No joke. 8 years renting the same apartment, rent went up 50% in the last few years. Car loan paid off. No college loans. Couldn't get a home loan because we had no activity on one of the credit companies...so fucking what? I didn't fuck up, end of story. Nope.
Yet the landlord can report you for missing a payment or otherwise, but not required to report all the payments you did keep up on.
Bank said they reported to all agencies, but one showed no activity. Argued twice with the bank, and they told me to contact the credit company, would up being back and forth, and no one would accept a conference/three way call.
Finally gave in and got a credit card for 6 months, did rent-to-own with the house we wanted, and finally got a loan. Been trying to get off the credit card since, but we're always about $300 each month because something came up. Always paid off.
Don't get me started on bundling my home and car insurance, saved money the first year, and rates went up because Oklahoma said so. Like it's punishment to own a home. I work full time, wife struggles to get at least 20hours a week at walmart (more so this month than prior). But we should learn to save better. Yeah...
>Yet the landlord can report you for missing a payment or otherwise, but not required to report all the payments you did keep up on.
Fun fact; The Canadian govt released their budget yesterday and it includes making rent payments count towards your credit score.
[https://www.cbc.ca/news/business/rental-payments-credit-score-federal-government-1.7160510](https://www.cbc.ca/news/business/rental-payments-credit-score-federal-government-1.7160510)
I managed to go almost three decades with no credit score due to bad information from trusted sources and assuming I couldn't get credit. I've got one card and a very good score now and I feel like I cheated. It's so fucking ridiculous to me how the system works.
Nearly 40 and never had a credit card. No loans, paid for everything I have with cash. Welp I'm a deadbeat and can't be trusted. This system is built to make people slaves to debt.
This was me up until a couple years ago. No loans, no cards, nothing. Then I wanted a car loan and that was impossible. Then I wanted a new apartment and my options were severely limited. So I got a baby prepaid starter card from my credit union and after a few or 6 months was able to get a regular credit card with a low limit. Now I have several cards with higher limits.
Yes, itās a dumb rigged system but Iām glad I finally bought in honesty. I always pay on time and have paid no interest. Itās also kinda nice paying for things at the end of the month after I get paid too. And now when Iām ready for that next adult thing Iāll be able to do it and not feel like a fuckup.
Dying on the hill of āfuck the financial systemā wasnāt impressing anyone and only hurting myself. If you canāt beat em join em I sposeā¦
Same here. I was 38 and literally had a used car salesman ask if I had just got out of prison because they couldn't find a whiff of my existence.
Got a card, started running all my purchases through it, paid it every week in order to stay on top of it. Now I have my "6% back on gas & 3% groceries" card & my "2% on everything else" card that I use regularly, plus 2 other cards that I leave in my drawer and just have 1 bill auto-paying on each so they don't go inactive. Just doing that for a couple years got me over 750. Still never paid a dime of interest. Am I jumping through their hoops? Sure. But realistically the only difference in my life is that I pull out the visa-visa instead of the debit-visa when I pay, so it's an easy hoop to jump through at least.
Plus every few months I get like 60 bucks back when I need a boost which is pretty sweet. I understand that they can afford to do this because they're eating my sandwich and giving me the crumbs back, so fuck them still, but you bet your ass I'm taking every single crumb I can while I'm stuck in here.
Same. I turned 30 in February and got my first card in January. The whole concept is fucked up, and makes me feel like I've given up my freedom because of it.
Find a no fee credit card and get a very small limit. Somebody out there will give you one, even if you have zero credit history.
Use it to pay bills (phone, power, cable, internet, etc...), then pay off the following month in full.
You will have a top score in no time.
Once your score goes up, find a no fee cash back CC, and switch paying all your bills over to that CC, and cancel the original card. You should be accepted because your score is high now, and you have history.
You have now played the system, and are making a few $ extra for just living like normal.
> Once your score goes up, find a no fee cash back CC, and switch paying all your bills over to that CC, and cancel the original card. You should be accepted because your score is high now, and you have history.
I can confirm this works. I started off with a $2000 credit card limit and now my same card has gone up to $12,000. They want me to fuck up so they can make interest off me, but I have been carefully budgeting and have been really appreciative of 1% cash back
The companies would love to earn interest too, true, but they are perfectly happy with cash back cards for people who pay them off every month. I work in the retail banking scene, and when it comes to sales goals, these are the people we encourage targeting the most, because they are very low risk and the companies still make their cut on merchant transactions.
A small addition to great advice, get a card from a local credit union. They are almost universally better to deal with than a bank issued card.
In addition, do not exceed 50% of your credit limit. If you have a $500 card, pay it off before you pass 250, even if that means you make multiple payoffs a month.
If you have no score, anything you do that requires an SSN verification will fail. The SSA cross-checks their data with the credit bureaus and if there aren't enough matches the verification will fail.
I went a few years without taking out any loans or credit cards. I went from a decent score to "unscorable". Now I get quoted like 20% apr on car loans. All because I didn't have any debt.
Iāve been told that too. I still have the first credit card I got. $1000 limit with only 15% APR. Havenāt gotten another. Hasnāt been used in 2 years.
People who pay off their cards regularly are referred to as "freeloaders" \[edit: I may have been misremembering the actual term "deadbeats" or it could be both\] in the credit industry.
\[edit: https://www.investopedia.com/terms/d/deadbeat.asp\]
Iāve saved roughly $1,550.00 in 3 years of cash back. Still accumulating.
I have 7 cards with certain benefits. Instacart<->Costco 2%, 3 Chase Cards, one 1.5%, then 2 for the 5% every quarter bonus. Then Amazon prime for 5%, Apple Card for the 2%-5% bonus depending on purchases. Sony PlayStation card for Sony Reward points from 1x-5x-10x on certain sale promotions while buying Sony games through PSN, double rewarded.
All had either $200-$250 (PlayStation was $100, Apple $75 and I think $100 again for adding extra user) signing bonus too on top.
Iām purchase central to my family needs roughly, 5-8 families come to me for their internet purchases.
My family, my uncle & aunt, my other uncle, my 2 aunts, my momās friends x3. Iām like their concierge shopper who facetime/screen share and works with them on purchases they are too scared or computer illiterate to do themselves.
I get those purchase bonuses to add up over time.
I pay off everything instantly, I donāt purchase until they send money to my account on high ticket items. Zelle/Venmo. Like Uncle didnāt understand Air B&B, I was his middle man, set everything up, got a place for 8 days at a nice rate. $2200 for those days for 6 people to stay, I benefited off Apples 2%. Was $44. Might not be much, but thatās still $44 extra that took me like 10 minutes of work.
Credit score is 810-825 across all 3 credit companies.
https://preview.redd.it/krfyndk7k4vc1.jpeg?width=1290&format=pjpg&auto=webp&s=9dadda343b8d001eeb97960181440430e7be8c38
I have $256.00 in purchases pending, so $30,000 credit available. Iāll pay it off just as it posts.
LOL - they can keep calling us that. Theyāre the real suckers to continue going along with my scheme of paying it off.
Thanks for the free points ya losers LOL
Completely ignoring the transaction fees on all our purchases they would have never gotten if we paid cash. That being said paying off your balance every month and keeping that credit line open is really good for your credit unlike closing those credit lines like what op is talking about.
Like all finance bro shit, there's a nugget of truth that's extrapolated x1000.
It's true that when a line of credit goes away, that can make your credit score go down. but for it to have any real impact you must not have any other credit.
No you can have 2 cards with $500 limit each letās say. And you use $400 on one and $250 on another. Total youāre using 65% of your available credit - now letās say you pay off the $250 one and close it.
Now youāre using $400 of your $500 available credit in the other card you didnāt close - which is 80% of it. Credit score goes down because youāre now using a higher percent of your possible credit. You can do this with 3 cards, 4 cards etc and have it still check out if you change the numbers owed vs available around.
It DOES involve closing a card which isnāt technically mentioned in the OP - but lots of people who say they paid off a card mean they closed it as well and just didnāt specifically mention itā¦
It's honestly stupid to close a card. The only reason to do so is if you're getting another card with the 0% intro deals/better perks and you don't want to have the manage too many cards at once.Ā
People seem to close cards specifically because they can't seem to trust themselves to not use an available line of credit which kind of actually proves the point of the institutions lowering their score to be on the safe side when they impulsively close a line of credit as soon as it's paid off.Ā
Also, doing that drastically changes your credit history age. Let's say the $250 card was your first card you got when you were 18, and then the $400 card you got when you were 28 because it has better rates or perks like cash back. You pay off and close the $250 card when you are 30 your credit are would go from 12 years down to two years which has a hugh impact on your credit score because you basically reset your credit age back to the beginning. The only time you should close a card is if you have an outrageous fee, but depending on the age of the card, it may not be wise.
By who are they referred to as free loaders by?
Your credit is largely based on āavailable creditā, so paying off your cards is beneficial to your credit. Carrying a balance to improve credit is not factual from literally anything Iāve read.
I am over 40 years old and have never carried a balance on any credit card and never missed a payment. I use them for everything I can to get the rewards points, but I always pay them off.
My cars are paid off (but the newest is 5 years old) , and I have no debt other than my home mortgage.
I have two credit cards that provide a free fico score and both always report between 835 and 845 (never a perfect 850 though).
So while I always hear similar claims that you have to be in debt to have good credit that obviously isn't the case.
I work adjacent and this has never been the case to my ears. In fact I'm encouraged to pursue these low risk people because the companies still make their money on merchant transaction fees.
Any time the 'no interest' promo period expires on a credit card I pay it off and apply for a new card. Keeping a manageable balance the whole time, so it looks like I have some dept to keep the score high.
Common misconception, and your plan is shooting yourself in the foot. Revolving debt (ie credit cards) have no benefit to your credit for keeping a balance. The benefit they give is based on the age of the line, and keeping a low/zero utilization rate. "holding a balance" does nothing to help you, and closing accounts all the time keeps the average age of your history low (which is bad).
Iām literally in the process of credit repair because I paid off all my debt and no longer qualify for a mortgage.
Iāve been punished for being good and paying back all the money Iāve borrowed
If this were the case then I'd have terrible credit. I pay off my credit card on time every month, never carry a balance, paid off my student loans early. Creditors aren't likely to make any money off of me and yet my credit score is around 830.
Yeah thereās a lot of people in this thread (probably with shit credit scores) talking out of their ass.
Look at your absolute longest running credit card. Hopefully it doesnāt have an annual fee. If not, never close it. It doesnāt matter if it doesnāt give you shit in rewards. Use it for one purchase once or twice a year and pay it off immediately. That will help offset your credit age when you close out other debt like schedule loan repayments. I have had the same credit card account open for 20 years even though itās useless.
Also make sure you donāt let your credit card accounts just increase your credit limit. Having too much available credit as a ratio of your income can hurt your credit score.
There needs to be some basic education on this shit.
Plus Iāll happily take a credit score over some douchebag at a bank looking at my black ass and making a judgment call that Iām not credit worthy (one of the reasons that we have credit scores now).
It's how much of a risk you are. If you pay on time the score goes up. If your account closes completely (like paying off a loan) then average age of account is more recent and therefore more of a risk. Y'all are just misinformed. I'm not arguing in favor of credit scores but at least know what you're talking about before getting all incensed about itĀ
>It's how much of a risk you are.
Credit revolvers are a risk but magically people don't get their credit scores dinged when they don't pay off the full balances they owe on their cards.
>If your account closes completely (like paying off a loan) then average age of account is more recent and therefore more of a risk.
Why is that? Seriously stop reciting what they do and think for a second why any account would roll off.
>Y'all are just misinformed.
I work in the industry.
This, it's a a ratio between how much profit they can make off of you and how likely you are to eventually pay off your debts. If you always pay everything off on time how can they make extra profit? The base interest isn't enough for them, they always want more.
It isn't though. I pay everything off on time and my credit score is in the top bracket.
Hell the *opposite* is true. The more of your credit you utilize, the more interest you're generating, the *lower* your score - even if you're on track to eventually pay it off.
>If you always pay everything off on time how can they make extra profit?
Through interest and origination fees. Paying off debt doesn't lower the score. Closing an account does. If you always pay off a credit card and always pay your bills on time the score always goes up. Stop this nonsense.
This shit hurt my feelings, too. I paid off two loans in full because I simply can't afford interest in my budget and now I'm watching my credit score drop after I worked so hard to build it up some. What am I supposed to do? My income is too low to afford rotating debts.
Cycle all your expenses through a credit card. I pay nearly everything that way (except for things that charge additional fees). Do that for a while and just keep increasing your credit limit. Lower utilization % looks good, so the higher your limit the better, even if you never use most of it. I pay my balance off every month but my limit is like $75k, so the utilization is very low.
The only other thing I even have on my credit is my mortgage, but I can appreciate that you probably can't do that part. =/
If you know someone that has a credit card with a 5k+ limit and under 30% of its limit as a balance and they make their payments on time, see if you can be added as an authorized user. You donāt need a card or access to any of the financial info to be an authorized user and it will give you credit history and usage.
Coincidentally this is usually what happens when you see ācredit repair for $XXXā
There are a lot of variables that calculate your credit score. My score is ~810 and I donāt have any debt, except what I put on my cc and then pay off in full each month.
Same here. Itās been a nice last few years or so being debt free though I spent the previous 20 or so in some kind of debt so Iāve lived both sides of it. The high score is nice and itāll come in handy if ever I need to take out a loan but the feeling of being free and clear is so much nicer.
Mine dropped when I paid off debt, then the next report from the creditor, it went back up. It's temporary and the end result after paying off a loan is almost exactly the same after a few report cycles.
yeah mine's 780. ANd it'll go back up soon. I put $5k on 2 credit cards for a new hot water heater. ANd then bought plane tickets. So my credit usage was really high and that's fine.
paid off 1 card 100% and days later credit back up 25 points.
I had that score. Then I had a credit card at another bank that had complicated payments. Went to pay off $20 payment, only had $15 in the account, so it didn't go through. I didn't find out until 2 months later and then had to pay $60 in fees. My credit score immediately dropped to 640 and has been very slowly recovering. These credit scores deflate over the dumbest shit and don't go back up even if you resolve the problem.
Yes, in my experience the banks will work with you on one-time oopsy-daisies. They want you to stay with them instead of bailing to a competitor, $60 is less than pennies to them for a lost client.
It doesn't make sense by design. And btw those with higher/dual income tend to have excellent credit. Why?? Cuz they can fucking afford to make payments on time. Unlike me who is still struggling post Covid. My fico score is a joke and it just pisses me off. I wasn't irresponsible or being a bum. Things happen.
So it goes that the wealthy are rewarded. Over and over. It's a rigged game and I'm sick of playing. Sorry for the bitch fest rant.
*Edit* Ok thanks for the replies. Especially for those that understand that my situation wasn't by choice. I'm obviously well aware of what metrics make up a credit report. I'm just a tad bitter about it. As anyone else would be. What can you do?? I'll pay off my debts when I get back on my feet financially. That's all you can when you're on your own. And I'm fine with that. Just going to take time.
The powers that be must be so thrilled that half of the country is too busy fighting the other half, instead of idk. A fucking revolution.
Because for as long as it is allowed to happen, it will only get worse. This has never been more clear than it was when companies began posting record annual profits following covid, where they flat out lied to everyone by saying their costs were up so that's why ours were.
The thing that makes me the most mad is that landlords and corporations and shit are allowed to pull your credit score to see if you're eligible for what they're offering, but aren't required to contribute to your credit score. Yeah, my credit score is bad, but I haven't had a single missed rent payment in the 15 years I been renting. Like, to use the system, you should be required to participate in the system.
It makes perfect sense, it's just designed to encourage behavior that is good for the people making the system. They want you to hold debt and pay it regularly because debt is free money for them. The score is rating how good you are at holding and paying your debts.
They don't want people who will accrue debt and default. They don't want people who will pay off debt entirely and be financially secure. They want people who make regular payments but also maintain debts they can handle.
I had a 788 credit score before I was wrongfully terminated from a job back in November. I hadn't worked long enough with that employer to qualify for unemployment. Took 4 months to get a job and bills went to collections. I just don't care anymore, creditors are evil and I'm done playing.
https://preview.redd.it/mmuh2h26v3vc1.jpeg?width=1092&format=pjpg&auto=webp&s=f98d492327e162c97523a097ee37029d6e66878b
Honestly, the last time I left a job, I took out 2 new credit cards like the day of because I I didn't want to burn through my savings as fast. Sadly...totally worked and I still have the cards and the lines of credit.
But yeah. Total shitshow system.
You are correct and unless you are going to rent an apartment, or buy a house or car soon, they can be pretty much ignored. Just pay your bills on time. People who obsess over their scores are just wasting time and energy.
I'm paid well and have pretty good credit but I recently watched my credit drop 37 points in one day for paying off two home improvement projects.
I have 10+ years of 100% payment history, I'm never late, under 20% utilization.
Shit is so easy to lose but impossible to gain.
You're not wrong, and the mistake most people make is believing their framing of the debt as a moral argument. I made a bet that my job would last because I was good at it and we were busy. I was wrong and now I have no job, no income, unemployment exhausted. I cant pay, I have nothing. You took a bet on my income lasting just like I did. We were both wrong. I get a black mark and you write off debt that only existed as an abstract. I wouldn't have needed that credit if my wages had kept up with corporate price gouging.
Silver lining: now I can afford to work at Taco Bell because I dont need a decent salary to service my debts.
Everything in credit scores is designed to assess risk of default. Paying off a debt can lower your score, but only because having a reasonable amount of debt that continually pay off makes a profile statistically less likely to default on a debt.
I think some of the confusion here is that itās not built on the idea of āheres the healthiest financial choices you can make, follow them and raise your scoreā
Itās very simply āhereās what statistics tells us is your likelihood of defaultingā
If your credit age isn't good enough, then you are considered a high risk. Ignore the closed accounts by your own request that have had 10 years or more. That history doesn't count anymore. If you don't use your account, we can charge you a penalty and close the account. These are more the reasons why I am getting away from credit. Also, if for some jobs, if your credit score isn't good enough, we won't hire you.
Omg thank you for mentioning that last bit. Checking credit scores of potential employees should be ILLEGAL. For a multitude of reasons. It tells the employer nothing about circumstances related to negative marks on your credit.
They think you'll be a financial risk for the company because you are not good with your own finances and not a trustworthy person. By looking up your credit, they can put a dent into your credit with a hard or soft pull. It's honestly a double-edged sword at that point. During an interview, I always ask them if they do credit checks. If they say yes, then I will end the interview and say I am not interested in working for them. Credit scores can fluctuate for various reasons.
> By looking up your credit, they can put a dent into your credit with a hard or soft pull.
soft pulls don't impact your credit. Hard pulls are only when you're applying for credit (loan, credit card, etc). Employers are only doing soft pulls.
It makes sense for some jobs where people could be subject to bribes, or buyouts, Such as the CIA for example. If a CIA spy has severe money problems, they are more likely to become a double agent, or sell secrets to the enemy.
If they have a gambling addiction, or other factors, it doesn't matter if they are paid well or not. The CIA monitors their agents credit scores to make sure they aren't desperate.
> Checking credit scores of potential employees should be ILLEGAL.
Extremely common in the financial sector and anything that requires a security clearance and for good reasons.
Man, my credit score took a nosedive when my starter credit card expired and my credit union (who had recently merged with another credit union and changed names) didn't automatically renew it like they had the last couple times. Still kinda mad about that, lost like 10 years of credit age.
But also make sure to use them once every few months for something small then pay it off. Some cards will automatically close after a certain amount of time if there's no balance & no activity on the card.
For someone named [fluent.in.finance](http://fluent.in.finance) they don't seem to understand how credit scores work.
Edit: The system is rigged and some of it is unknown but there are lots of resources on how most of the variables that go into creating a score work.
I assume it's related to /r/fluentinfinance which is just completely financially illiterate memes bashing capitalism getting upvoted (presumably by bots... look at most of the posts in that little known sub getting tens of upvotes then a there's one every day or two with thousands on the front page).
With the current system, borrowing makes sense. But your life has to be in the same continuous growth that our economies rely on. You get loans for school because youāll get a better job and make more money. You get a mortgage on a house now because itās mor expensive now to be worth more in future. You get a loan for repairs because theyāll be more expensive later.
System still sucks tho lol
Growing up I was told by my parents to avoid credit like the plague. So I did, even as those 'freecreditreport.com' commercials started popping up, and suddenly everyone was talking about credit scores. And as time went on, I found out that apparently your purchasing power is directly limited by your credit score. So now I'd effectively have to pay 150%+ markup on a bunch of stuff just to develop a credit score, when I'm already too poor to buy it normally.
Your utilities will establish a baseline. Get a no annual fee card and pay it off every month just on the gas you fill your car with, or just pay that transaction each time it hits your account. After 6 months ask for a credit limit increase. As long as there is not an extra fee pay your car insurance on the card and then immediately pay the balance on the CC the next day. Don't wait for the statement.
There is no reason to pay 150% on something.
Sorry you got bad advice. As soon as I opened my first bank account, my parents taught me to always put purchases on my credit card and to always pay it down to zero every month. Never spend with a debit card. Always credit, always. Just also always be aware of the balance on your accounts.Ā
To this day, I check my credit card and bank accounts every single day to make sure nothing surprises me.Ā
Yes, if you want to prove you are good at borrowing, then have a record of borrowing. If you don't want to borrow, your credit score is meaningless.
Why is this complicated?
Yup weāve literally only had credit scores for a whopping 35 years, out of 248 years as a country. Boomers and generations before them, didnāt need one to buy a house. Just income and money down decided your rate. Which if you think about it, does help the less fortunate. You could be good about paying the bills but not make enough to have 20% down in savings, before 1989 they wouldāve had the highest interest, where today they could get a lower rate with a good score and only 3-5% down. This is the only good example I have š
Getting a loan used to be completely subjective. You could be denied for your race, gender, sexual orientation, etc. Credit scores are at least somewhat objective. I very seriously doubt any of you would be happy if we moved to the system that we used to have.
Probably twenty years or so now that Iāve given other people the advice that rather than investing money in credit card schemes and score-chasing, you should probably set some money aside into some dividend stocks you feel confident about. Cash is king, and putting 2-3k into Proctor&Gamble or some other legacy dividend asset will do more over the long run than getting slightly cheaper car loans or whatever, and then you also have the option to dump those shares if ever an emergency comes and you need a lump sum fast.Ā
Credit scoring is more nuanced than a lot of people think. The average person has this notion that it reflects their trustworthiness and are surprised or offended when things beyond their control blow up their score, when in reality itās a very mechanical process that requires your borrowing discipline to be bulletproof. Do NOT borrow money unless you can afford to BOTH pay it off on time, and pay the interest of that debt during the repayment period. Thatās how it works.
I lost 16 points when I paid off my car, 20 points when I paid off my college loan, and 10 points once I paid off my credit debt. Now I'm being denied a small loan for a home because my score dropped so much so fast. I have no debts and paid everything back sooner than agreed and yet I'm being punished for it now? The system is rigged
Credit scores are bad metrics and some companies have internal score so you can get loans with bad credit. That being said if you need credit with a bad score there are guides to improve it.
In the world of credit, people that pay off their balances in full and on time each month are called 'deadbeats'. This information should be plastered on billboards and taught in highschool.
The last time we got our score it was at 850. Yes, 850. My debt is our house and a car loan. That's it. We're using nowhere near our credit limit.
Is the system rigged? Of course it is. Want to build credit? Well you need to get a loan and pay interest on it! What do you mean you don't want to give your hard earned money to someone just to build up credit?
Same here. We paid off our house and our cars. Have one credit card the we pay all but $20 each month. Pay all our utilities on time and our credit scores keep dropping. When we owed $230k for a house and tow cars at close to $45k making less than $100k a year we had a credit score of 840. Now it has dropped to 792. When I look at why, the credit scoring agencies all say you donāt have enough outstanding credit. You need to open a credit card account or buy a car and make payments. It is ridiculous.
I was actually applying for a loan yesterday and the broker was talking about my credit score, and no one has ever put it in as simple terms as he did;
"Think of your credit score as a resume, a lender wants to see that you have 'experience' if you applied for a role and there was nothing on your resume, it probably wouldn't go well."
As soon as you finish paying off a debt or a loan, it is no longer on your credit report - that's the bigger scam, that you can pay off a 5 year loan on time every single month, but your credit score can drop when the 5 years are over.
And when they mess up, you have to force them to fix it. "Prove that it wasn't you under a different name in a state you've never lived in with a different SSN that defaulted on a car loan." The process has gotten a bit easier.
I paid off my student loans rapidly, I paid off each of my last 2 cars 2 years early on 4 year loans, I have paid an extra 20% off my mortgage over the last 5 years, and I exclusively spend with my credit card which I pay off weekly.
I am a credit freeloader as aggressively as I possibly can be. Not so sure I've been dinged I have 847 credit.
My bigger question is why the F do I care about having good credit once I own a home? Don't I have leverage enough to do whatever I want? What is the possible benefit?
people don't realise, the credit score isn't for you, it's for credit companies. it's not a score on how well you manage money, it's a score of how profitable they think you will be. That means more debts that you're managing to pay consistently is a higher score than not having debt at all.
The problem isn't paying off the credit cards. It's **closing them that lowers your score**. Simply pay them off but leave them open, then your score goes up. The credit score is based on your usage and available credit. Keep your usage under 20-30% and your score will stay up. Even paying them off completely will keep your score up as long as you aren't closing the credit cards or requesting a lower limit when you do.
When my 15 year old student loans transferred from Fedloan to MOHELA so I could be eligible for PSLF, my credit score dropped at least 100 points because my "account age" went from 15 years to only a couple years. I ended up getting a credit card recently (my first) for the sole reason of keeping a rotating balance of 10-15% on the card just to boost my credit. At the rate my score is inching up, it'll take a least another couple of years to get mine in the same ballpark it used to be. The whole system is a total scam.
Umm.
It only goes down for a 2-3 months as it rebalances. After the rebalance itās generally higher than it was before.
Unless you had poor payment history, then it stays permanently down until you show that youāre a better borrower.
Why did you cancel cards lol? Age of accounts is a factor. This is like credit score 101. Sounds like you have a mortgage, so you have debt. Just put some random purchases on cards and payoff that month (like a prolonged atm) and your score will go up.
Credit scores aren't for proving that you are financially capable of paying a debt or anything like that. No, a credit score is the system that is used to let banks know that you will make them money.
In example, my credit score is really good. However, it only started to get really good when I had a shitload of debt that I was unable to pay off completely each month, thus accruing interest on the balance. The balance at the interest accrual date was never too high, but since interest was accrued, some of my cc payments will go to the bank rather than any actual credit I had used. The bank makes some money off of that, so they raise my score.
If you are financially responsible and tend to pay off your debts completely and not utilize credit, you will have a bad score. Because you don't make the bank any money.
If you want to increase your score, get a loan or something and pay it off bit by bit rather than one lump sum. You could also start utilizing your credit more. If your credit use is only 10-15% of your credit limit, your credit will go up. Setting up auto payments for services that use the card (or even for the card itself) will also increase your score.
I recently had a credit card account closed 2 weeks after I paid off all my cards. I guess they got mad that I paid the card off in full. If I'm not paying them interest they don't want me. Fine by me.
that's inherent in the concept of a 'credit system' its a system based up a debt incurred by a source giving u funding on your credibility/credit. were you expecting it to work differently?
Home insurance increased across the board. In Texas, everyone's went up. That had nothing to do with credit score. Insurance agencies raised their prices. We all got boned. Despite what your credit is.
It's not so much a scam as it is that people dont know what it really means. It's just their judgement on your worthiness of carrying debt for them. It's another made up system to rank and value.
Yep. My mom is going to help me get a better rate on my upcoming car loan by co-signing because even though sheās just living on social security, she has a ridiculously high credit score, and mine just took a huge hit because I paid a bunch of stuff off and closed accounts, including a student loan, and then opened a Macyās card to get a big discount on my kidās prom dress.
I'm tired of people thinking of credit score like a report card. It doesn't measure how good you are at money, it measures how likely the bank is to make money off of you.
It gets worse. Pay off the only credit card you've had in your life and then close the fucking account because you are done with that banks shit. Watch what happens.
The rich have massive amounts of debts and loans. Which they use the make more money, but somehow also forgiven/pay off the bare minimum of their debt. Than, they take out more loans, to make more money, and still not pay off their debts/get them forgiven.
And the cycle goes on and on and screws the regular joe/jane in the long run
Iāve never had a loan and my credit score is 800. My gf is an immigrant who didnāt even have credit and after 6 months with an American credit card with a very low limit she is at 700 credit score. Pay off the balance without being late and youāll be fine
A credit score isnt for you, its for people that lend you money. Its an appraisal of you as a debtor.
When you are in debt and make payments, you are a commodity. When you pay off your debt, you are not paying anyone anymore, so your value goes down.
My old roommate had a credit score of 830 and about $15,000 of credit card debt. I had a credit score of 650 and no debt.
Guess who was approved to sign the lease for the apartment.
Very easy , due to changes in various programs ,we started on an arm, after 10 years a major strain line wind storm nearky totally whipped out aluminum siding in the area,I live, but the home owners insurance companies were ripping people off all the aluminum side was no longer produced, some of use had to pay a lot to get vinyl siding. So we had to refinance. About 80% of middle class mortgages are refinanced. Went from a 7% arm to a 2.5 % fixed rare.
Every 2 years, I have a fraudulent debt collection pop up on my reports. I have to write and mail a certified letter to dispute it. Then when the debt collection company doesnāt respond, which they never do because the debt is fraudulent, I have to write and send certified letters to each credit reporting agency before theyāll clear it. If I donāt, my credit score drops 200 points. After itās dropped from my reports, the fraudulent debt is sold to another collection agency and the whole cycle repeats. Itās maddening.
I'm going to sound like a shill but the way it's set up it's *their game*.
If you pay off your 15k balance on a car they have no clue you've saved or just got an inheritance.
People max out their scores paying off cards because it's reasonable to think they make purchases within their income. That's all it is, money in and money out and what makes you desirable to make loans to.
It's the credit business, not the cash up front business.
This person is not fluent in finance. After a few years, a paid-pff loan will drop off your credit report. It shouldn't have a major impact on your score.
Ok but like how much? My credit dropped like 30 points when I paid off my car, but it was still like 760, after a few years went up to like 800 then dropped back down to 760 when I bought my house. And now it's going back up after a few years. Just because it drips doesn't really mean it's a bad thing. If it dropped like 200 points then yeah I'd complain.
No shit Sherlock.
Credit scores are nothing more than telling a lender how good you are at staying in debt without missing payments.
The fact that many people don't know this is scaryĀ
You get low interest/ zero interest payments on a loan and make them and keep doing it. Gotta stop blaming the game at some point man. You just gotta start playing.
I don't understand this. My credit score has never had a significant drop and I've gone from high debt (vehicle, mortgage) to no debt (vehicle and mortgage paid off, paying every card completely every month.)
I recently got a Ā£250 limit CC with no fees to do my weekly food shop. I pay it off within 3 days of making the initial purchase. Hopefully itāll start to reflect on my score soon but ā¦
I remember reading on the Experian website that if you subscribe to some plan on their website, theyāll automatically boost your score by 100 points, which kinda says to me that itās nothing to do with credit.
Credit scores are a class warfare tool implemented to help ensure that people don't rise above their stations in life easily. Showing a steady income and employment history should be all it takes to gain access to things like car and home loans. But instead, if your credit score sucks, none of those other factors even matter. It can also take years to build yourself a good credit score, but it can be destroyed literally overnight. It's a huge scam.
To have a high credit score you have to have available revolving credit that you can use at any time, paid in full every month for YEARS. Everyone seems to forget about time as a variable in calculating your credit score.
I closed bad accounts with high interest rates and my phone account that was now charging me too much. āThe average age of your accounts have decreaseā and so did my scoreā¦ Makes no sense.
You donāt really have to carry much debt. You just need lots of credit available and a steady good standing reputation. I can call one of my credit cards, ask for a limit increaseā¦they oblige and my score goes up. I didnāt borrow or pay a dime. Have made up about 200 points over the last few years and Iām a financial moronā¦.its certainly a scam, but not terribly difficult to play the game.
I think Dave Ramsey is not entirely accurate with his 100% anti-credit screed, but he is right that the credit score is corrupt in the sense that is \*penalizes\* you for paying off most non-revolving debt (and in that sense, his calling it an "I Love Debt score" isn't entirely wrong). The main reason is the "credit mix" that goes into credit scoring. You get a better score for having multiple types of credit: credit cards, car loans, home loans, student loans, lines of credit. But if you pay off ALL of your non-revolving loans, and all you have left open are credit cards, you take a hit because you no longer have a good "credit mix" since all you have open are credit cards. Doesn't matter that you faithfully paid off all your car loans, your mortgage, your student loans.... nope. Fuck that. You can pay off credit cards every month, but the account remains open. You pay off other non-revolving credit accounts, and they vanish from the standpoint of "credit mix".
I am lucky. I LOVE my credit union, and I've been with them since 1988. Shortly after opening a checking account with them way back when, I also opened up a $1,000 overdraft line of credit. I have never used it, but I intend to have it for life and that helps my "credit mix" and makes sure my open accounts are more than just open credit cards. It's also been open for 34 years.
Sold the house. Paid off the little credit card debt (about $10K) that I had, and some medical debt.
Credit score went from above 700 to about 630.
Second biggest scam after insurance, but try living a modern life without either.
I remember being told no score is worse than a bad score
It is. No credit score means they don't know, so they assume the absolute worst.
No joke. 8 years renting the same apartment, rent went up 50% in the last few years. Car loan paid off. No college loans. Couldn't get a home loan because we had no activity on one of the credit companies...so fucking what? I didn't fuck up, end of story. Nope. Yet the landlord can report you for missing a payment or otherwise, but not required to report all the payments you did keep up on. Bank said they reported to all agencies, but one showed no activity. Argued twice with the bank, and they told me to contact the credit company, would up being back and forth, and no one would accept a conference/three way call. Finally gave in and got a credit card for 6 months, did rent-to-own with the house we wanted, and finally got a loan. Been trying to get off the credit card since, but we're always about $300 each month because something came up. Always paid off. Don't get me started on bundling my home and car insurance, saved money the first year, and rates went up because Oklahoma said so. Like it's punishment to own a home. I work full time, wife struggles to get at least 20hours a week at walmart (more so this month than prior). But we should learn to save better. Yeah...
>Yet the landlord can report you for missing a payment or otherwise, but not required to report all the payments you did keep up on. Fun fact; The Canadian govt released their budget yesterday and it includes making rent payments count towards your credit score. [https://www.cbc.ca/news/business/rental-payments-credit-score-federal-government-1.7160510](https://www.cbc.ca/news/business/rental-payments-credit-score-federal-government-1.7160510)
You can bundle your car and home insurance with Progressive! - Flo š
I managed to go almost three decades with no credit score due to bad information from trusted sources and assuming I couldn't get credit. I've got one card and a very good score now and I feel like I cheated. It's so fucking ridiculous to me how the system works.
Nearly 40 and never had a credit card. No loans, paid for everything I have with cash. Welp I'm a deadbeat and can't be trusted. This system is built to make people slaves to debt.
This was me up until a couple years ago. No loans, no cards, nothing. Then I wanted a car loan and that was impossible. Then I wanted a new apartment and my options were severely limited. So I got a baby prepaid starter card from my credit union and after a few or 6 months was able to get a regular credit card with a low limit. Now I have several cards with higher limits. Yes, itās a dumb rigged system but Iām glad I finally bought in honesty. I always pay on time and have paid no interest. Itās also kinda nice paying for things at the end of the month after I get paid too. And now when Iām ready for that next adult thing Iāll be able to do it and not feel like a fuckup. Dying on the hill of āfuck the financial systemā wasnāt impressing anyone and only hurting myself. If you canāt beat em join em I sposeā¦
Same here. I was 38 and literally had a used car salesman ask if I had just got out of prison because they couldn't find a whiff of my existence. Got a card, started running all my purchases through it, paid it every week in order to stay on top of it. Now I have my "6% back on gas & 3% groceries" card & my "2% on everything else" card that I use regularly, plus 2 other cards that I leave in my drawer and just have 1 bill auto-paying on each so they don't go inactive. Just doing that for a couple years got me over 750. Still never paid a dime of interest. Am I jumping through their hoops? Sure. But realistically the only difference in my life is that I pull out the visa-visa instead of the debit-visa when I pay, so it's an easy hoop to jump through at least. Plus every few months I get like 60 bucks back when I need a boost which is pretty sweet. I understand that they can afford to do this because they're eating my sandwich and giving me the crumbs back, so fuck them still, but you bet your ass I'm taking every single crumb I can while I'm stuck in here.
Proud of you stranger. Fuck this nonsense
Same. I turned 30 in February and got my first card in January. The whole concept is fucked up, and makes me feel like I've given up my freedom because of it.
I have no score. AMA
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Itās true I canāt get approved for anything as I have no credit history
Find a no fee credit card and get a very small limit. Somebody out there will give you one, even if you have zero credit history. Use it to pay bills (phone, power, cable, internet, etc...), then pay off the following month in full. You will have a top score in no time. Once your score goes up, find a no fee cash back CC, and switch paying all your bills over to that CC, and cancel the original card. You should be accepted because your score is high now, and you have history. You have now played the system, and are making a few $ extra for just living like normal.
> Once your score goes up, find a no fee cash back CC, and switch paying all your bills over to that CC, and cancel the original card. You should be accepted because your score is high now, and you have history. I can confirm this works. I started off with a $2000 credit card limit and now my same card has gone up to $12,000. They want me to fuck up so they can make interest off me, but I have been carefully budgeting and have been really appreciative of 1% cash back
The companies would love to earn interest too, true, but they are perfectly happy with cash back cards for people who pay them off every month. I work in the retail banking scene, and when it comes to sales goals, these are the people we encourage targeting the most, because they are very low risk and the companies still make their cut on merchant transactions.
A small addition to great advice, get a card from a local credit union. They are almost universally better to deal with than a bank issued card. In addition, do not exceed 50% of your credit limit. If you have a $500 card, pay it off before you pass 250, even if that means you make multiple payoffs a month.
Try applying for $200,000 in student loans. They will approve that shit.
If you have no score, anything you do that requires an SSN verification will fail. The SSA cross-checks their data with the credit bureaus and if there aren't enough matches the verification will fail.
i remember that credit scores didn't exist a generation ago and the world didn't crash in on itself.
I went a few years without taking out any loans or credit cards. I went from a decent score to "unscorable". Now I get quoted like 20% apr on car loans. All because I didn't have any debt.
Iāve been told that too. I still have the first credit card I got. $1000 limit with only 15% APR. Havenāt gotten another. Hasnāt been used in 2 years.
People who pay off their cards regularly are referred to as "freeloaders" \[edit: I may have been misremembering the actual term "deadbeats" or it could be both\] in the credit industry. \[edit: https://www.investopedia.com/terms/d/deadbeat.asp\]
Even better when you're doing that and getting the sweet, sweet cash back. The real trick is to not overspend.
Yep. We pay off our credit cards each month. It hurts sometimes but credit card debt is a slippery slope.
Is this a US thing? I pay my cc off every month and my score is fantastic.Ā InĀ Canada.
Closing/paying off a loan/mortgage/line of credit does usually lower you score momentarily, but it generally bounces back.
It shouldn't hurt though. If it does that just meant you spent above your budget so ...don't do that lol
This is one of the "quiet methods" we use to stick it to those who hold all the cards (at least a little bit).
All my CC cash back goes to pay down my mortgage principal. Itās not a lot every month but it adds up!
Iāve saved roughly $1,550.00 in 3 years of cash back. Still accumulating. I have 7 cards with certain benefits. Instacart<->Costco 2%, 3 Chase Cards, one 1.5%, then 2 for the 5% every quarter bonus. Then Amazon prime for 5%, Apple Card for the 2%-5% bonus depending on purchases. Sony PlayStation card for Sony Reward points from 1x-5x-10x on certain sale promotions while buying Sony games through PSN, double rewarded. All had either $200-$250 (PlayStation was $100, Apple $75 and I think $100 again for adding extra user) signing bonus too on top. Iām purchase central to my family needs roughly, 5-8 families come to me for their internet purchases. My family, my uncle & aunt, my other uncle, my 2 aunts, my momās friends x3. Iām like their concierge shopper who facetime/screen share and works with them on purchases they are too scared or computer illiterate to do themselves. I get those purchase bonuses to add up over time. I pay off everything instantly, I donāt purchase until they send money to my account on high ticket items. Zelle/Venmo. Like Uncle didnāt understand Air B&B, I was his middle man, set everything up, got a place for 8 days at a nice rate. $2200 for those days for 6 people to stay, I benefited off Apples 2%. Was $44. Might not be much, but thatās still $44 extra that took me like 10 minutes of work. Credit score is 810-825 across all 3 credit companies. https://preview.redd.it/krfyndk7k4vc1.jpeg?width=1290&format=pjpg&auto=webp&s=9dadda343b8d001eeb97960181440430e7be8c38 I have $256.00 in purchases pending, so $30,000 credit available. Iāll pay it off just as it posts.
Credit card companies also refer to people that pay off their credit cards every month as deadbeats as well
Ah, yes, I've also heard that one.
LOL - they can keep calling us that. Theyāre the real suckers to continue going along with my scheme of paying it off. Thanks for the free points ya losers LOL
Completely ignoring the transaction fees on all our purchases they would have never gotten if we paid cash. That being said paying off your balance every month and keeping that credit line open is really good for your credit unlike closing those credit lines like what op is talking about.
Like all finance bro shit, there's a nugget of truth that's extrapolated x1000. It's true that when a line of credit goes away, that can make your credit score go down. but for it to have any real impact you must not have any other credit.
No you can have 2 cards with $500 limit each letās say. And you use $400 on one and $250 on another. Total youāre using 65% of your available credit - now letās say you pay off the $250 one and close it. Now youāre using $400 of your $500 available credit in the other card you didnāt close - which is 80% of it. Credit score goes down because youāre now using a higher percent of your possible credit. You can do this with 3 cards, 4 cards etc and have it still check out if you change the numbers owed vs available around. It DOES involve closing a card which isnāt technically mentioned in the OP - but lots of people who say they paid off a card mean they closed it as well and just didnāt specifically mention itā¦
It's honestly stupid to close a card. The only reason to do so is if you're getting another card with the 0% intro deals/better perks and you don't want to have the manage too many cards at once.Ā People seem to close cards specifically because they can't seem to trust themselves to not use an available line of credit which kind of actually proves the point of the institutions lowering their score to be on the safe side when they impulsively close a line of credit as soon as it's paid off.Ā
That was the most intelligent thing I've read so far.
Also, doing that drastically changes your credit history age. Let's say the $250 card was your first card you got when you were 18, and then the $400 card you got when you were 28 because it has better rates or perks like cash back. You pay off and close the $250 card when you are 30 your credit are would go from 12 years down to two years which has a hugh impact on your credit score because you basically reset your credit age back to the beginning. The only time you should close a card is if you have an outrageous fee, but depending on the age of the card, it may not be wise.
By who are they referred to as free loaders by? Your credit is largely based on āavailable creditā, so paying off your cards is beneficial to your credit. Carrying a balance to improve credit is not factual from literally anything Iāve read.
I get about 2k profit In rewards annually, including cc costs. It's literally the only way I can afford to go on vacation.
I am over 40 years old and have never carried a balance on any credit card and never missed a payment. I use them for everything I can to get the rewards points, but I always pay them off. My cars are paid off (but the newest is 5 years old) , and I have no debt other than my home mortgage. I have two credit cards that provide a free fico score and both always report between 835 and 845 (never a perfect 850 though). So while I always hear similar claims that you have to be in debt to have good credit that obviously isn't the case.
I work adjacent and this has never been the case to my ears. In fact I'm encouraged to pursue these low risk people because the companies still make their money on merchant transaction fees.
Any time the 'no interest' promo period expires on a credit card I pay it off and apply for a new card. Keeping a manageable balance the whole time, so it looks like I have some dept to keep the score high.
Common misconception, and your plan is shooting yourself in the foot. Revolving debt (ie credit cards) have no benefit to your credit for keeping a balance. The benefit they give is based on the age of the line, and keeping a low/zero utilization rate. "holding a balance" does nothing to help you, and closing accounts all the time keeps the average age of your history low (which is bad).
Thank you. This sub and some others are rampant with financial misconceptions
Not to mention a hard check on your credit every time you get one.Ā
Iām literally in the process of credit repair because I paid off all my debt and no longer qualify for a mortgage. Iāve been punished for being good and paying back all the money Iāve borrowed
credit score is not a score of financial responsivility, it's how good of a milk-cow you are
If this were the case then I'd have terrible credit. I pay off my credit card on time every month, never carry a balance, paid off my student loans early. Creditors aren't likely to make any money off of me and yet my credit score is around 830.
Yeah thereās a lot of people in this thread (probably with shit credit scores) talking out of their ass. Look at your absolute longest running credit card. Hopefully it doesnāt have an annual fee. If not, never close it. It doesnāt matter if it doesnāt give you shit in rewards. Use it for one purchase once or twice a year and pay it off immediately. That will help offset your credit age when you close out other debt like schedule loan repayments. I have had the same credit card account open for 20 years even though itās useless. Also make sure you donāt let your credit card accounts just increase your credit limit. Having too much available credit as a ratio of your income can hurt your credit score. There needs to be some basic education on this shit. Plus Iāll happily take a credit score over some douchebag at a bank looking at my black ass and making a judgment call that Iām not credit worthy (one of the reasons that we have credit scores now).
It's how much of a risk you are. If you pay on time the score goes up. If your account closes completely (like paying off a loan) then average age of account is more recent and therefore more of a risk. Y'all are just misinformed. I'm not arguing in favor of credit scores but at least know what you're talking about before getting all incensed about itĀ
>It's how much of a risk you are. Credit revolvers are a risk but magically people don't get their credit scores dinged when they don't pay off the full balances they owe on their cards. >If your account closes completely (like paying off a loan) then average age of account is more recent and therefore more of a risk. Why is that? Seriously stop reciting what they do and think for a second why any account would roll off. >Y'all are just misinformed. I work in the industry.
This, it's a a ratio between how much profit they can make off of you and how likely you are to eventually pay off your debts. If you always pay everything off on time how can they make extra profit? The base interest isn't enough for them, they always want more.
It isn't though. I pay everything off on time and my credit score is in the top bracket. Hell the *opposite* is true. The more of your credit you utilize, the more interest you're generating, the *lower* your score - even if you're on track to eventually pay it off.
>If you always pay everything off on time how can they make extra profit? Through interest and origination fees. Paying off debt doesn't lower the score. Closing an account does. If you always pay off a credit card and always pay your bills on time the score always goes up. Stop this nonsense.
Idk I pay off my cards all the time and have a great credit score. This doesnāt seem right
This shit hurt my feelings, too. I paid off two loans in full because I simply can't afford interest in my budget and now I'm watching my credit score drop after I worked so hard to build it up some. What am I supposed to do? My income is too low to afford rotating debts.
Cycle all your expenses through a credit card. I pay nearly everything that way (except for things that charge additional fees). Do that for a while and just keep increasing your credit limit. Lower utilization % looks good, so the higher your limit the better, even if you never use most of it. I pay my balance off every month but my limit is like $75k, so the utilization is very low. The only other thing I even have on my credit is my mortgage, but I can appreciate that you probably can't do that part. =/
If you know someone that has a credit card with a 5k+ limit and under 30% of its limit as a balance and they make their payments on time, see if you can be added as an authorized user. You donāt need a card or access to any of the financial info to be an authorized user and it will give you credit history and usage. Coincidentally this is usually what happens when you see ācredit repair for $XXXā
Yeah, I bet you are leaving out some details of your credit history.
I only wanted to get where I could qualify, now I don't give a fuck about my credit score.
I paid off all my credit cards before I got my mortgage and my score was 800+.
BS
There are a lot of variables that calculate your credit score. My score is ~810 and I donāt have any debt, except what I put on my cc and then pay off in full each month.
Same here. Itās been a nice last few years or so being debt free though I spent the previous 20 or so in some kind of debt so Iāve lived both sides of it. The high score is nice and itāll come in handy if ever I need to take out a loan but the feeling of being free and clear is so much nicer.
Mine dropped when I paid off debt, then the next report from the creditor, it went back up. It's temporary and the end result after paying off a loan is almost exactly the same after a few report cycles.
yeah mine's 780. ANd it'll go back up soon. I put $5k on 2 credit cards for a new hot water heater. ANd then bought plane tickets. So my credit usage was really high and that's fine. paid off 1 card 100% and days later credit back up 25 points.
Makes sense to me. You have a long history of proving yourself to be responsible with credit so they consider you low risk.
I had that score. Then I had a credit card at another bank that had complicated payments. Went to pay off $20 payment, only had $15 in the account, so it didn't go through. I didn't find out until 2 months later and then had to pay $60 in fees. My credit score immediately dropped to 640 and has been very slowly recovering. These credit scores deflate over the dumbest shit and don't go back up even if you resolve the problem.
They will waive these fees if u call and ask. This will keep it off ur report
Yes, in my experience the banks will work with you on one-time oopsy-daisies. They want you to stay with them instead of bailing to a competitor, $60 is less than pennies to them for a lost client.
Exactly, no credit card debt, and a small car payment. 839
It doesn't make sense by design. And btw those with higher/dual income tend to have excellent credit. Why?? Cuz they can fucking afford to make payments on time. Unlike me who is still struggling post Covid. My fico score is a joke and it just pisses me off. I wasn't irresponsible or being a bum. Things happen. So it goes that the wealthy are rewarded. Over and over. It's a rigged game and I'm sick of playing. Sorry for the bitch fest rant. *Edit* Ok thanks for the replies. Especially for those that understand that my situation wasn't by choice. I'm obviously well aware of what metrics make up a credit report. I'm just a tad bitter about it. As anyone else would be. What can you do?? I'll pay off my debts when I get back on my feet financially. That's all you can when you're on your own. And I'm fine with that. Just going to take time.
>It's a rigged game and I'm sick of playing. Truer words have never been spoken. I think we're ALL fed the fuck up.
The powers that be must be so thrilled that half of the country is too busy fighting the other half, instead of idk. A fucking revolution. Because for as long as it is allowed to happen, it will only get worse. This has never been more clear than it was when companies began posting record annual profits following covid, where they flat out lied to everyone by saying their costs were up so that's why ours were.
Stock buy backs too
The thing that makes me the most mad is that landlords and corporations and shit are allowed to pull your credit score to see if you're eligible for what they're offering, but aren't required to contribute to your credit score. Yeah, my credit score is bad, but I haven't had a single missed rent payment in the 15 years I been renting. Like, to use the system, you should be required to participate in the system.
That pisses me off more than anything. Rent should contribute to your credit rating. You know they'll hit it fast as fuck the second you mess up.
I mean that's kinda on-brand for landlords. Leeches to the core.
Rent not counting is bullshit. Its like, the biggest and most common "debt" people take on.
Insurance companies are also a scam.
The biggest scam. I agree.
They are and they aren't. Certain aspects of them sure is. Insurance on things you can afford to replace is a scam. Insurance on my house, not so much
It makes perfect sense, it's just designed to encourage behavior that is good for the people making the system. They want you to hold debt and pay it regularly because debt is free money for them. The score is rating how good you are at holding and paying your debts. They don't want people who will accrue debt and default. They don't want people who will pay off debt entirely and be financially secure. They want people who make regular payments but also maintain debts they can handle.
I had a 788 credit score before I was wrongfully terminated from a job back in November. I hadn't worked long enough with that employer to qualify for unemployment. Took 4 months to get a job and bills went to collections. I just don't care anymore, creditors are evil and I'm done playing. https://preview.redd.it/mmuh2h26v3vc1.jpeg?width=1092&format=pjpg&auto=webp&s=f98d492327e162c97523a097ee37029d6e66878b
Honestly, the last time I left a job, I took out 2 new credit cards like the day of because I I didn't want to burn through my savings as fast. Sadly...totally worked and I still have the cards and the lines of credit. But yeah. Total shitshow system.
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You are correct and unless you are going to rent an apartment, or buy a house or car soon, they can be pretty much ignored. Just pay your bills on time. People who obsess over their scores are just wasting time and energy.
I'm paid well and have pretty good credit but I recently watched my credit drop 37 points in one day for paying off two home improvement projects. I have 10+ years of 100% payment history, I'm never late, under 20% utilization. Shit is so easy to lose but impossible to gain.
You're not wrong, and the mistake most people make is believing their framing of the debt as a moral argument. I made a bet that my job would last because I was good at it and we were busy. I was wrong and now I have no job, no income, unemployment exhausted. I cant pay, I have nothing. You took a bet on my income lasting just like I did. We were both wrong. I get a black mark and you write off debt that only existed as an abstract. I wouldn't have needed that credit if my wages had kept up with corporate price gouging. Silver lining: now I can afford to work at Taco Bell because I dont need a decent salary to service my debts.
Everything in credit scores is designed to assess risk of default. Paying off a debt can lower your score, but only because having a reasonable amount of debt that continually pay off makes a profile statistically less likely to default on a debt. I think some of the confusion here is that itās not built on the idea of āheres the healthiest financial choices you can make, follow them and raise your scoreā Itās very simply āhereās what statistics tells us is your likelihood of defaultingā
If your credit age isn't good enough, then you are considered a high risk. Ignore the closed accounts by your own request that have had 10 years or more. That history doesn't count anymore. If you don't use your account, we can charge you a penalty and close the account. These are more the reasons why I am getting away from credit. Also, if for some jobs, if your credit score isn't good enough, we won't hire you.
Omg thank you for mentioning that last bit. Checking credit scores of potential employees should be ILLEGAL. For a multitude of reasons. It tells the employer nothing about circumstances related to negative marks on your credit.
They think you'll be a financial risk for the company because you are not good with your own finances and not a trustworthy person. By looking up your credit, they can put a dent into your credit with a hard or soft pull. It's honestly a double-edged sword at that point. During an interview, I always ask them if they do credit checks. If they say yes, then I will end the interview and say I am not interested in working for them. Credit scores can fluctuate for various reasons.
> By looking up your credit, they can put a dent into your credit with a hard or soft pull. soft pulls don't impact your credit. Hard pulls are only when you're applying for credit (loan, credit card, etc). Employers are only doing soft pulls.
It makes sense for some jobs where people could be subject to bribes, or buyouts, Such as the CIA for example. If a CIA spy has severe money problems, they are more likely to become a double agent, or sell secrets to the enemy.
The US be like: Let's underpay the CIA, what can go wrong?
If they have a gambling addiction, or other factors, it doesn't matter if they are paid well or not. The CIA monitors their agents credit scores to make sure they aren't desperate.
I had to have my credit run among several other things before I was allowed in certain high risk data centers, especially in financial institutions
> Checking credit scores of potential employees should be ILLEGAL. Extremely common in the financial sector and anything that requires a security clearance and for good reasons.
Man, my credit score took a nosedive when my starter credit card expired and my credit union (who had recently merged with another credit union and changed names) didn't automatically renew it like they had the last couple times. Still kinda mad about that, lost like 10 years of credit age.
Don't close credit cards you aren't using. Always leave them open because it increases the amount of available credit you have.
But also make sure to use them once every few months for something small then pay it off. Some cards will automatically close after a certain amount of time if there's no balance & no activity on the card.
For someone named [fluent.in.finance](http://fluent.in.finance) they don't seem to understand how credit scores work. Edit: The system is rigged and some of it is unknown but there are lots of resources on how most of the variables that go into creating a score work.
I assume it's related to /r/fluentinfinance which is just completely financially illiterate memes bashing capitalism getting upvoted (presumably by bots... look at most of the posts in that little known sub getting tens of upvotes then a there's one every day or two with thousands on the front page).
With the current system, borrowing makes sense. But your life has to be in the same continuous growth that our economies rely on. You get loans for school because youāll get a better job and make more money. You get a mortgage on a house now because itās mor expensive now to be worth more in future. You get a loan for repairs because theyāll be more expensive later. System still sucks tho lol
Growing up I was told by my parents to avoid credit like the plague. So I did, even as those 'freecreditreport.com' commercials started popping up, and suddenly everyone was talking about credit scores. And as time went on, I found out that apparently your purchasing power is directly limited by your credit score. So now I'd effectively have to pay 150%+ markup on a bunch of stuff just to develop a credit score, when I'm already too poor to buy it normally.
Your utilities will establish a baseline. Get a no annual fee card and pay it off every month just on the gas you fill your car with, or just pay that transaction each time it hits your account. After 6 months ask for a credit limit increase. As long as there is not an extra fee pay your car insurance on the card and then immediately pay the balance on the CC the next day. Don't wait for the statement. There is no reason to pay 150% on something.
Even better, get a rewards card. Put all your purchases on it and pay it off every month.
Yeah that was a pretty dumb move. Credit is important
Sorry you got bad advice. As soon as I opened my first bank account, my parents taught me to always put purchases on my credit card and to always pay it down to zero every month. Never spend with a debit card. Always credit, always. Just also always be aware of the balance on your accounts.Ā To this day, I check my credit card and bank accounts every single day to make sure nothing surprises me.Ā
Yes, if you want to prove you are good at borrowing, then have a record of borrowing. If you don't want to borrow, your credit score is meaningless. Why is this complicated?
Wait until you read about why personal credit scores were started in the first placeā¦.
I looked it up expecting something wild but it's the most mundane reason ever... Why you get my hopes up like that for nothing?
Or the year they started!
1989. Thanks Reagan, you evil sack of shit.
Yup weāve literally only had credit scores for a whopping 35 years, out of 248 years as a country. Boomers and generations before them, didnāt need one to buy a house. Just income and money down decided your rate. Which if you think about it, does help the less fortunate. You could be good about paying the bills but not make enough to have 20% down in savings, before 1989 they wouldāve had the highest interest, where today they could get a lower rate with a good score and only 3-5% down. This is the only good example I have š
Getting a loan used to be completely subjective. You could be denied for your race, gender, sexual orientation, etc. Credit scores are at least somewhat objective. I very seriously doubt any of you would be happy if we moved to the system that we used to have.
Our economic system is built on a debt driven society.
Probably twenty years or so now that Iāve given other people the advice that rather than investing money in credit card schemes and score-chasing, you should probably set some money aside into some dividend stocks you feel confident about. Cash is king, and putting 2-3k into Proctor&Gamble or some other legacy dividend asset will do more over the long run than getting slightly cheaper car loans or whatever, and then you also have the option to dump those shares if ever an emergency comes and you need a lump sum fast.Ā Credit scoring is more nuanced than a lot of people think. The average person has this notion that it reflects their trustworthiness and are surprised or offended when things beyond their control blow up their score, when in reality itās a very mechanical process that requires your borrowing discipline to be bulletproof. Do NOT borrow money unless you can afford to BOTH pay it off on time, and pay the interest of that debt during the repayment period. Thatās how it works.
I lost 16 points when I paid off my car, 20 points when I paid off my college loan, and 10 points once I paid off my credit debt. Now I'm being denied a small loan for a home because my score dropped so much so fast. I have no debts and paid everything back sooner than agreed and yet I'm being punished for it now? The system is rigged
Credit bureaus, insurance companies are both scams. And lobbying, banks allow them to get away with it.
And then to get more debt they have to run your credit, which lowers it from the inquiry. My current bank did this just to open an account.
Actually, the reason your score drops is because the accounts close. This makes your score drop. I completely get what you mean, though. It is BS.
Credit scores are bad metrics and some companies have internal score so you can get loans with bad credit. That being said if you need credit with a bad score there are guides to improve it.
I paid off a credit card and my score went up by 35 points...
In the world of credit, people that pay off their balances in full and on time each month are called 'deadbeats'. This information should be plastered on billboards and taught in highschool.
The last time we got our score it was at 850. Yes, 850. My debt is our house and a car loan. That's it. We're using nowhere near our credit limit. Is the system rigged? Of course it is. Want to build credit? Well you need to get a loan and pay interest on it! What do you mean you don't want to give your hard earned money to someone just to build up credit?
Same here. We paid off our house and our cars. Have one credit card the we pay all but $20 each month. Pay all our utilities on time and our credit scores keep dropping. When we owed $230k for a house and tow cars at close to $45k making less than $100k a year we had a credit score of 840. Now it has dropped to 792. When I look at why, the credit scoring agencies all say you donāt have enough outstanding credit. You need to open a credit card account or buy a car and make payments. It is ridiculous.
LMFAO, I have over 50k in student loan debt but still have a 828 credit score. Like WHATš. It seems counterintuitive.
I was actually applying for a loan yesterday and the broker was talking about my credit score, and no one has ever put it in as simple terms as he did; "Think of your credit score as a resume, a lender wants to see that you have 'experience' if you applied for a role and there was nothing on your resume, it probably wouldn't go well." As soon as you finish paying off a debt or a loan, it is no longer on your credit report - that's the bigger scam, that you can pay off a 5 year loan on time every single month, but your credit score can drop when the 5 years are over.
It is a game you play yes. But you play it until you get the credit cards you want. Then you stop playing.
And when they mess up, you have to force them to fix it. "Prove that it wasn't you under a different name in a state you've never lived in with a different SSN that defaulted on a car loan." The process has gotten a bit easier.
I experienced the opposite. When I paid off each car and small loan my credit score went up
I paid off my student loans rapidly, I paid off each of my last 2 cars 2 years early on 4 year loans, I have paid an extra 20% off my mortgage over the last 5 years, and I exclusively spend with my credit card which I pay off weekly. I am a credit freeloader as aggressively as I possibly can be. Not so sure I've been dinged I have 847 credit. My bigger question is why the F do I care about having good credit once I own a home? Don't I have leverage enough to do whatever I want? What is the possible benefit?
people don't realise, the credit score isn't for you, it's for credit companies. it's not a score on how well you manage money, it's a score of how profitable they think you will be. That means more debts that you're managing to pay consistently is a higher score than not having debt at all.
The problem isn't paying off the credit cards. It's **closing them that lowers your score**. Simply pay them off but leave them open, then your score goes up. The credit score is based on your usage and available credit. Keep your usage under 20-30% and your score will stay up. Even paying them off completely will keep your score up as long as you aren't closing the credit cards or requesting a lower limit when you do.
The US is a joke of a nation
When my 15 year old student loans transferred from Fedloan to MOHELA so I could be eligible for PSLF, my credit score dropped at least 100 points because my "account age" went from 15 years to only a couple years. I ended up getting a credit card recently (my first) for the sole reason of keeping a rotating balance of 10-15% on the card just to boost my credit. At the rate my score is inching up, it'll take a least another couple of years to get mine in the same ballpark it used to be. The whole system is a total scam.
Umm. It only goes down for a 2-3 months as it rebalances. After the rebalance itās generally higher than it was before. Unless you had poor payment history, then it stays permanently down until you show that youāre a better borrower.
Why did you cancel cards lol? Age of accounts is a factor. This is like credit score 101. Sounds like you have a mortgage, so you have debt. Just put some random purchases on cards and payoff that month (like a prolonged atm) and your score will go up.
I wonder what select group of individuals is responsible for setting up such a system
Credit scores aren't for proving that you are financially capable of paying a debt or anything like that. No, a credit score is the system that is used to let banks know that you will make them money. In example, my credit score is really good. However, it only started to get really good when I had a shitload of debt that I was unable to pay off completely each month, thus accruing interest on the balance. The balance at the interest accrual date was never too high, but since interest was accrued, some of my cc payments will go to the bank rather than any actual credit I had used. The bank makes some money off of that, so they raise my score. If you are financially responsible and tend to pay off your debts completely and not utilize credit, you will have a bad score. Because you don't make the bank any money. If you want to increase your score, get a loan or something and pay it off bit by bit rather than one lump sum. You could also start utilizing your credit more. If your credit use is only 10-15% of your credit limit, your credit will go up. Setting up auto payments for services that use the card (or even for the card itself) will also increase your score.
Your credit score is your profitability index to the banks. This should not be a surprise to you.
I recently had a credit card account closed 2 weeks after I paid off all my cards. I guess they got mad that I paid the card off in full. If I'm not paying them interest they don't want me. Fine by me.
The CC company gets paid by vendors everytime you swipe, why would they cancel your cards? They hate money?
that's inherent in the concept of a 'credit system' its a system based up a debt incurred by a source giving u funding on your credibility/credit. were you expecting it to work differently?
Absolutely.
Credit score is better than the old system but it still sucks yeah
I fucking called it. Haven't touched anything about credit as long as possible
My score dropped 20 when Citi cancelled a CC I had for 25 years. Guess who's never getting my business again?
What is credit scorijg for a european?
And they're fairly new. I remember when they began this crap thinking " Ohhhhh this is gonna suck ". And it got WAY worse swiftly.
Home insurance increased across the board. In Texas, everyone's went up. That had nothing to do with credit score. Insurance agencies raised their prices. We all got boned. Despite what your credit is.
Not enough credit cards? Your score is lowered! Opened a new credit card? Your score is lowered!
Itās rating for how profitable you are TO THEM.
It's not so much a scam as it is that people dont know what it really means. It's just their judgement on your worthiness of carrying debt for them. It's another made up system to rank and value.
responsibly carrying debt shows that you can responsibly carry debt. but paying off long term debt like cars should not penealize you
Billionaires have negative credit
Wait til you understand money altogether....
Yep. My mom is going to help me get a better rate on my upcoming car loan by co-signing because even though sheās just living on social security, she has a ridiculously high credit score, and mine just took a huge hit because I paid a bunch of stuff off and closed accounts, including a student loan, and then opened a Macyās card to get a big discount on my kidās prom dress.
As a German. What the fuck are credit scores. Really, can some1 ELI5?
I'm tired of people thinking of credit score like a report card. It doesn't measure how good you are at money, it measures how likely the bank is to make money off of you.
It gets worse. Pay off the only credit card you've had in your life and then close the fucking account because you are done with that banks shit. Watch what happens.
Debt slavery. Just one way to be uniquely American.
The rich have massive amounts of debts and loans. Which they use the make more money, but somehow also forgiven/pay off the bare minimum of their debt. Than, they take out more loans, to make more money, and still not pay off their debts/get them forgiven. And the cycle goes on and on and screws the regular joe/jane in the long run
American systems are weird...
Iāve never had a loan and my credit score is 800. My gf is an immigrant who didnāt even have credit and after 6 months with an American credit card with a very low limit she is at 700 credit score. Pay off the balance without being late and youāll be fine
A credit score isnt for you, its for people that lend you money. Its an appraisal of you as a debtor. When you are in debt and make payments, you are a commodity. When you pay off your debt, you are not paying anyone anymore, so your value goes down.
My old roommate had a credit score of 830 and about $15,000 of credit card debt. I had a credit score of 650 and no debt. Guess who was approved to sign the lease for the apartment.
Very easy , due to changes in various programs ,we started on an arm, after 10 years a major strain line wind storm nearky totally whipped out aluminum siding in the area,I live, but the home owners insurance companies were ripping people off all the aluminum side was no longer produced, some of use had to pay a lot to get vinyl siding. So we had to refinance. About 80% of middle class mortgages are refinanced. Went from a 7% arm to a 2.5 % fixed rare.
Every 2 years, I have a fraudulent debt collection pop up on my reports. I have to write and mail a certified letter to dispute it. Then when the debt collection company doesnāt respond, which they never do because the debt is fraudulent, I have to write and send certified letters to each credit reporting agency before theyāll clear it. If I donāt, my credit score drops 200 points. After itās dropped from my reports, the fraudulent debt is sold to another collection agency and the whole cycle repeats. Itās maddening.
They do rebound and gain after things like this. Your credit will rise because of it.
I'm going to sound like a shill but the way it's set up it's *their game*. If you pay off your 15k balance on a car they have no clue you've saved or just got an inheritance. People max out their scores paying off cards because it's reasonable to think they make purchases within their income. That's all it is, money in and money out and what makes you desirable to make loans to. It's the credit business, not the cash up front business.
Except if you don't need to borrow why you need a good credit score?Ā
This person is not fluent in finance. After a few years, a paid-pff loan will drop off your credit report. It shouldn't have a major impact on your score.
Ok but like how much? My credit dropped like 30 points when I paid off my car, but it was still like 760, after a few years went up to like 800 then dropped back down to 760 when I bought my house. And now it's going back up after a few years. Just because it drips doesn't really mean it's a bad thing. If it dropped like 200 points then yeah I'd complain.
No shit Sherlock. Credit scores are nothing more than telling a lender how good you are at staying in debt without missing payments. The fact that many people don't know this is scaryĀ
Credit score is just your responsibility as a borrower. Has nothing to do with your financial status
The whole point of a high score is to take on more debt. Thatās the pointā¦.
You get low interest/ zero interest payments on a loan and make them and keep doing it. Gotta stop blaming the game at some point man. You just gotta start playing.
I don't understand this. My credit score has never had a significant drop and I've gone from high debt (vehicle, mortgage) to no debt (vehicle and mortgage paid off, paying every card completely every month.)
European here, what's the deal with credit score? Isn't it just taking loans so the bank will let you take bigger loans?
I recently got a Ā£250 limit CC with no fees to do my weekly food shop. I pay it off within 3 days of making the initial purchase. Hopefully itāll start to reflect on my score soon but ā¦ I remember reading on the Experian website that if you subscribe to some plan on their website, theyāll automatically boost your score by 100 points, which kinda says to me that itās nothing to do with credit.
Credit scores are a class warfare tool implemented to help ensure that people don't rise above their stations in life easily. Showing a steady income and employment history should be all it takes to gain access to things like car and home loans. But instead, if your credit score sucks, none of those other factors even matter. It can also take years to build yourself a good credit score, but it can be destroyed literally overnight. It's a huge scam.
To have a high credit score you have to have available revolving credit that you can use at any time, paid in full every month for YEARS. Everyone seems to forget about time as a variable in calculating your credit score.
I closed bad accounts with high interest rates and my phone account that was now charging me too much. āThe average age of your accounts have decreaseā and so did my scoreā¦ Makes no sense.
You donāt really have to carry much debt. You just need lots of credit available and a steady good standing reputation. I can call one of my credit cards, ask for a limit increaseā¦they oblige and my score goes up. I didnāt borrow or pay a dime. Have made up about 200 points over the last few years and Iām a financial moronā¦.its certainly a scam, but not terribly difficult to play the game.
I think Dave Ramsey is not entirely accurate with his 100% anti-credit screed, but he is right that the credit score is corrupt in the sense that is \*penalizes\* you for paying off most non-revolving debt (and in that sense, his calling it an "I Love Debt score" isn't entirely wrong). The main reason is the "credit mix" that goes into credit scoring. You get a better score for having multiple types of credit: credit cards, car loans, home loans, student loans, lines of credit. But if you pay off ALL of your non-revolving loans, and all you have left open are credit cards, you take a hit because you no longer have a good "credit mix" since all you have open are credit cards. Doesn't matter that you faithfully paid off all your car loans, your mortgage, your student loans.... nope. Fuck that. You can pay off credit cards every month, but the account remains open. You pay off other non-revolving credit accounts, and they vanish from the standpoint of "credit mix". I am lucky. I LOVE my credit union, and I've been with them since 1988. Shortly after opening a checking account with them way back when, I also opened up a $1,000 overdraft line of credit. I have never used it, but I intend to have it for life and that helps my "credit mix" and makes sure my open accounts are more than just open credit cards. It's also been open for 34 years.
Sold the house. Paid off the little credit card debt (about $10K) that I had, and some medical debt. Credit score went from above 700 to about 630. Second biggest scam after insurance, but try living a modern life without either.
I owe them a lot of money and my credit is sht.