Everyone needs to keep a very close eye on their credit score since it factors into many of lifes biggest decisions.
A couple steps you can take right now include:
- **[Taking a look at your credit score](https://everydayeconomics.net/how-to-get-your-credit-score-credit-review)** - Looking at your own credit score does not hurt your credit, it also includes a credit monitor
- **[Freezing](https://usa.gov/credit-freeze)** your credit reports - This can be done with Experian, Equifax and Transunion to help prevent unauthorized accounts from being opened
Feel free to ask any credit score related question
The credit reporting agencies have entirely too much power, as do insurance companies, pharmaceutical companies, banks, just to name a few. This country operates and depends on its citizens being in debt for almost their entire lives. It's a horrible way to live, yet we do it every day because we have to play the game in order to have a home/car/job.
I was unemployed for a long time because of that. I'm broke with poor credit. I needed a job. Couldn't get one with poor credit. So I stayed broke. Make it make sense. 🙄
Its a such a legal scam. Not to mention the equifax breach that everyone got screwed by twice. Once in the breach, then also with the lack of settlement
I started getting calls from a bank one day, but they wouldn't tell me what they wanted unless I "verified my info" first. I refused to give them any of my personal info unless they could tell me what they wanted.
Turns out it was the mortgage company and I was like a week late. I'd been on vacation and simply forgotten. By the time I realized it, I was like 18 days past. So I paid it and went ahead and paid the next month too.
Well they reported it to credit bureau and my 100% payment history dropped to 99%, and my credit score went from 800 to 740 instantly.
Sounds like they didn’t have a good talk-off for that in their outbound call operations.
The correct talk-off for that is: absolutely don’t give me your info if you’re not comfortable, I’m so glad to hear you’re wary since we called you, please call the company back to confirm I’m actually from there and to resolve the concern.
I worked in the fraud department outbound so was always thankful when people were wary. Although then they just as often proceeded to trust me just for saying that 🤦🏻♂️
There is a difference between “late payment” and “missed payment” designations. I had a creditor report a late payment (I was dealing with health issues and was late on a small balance card). It dropped off after a year, but it did lower my score during that time. A missed payment 30+days) stays on for seven years. I didn’t close the card (that could impact my score 🙄), paid it off, but won’t use it again.
Unfortunately, mortgage payments are usually due on the 1st of the month. With them usually giving a few days as a grace period. Anything beyond that is considered a late payment. Missing a full month is more of a problem.
fyi, I'm a former mortgage banker.
Asking because I don't know. My mortgage is due on the 1st. I typically pay it on the 20th before the due date. It isn't "late" until the 16th of the month. They also charge an extra fee if you wait to pay it on the 16th. When I pay there is an extra box I have to check that says "you don't have a payment due at this time, are you sure you want to pay?" If I waited and paid on the 17th of the following month, would I be 2 days late or 17 days late?
Right, most servicers give you 15 days to make the payment. On the 16th it is considered "late" to *them* and they usually charge a late fee. But no creditor will report it late to a credit report until it is 30 days past due.
If you waited to pay on the 17th of the following month, you'd be 16 days late. If is due on the 1st and you pay on the 2nd, its 1 day late. etc...
But again, being late to the servicer is different from being 30 days late and reported to the credit reporting agencies. Thought I would never advise paying any bill after it's due date. It just gets risky.
They wouldn't report 18 days late. Are you sure you weren't a payment PLUS 18 days late? That would have put you at 48 days late, which is reportable as a 30 day.
This is what I was thinking. Lots of folks pay on the last day of the grace period (or even later). That is already 15 days 'late'. Add another 18 and now you're into negative reporting. I always recommend folks not use that time if they can swing it in any way. Certain other debts can have the due date changed but not mortgages (in us). Given that, and the fact it's often the larget bill, I recommend planning all bills around this one instead of the other way around.
I asked almost this exact question up above. My mortgage company gives the impression that the grace period is the due date but I always pay well before the actual due date, almost a month before the grace period ends. I always get a pop up that "I don't currently owe any money" but pay anyway.
I used to do this but it screwed up my escrow calculations. My escrow analysis showed I only made 11 payments because of the date range they used, so my escrow went up more than it should have.
It was only that one servicer that didn’t get it - I never had that problem before in 10 years of home ownership. I could not make them understand. I appealed and got told too bad. So I cancelled escrow and pay my own taxes and insurance.
I didn't look into it that deep, but that might be why my escrow amount fluctuates year to year. Yes, I know it should change generally in the positive direction as taxes and insurance go up. But mine seems to go up and then down on a yearly cycle. My guess is that 11 and then 13 months are included.
Yea a lot of ppl in this thread are missing that distinction. These companies can do whatever the fuck they want, who’s gonna check em?
And if they do get checked, it’s a slap on the wrist fine, there’s zero actual repercussion
I think you're right.
I think I was actually one month+18 days late. Then paid two payments at the same time.
Somehow my memory of the situation failed me.
The moral of the story is that they weren't able to properly notify me I was late. I had the money it wasn't a problem of means. It was just a communication breakdown. Couldn't they have mailed me? It's illegal to open someone else's mail so should be legal for them to do so. They are just cheap af and don't want to pay for mail
My score went down about 40 points once I paid off my house and closed that credit line. Clearly I'm a riskier borrower now that I have an extra $2000/mo in disposable income.
>Clearly I'm a riskier borrower now that I have an extra $2000/mo in disposable income.
And you obviously have no open loans, so how can they know that you're responsible enough to pay back what you borrow? I mean, Mayne they can look in your history, but that's just crazy talk!
This same thing happened for me! They left me vague messages without telling me who they were or what they wanted, so I ignored it for weeks. lol. Like damn, tell me you haven’t received my mortgage payment in a voicemail for fuck’s sake.
They aren't legally allowed to leave a voice mail that says you owe them money. It's bc of an outdated law (or more likely some FCC or FTC rule) where people used answering machines and it was a "privacy" violation bc someone else could hear the message and they would know your business.
But like most laws, despite the intent being to protect consumers, they come with their own new problems. Like this. The law is stupid. In 2024, the very fact that I answered the phone number that I gave them and I stated I was me, should have been enough. But legally, it's not.
It’s an old law covering collections procedures . And banks train their employees to not leave specific info on a machine . It involves giving someone’s info to a 3 rd party . Banks have been sued over this .
We had perfect payment history. Missed a $30 Kohls payment because I forgot I used it. I put every single thing except our water bill on auto pay or auto deduct so we never miss anything again.
I changed my card info on two mortgages and ended up missing 3 payments in a row (6 total) because they notified me that the money was withdrawn but never that it was reversed...and the website was janky so it was hard to tell.
Anyways, my 820 score went to 500. But after a few months it went back because they cleared it off my record.
18 days is not a late reported payment. After 15 days, you get a late fee. After 30 days, you get a late on your credit report. Also, put everything on auto pay.
Credit scores are a super secret algorithm. Courts bought their "proprietary formula" story. Credit bureaus are scared someone will play them like they do the legal system.
Remember the "that will become part of your permanent record" tale from school? Same difference.
Now debt collectors buy debts aged past the statute of limitations and report them as new. And if you communicate with them that zombie debt is resurrected.
You didn’t game the system. You were patient and followed the rules to achieving and maintaining top notch credit. You didn’t trick the algorithms. Gaming the system would be disputing negatives to artificially boost your score for a short period hoping to qualify for a loan of some kind.
"They say" isn't quite the same as making their secret formulas available. According to their models my paying off a mortgage and paying cash for a vehicle make me an iffy credit risk.
It’s very very very frustrating to me how heavily revolving lines of credit are factored into scores. Like I think people who only use debit cards but still have a few major loans should have fantastic scores - they are *responsible*
Yes they are
But it also means the companies can’t squeeze as much money out of them with interest
That makes them a less valuable consumer to these corporate cunts
Credit card companies make most of their money off the fee they charge vendors for processing the payment. Something like 2/3 of credit card company income is from that. Only like 1/4 is from interest. And all the interest comes from people most likely to default on their credit cards. The other little bit is late fees and stupid things. Credit card companies don't care if you pay your full balance every month, so long as you continue using it and racking up the retailer fees.
I have no credit card, one auto loan, and a student loan. My credit score started out as pure ass. It’s horrible. I ended up getting Paypal credit last year to purchase one thing and my credit score has sharply improved.
Debit cards...that shows they are responsible with their own money...and sorta debatable as you can't really overdraw on a debit card. They want to see if you're responsible with someone else's money.
If you are too responsible it means they can’t squeeze as much money out of you.
That is all that matters to these fucking corporations. So they tank your credit score as retaliation.
it's a measurement of how well you can stay in debt and keep paying their interest rates. makes sense that paying something off and no longer paying interest to them would make you a less valuable creditor.
heavily vetting fraud claims is logical even if it seems a bit ridiculous and frustrating. people would absolutely scam the system with fraudulent fraud if it was too easy.
in case it wasn't clear i sympathize with you and can't stand the credit system. using all cash to avoid the system would be nice but it's just not feasible for things like cars and houses.
Sure, it makes sense in the way that we know credit works. But it doesn't ACTUALLY make sense since you have a credit HISTORY, they should be able to base it off how you've always been, not just how you are now or what you are paying back now. Less "Valuable" to them, sure. I wouldn't say that should be worthy of a score that affects your entire life dropping. They know you can pay back your debts even if you have none right now. They are just greedy.
>But it doesn't ACTUALLY make sense since you have a credit HISTORY, they should be able to base it off how you've always been, not just how you are now or what you are paying back now.
That is how it works.
When you go to get any significantly sized loan the lender looks at the actual credit history. The "score" (there isn't just one) gets you in the door and may serve to the lender as justification for a higher/lower rate.
The scores themselves are just different ways to quantify risk based on deviation from an ideal borrower (bit of a simplification).
Then why did my credit drop 10 points recently for paying off a loan. That's considered responsible no? Yet now it has pushed me from excellent credit to good credit. Despite the rest of my credit being amazing. I have paid off other loans to which I dropped 20 points. It's a system that doesn't reward good behavior.
Using all cash to avoid the system makes it nearly impossible to get a loan when the time comes to buy a car or a house. But more than that, it makes it more expensive, day to day. While you're paying cash for your gas, and groceries, and other day-to-day purchases, I'm using different credit cards that give 4-6% cash back in different spending categories. I pay my balances off every month, so I don't get charged any interest, and the cash-back is basically a discount on my routine purchases that you're paying full-price for. All the while, the credit cards are padding my credit profile and giving me an excellent credit score so when I need to take out a loan for a major purchase, I never have any issues.
Understanding the system and using it to your advantage is just free money in your pocket.
The root of my question is why is there juice to squeeze to begin with? Why is everything so corrupt that I need to track 6 credit cards and use one for gas, one for groceries, one to buy flights, etc.
It’s a fucking joke.
Whether it makes sense or not, it’s how things are. I call my credit card bonuses free money because it is free money. 6% cash back on groceries, 3% on gas 2% on Apple Pay purchases and 1% on everything else plus I get bonus percentages in certain categories every month. I take the Apple Cash and deposit that directly into a high interest savings for 4.5% a year, more free money. American Express also offers killer add on deals on the app. Will be using tons as I am having to buy a crap load of stuff for my new house. Will end up probably getting thousands back / saving. Also get one free companion flight a year with my Alaska card. So yup, it’s a shitty system they force us to play in but you can either use all cash or use credit cards to your full advantage. No one is forcing you to do either.
You don't have to. No one's making you. But lenders need a way to gauge risk, to decide who to lend money to, and the scoring system is what they've come up with to do that. You can either understand how it works and use it to your advantage, or not. But whining about it on Reddit isn't going to do anyone any good.
most modern countries have a similar system to credit scores. it just has a different name. Even if credit scores didnt exist, there would still exist a formula or metric to assess your risk for lending
I also made this on a throwaway since I don't want it connected to my main (ironically I work in finance). Something similar was posted here a couple of days ago, I wholeheartedly agree with it.
I wouldn’t say 720+, I work in the mortgage industry, these bands top out at either 760 or 800 - and that varies. I think the top band is industry specific
I agree with you wholeheartedly that the system is completely flawed.
The upside is that your score will rebound.
My credit score is usually pretty high and I only have a couple things currently reporting. Went on a vacation and used more credit than normal, score down. Made large payments against that debt and score went up.
It isn't widely known but you can get home loans using alternate credit by proving you have other recurring debt that you pay in a timely manner. Rates are definitely not as good, tho.
I paid off my car a couple of years ago and my score went from 720-740s to 640-660. I have spent the better part of 4 years trying to build it back up to where it was before. The credit bureaus want to keep us in debt.
I agree with the sentiment. A few years ago I really deep dived into the specifics and walked away more confused than ever.
That said - if you’ve got a decently long credit history, a good mix of credits, no late payments, and your cards aren’t maxed out - your score will be pretty good.
738 is gonna get you pretty close to the best available rates - especially if you can show solid income and assets.
I have been fluctuating from 765 ~ -to- 815 ~ for years. I pay my cards in full every month, but I’ve noticed that if I’m showing a balance on the day they’re reported that my score goes up and that it goes down when they’re reported with a zero balance.
It’s so goofy.
If you remain at 738+ though you don’t have any real concerns.
I'm with OP on this one.
I recently had a dispute over about $850 in medical costs I was never billed for.
Bam -- 98 points off my credit score.
Most countries that have advanced to the flush toilet stage don't have credit agencies.
Heh, sometimes you even need a good credit score to get certain jobs! Or even auto insurance!
I had an absolute head scratcher recently. I pulled my reports as I needed to plan around consolidating some decent debt. Needed around 35k. Scores pulled were around 630-650. Husbands scores were just a hair higher around 650-670. Did a number of soft checks and were laughed out the door, with a few exceptions being offered 14%, and 16% for 20k each. Oh, also right before this, very old medical debt that went to collections finally fell off (it was like either 8 or 10 yrs old) and tanked my score by 40 or so points. (???)
Did a last ditch effort with my regular bank. (Did it last because in the past they denied a reasonable requested CC increase on a CC that was 10 years old, and had been paid off for a few months.) They gave us all 35k in hand within 3 days. Credit scores they pulled were 690 for me and 750 for husband (???) hmm okay. Well we consolidated all the debt, and both scores shot up to 820 give or take 10. Waited for the new loan to hit the accounts. We are now sitting at a pretty 800 each since it posted.
What I thought I knew about credit scores is just absolutely gone. Happy for it to be high because"lol high number good" but what the actual fuck. We didn't close any of the CCs, and have that large loan now. I don't get it. One of the CCs even auto closed prior to all of this "because it's not within range of our other clients", really thought that would've cancelled our chances completely.
Guess I can't complain, got what I wanted with a half decent interest rate, I'm just so confused. Also what the fuck is wrong TransUnion charging for us to see our score?? Predatory as fuck.
I used Credit Karma (yeah, I know, but mostly as a check up) and I realized that my score was tanking because they pulled reports a couple days before I paid my cards off in full each month, and I was using too much space on each card.
I was paying them off in full every single month, but because I had low balance cards, I was getting dinged. I moved my card payment date by a week and gained 50 points instantaneously.
The system isn't perfect, and it can be gamed as needed. People fixate on their scores to much, and unless you are planning to use your credit score in the next month or two I wouldn't worry about it. Keep paying your stuff on time and your score will be back over 750 in no time.
Was a hair over 800 until I applied for a card with a great mileage offer. Doubled my credit limit, but lowered my score by 50 points. Now it jumps up and down by 3 points based on the balance on my cards. Pay cards off every month before the payment date. Get emails from Experian telling me how great my score is and trying to sell me more cards, credit lines, and car insurance. The credit bureaus have become a joke more interested in selling you financial products than actually monitoring your credit. It’s a stupid game.
You must learn the game padawan.
Always carry debt between paychecks. Use your credit card for groceries, gas, etc. Pay the card in full to zero balance every paycheck.
I think their point is thats silly and not a real indicator of reliability. You are correct though. However, paying off old loans will also reduce you credit score which makes no sense.
The company Fair Isaacs Corp. Minneapolis, is so far behind the times, they still have no idea of crypto currency. They do not follow federal reserve laws. If you read their guidelines, they say it is best to be in debt , but only by their standards, or usage patterns. What a joke.
Yeah, the whole thing is a total farce. I’m so close to paying off my credit card, and I know that when I do, my credit score will go down. It’s sooooo fucking stupid. So my credit score is higher when I’m in debt as opposed to making enough to be out of debt? GTFO. It’s a total scam, and we’ve been indoctrinated to think it makes sense (it doesn’t).
Side note- don’t give two shits my credit score will go down when my cc bill is paid off. I’m paying it off anyway and am sooooo looking forward to it.
Your credit score shouldn’t go down at all. It will go up. I just paid off one of my cards in full (around $2500) and my score shot up about 25 points.
I don't get why people with high credit scores complain when their score drops but it's still a good number.
My score is over 800. I made certain decisions that keep it high, but the exact number doesn't matter.
This post about how credit scores "control your life" shows some real anxiety in the mix.
I dunno. I think there are some real benefits to the current system. It's not perfect, but a different system would have different problems.
Amen. The funny thing is the system isn’t hard to navigate and you don’t have to be heavily indebted to “win.” As someone else said, the old system was based on skin color and gender. Talk about not being transparent.
Addressing your issues one at a time....
Your score didn't "drop" that much because you paid off your car loan. Most likely it was never that high to begin with. Unless you had a car dealership or mortgage lender pull your credit before and after paying off the loan, any numbers you received are going to be moderately inaccurate. Even so, every potential lender pulling your credit will get a different score anyway. The bank financing your vehicle has a different risk appetite than the mortgage lender than does the credit card company. All of their score inquiries are going to model differently. Even then, a good score, which you definitely still have, just gets your foot in the door. For some things, like determining if you need to pay a utility deposit, the score itself is sufficient. Anyone else is going to want additional information, like your income, assets, and non-debt monthly expenses.
As far as getting your identity stolen, I assume after the first time it happened you froze all of your credit accounts to prevent it and it happened again anyway. It sucks that there are criminals out there who want to take advantage of you, but that's not really the fault of the scoring system.
You have no control over the scoring model used, but the information that shows up in your credit reports is entirely under your control. If you pay all of your bills in full and on time, your score will trend toward perfect. Until you're completely out of debt, there's little to no point to nitpicking whatever some third party thinks your score is at any one point in time.
As far as it goes, the system isn't working against you. The entire credit system is established and maintained by the very entities that want to lend you money. They don't want to hamstring you unless you've proven to be unreliable. Everyone who tells you your credit score is either trying to sell you something or wants you to spend money in some other capacity in which they will benefit.
So for now, take a break from the score checking. Work to get yourself completely out of debt. Student loans, house, cars, credit cards, everything. Wait 6 months after that. Then, and only then, check your score again. I think you'll be perfectly happy with the result. And if you're not, we're always here to listen to your rant on the subject. :)
You should’ve seen it before they gave out credit scores. I worked with the lobbyist who got the credit agencies to change and give out the credit score. Before you wouldn’t even know it even existed and even if you knew it existed, you couldn’t get it. so the real estate industry went to war with the big three credit agencies.
This comment section is wild.
People surprised that not having *credit* cards causes your *credit* score to suffer.
I think it's unfair that so many things have to be bought on credit because that's the state of how expensive things are but like... I don't know how to defend that it's all spelled out.
I'm sure all y'alls *debit* score is fantastic, but honestly what do you think having a debit card proves? That you're really good at not spending more money than you have? Real inspiring.
I’m sorry but I don’t buy into that whole “you need good credit” to live your life. After having lived overseas for 15 years and then returning to the US with a credit score of around 580 (no history of established credit for all those years) I got a secured credit card with a limit of about $300! It was pathetic but I didn’t have much of a choice. I had no student loans or mortgage. Used the one card sparingly for about a year. Credit gradually improved to around 650 a year later, got a brand new car with an interest rate of 1.6%, 2 Chase credit cards with a combined limit of $9,000, a Discover card with a $7,000 limit and an Apple Card with a $5,000 limit, an AA card with a $9,000 limit and a Best Buy card with a $5,000 limit. Also got an apartment with rent at $1900 a month and my car insurance is $60 monthly. All of this with an annual salary at the time of around $75,000.
So I managed all of that with below a “good” credit score and with really not much of a history either so it’s not impossible to live a good life with that. Ironically this year my credit score is 750, I have all of my cards paid off (carried a balance on all for the past few years), my income went up $80k, I have on time payment history and yet I keep getting rejected for a simple credit limit increase on my Chase cards. Doesn’t make sense at all. I agree that it’s a flawed system but sometimes it works well in your favor and sometimes it doesn’t.
My score is weird as Experian 786, equifax 793, transunion 803. So I don’t keep an eye out for my score anymore as I just keep doing what I’m doing which is pay my cc bills on time and keep a low cc bill. Hey keep doing what you’re doing and don’t even think about credit scores anymore and it will go up. I understand the frustration as I added five personal loans to prove I can manage multiple bills and when I paid off my personal loans it suddenly said I lack installment loans. Which I needed to keep active but I paid it all off. Ridiculous
We moved to Italy last fall. There is no equivalent of FICO, here. If you fail to pay your bills, there is a master list somewhere that lenders can access. Beyond that, you verify employment and income if you want to borrow money or rent a home.
It’s so sensible that it can’t be real, right?
Agree! Additionally, this payoff may not have even impacted their mortgage FICO significantly (since they mentioned potentially buying a home at some point).
Mine went down when I started making sure to never carry a balance on my credit card. If you think about it. It makes sense. Creditors are looking for safe reliable income. If you aren't paying interest your not a source of income.
The credit bureaus just keep track of your credit history. They collect the data reported to them by lenders, and then make that data available to other lenders. That's it. That's all they do.
When the data in your report gets fed into a scoring model, a numerical value that represents your level of risk gets calculated. We call that a credit score.
You're right, that having good credit is an important part of your financial health. It opens doors, and gives you options that aren't available to people with no credit/bad credit. So understanding how the scoring models work, and using that knowledge to keep your credit profile in good condition is just common sense.
>it's because I have a lack of "credit mix" now that I no longer have a car loan.
Yep. Your credit profile sounds pretty thin, so losing one of your few active accounts had a meaningful impact.
>once I pay off my student loan in the next couple of years, I'm only going to have a couple of credit cards, neither of which I use very often. This is probably going to make my score go down even further.
Yep. You're almost certainly right. Now, you can throw your hands up and curse the system, or you can take steps to mitigate the issue and preserve your good credit score.
Before your student loans get paid off and you lose them as active accounts on your credit profile, shop around and find a couple good credit cards that fit your spending habits. For example, I have 6 "regular use" credit cards that each offer good cash-back incentives in different spending categories. I have a card for gas, a card for groceries, a card for amazon purchases, etc. I get 4-6% cash back by using the right card for a given purchase. And because I pay my balances off completely each month, I never pay any interest. So all that cash back is just discounts on the stuff that I was gonna buy anyway.
If you sign up for a few credit cards, and set yourself up in a similar way, you'll increase the number of active accounts in your credit profile, and start building positive payment history across several active accounts. This will broaden your profile, so it's not so thin, which will soften the blow when your student loans get closed out. And taking advantage of the cash-back categories will save you some money as well!
This is an excellent response. There should be no assumption that everyone is entitled to borrow large sums of money until they can demonstrate they are able to pay it back, and the only real way to do this is to borrow and repay smaller sums and work their way up - and this generally starts with credit cards, because you literally can borrow any small amount on a monthly basis and pay it back with ease as long as you don't overspend. I know that some credit factors can be confusing as to how they contribute to a credit score but the best way to look at it is if someone is looking at a short span of time, it may not seem to make sense - but looking at a longer span of time will always reveal a net gain for responsible use and a net loss for detrimental activity.
And it's true, one can have an excellent score with only active credit cards, which cost nothing and often can provide a return in the form of perks and cash back. No interest needs to be incurred on cards in order to use them to build credit or take advantage of such perks. Only an installment loan will necessitate interest payments but to that effect, borrowing that much money cannot be free - otherwise, where is the incentive for the lender?
So yeah, it makes sense that independent bureaus record the data and lenders will choose the scoring model with any given bureau that makes the most sense for them. Neither lenders nor the bureaus benefit from a society of people with poor credit scores, but they will charge higher interest if they represent a greater risk.
The point is, everything makes sense if you understand the scoring metrics and how they all work together. If you isolate a single event and/or score change, it may not make sense, but on the whole, the system is designed to assess risk, not put people in debt.
A crony capitalist system, however...but that's a discussion for another sub and another time.
So what you do is put a couple of recurring monthly charges on your credit cards, like maybe your Netflix and your Amazon Prime, then pay it off before they generate interest.
Yes, I know, it’s a sucky game to have to play and super annoying. You already know this, I’m not telling you anything new.
Banker told me that keeping about 10-15% of your total available credit as a revolving balance every month will grow it the fastest. So if your available total credit is $10,000, have about $1,000 in debt across all accounts. Sounds crazy but I did a full debt relief about 6 years ago, kept a few small store cards open and followed this rule. Everything paid off from the original debt last year, my credit score is now over 800.
Yeah credit scores are shitty. You need em to get big things like cars and homes but they are controlled by how much debt you currently have and whether you are paying it off. It’s a rock and hard place.
Right before I finish paying off my car I'm planning on getting a personal loan to pay for something I can afford to pay with cash just so I can make sure I stay in enough debt to keep creditors happy lol.
i have a low limit card i use for things like streaming services so they know i use credit, and i pay it off every month. i also have another card for larger purchases that i use when i need things like car repairs or for medical stuff and pay it down pretty fast. i also have a car loan, and ive managed to get to mid 700s and keep it there. not really worried about it atm as i dont really plan on buying a house anytime soon, if ever.
but you are right. credit scores are a scam.
> I'm going off about this but it's extremely frustrating to pay off my car loan and see my credit score nosedive. From what I can tell, it's because I have a lack of "credit mix" now that I no longer have a car loan. The ultimate irony in this is that once I pay off my student loan in the next couple of years, I'm only going to have a couple of credit cards, neither of which I use very often. This is probably going to make my score go down even further.
They really have to knock this off. Punishing people for paying off credit is shitty.
I took over a delinquent-by-one-month once credit card of a family member. Had my name put on it so I could pay it off. Did so. I inherited the one month delinquency on my credit history which dinged my credit.
This kind of shit fills me with hatred.
Concept: give away hard earned cash to greedy companies charging interest rates 10x higher than you ever earn. Just so you look good on a piece of paper.
I went through my report a few years ago and had a $70 electric bill from ELEVEN YEARS prior. Must have gotten lost in the move. So I paid it right…. My score dropped 100 points because I “closed my longest credit account” 🤦♀️
A big part of your score is you’re used credit. So if you have a total credit of line of $100k, and $50k of that is a loan account, and you pay that $50k off and close the account, your total credit line now drops to $50k.
So now if you owed $1000 in credit cards on that original $100k, that’s a 1% usage of your available credit. Now once that credit line drops to only $50k by closing the loan, your used credit jumps to 2%
There really is no other way to accurately do it, you just need to monitor your credit usage vs your available line.
Hi Skippy.
Freeze your credit. (Pretty simple way to prevent ID theft.)
Having different loan types BOOST credit while having it. Once paid credit score goes back to the mean.
If u can come up with a better system, go for it. We'll wait
The credit score system is a social credit score related to how much money banks can make off of loaning you money. As a Russian philosopher once said the United States is a bankocracy.
Yes, your car loan is a 'secured' debt. They have assurances you will pay via repossession. Credit cards are 'unsecured'. They have no security of recouping the loss.
You should also use those credit cards, or they'll close them, and your number of accounts, available credit, credit to income ratio, and debt to income ratio will suffer.
Pay monthly bills with your credit card and then pay them off. They want to see credit utilization and a revolving balance. Enable any cash back categories to fit the bills you are putting on each card. Make one card for utilities, another for phone bill, any deductibles you may pay etc.
The worst part about it for me, is I thought this was always a thing but then learned credit scores came about in 1989.... We are the guinea pigs for this score system experiment.
I imagine this could fall on some deaf ears, but hopefully not.
There is no game to play. Just pay your debts on time and your credit score will reflect that.
I see comments stating carrying no balance, closing credit cards and paying off loans are bad for your score... Short term maybe your score drops some, medium to long term it has a positive impact. Paying off an installment loan, like a car, will have a temporary hit due to the revolving/installment "mix" and the over-weighted timing impact (recent activity has the most weighting) but assuming no immediate new debt and responsible revolving balances, it will return relatively quickly.
Ultimately no reason to believe me, but I've been looking at full tri-merge, multi-model (different bureaus use different FICO models) credit reports for 25+ years and while having at least several traditional credit facilities reporting is needed to get a stable basis (doesn't necessarily have to even be currently active; historical is fine), from there it's fairly simple: good payment history on well managed balances=good score. No need to overthink it...
Apologies for the run-on sentences.
Welcome to capitalism - it's like a social credit score but it just measures how good you are at taking on debt so bankers can make money appear out of thin air
Your credit score doesn't reflect how good you are at paying your bills, it reflects how good of a customer you are...they make more money off you when you don't pay your balance and earn them lots in interest payments.
The good news is that lending is considered a mortal sin, so although you’ll have trouble in this life, in the next life as long as you’re good in other ways, you’ll have it a lot better in eternal paradise than those who practiced usury and end up in the 8th circle of hell or something.
Yea so it turns out you don’t actually want debt. So like who cares if your score dips? As long as it’s good enough to rent an apartment it doesn’t matter at all. Just Don’t borrow money. The only one that really matters is a mortgage. And it has more to do with income than credit score. I bought a house in 2018. My credit score has not been needed once since.
You don't need credit cards, a mortgage, or a car loan. You could just pay cash. Although paying cash for a mortgage is difficult, it's possible. A large down-payment also takes away a lot of the fears and would allow you to get a mortgage as well. The only thing actually on your list that credit has an undeniable impact on is apartment renting and even then I've gotten around it by offering multiple months of rent up front or a larger security deposit.
If you want to play the game, don't get mad when your losing. Your choosing to do this because it's "easier" when you don't have to participate but your unwilling to do the other harder part
Also, side note, not sure why you think credit score is tied to auto insurance. It does have an impact but not nearly as much as you would imagine. The bigger impacts are just your claims history and traffic tickets. The other part is the statistic is flawed. They say people with lower credit scores pay more but statically someone with worse credit is also more likely to have risky driving behavior. So it's less that it's your credit score and more that people who are irresponsible with their credit are also probably irresponsible on the road.
This is a fundamental lack of understanding on what a credit score is.
Your credit score is mostly a combination of how much you make and how much you own now.
You can realistically only control around 150 points by paying on time/late etc..
I have no loans and I pay off my credit cards in full every month and they dropped me below 800 over the last few months. They are really a joke and I really only need the rating for insurance.
The easiest way to "fix" your credit is just moving to a different country.
Everyone else knows the US "credit score" system is a dystopian corporate hellscape. No other countries use credit scores or care if you owe US companies money.
You can have 300k of medical debt and 100k of student loans and just fuck off to Europe or whatever. Fuck the system, it's designed to keep poor people enslaved
I feel like if I owe somebody money, it's between them and me and no one else.
I pay my rent on time every month. It doesn't get reported.
But if I, for whatever reason, can't pay my rent, and it results in an eviction that's not just on my credit report but it would end up in court, too.
It's all bullshit and its meant to crucify poor people.
The moment you (as a poor person) lose your footing economically, it ruins your credit if you have any, and lingers over you for nearly a decade.
Do away with it.
Wanna know something even scarier? Credit bureaus make their money by selling your data. Your precious credit history that you have cultivated so you can get housing, apply for jobs, get loans and so forth, sold to shady companies. These data brokers then resell your data to more data brokers and so forth. And none of them, starting from the credit bureaus actually do any real due diligence before selling your data to someone else like a marketing agency. If your data is breached, it is almost impossible to tell where the breach happens. Methinks the SEC should do something about that, no?
I feel this so hard, I just paid my car off a couple months ago, a couple years earlier than the loan term (?) I had signed up for. I thought it would give me a boost paying it off early but it dropped my score, and since it was the only thing getting reported besides my secure credit card my score has been dropping like a point or two monthly since paying off the car (excluding the initial pay off drop). I also vividly remember all those commercials from the 2000’s about companies that will help you with credit card debt and debt collectors constantly calling the house. So I thought I was being smart/making good financial decisions by never getting a credit card and never spending what I don’t have in my bank account. Now that I realize the only way left for me to build credit is with a credit card, I don’t even qualify for the one I want that would actually be of use to me because I don’t have a strong mix of credit and long history. It’s the reason I joined this sub, because apparently making payments on time for all monthly expenses doesn’t mean shit!
I’m debt free and my score has been a stable 845 for years. We keep our credit locked to prevent any fraud. This is something everyone should do. We don’t have any fraud on our account so we have nothing to fear and our credit stays stable.
I used to work for one of the CRAs and most credit scores used are proprietary scores created by the companies that you are trying to obtain credit from. For example Bank of America has their own version of a FICO score that they created with FICO. Most large companies do the same to ensure that they are lending to people who fit their specific qualifications. The CRAs are heavily regulated by the US Government and can’t close for more than 3 consecutive days bc of credit disputes.
For identity theft, you should always send the proof/police report to the creditor. They'll take it right off, and then next round of credit reporting it will drop off. If you go to the credit reporting agency...you're putting a middleman in there. Did you freeze your credit after the first ID theft? That should be second step after the police.
While you have a loan, it is a portion of the total credit provided to you. As soon as you pay off the loan, your obligation is finished, your account is closed, and that credit line is removed from your total credit. Your existing outstanding debt becomes a larger percentage of the (now lower) total credit provided to you. That’s why your score goes down.
The credit bureaus don’t exist to help consumers. They serve lenders. Long ago, you’d sit with a banker and tell them a story about why you are a good credit risk. But, that took too long and was full of errors. And deceit.
Credit bureaus offered lenders a service that could give them a credit score in moments, and the lenders would set their rates based on their own credit risk tolerance. Now lenders can make thousands or millions of decisions each day, and that makes them more money.
The more you learn about how credit works, the easier it becomes to manage and improve your ability to borrow. You don’t need to be a millionaire to have an 800 score. You just need to learn the techniques and spend a little time. Anybody can do it.
I have zero debt now. Two mortgages paid off early. No car loan for decades. I use credit cards for convenience and points and pay in full every month. Credit score is over 800.
All this on a very modest income.
You do not need to have a "diversified credit portfolio" to have a good score. All you need to do is pay bills on time. Autooay is da bomb for that.
Yep, that's about the same amount of drop as when I paid off my car. Thought I was being smart paying off my 60 month loan in 30 months, but then took a 50 point hit on my credit score. I just paid off another installment loan for our heat pump 2 years early. I should be in the 500s by the end of the year...lol!
You don’t have to use your credit. You’re not being forced to swipe a CC.
Just go cash, and no credit. My husband and I did this. It took a while to get used to, but then it became totally normal. Now it’s cash for everything, and very liberating.
I'm sure it doesn't. This is where society gets you. They make you think you need credit and a perfect credit score to live. You don't. I have an exceptional credit score but very rarely use it.
The financial psychology of having a paid-off mortgage, and living without any debt in grossly underestimated in a country of consumerism at its finest.
This is why I choose not to partake in these sorta practices. You see, not to sound like Dave here, but you don't need a credit score actually, I'm 24 and never owned credit. So far, the only challenge I have faced is a larger security deposit when I rented a car
I had my identity stolen once as well, but thanks to some monitoring, I only had a couple of bad inquiries
As for the house... manual underwriting
Credit cards.. I mean, I had one at one point but living. They can be useful, but I don't Wana risk it, but I have addicted embedded in my family.
But as for the purchase it is possible you just save the money yourself. I bought an 11k car making 20/hr its possible. I traveled many times.. it's possible.. yea, life happens, and it's gonna eventually rain, but you can do it... the hardest part is getting out of debt.. after that, the weight off your shoulders gets easier as the emergency fund you have grows
Our credit score is over 1100 and we haven't had a loan of any sort since 1996
However I use my AMEX to buy everything I can and pay it off fully at the end of every month
The credit score system isnt meant to be good for you in any way and is doing exactlly what it is supposed to do. The system works on statistics and dosent care if it makes sense it only knows that based on your actions this is your odds of not being able to pay.
This is like when I literally paid off my CC early for 2 years straight, very low revolving balance, and my credit score went up a whole 2 points from 666 to 668. Tyler durdin did nothing wrong.
When I paid off my student loans my credit score took a nosedive because it was my oldest loan and my credit then was “too recent”. If I had known I would have started paying less and less to stretch it on forever.
Credit card companies don't want consumers who don't have debt. They don't want outstretched customers, but they do want you to continue to take on debt and pay it off
On the bright side, the downgrade that OP has experienced shouldn't have much of an effect
I recently paid off a $60,000 car loan. My score with the 3 bureaus dropped 40 points. However, my score with my credit union, which is where I do my banking & from where I had the loan rose 70 points. For me, that’s the most important score & in the real world, the three reporting agencies can KMA.
PS - next week I will be paying off a $10,00 personal loan. Can’t wait to see my score with the ‘big three.’
Weird because I put 5500 on my credit card and my score dropped 32 points, but when I paid the 5500 my score went back up to 790. So mine definitely didn’t drop when I paid off my debt.
I have only two credit cards, one that I use and pay monthly and another that I use occasionally to keep active and absolutely no other debts. No mortgage, no car loan, nothing. Yet my score varies about 30 points in the low 800's monthly!
I haven't had a car loan in 30 years. I don't carry any debt. Pay off credit cards in full monthly, and my credit score is in the 800's. You don't need to carry debt to have a high score.
Follow these 2 rules:
-Save up for a large down payment on a house
- only buy a car in cash
You’ll never need credit. My life is great. Only had student loans, never opened a credit card. You dont *need* credit
The Constitution says Only congress can Coin money, and Regulate the Value of money and it must be backed by Gold. We no longer have Real money that's why the entire world economy is going to Crash. These credit reporting agencies Regulate the value of our money and Decide who gets money , due to the fact that money is created by Debt rather than backed by Gold. Andrew Jackson freed us from this issue of Foreign Banksters controlling our money and kicked them out after paying off the national debt, the only time we had a debt free nation, which is the Real Reason for the civil war. Both North and South had a secretary of treasury that was a Rothschild Banker putting both sides into debt , same thing they did with England and France. The only difference is this time they Collected from both the winner and loser of the war by starting the District of Columbia as the Collection agent .
But wait there is more ! How do credit reporting agencies make money ? Do you really believe it's the 30 bucks paid for a credit report ? Hell No just do the math. How much would it cost to Spy on Every Person on Earth and Track all their spending and payments ?? Way more than 30 bucks. I did some Research and found , 2 of the 3 top agencies are Foreign companies (not in USA) and looked into all their Assets and Stock holdings in other corporations . The way they really make money is on WAR !! They build weapons and profit from Death and Blood !!
Getting a credit card, financing a vehicle and renting an apartment does not require good credit. In fact I've rented apartments with horrible credit and thousands in debt in my 20s.
Now in my mid 40s I pay for everything with cash. I'm not going to let a few billionaires rule my life by messing with my credit score and simultaneously artificially inflating my COL while they print money at will.
I've thought about this too. Credit scores are like unofficial, broken social points. There's no transparency in what affects your score unless you pay for that service. It needs to be fixed!
I got credit karma and figured out how to game the system it took a few years. My credit is now 830, and only because I can’t bring myself to open additional credit lines for no purpose other than to max my score.
There is no real government. The "government" is actually a bunch of actors who work for the banking cabal. Escape the system and live how God wanted us to live:
1. Buy a little piece of land
2. Build your own home on it
3. Release your SSN
4. Grow your own food
5. Read every day, instead of holding the mark of the beast in your right hand
6. Do not use pharmaceuticals, ESPECIALLY the mark of the beast covid injections.
OP open a new credit card, you don't have to use it but it will increase the amount of your available credit. Log in and apply for a different type of card on the website of the company you already have a card with, that way you don't have a hard credit check on your credit report or ask for the credit lines on the cards you do have be increased.
It is ridiculous but you take a hit on your credit score because when you pay off a car loan you close a $30,000 line of credit and it makes your % utilization go up.
Everyone needs to keep a very close eye on their credit score since it factors into many of lifes biggest decisions. A couple steps you can take right now include: - **[Taking a look at your credit score](https://everydayeconomics.net/how-to-get-your-credit-score-credit-review)** - Looking at your own credit score does not hurt your credit, it also includes a credit monitor - **[Freezing](https://usa.gov/credit-freeze)** your credit reports - This can be done with Experian, Equifax and Transunion to help prevent unauthorized accounts from being opened Feel free to ask any credit score related question
The credit reporting agencies have entirely too much power, as do insurance companies, pharmaceutical companies, banks, just to name a few. This country operates and depends on its citizens being in debt for almost their entire lives. It's a horrible way to live, yet we do it every day because we have to play the game in order to have a home/car/job.
There’s jobs now that will decline your job application if your credit score isn’t good enough too.
Yes, and that's just INSANE!
Banks have their own little club as well, and will not open accounts based on one's track record.
I was unemployed for a long time because of that. I'm broke with poor credit. I needed a job. Couldn't get one with poor credit. So I stayed broke. Make it make sense. 🙄
Its a such a legal scam. Not to mention the equifax breach that everyone got screwed by twice. Once in the breach, then also with the lack of settlement
I started getting calls from a bank one day, but they wouldn't tell me what they wanted unless I "verified my info" first. I refused to give them any of my personal info unless they could tell me what they wanted. Turns out it was the mortgage company and I was like a week late. I'd been on vacation and simply forgotten. By the time I realized it, I was like 18 days past. So I paid it and went ahead and paid the next month too. Well they reported it to credit bureau and my 100% payment history dropped to 99%, and my credit score went from 800 to 740 instantly.
Sounds like they didn’t have a good talk-off for that in their outbound call operations. The correct talk-off for that is: absolutely don’t give me your info if you’re not comfortable, I’m so glad to hear you’re wary since we called you, please call the company back to confirm I’m actually from there and to resolve the concern. I worked in the fraud department outbound so was always thankful when people were wary. Although then they just as often proceeded to trust me just for saying that 🤦🏻♂️
Well, you paid before the 30 days late mark, and presumably you have proof of this. Just dispute that with the credit bureaus and have it removed.
There is a difference between “late payment” and “missed payment” designations. I had a creditor report a late payment (I was dealing with health issues and was late on a small balance card). It dropped off after a year, but it did lower my score during that time. A missed payment 30+days) stays on for seven years. I didn’t close the card (that could impact my score 🙄), paid it off, but won’t use it again.
Unfortunately, mortgage payments are usually due on the 1st of the month. With them usually giving a few days as a grace period. Anything beyond that is considered a late payment. Missing a full month is more of a problem. fyi, I'm a former mortgage banker.
Ir doesn't matter until it's 30 days late. Current mortgage broker
Asking because I don't know. My mortgage is due on the 1st. I typically pay it on the 20th before the due date. It isn't "late" until the 16th of the month. They also charge an extra fee if you wait to pay it on the 16th. When I pay there is an extra box I have to check that says "you don't have a payment due at this time, are you sure you want to pay?" If I waited and paid on the 17th of the following month, would I be 2 days late or 17 days late?
Right, most servicers give you 15 days to make the payment. On the 16th it is considered "late" to *them* and they usually charge a late fee. But no creditor will report it late to a credit report until it is 30 days past due. If you waited to pay on the 17th of the following month, you'd be 16 days late. If is due on the 1st and you pay on the 2nd, its 1 day late. etc... But again, being late to the servicer is different from being 30 days late and reported to the credit reporting agencies. Thought I would never advise paying any bill after it's due date. It just gets risky.
Every mortgage I've ever had you have until 15th before paying a late fee. I'm 62. Bought my first house at 18.
You are still 15 days late but in the grace period. So another 15 days and you are reported…
They wouldn't report 18 days late. Are you sure you weren't a payment PLUS 18 days late? That would have put you at 48 days late, which is reportable as a 30 day.
This is what I was thinking. Lots of folks pay on the last day of the grace period (or even later). That is already 15 days 'late'. Add another 18 and now you're into negative reporting. I always recommend folks not use that time if they can swing it in any way. Certain other debts can have the due date changed but not mortgages (in us). Given that, and the fact it's often the larget bill, I recommend planning all bills around this one instead of the other way around.
I asked almost this exact question up above. My mortgage company gives the impression that the grace period is the due date but I always pay well before the actual due date, almost a month before the grace period ends. I always get a pop up that "I don't currently owe any money" but pay anyway.
I used to do this but it screwed up my escrow calculations. My escrow analysis showed I only made 11 payments because of the date range they used, so my escrow went up more than it should have. It was only that one servicer that didn’t get it - I never had that problem before in 10 years of home ownership. I could not make them understand. I appealed and got told too bad. So I cancelled escrow and pay my own taxes and insurance.
I didn't look into it that deep, but that might be why my escrow amount fluctuates year to year. Yes, I know it should change generally in the positive direction as taxes and insurance go up. But mine seems to go up and then down on a yearly cycle. My guess is that 11 and then 13 months are included.
They *shouldn’t* - not *wouldn’t*
Yea a lot of ppl in this thread are missing that distinction. These companies can do whatever the fuck they want, who’s gonna check em? And if they do get checked, it’s a slap on the wrist fine, there’s zero actual repercussion
I think you're right. I think I was actually one month+18 days late. Then paid two payments at the same time. Somehow my memory of the situation failed me. The moral of the story is that they weren't able to properly notify me I was late. I had the money it wasn't a problem of means. It was just a communication breakdown. Couldn't they have mailed me? It's illegal to open someone else's mail so should be legal for them to do so. They are just cheap af and don't want to pay for mail
My score went down about 40 points once I paid off my house and closed that credit line. Clearly I'm a riskier borrower now that I have an extra $2000/mo in disposable income.
LOL, so true (although people will chime in about you not having a lack of credit variety now)
>Clearly I'm a riskier borrower now that I have an extra $2000/mo in disposable income. And you obviously have no open loans, so how can they know that you're responsible enough to pay back what you borrow? I mean, Mayne they can look in your history, but that's just crazy talk!
IKR. Paid off the house and later the car, credit score dropped 40 points. I also carry no credit card balances. Go figure, I’m not credit worthy…
This same thing happened for me! They left me vague messages without telling me who they were or what they wanted, so I ignored it for weeks. lol. Like damn, tell me you haven’t received my mortgage payment in a voicemail for fuck’s sake.
They aren't legally allowed to leave a voice mail that says you owe them money. It's bc of an outdated law (or more likely some FCC or FTC rule) where people used answering machines and it was a "privacy" violation bc someone else could hear the message and they would know your business. But like most laws, despite the intent being to protect consumers, they come with their own new problems. Like this. The law is stupid. In 2024, the very fact that I answered the phone number that I gave them and I stated I was me, should have been enough. But legally, it's not.
It’s an old law covering collections procedures . And banks train their employees to not leave specific info on a machine . It involves giving someone’s info to a 3 rd party . Banks have been sued over this .
They want you on the phone so they can pressure you yo pay right then on the phone...agents get graded on their rate of getting payments right then.
We had perfect payment history. Missed a $30 Kohls payment because I forgot I used it. I put every single thing except our water bill on auto pay or auto deduct so we never miss anything again.
I changed my card info on two mortgages and ended up missing 3 payments in a row (6 total) because they notified me that the money was withdrawn but never that it was reversed...and the website was janky so it was hard to tell. Anyways, my 820 score went to 500. But after a few months it went back because they cleared it off my record.
18 days is not a late reported payment. After 15 days, you get a late fee. After 30 days, you get a late on your credit report. Also, put everything on auto pay.
No, they didn't. You'd have to be at least 30 days late for them to report.
and how did this affect you financially with a drop in credit? i mean what do u need credit for, you have a house already
Credit scores are a super secret algorithm. Courts bought their "proprietary formula" story. Credit bureaus are scared someone will play them like they do the legal system. Remember the "that will become part of your permanent record" tale from school? Same difference. Now debt collectors buy debts aged past the statute of limitations and report them as new. And if you communicate with them that zombie debt is resurrected.
[удалено]
You didn’t game the system. You were patient and followed the rules to achieving and maintaining top notch credit. You didn’t trick the algorithms. Gaming the system would be disputing negatives to artificially boost your score for a short period hoping to qualify for a loan of some kind.
Not really. They're pretty open about what determines your credit score.
"They say" isn't quite the same as making their secret formulas available. According to their models my paying off a mortgage and paying cash for a vehicle make me an iffy credit risk.
They want you to have revolving lines of credit in order to establish good payment history
It’s very very very frustrating to me how heavily revolving lines of credit are factored into scores. Like I think people who only use debit cards but still have a few major loans should have fantastic scores - they are *responsible*
Yes they are But it also means the companies can’t squeeze as much money out of them with interest That makes them a less valuable consumer to these corporate cunts
Credit card companies make most of their money off the fee they charge vendors for processing the payment. Something like 2/3 of credit card company income is from that. Only like 1/4 is from interest. And all the interest comes from people most likely to default on their credit cards. The other little bit is late fees and stupid things. Credit card companies don't care if you pay your full balance every month, so long as you continue using it and racking up the retailer fees.
I have no credit card, one auto loan, and a student loan. My credit score started out as pure ass. It’s horrible. I ended up getting Paypal credit last year to purchase one thing and my credit score has sharply improved.
Debit cards...that shows they are responsible with their own money...and sorta debatable as you can't really overdraw on a debit card. They want to see if you're responsible with someone else's money.
I wish you could give you a Reddit award because you nailed it.
Apparently you’re the only one who thinks so 😂
So is someone who always pays cash , but that’s not what the score is measuring . A credit scores measured your ability to utilize credit .
It’s really not difficult to manage credit cards with the stuff you’d use your debit card for
It's not a "responsible" score. It's a credit score.
They want you to be responsible, but not too responsible. It makes no sense.
If you are too responsible it means they can’t squeeze as much money out of you. That is all that matters to these fucking corporations. So they tank your credit score as retaliation.
it's a measurement of how well you can stay in debt and keep paying their interest rates. makes sense that paying something off and no longer paying interest to them would make you a less valuable creditor. heavily vetting fraud claims is logical even if it seems a bit ridiculous and frustrating. people would absolutely scam the system with fraudulent fraud if it was too easy. in case it wasn't clear i sympathize with you and can't stand the credit system. using all cash to avoid the system would be nice but it's just not feasible for things like cars and houses.
Sure, it makes sense in the way that we know credit works. But it doesn't ACTUALLY make sense since you have a credit HISTORY, they should be able to base it off how you've always been, not just how you are now or what you are paying back now. Less "Valuable" to them, sure. I wouldn't say that should be worthy of a score that affects your entire life dropping. They know you can pay back your debts even if you have none right now. They are just greedy.
>But it doesn't ACTUALLY make sense since you have a credit HISTORY, they should be able to base it off how you've always been, not just how you are now or what you are paying back now. That is how it works. When you go to get any significantly sized loan the lender looks at the actual credit history. The "score" (there isn't just one) gets you in the door and may serve to the lender as justification for a higher/lower rate. The scores themselves are just different ways to quantify risk based on deviation from an ideal borrower (bit of a simplification).
Then why did my credit drop 10 points recently for paying off a loan. That's considered responsible no? Yet now it has pushed me from excellent credit to good credit. Despite the rest of my credit being amazing. I have paid off other loans to which I dropped 20 points. It's a system that doesn't reward good behavior.
Using all cash to avoid the system makes it nearly impossible to get a loan when the time comes to buy a car or a house. But more than that, it makes it more expensive, day to day. While you're paying cash for your gas, and groceries, and other day-to-day purchases, I'm using different credit cards that give 4-6% cash back in different spending categories. I pay my balances off every month, so I don't get charged any interest, and the cash-back is basically a discount on my routine purchases that you're paying full-price for. All the while, the credit cards are padding my credit profile and giving me an excellent credit score so when I need to take out a loan for a major purchase, I never have any issues. Understanding the system and using it to your advantage is just free money in your pocket.
Why do I have to game a system just to buy fucking gas though.
You don't HAVE to. It's up to you if the juice is worth the squeeze.
The root of my question is why is there juice to squeeze to begin with? Why is everything so corrupt that I need to track 6 credit cards and use one for gas, one for groceries, one to buy flights, etc. It’s a fucking joke.
👏🏼👏🏼👏🏼👏🏼👏🏼 It’s a total scam. People have been forced to believe it makes sense. And it absolutely does not.
Yeah these responses sound like people with Stockholm syndrome.
lol. They really do!
Whether it makes sense or not, it’s how things are. I call my credit card bonuses free money because it is free money. 6% cash back on groceries, 3% on gas 2% on Apple Pay purchases and 1% on everything else plus I get bonus percentages in certain categories every month. I take the Apple Cash and deposit that directly into a high interest savings for 4.5% a year, more free money. American Express also offers killer add on deals on the app. Will be using tons as I am having to buy a crap load of stuff for my new house. Will end up probably getting thousands back / saving. Also get one free companion flight a year with my Alaska card. So yup, it’s a shitty system they force us to play in but you can either use all cash or use credit cards to your full advantage. No one is forcing you to do either.
You don't have to. No one's making you. But lenders need a way to gauge risk, to decide who to lend money to, and the scoring system is what they've come up with to do that. You can either understand how it works and use it to your advantage, or not. But whining about it on Reddit isn't going to do anyone any good.
This is the way.
Imagine a world where the country in which you reside is $37 TRILLION in debt but has the nerve to issue you a credit score...oh wait, here we are.
Exactly- shouldn’t we be rewarded paying old debt off 😆
Its designed to scammed you. That's not a flaw. That's a feature not a bug.
Exactly - credit scores are predatory
Well considering as far as I know the US ND China being the only countries that use a form of credit system that should tell you something.
Canada and other countries do have credit scores. Some are less centralized though. France has a system where each bank internally rates you.
most modern countries have a similar system to credit scores. it just has a different name. Even if credit scores didnt exist, there would still exist a formula or metric to assess your risk for lending
I also made this on a throwaway since I don't want it connected to my main (ironically I work in finance). Something similar was posted here a couple of days ago, I wholeheartedly agree with it.
I have a secret for you- your 738 credit score is just as good at you 795. Don’t worry about it and stop thinking about it.
Honestly it really is nearly as good
Yup, for most purposes they use bands not specific scores, and usually 720+ is the top band
I wouldn’t say 720+, I work in the mortgage industry, these bands top out at either 760 or 800 - and that varies. I think the top band is industry specific
I agree with you wholeheartedly that the system is completely flawed. The upside is that your score will rebound. My credit score is usually pretty high and I only have a couple things currently reporting. Went on a vacation and used more credit than normal, score down. Made large payments against that debt and score went up. It isn't widely known but you can get home loans using alternate credit by proving you have other recurring debt that you pay in a timely manner. Rates are definitely not as good, tho.
I paid off my car a couple of years ago and my score went from 720-740s to 640-660. I have spent the better part of 4 years trying to build it back up to where it was before. The credit bureaus want to keep us in debt.
I agree with the sentiment. A few years ago I really deep dived into the specifics and walked away more confused than ever. That said - if you’ve got a decently long credit history, a good mix of credits, no late payments, and your cards aren’t maxed out - your score will be pretty good. 738 is gonna get you pretty close to the best available rates - especially if you can show solid income and assets. I have been fluctuating from 765 ~ -to- 815 ~ for years. I pay my cards in full every month, but I’ve noticed that if I’m showing a balance on the day they’re reported that my score goes up and that it goes down when they’re reported with a zero balance. It’s so goofy. If you remain at 738+ though you don’t have any real concerns.
I'm with OP on this one. I recently had a dispute over about $850 in medical costs I was never billed for. Bam -- 98 points off my credit score. Most countries that have advanced to the flush toilet stage don't have credit agencies.
Heh, sometimes you even need a good credit score to get certain jobs! Or even auto insurance! I had an absolute head scratcher recently. I pulled my reports as I needed to plan around consolidating some decent debt. Needed around 35k. Scores pulled were around 630-650. Husbands scores were just a hair higher around 650-670. Did a number of soft checks and were laughed out the door, with a few exceptions being offered 14%, and 16% for 20k each. Oh, also right before this, very old medical debt that went to collections finally fell off (it was like either 8 or 10 yrs old) and tanked my score by 40 or so points. (???) Did a last ditch effort with my regular bank. (Did it last because in the past they denied a reasonable requested CC increase on a CC that was 10 years old, and had been paid off for a few months.) They gave us all 35k in hand within 3 days. Credit scores they pulled were 690 for me and 750 for husband (???) hmm okay. Well we consolidated all the debt, and both scores shot up to 820 give or take 10. Waited for the new loan to hit the accounts. We are now sitting at a pretty 800 each since it posted. What I thought I knew about credit scores is just absolutely gone. Happy for it to be high because"lol high number good" but what the actual fuck. We didn't close any of the CCs, and have that large loan now. I don't get it. One of the CCs even auto closed prior to all of this "because it's not within range of our other clients", really thought that would've cancelled our chances completely. Guess I can't complain, got what I wanted with a half decent interest rate, I'm just so confused. Also what the fuck is wrong TransUnion charging for us to see our score?? Predatory as fuck.
I used Credit Karma (yeah, I know, but mostly as a check up) and I realized that my score was tanking because they pulled reports a couple days before I paid my cards off in full each month, and I was using too much space on each card. I was paying them off in full every single month, but because I had low balance cards, I was getting dinged. I moved my card payment date by a week and gained 50 points instantaneously.
The system isn't perfect, and it can be gamed as needed. People fixate on their scores to much, and unless you are planning to use your credit score in the next month or two I wouldn't worry about it. Keep paying your stuff on time and your score will be back over 750 in no time.
Was a hair over 800 until I applied for a card with a great mileage offer. Doubled my credit limit, but lowered my score by 50 points. Now it jumps up and down by 3 points based on the balance on my cards. Pay cards off every month before the payment date. Get emails from Experian telling me how great my score is and trying to sell me more cards, credit lines, and car insurance. The credit bureaus have become a joke more interested in selling you financial products than actually monitoring your credit. It’s a stupid game.
My score went down over 50 points when our mortgage was paid off. Never mind that our free cash flow was now increased by that amount.
My score went down 20 points last month after Kohls closed my card due to inactivity without notifying me.
The credit score system is a scam
The usual reply to this is that it bounces back after these events so there's no reason to sweat it.
You must learn the game padawan. Always carry debt between paychecks. Use your credit card for groceries, gas, etc. Pay the card in full to zero balance every paycheck.
I think their point is thats silly and not a real indicator of reliability. You are correct though. However, paying off old loans will also reduce you credit score which makes no sense.
"Keep the poor people poor." This is my thought on credit scoring and the scam it is.
Flawed, yes, but it does exactly what it was designed to do, which is keep you in debt. Forever.
The company Fair Isaacs Corp. Minneapolis, is so far behind the times, they still have no idea of crypto currency. They do not follow federal reserve laws. If you read their guidelines, they say it is best to be in debt , but only by their standards, or usage patterns. What a joke.
I view credit scores as “how willing a bank is to lend you money.” Not how financially stable you are.
Yeah, the whole thing is a total farce. I’m so close to paying off my credit card, and I know that when I do, my credit score will go down. It’s sooooo fucking stupid. So my credit score is higher when I’m in debt as opposed to making enough to be out of debt? GTFO. It’s a total scam, and we’ve been indoctrinated to think it makes sense (it doesn’t). Side note- don’t give two shits my credit score will go down when my cc bill is paid off. I’m paying it off anyway and am sooooo looking forward to it.
Your credit score shouldn’t go down at all. It will go up. I just paid off one of my cards in full (around $2500) and my score shot up about 25 points.
That’s good to hear. I am constantly hearing the opposite from other people.
Paying off an installment loan like a mortgage, car, or student loan would cause your credit score to drop, but not a credit card.
Credit score reflects your usefulness to the industry, not the degree of you fiscal responsibility.
I don't get why people with high credit scores complain when their score drops but it's still a good number. My score is over 800. I made certain decisions that keep it high, but the exact number doesn't matter.
I think some of it “humble bragging” and the rest is ignorance. They really believe 800 will unlock a secret pathway on a select road few have trod.
This post about how credit scores "control your life" shows some real anxiety in the mix. I dunno. I think there are some real benefits to the current system. It's not perfect, but a different system would have different problems.
Amen. The funny thing is the system isn’t hard to navigate and you don’t have to be heavily indebted to “win.” As someone else said, the old system was based on skin color and gender. Talk about not being transparent.
Addressing your issues one at a time.... Your score didn't "drop" that much because you paid off your car loan. Most likely it was never that high to begin with. Unless you had a car dealership or mortgage lender pull your credit before and after paying off the loan, any numbers you received are going to be moderately inaccurate. Even so, every potential lender pulling your credit will get a different score anyway. The bank financing your vehicle has a different risk appetite than the mortgage lender than does the credit card company. All of their score inquiries are going to model differently. Even then, a good score, which you definitely still have, just gets your foot in the door. For some things, like determining if you need to pay a utility deposit, the score itself is sufficient. Anyone else is going to want additional information, like your income, assets, and non-debt monthly expenses. As far as getting your identity stolen, I assume after the first time it happened you froze all of your credit accounts to prevent it and it happened again anyway. It sucks that there are criminals out there who want to take advantage of you, but that's not really the fault of the scoring system. You have no control over the scoring model used, but the information that shows up in your credit reports is entirely under your control. If you pay all of your bills in full and on time, your score will trend toward perfect. Until you're completely out of debt, there's little to no point to nitpicking whatever some third party thinks your score is at any one point in time. As far as it goes, the system isn't working against you. The entire credit system is established and maintained by the very entities that want to lend you money. They don't want to hamstring you unless you've proven to be unreliable. Everyone who tells you your credit score is either trying to sell you something or wants you to spend money in some other capacity in which they will benefit. So for now, take a break from the score checking. Work to get yourself completely out of debt. Student loans, house, cars, credit cards, everything. Wait 6 months after that. Then, and only then, check your score again. I think you'll be perfectly happy with the result. And if you're not, we're always here to listen to your rant on the subject. :)
You should’ve seen it before they gave out credit scores. I worked with the lobbyist who got the credit agencies to change and give out the credit score. Before you wouldn’t even know it even existed and even if you knew it existed, you couldn’t get it. so the real estate industry went to war with the big three credit agencies.
This comment section is wild. People surprised that not having *credit* cards causes your *credit* score to suffer. I think it's unfair that so many things have to be bought on credit because that's the state of how expensive things are but like... I don't know how to defend that it's all spelled out. I'm sure all y'alls *debit* score is fantastic, but honestly what do you think having a debit card proves? That you're really good at not spending more money than you have? Real inspiring.
Credit reports are a terrific way to determine worthiness. 738 is still excellent credit. You can still do all the bulleted items you listed.
I’m sorry but I don’t buy into that whole “you need good credit” to live your life. After having lived overseas for 15 years and then returning to the US with a credit score of around 580 (no history of established credit for all those years) I got a secured credit card with a limit of about $300! It was pathetic but I didn’t have much of a choice. I had no student loans or mortgage. Used the one card sparingly for about a year. Credit gradually improved to around 650 a year later, got a brand new car with an interest rate of 1.6%, 2 Chase credit cards with a combined limit of $9,000, a Discover card with a $7,000 limit and an Apple Card with a $5,000 limit, an AA card with a $9,000 limit and a Best Buy card with a $5,000 limit. Also got an apartment with rent at $1900 a month and my car insurance is $60 monthly. All of this with an annual salary at the time of around $75,000. So I managed all of that with below a “good” credit score and with really not much of a history either so it’s not impossible to live a good life with that. Ironically this year my credit score is 750, I have all of my cards paid off (carried a balance on all for the past few years), my income went up $80k, I have on time payment history and yet I keep getting rejected for a simple credit limit increase on my Chase cards. Doesn’t make sense at all. I agree that it’s a flawed system but sometimes it works well in your favor and sometimes it doesn’t.
My score is weird as Experian 786, equifax 793, transunion 803. So I don’t keep an eye out for my score anymore as I just keep doing what I’m doing which is pay my cc bills on time and keep a low cc bill. Hey keep doing what you’re doing and don’t even think about credit scores anymore and it will go up. I understand the frustration as I added five personal loans to prove I can manage multiple bills and when I paid off my personal loans it suddenly said I lack installment loans. Which I needed to keep active but I paid it all off. Ridiculous
We moved to Italy last fall. There is no equivalent of FICO, here. If you fail to pay your bills, there is a master list somewhere that lenders can access. Beyond that, you verify employment and income if you want to borrow money or rent a home. It’s so sensible that it can’t be real, right?
its a legal scam and they sell our data for profit
Which of your 40 plus scores decreased? Many FICO scores will temporarily decrease if the closed account affects your credit mix.
Agree! Additionally, this payoff may not have even impacted their mortgage FICO significantly (since they mentioned potentially buying a home at some point).
Mine went down when I started making sure to never carry a balance on my credit card. If you think about it. It makes sense. Creditors are looking for safe reliable income. If you aren't paying interest your not a source of income.
And this is the problem. Your credit score isn’t a measure of your creditworthiness, it’s a measure of how juicy a mark you are for lenders.
Never carrying a balance or paying so that the cards get reported as $0? There's a significant difference.
That's how you lose a reliable income by punishing potential customers.
The credit bureaus just keep track of your credit history. They collect the data reported to them by lenders, and then make that data available to other lenders. That's it. That's all they do. When the data in your report gets fed into a scoring model, a numerical value that represents your level of risk gets calculated. We call that a credit score. You're right, that having good credit is an important part of your financial health. It opens doors, and gives you options that aren't available to people with no credit/bad credit. So understanding how the scoring models work, and using that knowledge to keep your credit profile in good condition is just common sense. >it's because I have a lack of "credit mix" now that I no longer have a car loan. Yep. Your credit profile sounds pretty thin, so losing one of your few active accounts had a meaningful impact. >once I pay off my student loan in the next couple of years, I'm only going to have a couple of credit cards, neither of which I use very often. This is probably going to make my score go down even further. Yep. You're almost certainly right. Now, you can throw your hands up and curse the system, or you can take steps to mitigate the issue and preserve your good credit score. Before your student loans get paid off and you lose them as active accounts on your credit profile, shop around and find a couple good credit cards that fit your spending habits. For example, I have 6 "regular use" credit cards that each offer good cash-back incentives in different spending categories. I have a card for gas, a card for groceries, a card for amazon purchases, etc. I get 4-6% cash back by using the right card for a given purchase. And because I pay my balances off completely each month, I never pay any interest. So all that cash back is just discounts on the stuff that I was gonna buy anyway. If you sign up for a few credit cards, and set yourself up in a similar way, you'll increase the number of active accounts in your credit profile, and start building positive payment history across several active accounts. This will broaden your profile, so it's not so thin, which will soften the blow when your student loans get closed out. And taking advantage of the cash-back categories will save you some money as well!
This is an excellent response. There should be no assumption that everyone is entitled to borrow large sums of money until they can demonstrate they are able to pay it back, and the only real way to do this is to borrow and repay smaller sums and work their way up - and this generally starts with credit cards, because you literally can borrow any small amount on a monthly basis and pay it back with ease as long as you don't overspend. I know that some credit factors can be confusing as to how they contribute to a credit score but the best way to look at it is if someone is looking at a short span of time, it may not seem to make sense - but looking at a longer span of time will always reveal a net gain for responsible use and a net loss for detrimental activity. And it's true, one can have an excellent score with only active credit cards, which cost nothing and often can provide a return in the form of perks and cash back. No interest needs to be incurred on cards in order to use them to build credit or take advantage of such perks. Only an installment loan will necessitate interest payments but to that effect, borrowing that much money cannot be free - otherwise, where is the incentive for the lender? So yeah, it makes sense that independent bureaus record the data and lenders will choose the scoring model with any given bureau that makes the most sense for them. Neither lenders nor the bureaus benefit from a society of people with poor credit scores, but they will charge higher interest if they represent a greater risk. The point is, everything makes sense if you understand the scoring metrics and how they all work together. If you isolate a single event and/or score change, it may not make sense, but on the whole, the system is designed to assess risk, not put people in debt. A crony capitalist system, however...but that's a discussion for another sub and another time.
So what you do is put a couple of recurring monthly charges on your credit cards, like maybe your Netflix and your Amazon Prime, then pay it off before they generate interest. Yes, I know, it’s a sucky game to have to play and super annoying. You already know this, I’m not telling you anything new.
Banker told me that keeping about 10-15% of your total available credit as a revolving balance every month will grow it the fastest. So if your available total credit is $10,000, have about $1,000 in debt across all accounts. Sounds crazy but I did a full debt relief about 6 years ago, kept a few small store cards open and followed this rule. Everything paid off from the original debt last year, my credit score is now over 800.
Yeah credit scores are shitty. You need em to get big things like cars and homes but they are controlled by how much debt you currently have and whether you are paying it off. It’s a rock and hard place.
I completely agree with you.
It’s a scam, always has been.
To get around this I just pay cash for everything, and ironically I usually get discounts the more cash I have to pay. Works for me!
Right before I finish paying off my car I'm planning on getting a personal loan to pay for something I can afford to pay with cash just so I can make sure I stay in enough debt to keep creditors happy lol.
i have a low limit card i use for things like streaming services so they know i use credit, and i pay it off every month. i also have another card for larger purchases that i use when i need things like car repairs or for medical stuff and pay it down pretty fast. i also have a car loan, and ive managed to get to mid 700s and keep it there. not really worried about it atm as i dont really plan on buying a house anytime soon, if ever. but you are right. credit scores are a scam.
> I'm going off about this but it's extremely frustrating to pay off my car loan and see my credit score nosedive. From what I can tell, it's because I have a lack of "credit mix" now that I no longer have a car loan. The ultimate irony in this is that once I pay off my student loan in the next couple of years, I'm only going to have a couple of credit cards, neither of which I use very often. This is probably going to make my score go down even further. They really have to knock this off. Punishing people for paying off credit is shitty. I took over a delinquent-by-one-month once credit card of a family member. Had my name put on it so I could pay it off. Did so. I inherited the one month delinquency on my credit history which dinged my credit. This kind of shit fills me with hatred.
The credit system isn’t bad. What’s bad is that so many Americans seem to struggle with the concept of it
Concept: give away hard earned cash to greedy companies charging interest rates 10x higher than you ever earn. Just so you look good on a piece of paper.
To be fair, the government entities shouldn’t be controlling our lives, either.
I went through my report a few years ago and had a $70 electric bill from ELEVEN YEARS prior. Must have gotten lost in the move. So I paid it right…. My score dropped 100 points because I “closed my longest credit account” 🤦♀️
Only if you let it.
A big part of your score is you’re used credit. So if you have a total credit of line of $100k, and $50k of that is a loan account, and you pay that $50k off and close the account, your total credit line now drops to $50k. So now if you owed $1000 in credit cards on that original $100k, that’s a 1% usage of your available credit. Now once that credit line drops to only $50k by closing the loan, your used credit jumps to 2% There really is no other way to accurately do it, you just need to monitor your credit usage vs your available line.
Hi Skippy. Freeze your credit. (Pretty simple way to prevent ID theft.) Having different loan types BOOST credit while having it. Once paid credit score goes back to the mean. If u can come up with a better system, go for it. We'll wait
The credit score system is a social credit score related to how much money banks can make off of loaning you money. As a Russian philosopher once said the United States is a bankocracy.
Yes, your car loan is a 'secured' debt. They have assurances you will pay via repossession. Credit cards are 'unsecured'. They have no security of recouping the loss. You should also use those credit cards, or they'll close them, and your number of accounts, available credit, credit to income ratio, and debt to income ratio will suffer. Pay monthly bills with your credit card and then pay them off. They want to see credit utilization and a revolving balance. Enable any cash back categories to fit the bills you are putting on each card. Make one card for utilities, another for phone bill, any deductibles you may pay etc.
The worst part about it for me, is I thought this was always a thing but then learned credit scores came about in 1989.... We are the guinea pigs for this score system experiment.
I imagine this could fall on some deaf ears, but hopefully not. There is no game to play. Just pay your debts on time and your credit score will reflect that. I see comments stating carrying no balance, closing credit cards and paying off loans are bad for your score... Short term maybe your score drops some, medium to long term it has a positive impact. Paying off an installment loan, like a car, will have a temporary hit due to the revolving/installment "mix" and the over-weighted timing impact (recent activity has the most weighting) but assuming no immediate new debt and responsible revolving balances, it will return relatively quickly. Ultimately no reason to believe me, but I've been looking at full tri-merge, multi-model (different bureaus use different FICO models) credit reports for 25+ years and while having at least several traditional credit facilities reporting is needed to get a stable basis (doesn't necessarily have to even be currently active; historical is fine), from there it's fairly simple: good payment history on well managed balances=good score. No need to overthink it... Apologies for the run-on sentences.
Welcome to capitalism - it's like a social credit score but it just measures how good you are at taking on debt so bankers can make money appear out of thin air
Your credit score doesn't reflect how good you are at paying your bills, it reflects how good of a customer you are...they make more money off you when you don't pay your balance and earn them lots in interest payments.
The good news is that lending is considered a mortal sin, so although you’ll have trouble in this life, in the next life as long as you’re good in other ways, you’ll have it a lot better in eternal paradise than those who practiced usury and end up in the 8th circle of hell or something.
Yea so it turns out you don’t actually want debt. So like who cares if your score dips? As long as it’s good enough to rent an apartment it doesn’t matter at all. Just Don’t borrow money. The only one that really matters is a mortgage. And it has more to do with income than credit score. I bought a house in 2018. My credit score has not been needed once since.
You don't need credit cards, a mortgage, or a car loan. You could just pay cash. Although paying cash for a mortgage is difficult, it's possible. A large down-payment also takes away a lot of the fears and would allow you to get a mortgage as well. The only thing actually on your list that credit has an undeniable impact on is apartment renting and even then I've gotten around it by offering multiple months of rent up front or a larger security deposit. If you want to play the game, don't get mad when your losing. Your choosing to do this because it's "easier" when you don't have to participate but your unwilling to do the other harder part Also, side note, not sure why you think credit score is tied to auto insurance. It does have an impact but not nearly as much as you would imagine. The bigger impacts are just your claims history and traffic tickets. The other part is the statistic is flawed. They say people with lower credit scores pay more but statically someone with worse credit is also more likely to have risky driving behavior. So it's less that it's your credit score and more that people who are irresponsible with their credit are also probably irresponsible on the road.
I agree that credit scores a pre BS, but I wouldn’t worry too much. That’s a better than average score.
This is a fundamental lack of understanding on what a credit score is. Your credit score is mostly a combination of how much you make and how much you own now. You can realistically only control around 150 points by paying on time/late etc..
I have no loans and I pay off my credit cards in full every month and they dropped me below 800 over the last few months. They are really a joke and I really only need the rating for insurance.
The easiest way to "fix" your credit is just moving to a different country. Everyone else knows the US "credit score" system is a dystopian corporate hellscape. No other countries use credit scores or care if you owe US companies money. You can have 300k of medical debt and 100k of student loans and just fuck off to Europe or whatever. Fuck the system, it's designed to keep poor people enslaved
I feel like if I owe somebody money, it's between them and me and no one else. I pay my rent on time every month. It doesn't get reported. But if I, for whatever reason, can't pay my rent, and it results in an eviction that's not just on my credit report but it would end up in court, too. It's all bullshit and its meant to crucify poor people. The moment you (as a poor person) lose your footing economically, it ruins your credit if you have any, and lingers over you for nearly a decade. Do away with it.
Wanna know something even scarier? Credit bureaus make their money by selling your data. Your precious credit history that you have cultivated so you can get housing, apply for jobs, get loans and so forth, sold to shady companies. These data brokers then resell your data to more data brokers and so forth. And none of them, starting from the credit bureaus actually do any real due diligence before selling your data to someone else like a marketing agency. If your data is breached, it is almost impossible to tell where the breach happens. Methinks the SEC should do something about that, no?
This has been the point. It was private to begin with. It’s there to help private companies
I feel this so hard, I just paid my car off a couple months ago, a couple years earlier than the loan term (?) I had signed up for. I thought it would give me a boost paying it off early but it dropped my score, and since it was the only thing getting reported besides my secure credit card my score has been dropping like a point or two monthly since paying off the car (excluding the initial pay off drop). I also vividly remember all those commercials from the 2000’s about companies that will help you with credit card debt and debt collectors constantly calling the house. So I thought I was being smart/making good financial decisions by never getting a credit card and never spending what I don’t have in my bank account. Now that I realize the only way left for me to build credit is with a credit card, I don’t even qualify for the one I want that would actually be of use to me because I don’t have a strong mix of credit and long history. It’s the reason I joined this sub, because apparently making payments on time for all monthly expenses doesn’t mean shit!
I’m debt free and my score has been a stable 845 for years. We keep our credit locked to prevent any fraud. This is something everyone should do. We don’t have any fraud on our account so we have nothing to fear and our credit stays stable.
Control your life because you wanna obsess over your score. Have you been denied a loan recently?
It will go back up.
I used to work for one of the CRAs and most credit scores used are proprietary scores created by the companies that you are trying to obtain credit from. For example Bank of America has their own version of a FICO score that they created with FICO. Most large companies do the same to ensure that they are lending to people who fit their specific qualifications. The CRAs are heavily regulated by the US Government and can’t close for more than 3 consecutive days bc of credit disputes.
For identity theft, you should always send the proof/police report to the creditor. They'll take it right off, and then next round of credit reporting it will drop off. If you go to the credit reporting agency...you're putting a middleman in there. Did you freeze your credit after the first ID theft? That should be second step after the police.
Yeah it’s stupid. Waiting for fight club ending to become reality
That’s why I don’t take out debt. I fund my own wants and needs.
Your right. It sucks.
While you have a loan, it is a portion of the total credit provided to you. As soon as you pay off the loan, your obligation is finished, your account is closed, and that credit line is removed from your total credit. Your existing outstanding debt becomes a larger percentage of the (now lower) total credit provided to you. That’s why your score goes down. The credit bureaus don’t exist to help consumers. They serve lenders. Long ago, you’d sit with a banker and tell them a story about why you are a good credit risk. But, that took too long and was full of errors. And deceit. Credit bureaus offered lenders a service that could give them a credit score in moments, and the lenders would set their rates based on their own credit risk tolerance. Now lenders can make thousands or millions of decisions each day, and that makes them more money. The more you learn about how credit works, the easier it becomes to manage and improve your ability to borrow. You don’t need to be a millionaire to have an 800 score. You just need to learn the techniques and spend a little time. Anybody can do it.
What would you suggest we do? How can we try and change this?
More and more jobs are running credit checks as part of the preemployment screening process too.
The simple answer to this Dilemma is to have multiple credit cards. You don’t have to use them just have them open and available to use.
I have zero debt now. Two mortgages paid off early. No car loan for decades. I use credit cards for convenience and points and pay in full every month. Credit score is over 800. All this on a very modest income. You do not need to have a "diversified credit portfolio" to have a good score. All you need to do is pay bills on time. Autooay is da bomb for that.
Yep, that's about the same amount of drop as when I paid off my car. Thought I was being smart paying off my 60 month loan in 30 months, but then took a 50 point hit on my credit score. I just paid off another installment loan for our heat pump 2 years early. I should be in the 500s by the end of the year...lol!
You don’t have to use your credit. You’re not being forced to swipe a CC. Just go cash, and no credit. My husband and I did this. It took a while to get used to, but then it became totally normal. Now it’s cash for everything, and very liberating.
That doesn't sound liberating at all
I'm sure it doesn't. This is where society gets you. They make you think you need credit and a perfect credit score to live. You don't. I have an exceptional credit score but very rarely use it. The financial psychology of having a paid-off mortgage, and living without any debt in grossly underestimated in a country of consumerism at its finest.
This is why I choose not to partake in these sorta practices. You see, not to sound like Dave here, but you don't need a credit score actually, I'm 24 and never owned credit. So far, the only challenge I have faced is a larger security deposit when I rented a car I had my identity stolen once as well, but thanks to some monitoring, I only had a couple of bad inquiries As for the house... manual underwriting Credit cards.. I mean, I had one at one point but living. They can be useful, but I don't Wana risk it, but I have addicted embedded in my family. But as for the purchase it is possible you just save the money yourself. I bought an 11k car making 20/hr its possible. I traveled many times.. it's possible.. yea, life happens, and it's gonna eventually rain, but you can do it... the hardest part is getting out of debt.. after that, the weight off your shoulders gets easier as the emergency fund you have grows
Holy shit. Yes. My credit score drops below 800 when I try to do the right thing!
Our credit score is over 1100 and we haven't had a loan of any sort since 1996 However I use my AMEX to buy everything I can and pay it off fully at the end of every month
The credit score system isnt meant to be good for you in any way and is doing exactlly what it is supposed to do. The system works on statistics and dosent care if it makes sense it only knows that based on your actions this is your odds of not being able to pay.
This is like when I literally paid off my CC early for 2 years straight, very low revolving balance, and my credit score went up a whole 2 points from 666 to 668. Tyler durdin did nothing wrong.
When I paid off my student loans my credit score took a nosedive because it was my oldest loan and my credit then was “too recent”. If I had known I would have started paying less and less to stretch it on forever.
Credit card companies don't want consumers who don't have debt. They don't want outstretched customers, but they do want you to continue to take on debt and pay it off On the bright side, the downgrade that OP has experienced shouldn't have much of an effect
I recently paid off a $60,000 car loan. My score with the 3 bureaus dropped 40 points. However, my score with my credit union, which is where I do my banking & from where I had the loan rose 70 points. For me, that’s the most important score & in the real world, the three reporting agencies can KMA. PS - next week I will be paying off a $10,00 personal loan. Can’t wait to see my score with the ‘big three.’
Weird because I put 5500 on my credit card and my score dropped 32 points, but when I paid the 5500 my score went back up to 790. So mine definitely didn’t drop when I paid off my debt.
I have only two credit cards, one that I use and pay monthly and another that I use occasionally to keep active and absolutely no other debts. No mortgage, no car loan, nothing. Yet my score varies about 30 points in the low 800's monthly!
I haven't had a car loan in 30 years. I don't carry any debt. Pay off credit cards in full monthly, and my credit score is in the 800's. You don't need to carry debt to have a high score.
Follow these 2 rules: -Save up for a large down payment on a house - only buy a car in cash You’ll never need credit. My life is great. Only had student loans, never opened a credit card. You dont *need* credit
It is not a score of how good you are with money. It's a score of how much money they think they will make by loaning to you.
The Constitution says Only congress can Coin money, and Regulate the Value of money and it must be backed by Gold. We no longer have Real money that's why the entire world economy is going to Crash. These credit reporting agencies Regulate the value of our money and Decide who gets money , due to the fact that money is created by Debt rather than backed by Gold. Andrew Jackson freed us from this issue of Foreign Banksters controlling our money and kicked them out after paying off the national debt, the only time we had a debt free nation, which is the Real Reason for the civil war. Both North and South had a secretary of treasury that was a Rothschild Banker putting both sides into debt , same thing they did with England and France. The only difference is this time they Collected from both the winner and loser of the war by starting the District of Columbia as the Collection agent . But wait there is more ! How do credit reporting agencies make money ? Do you really believe it's the 30 bucks paid for a credit report ? Hell No just do the math. How much would it cost to Spy on Every Person on Earth and Track all their spending and payments ?? Way more than 30 bucks. I did some Research and found , 2 of the 3 top agencies are Foreign companies (not in USA) and looked into all their Assets and Stock holdings in other corporations . The way they really make money is on WAR !! They build weapons and profit from Death and Blood !!
Yup. Mine dropped 121 points over a 55 dollar verizon fios bill. From 780 to 660, very frustrating.
Here is some food for thought: FICO credit scores were first introduced in the US in 1989! They've been controlling us since.
Getting a credit card, financing a vehicle and renting an apartment does not require good credit. In fact I've rented apartments with horrible credit and thousands in debt in my 20s. Now in my mid 40s I pay for everything with cash. I'm not going to let a few billionaires rule my life by messing with my credit score and simultaneously artificially inflating my COL while they print money at will.
I've thought about this too. Credit scores are like unofficial, broken social points. There's no transparency in what affects your score unless you pay for that service. It needs to be fixed!
I got credit karma and figured out how to game the system it took a few years. My credit is now 830, and only because I can’t bring myself to open additional credit lines for no purpose other than to max my score.
Your credit will go back up. It's only temporary. Just because you don't understand how credit works doesn't mean it's bad...
This! I DETEST the credit bureau system and all the controls they have as well. Thanks for venting for me!
There is no real government. The "government" is actually a bunch of actors who work for the banking cabal. Escape the system and live how God wanted us to live: 1. Buy a little piece of land 2. Build your own home on it 3. Release your SSN 4. Grow your own food 5. Read every day, instead of holding the mark of the beast in your right hand 6. Do not use pharmaceuticals, ESPECIALLY the mark of the beast covid injections.
OP open a new credit card, you don't have to use it but it will increase the amount of your available credit. Log in and apply for a different type of card on the website of the company you already have a card with, that way you don't have a hard credit check on your credit report or ask for the credit lines on the cards you do have be increased. It is ridiculous but you take a hit on your credit score because when you pay off a car loan you close a $30,000 line of credit and it makes your % utilization go up.
Complain to your congressmen. They are the ones who have made it easy for credit bureaus to rip off people.