is more likely to attract the attention of the IRS than someone with a conventional financial profile who just happens to do a few things for cash, off the books. Just sayin'.

Got to tell my favorite "off the books" story before I go. A guy ("Dave"- not his real name) came to me and asked for help in getting "on the books". He was in his 60's, had never filed income tax, had never had a job, never had a bank account, and had NEVER HAD A SOCIAL SECURITY CARD! Needed to get on the books because he had a nice property which was in his mother's name- she was 85, and he needed to get it in his name before she died. He had made his living buying and selling industrial and logging equipment, always with a roll of bills in his pocket, and he was very good at it. I hooked him up with a tax attorney with some common sense in Seattle.

Attorney set up a meeting with the IRS agent. Dave asked if he should dress up- attorney said no, just wear what you have on today (flannel shirt with a few holes, logger jeans with suspenders, 3 day growth of whiskers, can of snoose in his pocket). Attorney called me after the meeting, and said it was, without a doubt, the most fun IRS negotiation he had ever had. They came in, and the agent asked Dave, "Did you bring your records?" "I don't have any records." "How can you run a business without records?" "I ran it out of my pocket. If my pocket got too full, I need to buy some more stuff to re-sell. If it got too empty, I'd better get busy and sell some stuff or Mrs. couldn't buy groceries". "Why didn't you file any taxes?" "Figured I was kind of on my own- I've never asked the government for anything, and never will- I fend for myself, and didn't see why someone else needed to have their hand in my pocket." "What are you going to do about Social Security?" "Well, nothing, I guess- I never paid anything in, so I guess I'm not entitled to get anything- but will never know for sure, because I'll never file for it." And so on. Dave never did give any estimate of the business he had done per year- "Had my mind on that pocket I talked about earlier."

In the end, with no figures to work from, the agent decided that if Dave would pay $20,000 total for the 40 years he had worked off the books, they would call it square. Attorney said Dave was about to say something, but attorney put his hand on Dave's arm, and told agent "My client and I would like to discuss this." Once in private, attorney said to Dave, "You were about to pull that roll out of your pocket and start peeling off hundreds, weren't you?" "Dam straight- I want to get this over with". "Offer's not final until the paperwork is done, and we don't want to let him know he let you off too easy. We'll accept the offer, plead poverty, get a payment program, get all the paperwork signed so they can't welch on it, then when the first payment is due, send me a cashier's check for the 20, and I'll pay it off." "I've got a better idea- (begins peeling off hundreds)- I'll just leave it with you, and you take care of it. And figure up my bill- I'll pay it now, too."

Dave was a lifelong heavy smoker, and even his end was sort of happy. Started having trouble breathing at about age 75, spent a couple days in the recliner trying to get his breath, then passed on. Wife sold the remaining inventory and the property, and moved to town with a nice nest egg in her purse.

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