Loans By Kathy: Cash Isn't King, Credit Is!

Cash Isn't King, Credit Is!

Cash isn't king, credit is!  Many Americans have struggled during this last economic crisis and many have opted to not make the same mistakes they have made before.  In doing so, they have stopped using credit cards,  Instead they have paid cash for all of their purchases.  While I understand the desire to be debt free, this philosophy of cash only payment system creates a problem when they want to purchase a home.

Are you paying cash for your rent?  If so, this is a HUGE issue, let me say that again, this is a HUGE issue.  Cash payments cannot be documented.  If you have no credit, or limited credit it will be necessary that you have been making on time housing payments.  No, we cannot accept a letter from your landlord.  Only a verification from a management company is going to be acceptable.

If you are going to pay cash, be sure to keep your receipts.  Whenever possible, pay using your debit card or personal checks.  This way you have a better chance of documenting the on time payments.

My last recommendation, consider at least one credit card.  I suggest a Visa, Master Card or Discover.  Stay away from private retailers.  Even if it is a small credit limit, it will help you build the credit history that is needed to determine a credit score.

Here are some other articles that you might also find helpful:

Every Household Should Have a Budget - Getting Started

Every Household Should Have a Budget - Step 2

Every Household Should Have a Budget - Savings

Every Household Should Have a Budget - Checking Account

Every Household Should Have a Budget - Life Insurance 

Every Household Should Have a Budget - Auto Insurance Policies


Every Household Should Have a Budget - Get young children involved


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Kathy Sheehan Senior Loan Officer






Bay Equity LLC

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11475 Great Oaks Way, Suite 350, Alpharetta, GA 30002

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.


Comment balloon 28 commentsKathy Sheehan • September 24 2013 07:29PM


Excellent Kathy and now SUGGESTED.

Posted by John McCormack, CRS, Honesty, Integrity, Results, Experienced. HIRE Me! (Albuquerque Homes Realty) about 6 years ago

Kathy, great reminder of the "new reality" for building credit and also how a cash/debt free approach can harm the credit we work so hard to create.  The other example of this is paying off a credit card and having your credit rating go down instead of up as a result.  

Posted by Kelly Young, Colorado Springs Real Estate ~ 719-226-0126 (The Platinum Group Realtors) about 6 years ago

Thanks John!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Kelly, unfortunately there is too much misinformation about credit.  What one person might need to do to improve their credit score could be very different than someone else.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Kathy -- this is the new normal.... cash is not king.. even when making an offer... who would have thought?

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) about 6 years ago

Joan, it is turning into more and more of a problem.  Please spread the word!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Awesome blog, and so right, I suggested also.  My son had this problem and had to start using credit cards to build up his credit score although, I still believe cash is king when making offers to purchase homes.

Posted by Suzanne Taylor, Home Sales In Corpus Christi, TX (Ultima Real Estate - Corpus Christi) about 6 years ago

I am not on the Credit is God Bandwagon anymore.

We have eliminated most of our credit cards and will finish eliminating all but one in the very near future.

Credit cards are the work of the devil!!! I seriously believe that.  If you cannot pay them off completely each month...don't use them.

For a lender for your home mortgage...Go to the bank or credit union where they have local not a national chain bank or lender, etc. Find the lenders that do not rely just on some half cockeyed FICO process that is woefully broke.

Big banks lump us all together...small banks look at you individually.  And if you do not have any small banks or credit unions where you live...I suggest...sell your home and move to a town that does.

It worked for us!!! 

Posted by Mike McCann - Nebraska Farm Land Broker, Farm Land For Sale 308-627-3700 or 800-241-3940 (Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska) about 6 years ago

Oh, so true!  Some people, especially those with less money, don't realize this.  It's important to have credit cards and pay them on time!  That's the winning combo.  Not having them is a mistake and not paying them is a bigger mistake.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) about 6 years ago

BINGO!  Excellent topic Kathy, and so true.  This post should be wearing a Gold Star!

Posted by Roger D. Mucci, Lets shake things up at your home today! (Shaken...with a Twist 216.633.2092) about 6 years ago

Suzanne, unfortunately many find out too late.  Thanks for your comments.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Mike, while I understand your position I can't say that I agree.  Credit is not evil, not understanding how to use credit wisely is the true problem.  Just because there is a credit card in the wallet doesn't mean you should spend money you don't have!

The second problem is that those that have built good credit history, then close accounts which is another big mistake.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Debbie, we agree!

Thanks Roger!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Good morning kathy. Who knew that there were any down sides to cash? I think this post is important and thought provoking. Having cash is one you use it another. Suggested.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) about 6 years ago

Thanks Sheila, that is exactly the point!!!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

I have a buyer now that is in this boat, paid cash for rent, utilities, no car payment, no credit cards. The wife has a salaried job but the husband you guessed it, is self employed in a cash business. They have tons of savings, but no credit history for years. 

Posted by Scott Godzyk, One of the Manchester NH's area Leading Agents (Godzyk Real Estate Services) about 6 years ago

Great topic Kathy!  Some folks don't understand that paying cash for things doesn't help build your credit.  We are currently working on becoming debt free, but we do keep one credit card for gas that we use and pay off each month to keep our credit where it needs to be. 


Posted by Amanda Christiansen, Christiansen Group Realty (Christiansen Group Realty (260)704-0843) about 6 years ago

Kathy-I can agree that being able to document payment history for rentals is important, but I'm still a believer that cash is king.

Posted by Wayne Johnson, San Antonio REALTOR, San Antonio Homes For Sale (Coldwell Banker D'Ann Harper REALTORS®) about 6 years ago

Most folks with enough cash will still try to do something with credit so they leverage their money as much as possible.

Posted by Bryan Robertson about 6 years ago

Suggested!  Valuable information that most people are not aware of!

Posted by Sharon Tara, New Hampshire Home Stager (Sharon Tara Transformations) about 6 years ago

Scott that can be a problem.  Hope you can work it out.

Jared, the key is to build the credit, not max out the cards!

Wayne, I believe in being debt free too but with an established credit history.

Bryan, they do!

Sharon, thank you!

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago
Kathy, I remember when my husband and I applied for our first credit card almost 30 years ago. We had money in the bank, good jobs and income, no debt at all a d we were denied because we didn't have a credit history! Case in point!
Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) about 6 years ago

Silvia, everyone needs to start somewhere.

Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago
Kathy, I run into this with some buyers.They think paying cash is a good thing but it has problems as you say.
Posted by Debbie Reynolds, Your Dedicated Clarksville TN Real Estate Agent (Platinum Properties) about 6 years ago

Hi Kathy,

This is a good post.  A healthy balance between having cash and having the ability to obtain credit for a mortgage loan is where I am at.  As little debt as possible and use credit wisely.

Best of GREAT success to you always!

Posted by Jordon Wheeler, J W Group Real Estate Sales and Service (The Jordon Wheeler Group) about 6 years ago
That will be a problem.
Posted by Kathy Sheehan, Senior Loan Officer (Bay Equity, LLC 770-634-4021) about 6 years ago

Kathy, my lender has had some issues with some of my buyers hoarding cash in their home and not having a paper trail.     Good advice!

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (House to Home, Inc. - Denver Real Estate - 720-231-6373) about 6 years ago

Kathleen, you make some really good points. We swapped our credit cards for debit cards and are working on paying down debt.

Posted by Lara O'Keefe (North Texas Home Finders) about 6 years ago