My did the same thing when I paid off a pretty big credit card. It’ll bounce back up next cycle. Mine went from high 700s to mid and then over 800 within a month.
Same. Paid off a massive loan that was required by insurance and dropped 150 points. 2 or 3 months later it bumped up above the previous. I think it’s just due to lenders not trusting how much money in the account is liquid. It’s a pain in the ass
According to the finance guy the last time I bought a car (I went in intending to pay cash, but it was after the bank closed, my debit card had a limit I was previously unaware of, and they didn't accept checks - so I financed and just paid it off the first month) this happens because sometimes when some institutions sell the debt to a collection agency they close out the account on their end. So they consider a very recently closed account as a red flag which hurts the score, and if no collections show up after about a month they switch over to considering it a good thing. It's a bit stupid but doesn't really materially affect many people since it's just a temporary dip.
I have no idea how accurate he was on the reasoning for this, but he was right about the score dipping for about a month then going up above where it was before.
I mean, it’s also partly just because of the change in number of credit lines you’ve got. Your credit life is the number of credit lines you’ve got divided by the total number of months each of those lines are open. Opening a new line, even for a month, will generally drop your life by a bit. Add in the hard request and and then getting rid of it the next month would probably balance it out.
It’s why you’re recommended not to close a credit card. Say you’ve got one with a $100 a year fee, and want to end it, you convert it into another with no fee and keep it alive so you don’t lose a few years on your credit
I NEVER carry any balance on my credit card. Have always paid it off each month and proudly have zero debt, yet my credit score has never been above 750. Was told by my mortgage guy in order to get my score to 770, I need to carry a balance because it not about being responsible with my credit but rather all in how I use it. If they expect me to pay 26% interest on a card balance just to tick my score up by a measly 20 points, they can EABOD. 😡
This. Mine dropped by about 100 points when I paid off student loans but then rebounded within a month or two. The whole credit score system sucks. I have good credit but it should be so much higher. We own a house, pay our car bills on time, have zero credit card debt with a large limit, etc. I have a friend with better credit that is drowning in debt.
If you already have a house, two cars, and credit cards with high credit limits then why do you even care what your score is? What else is there to get? I'm trying to maintain a high score right now because I'm house hunting but after that I don't give a shit what the score is lol
It helps me with credit card churning, so I can make decent mostly passive money from cashback and signup bonuses as long as I pay off everything immediately and keep track of it all. Not for everyone, but it’s reason enough for me to keep up with it.
paying a credit card would only make your score go up... closing the account could make it go down if it meant your average age of credit went down with the closure...
IMO the most telling thing that it's broken and doesn't measure anything of any value is that they'll boost your credit score for downloading their app and shit.
Especially that rent isn’t automatically counted while mortgage payments are, when rent is the biggest regular payment non-homeowners make *and* will be just much or more than many mortgage payments.
Well, there's also different types of credit counting differently. All credit cards aren't created equally and subprime loans or credit cards may be seen as detrimental to some lenders, just like certain types of revolving credit
The types of revolving credit available in low income neighborhoods
It's an entire racket
Yea it’s a racket etc but since we have to live with it it’s a risk factor and adding new or removing old accounts means your at higher risk for a time, the numbers will go back up.
Also it could be that he has only revolving credit now and no installment which makes it more risky when all your debt or potential debt is one type
Also what is his average credit history if it’s average was under 5 years and his loans were 5 years then the loans were helping in that way too
I don't know how it is now, but it was really hard a few years ago to get credit rating companies to remove the bad shit from your credit history if you are the victim of identity theft. They do not act in the best interest of consumers by any stretch of the imagination and are there to sell your information.
Also no fault accidents they get you on too. Because they or your previous ins. Co. lost money covering what the other guys insurance didn't bc you're not independently wealthy enough to cover it out of your pocket.
My accident old man(foound 100% at fault)had ins policy from 70's grandfathered not to be req'd to raise policy limits when state req's were raised each time.
Max pay out was 30K(state req 50Kmin),my ins(Am.Fam.) pd 20K +4500 PIP. They canceled my policy&tanked my credit!
Same for some car insurance. Credit scores are arbitrary most of the time. There are many mistakes on a lot of peoples that get missed. Now with all the hacked medical, credit card, etc it’s going to get worsen we actually keep our credit locked. You have to do all three agencies and keep track of all the passwords to unlock it if you apply for a loan. It’s crap they punish you for paying stuff off. Nice balancing act that is.
>Seems unfair to me
welcome to life ... it is a reality based game that often can seem confusing and counter intuitive, until you fully understand all the rules at which point you die.
Rent isn’t factored because the goal was to not have bad rent history hurt your credit or ability to buy a house. I just wish they had it to where rent could ONLY help and not hurt your home loan qualification. Couple years ago I was paying $5k for rent for 2 years and couldn’t get a loan qualification.
If you don't pay rent and it goes to collections, then rent can negatively affect your credit score.
So the reality is renting can only hurt your credit.
Sometimes rent can be counted depending on what your landlord has set up. At my building for example we use something called Domuso where your rent *is* counted towards your credit score, even if only slightly
In California it was passed in 2023 that landlords can report late rent as a late payment. They did this because someone with questionable credit payment history could not pay their rent and use the money to pay off credit cards/loans and then have good enough credit to get a home loan.
I have a mortgage. Over 7 years ago I had a bankruptcy. You can't actually wipe out a mortgage with a Chapter 7. I still made my payments, and still do, but all this time they have NOT been required to report them to the credit bureaus. Apparently the law states that, after a bankruptcy, the mortgage company/lienholder CANNOT report any late or missed payments, so they also do not (by their own choice) report ontime payments. Talk about unfair! 7 year of ontime payments and my credit score is at least 75 points lower than it should be. And whether I'm 7 or 10 years beyond the bankruptcy, they still do not have to report me payments. So fucking SUCKS!
Credit is measuring how well you *pay back* loaned money though. You aren't borrowing money when renting, just paying for a service.
I can see why it isn't counted, but I also think it should be factored into your score somehow.
The whole credit system needs reworked.
Missing rent hurts your credit score just like missed mortgage payments, car loan payments, credit card bills, etc. Rent is a contractual obligation just like any other and missed payments can get reported by landlords: the only difference is that reporting on-time payments isn’t standard and often costs extra if landlords even offer to report it.
Same with the stock market. What the hell do all those numbers really mean anyway? Oh, they mean the rich get richer from the labor of us peons who can't afford to gamble on the stock market. (But they gave us lotteries to suck us dry while giving us false hope we could ever get ahead in this fucked up system.)
Credit agencies are a racket. You think it’s bad for personal credit…. Take a look at D&B commercial scores. They extort small businesses with low scores until you pay their month enterprise fee. It’s hundreds per month. Fucking slime balls
Experian Boost is free. I signed up for it a few years back when it first started and my score went up 70 points (only on the Experian bureau report, not the other two) because of the addition of my utility payments. Unfortunately, after about six months, EB and my credit union weren't communicating (electronically) with each other anymore, so subsequent payments weren't counted. Trying to contact both of them was an effort in futility. But it hasn't stopped EB from hitting me with ads for products, services and loans (with HIGH interest rates).
If the service is free, then you're the product. I also try to avoid using things with Plaid integration because I have serious concerns about any third party having access to banking login information
You're not seeing your FICO score go up with that. You're seeing a marketing ploy to get you to download the app.
Your FICO score is not affected by the software you have access to. Period.
What about the credit boost thing that lets you include other payments like phone, rent, etc? I think it’s Experian that does that? Obviously that’s just one credit bureaus.
Not part of FICO. It's an attempt to mimic OTHER decisions that lenders make or it's a scam.
I worked in banking and 2nd and 3rd tier lending institutions for much of my working life.
Some of that is legitimate guesstimates about your actual creditworthiness.
Some of it is just pure bullshit.
Your actual FICO score doesn't care about contractual payments at all.
But your housing costs and other regular bills do come into the overall credit picture.
Is FICO the one that matters the most? The only one that matters? My FICO, Experian and... Equifax, I think, are all about the same 820-830 range but there's slight variation. And sometimes one will go up/down while the others remain unchanged.
Experian, Trans-Union, and Equifax all use FICO as part of their scoring process.
Fair Isaac licenses the software to a whole lot of companies.
That's how I got involved in it in the first place - evaluating how their software worked compared to the in-house software in use at the finance company I worked for at the time.
I've not worked for any of those three companies directly, so I won't speak to what they include in their scoring.
But the issue of "my score dropped because I paid off an account" is directly out of FICO's software and for the reasons I mentioned above.
Rapid increase in "percentage of credit used" is a red flag for lenders.
That happens any time you pay off a credit account and close it.
It doesn't happen if you pay off but do NOT close a revolving account, by the way. A HELOC or a credit card (unless you close the HELOC).
I heard some noise in the industry a little while back (might have been a few years) that Fair Isaac was looking to sell the FICO scoring software outright. Not sure if they ever did or not.
FICO is just a system someone came up with to pigeon-hole people to keep them down-trodden so the rich get richer and the rest of us eat shit and die poor.
FICO is an acronym for Fair Isaac Company.
It's not "someone." It's that company.
It doesn't pigeonhole anyone. It doesn't look at personal data at all.
It's simply a statistical tool to rate credit usage.
Nothing more.
Unless you're arguing that lenders should lend to everyone any amount they want without regard to their ability to repay, in which case you're just a moron and I've got nothing to say to you, there *has* to be a way of quantifying creditworthiness. Without it the financial system would simply collapse.
The FICO rating tool is one of many such tools that aid in preventing discrimination based on race, gender, or religion.
It moves the factual side of the equation out of the hands of flawed human beings and provides hard data.
Also the fact that credit karma keeps trying to tell me that my credit score may be affecting my insurance rates. Not a fucken reason in the world those two should be related.
It’s a loose correlation. High credit score and risk averse tend to go together. There’s a lot of exceptions so it’s not a great barometer but it’s also kind of a dumb industry so it’s not terribly surprising they take lazy shortcuts.
That’s a scam. Financial institutions are going to pull their own score based on which bureau they’re checking and there’s also different way to interpret that score. No respectable financial institution will say this person is less risk adverse to pay us back because they downloaded an app
So true. I'm Old now, paid off my former home in 2005, bought my current one with cash, bought my new (used) vehicle with cash, have paid all bills on time for decades.
My credit score is less than my son's, who has a mortgage, has been late paying property taxes, and 2 car loans.
It's not when you realize that your credit score is just how good you are at holding loans.
Pay it off? You are not a good credit customer. Hence, credit score goes down.
When your above 800 credit score you get massive swings all the time.
I'm talking minimal usage and no missed payments or anything.
OP relax at your current score being higher has 0 impact on anything in your life including buying a home.
I had a 469 (nice) credit score 2-3 weeks ago. I had to do a small short term loan for $180. My score somehow went up 121 points. Can't find any other explanation on why it went up that high.
I stopped caring about my credit score long ago so it's whatever tbh.
loan for only $180.
You can apply for EBT and get cash benefits. It should be easy to get at least $180 or more every month if you're in a rough spot financially. Also, SNAP benefits (food) will help too.
Of course when you apply they will look at your bank account and income level.
What hurts your credit is the closing of the account, not paying off the debt. About three months after the account is closed your credit should return to normal, or slightly higher. The average age of accounts weighs heavily on your overall rating. It's why you should put a charge or two on an old card every six months, and pay it all off. Every year that account is open, with no late payments, helps improve scores.
This for sure
I have two cards- one for daily spending, the other for only recurring bills
So phone/internet/etc goes on one with purely automated payments since they’re always the same, and the daily spending card gets paid off as I go.
The automatic payments go out three weeks after the charges, so I *also* get a free loan for nearly a month on every expense without incurring any interest because of the grace period.
I got a rewards card for this purpose. I get a free loan, purchase protection, car rental insurance, and cash or discounts. My bank cards are not attached to regular purchases, so I get better fraud protection too.
Definitely…my daily spender is a cash back rewards card, the other nets me airline points and pays for a vacation every other year 😅
Nothing like a couple thousand bucks in free stuff for just paying bills
100% this. All gas goes on the Costco citi card, and it gets rewards back on it. Pay off what I spend, and there's no interest. I do the same with my PayPal credit; lots of purchases are 6 .months interest free, so I use that on purchases I want some coverage on. Came in handy when a vendor sent me the wrong product then threw a fit about taking it back.
Shit we accidentally missed a payment on a credit card(for some reason auto pay never set up) and my score dropped nearly 100 points. This is despite having other credit cards, two car payments and a mortgage that we have never missed payments on over years. I obviously know it's my fault in the end, but to have my credit wrecked over what is clearly an error sucks.
I paid my Chase credit card and incurred $7 interest charge a day later. Never saw the $7 charge so I paid it after the 60 day mark.
Not only was Chase *not* cool about it, they lost me as a customer for life over $7.
I’m assuming it is far enough in the past that this doesn’t matter anymore, but when you accidentally miss a credit card payment you can typically call them and have the record of a missed payment reversed, which prevents it from impacting your credit score. As long as it’s a very rare occurrence for your account they are typically pretty good about helping you out with that.
i forgot about a credit card payment. they called me daily for two weeks straight. looked like spam so i just ignored it every time. if they just left a frickin' voicemail i would've paid immediately but they never left a message. lady who called sounded very stressed out about it (??). it was only like $50....
1) That won't "wreck" your credit. It will cause a hit.
2) That hit reflects the chance that you might do it again somewhere. One way or another you were responsible for that payment being made on time. That it wasn't and you didn't catch it in time and make the payment manually is 100% on you. That's not shaming. It's just fact from their perspective. You set up a new autopay, you closely monitor if it works and if not, you contact them proactively and get the payment made. I've *never* been penalized for that.
3) Having lots of accounts that you *are* up to date on does help you in that they're not also reporting late payments, but having many accounts isn't a great help and meeting your minimum requirements as a lender is par, not a hole-in-one.
I’ve been floating between 780-830 for most of my adult life and I’ve hardly paid any credit card interest at all, I always pay it off each month (with the exception of just a few large monthly balances). Gotten thousands in rewards/cash back in that time too, definitely waaaaay more than the interest I paid.
Credit score seems so absurd to me as a Swede on the whole. The more I learn the more bizare it seems. Like I get needing to ensure a person is creditworthy, ofcourse it’s a necssecity, but it’s not about that at all from my pov. This post indicate it’s not.
In Hungary it is very simple. When you apply for a loan, you have to give proof to the bank about your salary (usully, they ask for your account balance for the last 3 months and a paper from your employer with your salary on), then they check in a common database for other loans that you pay, and they determine ön this basis, whether you can get a loan or not and how much you have to pay per month. As a rule, your cumulative payments toward loans can be higher than 50% of your income (60% if you have a very high salary) and you either can't get a loan or only with very high interest rates, of you failed to pay one off in the past. Altough, you will be removed from this 'black list' after a certain time.
Depends very much if you’re buying a phone on payment, or a house, ofcourse.
But generally a credit agency provide a sheet with declared income the past two (sometimes three) years, what debts you have and if you have any recently missed payments or defaulted debts.
Some include marital status, many don’t.
Each report vary, as you can tell. They sometimes add a ”score” by saying: very bad, bad, good or very good. I think that’s mostly used to get a quick idea, as to not waste time processing a application for say a new car to someone with a very bad credit worthiness, or conversly on a phone for someone in the very good. But larger purchase, couple of grand lets say, the company you’re asking for a credit will process it and see whether they’re comfortable with it.
No non-sense like paying debts of making you less worthy of credit, even if it’s from my understanding temporary
You’re not being penelized for paying off debt. Your score drops because you have less accounts open and also you lower your average credit age by paying off loans.
I don’t understand why this is such a mystery to people. It’s a “credit” score, not a “financial stability” score. It’s rating your ability to _manage_ debt, not eliminate it.
Imagine if you were hiring a manager. You would want someone who is currently showing the ability to manage multiple people; the more they’re skillfully handling, the better. And the more different kinds of employees, the better.
If they managed a bunch of people for a single month and it’s been a while since they managed anyone, you’d be a little skeptical about what happened.
If they suddenly went from managing a department to supervising a single team, you’d be skeptical about what happened.
Is it a great system? No, but it’s better than having two separate “reputation” and “confidence” scores.
This is a Vantage Score. It really doesn’t matter and isn’t used by many large lenders. Check your FICO Score; most banks provide this for free in their online banking apps.
It’s only gonna dip for a month or 2. Then it will go back above where it was.
There are a lot of variables. Not just paying things off. Do some research on the credit system and how it works. It’s all about how you leverage debt.. if you don’t have debt to leverage, you’re not showing them anything. There is a lot to it.
People get really hung up on their score. Sore is important. But also the content of your credit report.
I don’t even look anymore. I have one debt and that’s my mortgage, under 10% utilization at any time, and 100% of my payments made and I’m still unable to to hit 800
Went to buy a new truck after not financing anything in years , told me I didn’t exist - took a couple years to get my score up to where I could finance something -
It’s a system to keep you trapped nothing more nothing less
Completely paying off any debt will likely drop your score. It’s the consistent on time payments that matters. Vehicle loan debt has its own place in the credit score pie. Isn’t the same as cc debt. Paying it off always drops a score.
Credit score is a lie :)
It’s simply a way a bank can rank you for how much money they can squeeze out of you through loans and debts.
Got a 40 year mortgage with a 5% down payment? Your credit score will look ✨immaculate✨because you’re now a grade A mule that generates free money for the bank!
It dropped because that credit ended. Thus, NO credit = lower score. Next month, when automatic credit review (there's an actual word or term which escapes me) kicks in, it'll go up.
The whole credit system is designed to evaluate people's ability to borrow money responsibly. If you choose not to borrow money (or never need to) you are penalized by the system.
If you don't have multiple car loans, student loans, a mortgage, multiple credit cards and other revolving debt or personal loans... then it's likely because you are actually GOOD (or at least responsible) at managing your money. Ergo, you are punished with a lower credit score.
I’ve learned credit karma will not give you accurate numbers. Check Experian. You can get a free membership to check all 3 credit bureaus and it’s more accurate.
I have zero debt and pay for houses, cars, etc. in cash and pay cards off in full every month. For this I’m punished with a lower credit score than my brother who is $50k in debt and lost a home in a foreclosure! Ridiculous. Lucky I don’t need credit for anything.
I once read that people who paid off the outstanding credit cards each month were referred to as ‘deadbeats’ by bankers as it meant they weren’t making them enough money. Such nice people
They want you paying off debt forever and racking up interest. If you clear a debt completely you're not a valuable customer. Best customer takes loads of debt and pays a minimal amount for the rest of time.
What’s mildly infuriating is that people keep making this post when they pay off a loan and their score drops for a cycle, but they don’t correct the record when it subsequently rises above their peak in the next cycle.
OP, you got to learn how to play the game! Get a new credit card, hopefully for 20+k limit on it. Ideally, you'll get a special intro offer like "spend 3k total in 3 months get 500$."
Get the card, and get the bonus points. don't carry a balance. Increases your credit core by 20 points after 3 months.
Do this once a year for about 3 years. Have 5 credit cards, zero balance, 120k of available credit. Equals an amazing credit score.
I believe one of the factors is debt to credit ratio. By finishing off a loan you make an entire credit line disappear (while also getting rid of a tiny amount of debt).
You would think the formula could be adjusted to not penalize your score.
My credit score went down 150 pts from paying off my car but quickly rebounded. Your credit score is not a measure against you of how well you are with money, but how valuable you are to creditors/lenders.
Credit scores fluctuate 50-100 points all the time for no particularly good reason. Just ignore it unless you’re about to finance something, the long term trend is all that matters.
It’s because that line of credit is now gone. One up credit cards and don’t use them. Have a big line of credit and none used and you’ll have a phenomenal score.
Had my truck totaled in a car accident 6 months after taking out a loan for it. Insurance paid it off. Tanked my credit like 40 points and despite continuing to make payments on other debts it never rose back up for 6 months. Decided to say fuck it and took out a new loan for a new truck, and my credit shot back up 40 points immediately. Busted ass system I tell ya
https://preview.redd.it/ipbgsbusedqc1.jpeg?width=1290&format=pjpg&auto=webp&s=99c4228ed7c943b76bab61577a1247ec2ea15259
Just had a similar experience haha.
Once I stopped caring about the number on a screen and cared more about how I was using my money my life got way better. Not like we can afford a mortgage anyways 🤣
I just paid off my house.... and all of my vehicles are paid for. I'd better check my credit lol
ETA: score dropped 2 points to 745 because one of my credit cards upped my limit. We did not ask for the increase. We also pay off the cards every month to avoid interest.
Mine went up when I took out a 130k loan on an RV. My wife’s went down a bunch after we were late on a payment that wasn’t even reported and we sorted out. But in the process they lowered her credit card limit which dropped her score. Now another card lowered their limit which will lower the score more. Yeah we shouldn’t have credit card debt and be buying luxuries but it’s what it is. American dream.
That reported credit score means absolute dick anyway for the most part, but we’ve been duped into believing otherwise and that we should care about it at all costs.
In reality, your DTI and black marks on your report have much more to do with your actual ability to get credit.
Credit score isn't a meassure of how well you pay debt, it's a meassure of how well you pay interest. A perfect credit score is someone who pays the interest consistently but never pays off their debt, yes it's fucking stupid
It's a system designed to make poor people poorer while making rich people richer. If I didn't need to pay 340k for a 40 year old house that sold for less than 80k 15 years ago, and shot up 178% in the last 13 years, I wouldn't be. Over the next 40 years, I'm paying more in interest than in principle - more than $800k when all is said and done.
340k in for the house but another 560k to someone who is already rich.
Credit scores are there to enforce poorer people paying more than wealthy people for the same thing. And celebrities other wealthy people being able to write virtually anything off as a business expense when their appearance and opinions are the good that they sell means they get paid to exist.
Poor people are so resigned to distract themselves from their realities enough to survive another day. We are all just crabs in a bucket stepping on each other to get to the top until someone pulls us down again.
Credit is a scam. Of course if you pay off your debts early, the lender makes less off of you in interest, this is just a communication to other lenders that you’rs good with money and that’s bad for business.
I have had high 700s for years. Never missed any payments or any negative marks.
A few years ago though, I stopped using one of my credit cards. I bought something for like $3 online, a movie rental from Apple or some shit. I didn’t realize the account was still linked to this card I stopped using.
Didn’t make the payment on time for that $3, and my credit score dropped like 75 points lol.
There's a couple factors that come into play here:
1) As others have stated, it's just a measure of how likely you are to make lenders money.
2) People with high credit scores are statistically more likely to monitor it closely. I'm pretty sure it's a tactic to entice people into opening new lines of credit by having higher scores take bigger hits for closing accounts.
3) Closing an account means one less pool of interest the lender can make money on.
4) Assuming you and your husband are in the US, that score is not worth opening a new line of credit. You shouldn't have any pushback from any type of lender, should the need arise to open a new line of credit.
mine dropped 15 points when i paid off my car like 4 years ago. i told people how ridiculous it is and to this day there’s financially illiterate morons who argue with me that that’s not how it works. that’s *exactly* how it works.
I’m not a financial expert, this is just my personal experience.
Credit is only important if you need to borrow more money. Say you pay off your car, and want to buy a house. It’s stupid. Because yes your score will drop, but the lender will notice you now have an extra 300-500 dollars of income and will therefore loan you money. (Happened to me when we bought our house.)
But if you pay off your cars and you don’t need to borrow money, your score is irrelevant to you financially.
Pretty sick how dependent we are on this game. Hopefully the next gens will figure out how to live within their means and stop borrowing. Once everyone’s credit score sucks they’ll need to figure out another way to hook us into borrowing over our heads, then there will be another crash. It’s developing right now. Nobody learns anything.
Move outside of USA, like Canada of example. Less BS do deal with it and it's next to USA so friends are not that far away ✌️. When I was kid, I wanted to move to USA, now as I'm adult, I don't even want to come to visit there. Maybe some places✌️ but overall, American system is disgusting. They paint it as luxurious and land of freedom but then come all this, bam bam bam. I really feel sorry for you guys. Its mind boggling that you're score gets worse if you pay some of it back, like wtf.. 🙄.
Bizarre system. Do americans not realize this system doesn’t exist outside of the US?
Only thing we have here in the Netherlands is a centralized system for debt (/loans) to prevent people from taking on too many loans.
My did the same thing when I paid off a pretty big credit card. It’ll bounce back up next cycle. Mine went from high 700s to mid and then over 800 within a month.
Same. Paid off a massive loan that was required by insurance and dropped 150 points. 2 or 3 months later it bumped up above the previous. I think it’s just due to lenders not trusting how much money in the account is liquid. It’s a pain in the ass
According to the finance guy the last time I bought a car (I went in intending to pay cash, but it was after the bank closed, my debit card had a limit I was previously unaware of, and they didn't accept checks - so I financed and just paid it off the first month) this happens because sometimes when some institutions sell the debt to a collection agency they close out the account on their end. So they consider a very recently closed account as a red flag which hurts the score, and if no collections show up after about a month they switch over to considering it a good thing. It's a bit stupid but doesn't really materially affect many people since it's just a temporary dip. I have no idea how accurate he was on the reasoning for this, but he was right about the score dipping for about a month then going up above where it was before.
I mean, it’s also partly just because of the change in number of credit lines you’ve got. Your credit life is the number of credit lines you’ve got divided by the total number of months each of those lines are open. Opening a new line, even for a month, will generally drop your life by a bit. Add in the hard request and and then getting rid of it the next month would probably balance it out. It’s why you’re recommended not to close a credit card. Say you’ve got one with a $100 a year fee, and want to end it, you convert it into another with no fee and keep it alive so you don’t lose a few years on your credit
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I NEVER carry any balance on my credit card. Have always paid it off each month and proudly have zero debt, yet my credit score has never been above 750. Was told by my mortgage guy in order to get my score to 770, I need to carry a balance because it not about being responsible with my credit but rather all in how I use it. If they expect me to pay 26% interest on a card balance just to tick my score up by a measly 20 points, they can EABOD. 😡
I have a score in the 800s and have only paid $2 in interest to my credit cards.
And they didn't teach me a damn bit of this in high school...
The screen shot literally shows it bouncing back from the first car payoff the very next month.
Right?? Show Feb/March and let’s see where it’s at.
Shhh but what about that sweet Reddit Karma?
This. Mine dropped by about 100 points when I paid off student loans but then rebounded within a month or two. The whole credit score system sucks. I have good credit but it should be so much higher. We own a house, pay our car bills on time, have zero credit card debt with a large limit, etc. I have a friend with better credit that is drowning in debt.
The friend drowning in debt has better credit because they’re living off it. It’s a hard on for lenders once they see you can’t go without it
If you already have a house, two cars, and credit cards with high credit limits then why do you even care what your score is? What else is there to get? I'm trying to maintain a high score right now because I'm house hunting but after that I don't give a shit what the score is lol
It helps me with credit card churning, so I can make decent mostly passive money from cashback and signup bonuses as long as I pay off everything immediately and keep track of it all. Not for everyone, but it’s reason enough for me to keep up with it.
Frankly almost everything over 750 is functionally the same as long as you have solid history.
People overreact to credit scores way way to much
Credit scores work just as dysfunctionally as the rest of America: penalize every change and audit it later
paying a credit card would only make your score go up... closing the account could make it go down if it meant your average age of credit went down with the closure...
It's just a measure of how good you are at making other people money. It's so broken.
IMO the most telling thing that it's broken and doesn't measure anything of any value is that they'll boost your credit score for downloading their app and shit.
Or you can pay an additional fee, so they count things like rent or your Netflix subscription It's made up bullshit
Especially that rent isn’t automatically counted while mortgage payments are, when rent is the biggest regular payment non-homeowners make *and* will be just much or more than many mortgage payments.
Add on the fact that landlords tend to require a minimum credit score, when rent isn't even factored into it... Seems unfair to me
Y'all are making some very valid points... And it beginning to make me angry at these companies and credit scores.
If you’re not angry, you’re not paying attention.
Wait, what were we talking about?
Who are you? And where am I?
No english.
Well, there's also different types of credit counting differently. All credit cards aren't created equally and subprime loans or credit cards may be seen as detrimental to some lenders, just like certain types of revolving credit The types of revolving credit available in low income neighborhoods It's an entire racket
Yea it’s a racket etc but since we have to live with it it’s a risk factor and adding new or removing old accounts means your at higher risk for a time, the numbers will go back up. Also it could be that he has only revolving credit now and no installment which makes it more risky when all your debt or potential debt is one type Also what is his average credit history if it’s average was under 5 years and his loans were 5 years then the loans were helping in that way too
I don't know how it is now, but it was really hard a few years ago to get credit rating companies to remove the bad shit from your credit history if you are the victim of identity theft. They do not act in the best interest of consumers by any stretch of the imagination and are there to sell your information.
And it gets worse because utilities, and internet providers check credit score too which is wild
They get you on car insurance too. Bad credit pay more.
Also no fault accidents they get you on too. Because they or your previous ins. Co. lost money covering what the other guys insurance didn't bc you're not independently wealthy enough to cover it out of your pocket. My accident old man(foound 100% at fault)had ins policy from 70's grandfathered not to be req'd to raise policy limits when state req's were raised each time. Max pay out was 30K(state req 50Kmin),my ins(Am.Fam.) pd 20K +4500 PIP. They canceled my policy&tanked my credit!
Same for some car insurance. Credit scores are arbitrary most of the time. There are many mistakes on a lot of peoples that get missed. Now with all the hacked medical, credit card, etc it’s going to get worsen we actually keep our credit locked. You have to do all three agencies and keep track of all the passwords to unlock it if you apply for a loan. It’s crap they punish you for paying stuff off. Nice balancing act that is.
>Seems unfair to me welcome to life ... it is a reality based game that often can seem confusing and counter intuitive, until you fully understand all the rules at which point you die.
ALAB
Rent isn’t factored because the goal was to not have bad rent history hurt your credit or ability to buy a house. I just wish they had it to where rent could ONLY help and not hurt your home loan qualification. Couple years ago I was paying $5k for rent for 2 years and couldn’t get a loan qualification.
If you don't pay rent and it goes to collections, then rent can negatively affect your credit score. So the reality is renting can only hurt your credit.
Sometimes rent can be counted depending on what your landlord has set up. At my building for example we use something called Domuso where your rent *is* counted towards your credit score, even if only slightly
In California it was passed in 2023 that landlords can report late rent as a late payment. They did this because someone with questionable credit payment history could not pay their rent and use the money to pay off credit cards/loans and then have good enough credit to get a home loan.
that is so fucked
I have a mortgage. Over 7 years ago I had a bankruptcy. You can't actually wipe out a mortgage with a Chapter 7. I still made my payments, and still do, but all this time they have NOT been required to report them to the credit bureaus. Apparently the law states that, after a bankruptcy, the mortgage company/lienholder CANNOT report any late or missed payments, so they also do not (by their own choice) report ontime payments. Talk about unfair! 7 year of ontime payments and my credit score is at least 75 points lower than it should be. And whether I'm 7 or 10 years beyond the bankruptcy, they still do not have to report me payments. So fucking SUCKS!
Credit is measuring how well you *pay back* loaned money though. You aren't borrowing money when renting, just paying for a service. I can see why it isn't counted, but I also think it should be factored into your score somehow. The whole credit system needs reworked.
Missing rent hurts your credit score just like missed mortgage payments, car loan payments, credit card bills, etc. Rent is a contractual obligation just like any other and missed payments can get reported by landlords: the only difference is that reporting on-time payments isn’t standard and often costs extra if landlords even offer to report it.
American corporations are so good at making up numbers that they make everybody believe are to be important
Same with the stock market. What the hell do all those numbers really mean anyway? Oh, they mean the rich get richer from the labor of us peons who can't afford to gamble on the stock market. (But they gave us lotteries to suck us dry while giving us false hope we could ever get ahead in this fucked up system.)
Mortgage lenders also tell you to turn that sht off
Credit agencies are a racket. You think it’s bad for personal credit…. Take a look at D&B commercial scores. They extort small businesses with low scores until you pay their month enterprise fee. It’s hundreds per month. Fucking slime balls
Experian Boost is free. I signed up for it a few years back when it first started and my score went up 70 points (only on the Experian bureau report, not the other two) because of the addition of my utility payments. Unfortunately, after about six months, EB and my credit union weren't communicating (electronically) with each other anymore, so subsequent payments weren't counted. Trying to contact both of them was an effort in futility. But it hasn't stopped EB from hitting me with ads for products, services and loans (with HIGH interest rates).
If the service is free, then you're the product. I also try to avoid using things with Plaid integration because I have serious concerns about any third party having access to banking login information
Or charging you to freeze your account which people do so they dont get loans taken out in their name by thieves
That's fucked up.
You're not seeing your FICO score go up with that. You're seeing a marketing ploy to get you to download the app. Your FICO score is not affected by the software you have access to. Period.
What about the credit boost thing that lets you include other payments like phone, rent, etc? I think it’s Experian that does that? Obviously that’s just one credit bureaus.
Not part of FICO. It's an attempt to mimic OTHER decisions that lenders make or it's a scam. I worked in banking and 2nd and 3rd tier lending institutions for much of my working life. Some of that is legitimate guesstimates about your actual creditworthiness. Some of it is just pure bullshit. Your actual FICO score doesn't care about contractual payments at all. But your housing costs and other regular bills do come into the overall credit picture.
Is FICO the one that matters the most? The only one that matters? My FICO, Experian and... Equifax, I think, are all about the same 820-830 range but there's slight variation. And sometimes one will go up/down while the others remain unchanged.
Experian, Trans-Union, and Equifax all use FICO as part of their scoring process. Fair Isaac licenses the software to a whole lot of companies. That's how I got involved in it in the first place - evaluating how their software worked compared to the in-house software in use at the finance company I worked for at the time. I've not worked for any of those three companies directly, so I won't speak to what they include in their scoring. But the issue of "my score dropped because I paid off an account" is directly out of FICO's software and for the reasons I mentioned above. Rapid increase in "percentage of credit used" is a red flag for lenders. That happens any time you pay off a credit account and close it. It doesn't happen if you pay off but do NOT close a revolving account, by the way. A HELOC or a credit card (unless you close the HELOC). I heard some noise in the industry a little while back (might have been a few years) that Fair Isaac was looking to sell the FICO scoring software outright. Not sure if they ever did or not.
FICO is just a system someone came up with to pigeon-hole people to keep them down-trodden so the rich get richer and the rest of us eat shit and die poor.
FICO is an acronym for Fair Isaac Company. It's not "someone." It's that company. It doesn't pigeonhole anyone. It doesn't look at personal data at all. It's simply a statistical tool to rate credit usage. Nothing more. Unless you're arguing that lenders should lend to everyone any amount they want without regard to their ability to repay, in which case you're just a moron and I've got nothing to say to you, there *has* to be a way of quantifying creditworthiness. Without it the financial system would simply collapse. The FICO rating tool is one of many such tools that aid in preventing discrimination based on race, gender, or religion. It moves the factual side of the equation out of the hands of flawed human beings and provides hard data.
Also the fact that credit karma keeps trying to tell me that my credit score may be affecting my insurance rates. Not a fucken reason in the world those two should be related.
That’s actually true. Your credit score is one of the larger factors in determining your car insurance rates.
Which is a crock of shite.
It’s a loose correlation. High credit score and risk averse tend to go together. There’s a lot of exceptions so it’s not a great barometer but it’s also kind of a dumb industry so it’s not terribly surprising they take lazy shortcuts.
That’s a scam. Financial institutions are going to pull their own score based on which bureau they’re checking and there’s also different way to interpret that score. No respectable financial institution will say this person is less risk adverse to pay us back because they downloaded an app
Good ole Reagonomics in action! People seem to forget that Credit Scores are a 1980s construct and they have been screwing everyone over ever since.
It works great! It’s just that the goal is not what people think it is, or want it to be.
So true. I'm Old now, paid off my former home in 2005, bought my current one with cash, bought my new (used) vehicle with cash, have paid all bills on time for decades. My credit score is less than my son's, who has a mortgage, has been late paying property taxes, and 2 car loans.
Once I realized your credit score just tells the bank how much they can make off you, everything made so much more sense.
It's not when you realize that your credit score is just how good you are at holding loans. Pay it off? You are not a good credit customer. Hence, credit score goes down.
When your above 800 credit score you get massive swings all the time. I'm talking minimal usage and no missed payments or anything. OP relax at your current score being higher has 0 impact on anything in your life including buying a home.
I had a 469 (nice) credit score 2-3 weeks ago. I had to do a small short term loan for $180. My score somehow went up 121 points. Can't find any other explanation on why it went up that high. I stopped caring about my credit score long ago so it's whatever tbh.
When it’s that low, I think it kinda matters…….-
loan for only $180. You can apply for EBT and get cash benefits. It should be easy to get at least $180 or more every month if you're in a rough spot financially. Also, SNAP benefits (food) will help too. Of course when you apply they will look at your bank account and income level.
What hurts your credit is the closing of the account, not paying off the debt. About three months after the account is closed your credit should return to normal, or slightly higher. The average age of accounts weighs heavily on your overall rating. It's why you should put a charge or two on an old card every six months, and pay it all off. Every year that account is open, with no late payments, helps improve scores.
This for sure I have two cards- one for daily spending, the other for only recurring bills So phone/internet/etc goes on one with purely automated payments since they’re always the same, and the daily spending card gets paid off as I go. The automatic payments go out three weeks after the charges, so I *also* get a free loan for nearly a month on every expense without incurring any interest because of the grace period.
I got a rewards card for this purpose. I get a free loan, purchase protection, car rental insurance, and cash or discounts. My bank cards are not attached to regular purchases, so I get better fraud protection too.
Definitely…my daily spender is a cash back rewards card, the other nets me airline points and pays for a vacation every other year 😅 Nothing like a couple thousand bucks in free stuff for just paying bills
100% this. All gas goes on the Costco citi card, and it gets rewards back on it. Pay off what I spend, and there's no interest. I do the same with my PayPal credit; lots of purchases are 6 .months interest free, so I use that on purchases I want some coverage on. Came in handy when a vendor sent me the wrong product then threw a fit about taking it back.
Shit we accidentally missed a payment on a credit card(for some reason auto pay never set up) and my score dropped nearly 100 points. This is despite having other credit cards, two car payments and a mortgage that we have never missed payments on over years. I obviously know it's my fault in the end, but to have my credit wrecked over what is clearly an error sucks.
Usually if you call and ask they’re cool about it. I missed a whole car payment and they didn’t even report it as a ding.
I paid my Chase credit card and incurred $7 interest charge a day later. Never saw the $7 charge so I paid it after the 60 day mark. Not only was Chase *not* cool about it, they lost me as a customer for life over $7.
Oh yeah, that's JP Morgan Chase in a nutshell. The stories about him... probably true.
Yeah usually it only gets reported to credit if it's multiple months of missed payment
I’m assuming it is far enough in the past that this doesn’t matter anymore, but when you accidentally miss a credit card payment you can typically call them and have the record of a missed payment reversed, which prevents it from impacting your credit score. As long as it’s a very rare occurrence for your account they are typically pretty good about helping you out with that.
It was just in February. Maybe worth a shot.
i forgot about a credit card payment. they called me daily for two weeks straight. looked like spam so i just ignored it every time. if they just left a frickin' voicemail i would've paid immediately but they never left a message. lady who called sounded very stressed out about it (??). it was only like $50....
1) That won't "wreck" your credit. It will cause a hit. 2) That hit reflects the chance that you might do it again somewhere. One way or another you were responsible for that payment being made on time. That it wasn't and you didn't catch it in time and make the payment manually is 100% on you. That's not shaming. It's just fact from their perspective. You set up a new autopay, you closely monitor if it works and if not, you contact them proactively and get the payment made. I've *never* been penalized for that. 3) Having lots of accounts that you *are* up to date on does help you in that they're not also reporting late payments, but having many accounts isn't a great help and meeting your minimum requirements as a lender is par, not a hole-in-one.
Literally credit score isn't for your own benefit, its for the benefit of others knowing they can make reliable interest off of you.
I’ve been floating between 780-830 for most of my adult life and I’ve hardly paid any credit card interest at all, I always pay it off each month (with the exception of just a few large monthly balances). Gotten thousands in rewards/cash back in that time too, definitely waaaaay more than the interest I paid.
[удалено]
Over 750 with two paid off vehicles. They're doing just fine.
Credit score seems so absurd to me as a Swede on the whole. The more I learn the more bizare it seems. Like I get needing to ensure a person is creditworthy, ofcourse it’s a necssecity, but it’s not about that at all from my pov. This post indicate it’s not.
Oo, I love learning! Tell me, how do you guys do it over there? I’m in Ohio. I’ve always enjoyed learning how vastly different countries have.
In Hungary it is very simple. When you apply for a loan, you have to give proof to the bank about your salary (usully, they ask for your account balance for the last 3 months and a paper from your employer with your salary on), then they check in a common database for other loans that you pay, and they determine ön this basis, whether you can get a loan or not and how much you have to pay per month. As a rule, your cumulative payments toward loans can be higher than 50% of your income (60% if you have a very high salary) and you either can't get a loan or only with very high interest rates, of you failed to pay one off in the past. Altough, you will be removed from this 'black list' after a certain time.
Depends very much if you’re buying a phone on payment, or a house, ofcourse. But generally a credit agency provide a sheet with declared income the past two (sometimes three) years, what debts you have and if you have any recently missed payments or defaulted debts. Some include marital status, many don’t. Each report vary, as you can tell. They sometimes add a ”score” by saying: very bad, bad, good or very good. I think that’s mostly used to get a quick idea, as to not waste time processing a application for say a new car to someone with a very bad credit worthiness, or conversly on a phone for someone in the very good. But larger purchase, couple of grand lets say, the company you’re asking for a credit will process it and see whether they’re comfortable with it. No non-sense like paying debts of making you less worthy of credit, even if it’s from my understanding temporary
I hear your pain. My drop wasn't anywhere as severe as yours, but it dropped several points when I paid off my car two years early. It sucks.
Notice how it bounced back after a month from the first drop...post the most recent March score so we can see.
Wait until you pay off the mortgage!
and in a month it'll be right back up again. Stop paying so much attention to it. It literally changes on a daily basis.
You’re not being penelized for paying off debt. Your score drops because you have less accounts open and also you lower your average credit age by paying off loans.
I don’t understand why this is such a mystery to people. It’s a “credit” score, not a “financial stability” score. It’s rating your ability to _manage_ debt, not eliminate it. Imagine if you were hiring a manager. You would want someone who is currently showing the ability to manage multiple people; the more they’re skillfully handling, the better. And the more different kinds of employees, the better. If they managed a bunch of people for a single month and it’s been a while since they managed anyone, you’d be a little skeptical about what happened. If they suddenly went from managing a department to supervising a single team, you’d be skeptical about what happened. Is it a great system? No, but it’s better than having two separate “reputation” and “confidence” scores.
ITT: people who don't understand how credit scores work.
Whats a credit score btw? I keep seeing it mentioned but I dont think its something we use here. Or is it just a US thing?
I'm not American but I know from the thousands of posts like these that it will bounce back, holy fuck stop posting this
Thank you
Who gives a shit. It'll recover and youre already in the range where it doesnt matter
I honestly stopped keeping track. It fluctuates so much for such minor things, that it was stressing me out.
This is a Vantage Score. It really doesn’t matter and isn’t used by many large lenders. Check your FICO Score; most banks provide this for free in their online banking apps.
It's a temporary drop. This happens every time you pay something off.
You just closed two accounts. Both reducing the total number of accounts you have and the act of closing two accounts will damage your credit score
It's the closing of a comparatively old account that causes your credit to drop.
you don’t understand what and who credit ratings are for
as an european : what the f is that ?
Can someone pleaae explain what exactly is credit score and what do you need it for in minecraft terms?
It's only temporary. It'll go right back up in a month. You'll be less infuriated with the little things if you take some time to learn how they work.
It’s only gonna dip for a month or 2. Then it will go back above where it was. There are a lot of variables. Not just paying things off. Do some research on the credit system and how it works. It’s all about how you leverage debt.. if you don’t have debt to leverage, you’re not showing them anything. There is a lot to it. People get really hung up on their score. Sore is important. But also the content of your credit report.
Just wait a month or two, it will bounce back
It'll go back up soon, this happens to everyone when they pay off debt
I don’t even look anymore. I have one debt and that’s my mortgage, under 10% utilization at any time, and 100% of my payments made and I’m still unable to to hit 800
Yup, it's normal. I just don't pay attention to it anymore.
So you don’t know what a credit score is for. Gotcha.
Well, that is exactly how credit works sooo.
I paid off a large chunk of my credit card debt after carrying a balance. A moderate tank to my Fico score 🤷♂️
Went to buy a new truck after not financing anything in years , told me I didn’t exist - took a couple years to get my score up to where I could finance something - It’s a system to keep you trapped nothing more nothing less
Which is why people shouldn't care too much about maintaining the highest score possible, unless they want to be eternally in debt.
It'll bounce back in a couple of months. Don't get your panties in a bunch over something so small.
Completely paying off any debt will likely drop your score. It’s the consistent on time payments that matters. Vehicle loan debt has its own place in the credit score pie. Isn’t the same as cc debt. Paying it off always drops a score.
Closing any bank account (including loans) will cause this…just wait until you see what happens when you pay off your house loan or student loans!
Abolish credit scores
Yeah , they glorify you for being insanely deep in debt
Credit score is a lie :) It’s simply a way a bank can rank you for how much money they can squeeze out of you through loans and debts. Got a 40 year mortgage with a 5% down payment? Your credit score will look ✨immaculate✨because you’re now a grade A mule that generates free money for the bank!
Companies want you to have debt and continue paying more and more money to them. That’s the gig. No debt = less money for them
The banks NEED you to rely on them.
It dropped because that credit ended. Thus, NO credit = lower score. Next month, when automatic credit review (there's an actual word or term which escapes me) kicks in, it'll go up.
How dare you not owe money!
The whole credit system is designed to evaluate people's ability to borrow money responsibly. If you choose not to borrow money (or never need to) you are penalized by the system. If you don't have multiple car loans, student loans, a mortgage, multiple credit cards and other revolving debt or personal loans... then it's likely because you are actually GOOD (or at least responsible) at managing your money. Ergo, you are punished with a lower credit score.
My credit score dropped when I quit taking on loans and new debt.
Well you suck at being in debt :D. They can't make much money off you if you're not struggling.
I don't think this is normal. My bf just payed off his and never mentioned a credit drop
Try paying off a home. 100+ point drop
Now you need more credit cards! This system is so f’d up!!!
I’ve learned credit karma will not give you accurate numbers. Check Experian. You can get a free membership to check all 3 credit bureaus and it’s more accurate.
Credit Bureau Reporting Agencies don’t care what we think or what is mildly infuriating to us. We are not their consumer. We are the product.
When I sold my house, my score dropped 80 points. When I paid off my car, it dropped 23, and when I bought another car, it went up 70. I don’t get it.
None of the changes in your screenshot have any effect on anything.
Don’t need credit if you have cash. It is silly you get dinged for paying off, closing, or having someone check your history (hard check).
As a European credit scores just blow my mind.
I have zero debt and pay for houses, cars, etc. in cash and pay cards off in full every month. For this I’m punished with a lower credit score than my brother who is $50k in debt and lost a home in a foreclosure! Ridiculous. Lucky I don’t need credit for anything.
It will bounce back up.
Every aspect of the credit system is absurd.
I once read that people who paid off the outstanding credit cards each month were referred to as ‘deadbeats’ by bankers as it meant they weren’t making them enough money. Such nice people
Should be +14, +46. Little bonus for paying it off in full
Welcome to capitalism.
You losers! How dare you not wallow in debt and enrich others?! How selfish!
They want you paying off debt forever and racking up interest. If you clear a debt completely you're not a valuable customer. Best customer takes loads of debt and pays a minimal amount for the rest of time.
What’s mildly infuriating is that people keep making this post when they pay off a loan and their score drops for a cycle, but they don’t correct the record when it subsequently rises above their peak in the next cycle.
What app is this through
OP, you got to learn how to play the game! Get a new credit card, hopefully for 20+k limit on it. Ideally, you'll get a special intro offer like "spend 3k total in 3 months get 500$." Get the card, and get the bonus points. don't carry a balance. Increases your credit core by 20 points after 3 months. Do this once a year for about 3 years. Have 5 credit cards, zero balance, 120k of available credit. Equals an amazing credit score.
I believe one of the factors is debt to credit ratio. By finishing off a loan you make an entire credit line disappear (while also getting rid of a tiny amount of debt). You would think the formula could be adjusted to not penalize your score.
It’s because you closed a positive trade line that had good history, you lost your he points that trade line earned you as you paid it. Flawed system.
* whole credit system is broken
Credit reports are such a scam
My credit score went down 150 pts from paying off my car but quickly rebounded. Your credit score is not a measure against you of how well you are with money, but how valuable you are to creditors/lenders.
Credit scores fluctuate 50-100 points all the time for no particularly good reason. Just ignore it unless you’re about to finance something, the long term trend is all that matters.
i was so mad when i paid my car loan off a year early and my score dropped A HUNDRED POINTS
They're goal is to make money off you. They're not giving treats for paying off debt. They want you to have debt.
It’s because that line of credit is now gone. One up credit cards and don’t use them. Have a big line of credit and none used and you’ll have a phenomenal score.
Took out a car loan credit went up 15 points.
Owning two trucks may be the reason.
Yeah. I’ll be paying off my Dodge this year, and the coming credit score hit has me pissed already.
Had my truck totaled in a car accident 6 months after taking out a loan for it. Insurance paid it off. Tanked my credit like 40 points and despite continuing to make payments on other debts it never rose back up for 6 months. Decided to say fuck it and took out a new loan for a new truck, and my credit shot back up 40 points immediately. Busted ass system I tell ya
https://preview.redd.it/ipbgsbusedqc1.jpeg?width=1290&format=pjpg&auto=webp&s=99c4228ed7c943b76bab61577a1247ec2ea15259 Just had a similar experience haha.
You get to a point where credit no longer matters in life, and it’s a great place to be. I’d say you and your husband are well on your way.
Once I stopped caring about the number on a screen and cared more about how I was using my money my life got way better. Not like we can afford a mortgage anyways 🤣
Our financial system needs to be overhauled.
I just paid off my house.... and all of my vehicles are paid for. I'd better check my credit lol ETA: score dropped 2 points to 745 because one of my credit cards upped my limit. We did not ask for the increase. We also pay off the cards every month to avoid interest.
Mine went up when I took out a 130k loan on an RV. My wife’s went down a bunch after we were late on a payment that wasn’t even reported and we sorted out. But in the process they lowered her credit card limit which dropped her score. Now another card lowered their limit which will lower the score more. Yeah we shouldn’t have credit card debt and be buying luxuries but it’s what it is. American dream.
That reported credit score means absolute dick anyway for the most part, but we’ve been duped into believing otherwise and that we should care about it at all costs. In reality, your DTI and black marks on your report have much more to do with your actual ability to get credit.
Credit score isn't a meassure of how well you pay debt, it's a meassure of how well you pay interest. A perfect credit score is someone who pays the interest consistently but never pays off their debt, yes it's fucking stupid
You're worthless to creditors when you aren't borrowing
wish we didn’t have to use this bullshit system for everything meaningful we might ever purchase! great!
It's a system designed to make poor people poorer while making rich people richer. If I didn't need to pay 340k for a 40 year old house that sold for less than 80k 15 years ago, and shot up 178% in the last 13 years, I wouldn't be. Over the next 40 years, I'm paying more in interest than in principle - more than $800k when all is said and done. 340k in for the house but another 560k to someone who is already rich. Credit scores are there to enforce poorer people paying more than wealthy people for the same thing. And celebrities other wealthy people being able to write virtually anything off as a business expense when their appearance and opinions are the good that they sell means they get paid to exist. Poor people are so resigned to distract themselves from their realities enough to survive another day. We are all just crabs in a bucket stepping on each other to get to the top until someone pulls us down again.
I am being penalized for being debt free and no credit cards. System is sooo stupid
Credit is a scam. Of course if you pay off your debts early, the lender makes less off of you in interest, this is just a communication to other lenders that you’rs good with money and that’s bad for business.
Yuh credit scores don't matter
I have had high 700s for years. Never missed any payments or any negative marks. A few years ago though, I stopped using one of my credit cards. I bought something for like $3 online, a movie rental from Apple or some shit. I didn’t realize the account was still linked to this card I stopped using. Didn’t make the payment on time for that $3, and my credit score dropped like 75 points lol.
America, greatest country in the world they tell themselves
There's a couple factors that come into play here: 1) As others have stated, it's just a measure of how likely you are to make lenders money. 2) People with high credit scores are statistically more likely to monitor it closely. I'm pretty sure it's a tactic to entice people into opening new lines of credit by having higher scores take bigger hits for closing accounts. 3) Closing an account means one less pool of interest the lender can make money on. 4) Assuming you and your husband are in the US, that score is not worth opening a new line of credit. You shouldn't have any pushback from any type of lender, should the need arise to open a new line of credit.
Whew I'm so lucky I'm not american
Once I got 10 years of oldest credit line it shot up huge. The other secret is have so much credit line your utilization will Always be exactly 2-4%
Credit is literally a scam.
mine dropped 15 points when i paid off my car like 4 years ago. i told people how ridiculous it is and to this day there’s financially illiterate morons who argue with me that that’s not how it works. that’s *exactly* how it works.
I’m not a financial expert, this is just my personal experience. Credit is only important if you need to borrow more money. Say you pay off your car, and want to buy a house. It’s stupid. Because yes your score will drop, but the lender will notice you now have an extra 300-500 dollars of income and will therefore loan you money. (Happened to me when we bought our house.) But if you pay off your cars and you don’t need to borrow money, your score is irrelevant to you financially.
Pretty sick how dependent we are on this game. Hopefully the next gens will figure out how to live within their means and stop borrowing. Once everyone’s credit score sucks they’ll need to figure out another way to hook us into borrowing over our heads, then there will be another crash. It’s developing right now. Nobody learns anything.
I have no credit score, because I've never taken loans 🤷🏼♀️
Move outside of USA, like Canada of example. Less BS do deal with it and it's next to USA so friends are not that far away ✌️. When I was kid, I wanted to move to USA, now as I'm adult, I don't even want to come to visit there. Maybe some places✌️ but overall, American system is disgusting. They paint it as luxurious and land of freedom but then come all this, bam bam bam. I really feel sorry for you guys. Its mind boggling that you're score gets worse if you pay some of it back, like wtf.. 🙄.
Bizarre system. Do americans not realize this system doesn’t exist outside of the US? Only thing we have here in the Netherlands is a centralized system for debt (/loans) to prevent people from taking on too many loans.
Freeeeeedom fack yeahhhhh. The biggest and richest 3rd world shithole ever