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Living with credit, Protecting yourself

The buying habits of high-scorers might surprise you

Brady Porche

What would you do if your credit score magically increased by 100 or 200 points overnight? Would you apply for a big-box store credit card and snag a brand new 72-inch 4K ultra HD TV, or a fridge with a camera inside? Or would you preserve your shiny new credit score – and the extra buying power it can afford you when home or car shopping – by seeking out the best deals on lower-priced used or clearance items?

New data from Experian suggest shoppers with high credit scores tend to take the latter, more conservative approach. In its Sept. 6 “State of the Automotive Finance Market” report, the credit reporting agency said the number of “super prime” auto consumers – those with credit scores of 781 or higher – who chose used vehicles surged 10 percent year-over-year in the second quarter of 2016. Sixty percent of “prime” consumers (those with credit scores between 661 and 780) bought used – a 6.6 percent increase over last year.

Experian automotive finance chief Melinda Zabrinski said in a CNBC report that the move toward used vehicles is being driven by “savvy consumers … looking for ways to control costs” as new car prices rise. Perhaps the trend is unique to the automobile market, where the difference between “new” and “used” can be modest in terms of vehicle condition, but significant in terms of price.

Other research suggests prime and super-prime credit users are predisposed to live within their means. In a 2012 article in the Journal of Applied Psychology, researchers studying workplace behaviors and employee credit scores found that conscientiousness was among the traits that correlated positively to high scores. Other traits such as neuroticism, extroversion and agreeableness correlated negatively to credit ratings.

This is not to say that all high achievers have excellent credit or that all extroverts are subprime borrowers. But if you have a credit score in the high 700s or 800s, chances are you earned it because you are careful and thorough, you don’t give in to impulses or irrational fear, and you’re not easily swayed by a slick sales pitch. Your responsible, cool-headed nature has helped you pay your bills on time and keep your balances well below your credit limit – the two factors most critical to good credit.

But can elevated buying and borrowing power ultimately go to a high scorer’s head?

Even the most responsible spenders are capable of giving in to temptation. What’s more, these are the people to whom lenders are most eager to lend. I recently learned while house hunting that a good credit score combined with a steady income can get you preapproved for a home loan well beyond your price range. Retailers offer the best no-interest deals to shoppers with good credit, sometimes giving customers three full years to pay for high-dollar items with no interest.

With good credit you can live in a palace and watch football games in lifelike ultra HD while sipping drinks from a refrigerator that you checked while you were standing in front of your grocer’s beer cooler. But is all that luxury worth overextending yourself and putting a rare black mark on your otherwise pearly white credit report? It is easier to ruin good credit than it is to fix it. A high credit score is earned over time, but a few missed payments can do quick damage.

It seems today’s car buyers are in the driver’s seat when it comes to preserving their high credit scores.

See related: Options dwindle for paying mortgage, car loan on credit

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