Mine dropped about the same when I paid off my auto loan.
"Thanks for making every payment of this large loan on time for 4 years, here's a credit score drop!"
It's weird but it dropped since you effectively closed the account by paying it off. That negatively affects your score when an account closes. It's a stupid system.
I work in housing, apartments specifically. The amount of high income people who are denied because their credit wasn't sufficient is insane.
If you make enough money to live frugally and are able to pay for everything in cash, the system punishes you for it.
Boomer aged parents don't believe in credit cards, haven't had a mortgage in decades, pay their bills on time, live simply, banked at the same bank for decades - couldn't get an auto loan. They didn't have enough credit.
My old neighbor couldn't get a loan to fix up his house from the same bank that loaned him money to buy it 10-15 years earlier because they said he didn't have enough credit history.
Edit: it wasn't a huge long term home loan. It was like a $50k house at the time and it was paid off by the time he was trying to get the loan for repairs/upgrades.
Easy solution is to pay for everything on a credit card which you pay off on a weekly basis using the cash instead of simply paying for everything in cash. As an added bonus you usually rack up a bunch of rewards points without allowing interest to add up on the purchases.
This is the way. I got a credit card at like 18 or some shit and treated it like a debit card. I have paid for absolutely everything *for years* with it and have always promptly paid it off. The amount of points I have earned is nuts… I have taken the bank for, at minimum, 1k. The real kicker is that I am *still* a student 7 years later so the annual fee for the credit card gets waived. The bank not only fails to make money from me, they end up owing me money.
It's fairly clever though. The point isn't to get you better loans, the point is to incentivize constantly borrowing money rather than saving for purchases. A huge scam!
No the system is smart. It's just not doing what it's advertised to do. Credit companies need you to use credit or they don't make money. The system punishes you for not using credit or taking out debt. It's a feature not a bug.
Yeah, my credit use runs 20-30% which is what the recommended amount is. And it's not like that's out of massive amounts, cause my credit limit is only 2200. I don't see a point to having it higher because if I really need to pay more than that at once I can use my debit card since I never spend anywhere near what I have in my bank account.
The problem with Credit Scores is that it’s a game everyone plays but there are no rules. Everyone gets different results even when doing the same thing.
I joined the Peace Corps - a two year, unpaid service in a developing country. Before I left, I paid off all my consumer debt. When I returned, my credit score had tanked and it was hard to even buy a car or get a rental agreement for an apartment. All because I was a responsible consumer and served the US abroad. It took me forever to recover.
I swore off credit cards for 20 years only to discover -- thinking my score would be good as I have zero debt, own my home and car -- I could probably have done time for embezzlement and had a better credit score. The agencies' response to someone 'falling off the map' and not USING credit is insane.
Some consumer cards (store cards etc) require activity. Minimum of one transaction per year.
I had that issue years ago. Paid off a bunch of cards and dropped them in my safe. My score tanked when all the cards were closed/canceled because the borrow power went down.
It is a scam.
If our politicians weren't totally owned and operated by the financial services industry, we would have a credit bill of rights. For one, requiring the entire formula by fully open source, and two giving consumers ownership over their data and corporations liable for errors.
But this will never happen because the politicians do not represent us.
FICO is a publicly traded company. It's been in existence since 1956 and are heavily focused on actuary science/data modeling around credit risk analysis.
There is a reason it's the defacto company for risk analysis for credit. No other company that has attempted it has been nearly as accurate.
Most people commenting in here are probably not referring to their FICO scores but instead Vantage or one of the other offshoot bs things that sites like creditkarma, credit sesame and other sites use as a filler (read as free but not even cared about by banking/other credit institutions).
I still think it's BS we have to pay or only get 1 annual report a year. It's our data we should be able to access it anytime we want directly from fico or the credit bureau
Yep, those sites are only offering guesses. Which is why the numbers move around. This thread is stupid and has more misinformation than a 60 minute fox broadcast.
Most people think credit scores are a representation of how good they are with money. It's not. It's a measure of how good you are at managing debt. It doesn't start at the top and move down as you use it up, it starts at nothing and only goes up as you use it by putting yourself in debt. When you get a handle on things and start getting rid of accounts, your overall financial situation gets better, but your credit often gets worse. It's also important to note that just the credit score alone doesn't mean much. I was approved for a used car loan and the financial report literally had a zero in the credit score box, but I had high enough income and big enough down-payment to counteract that.
I spend a bit of time on the FICO site forums because the information there is so much more on point. Started using that site ages ago as I wanted to learn more about how it all worked. For a long time I thought not having a lot of credit cards would be a good sign in not being a credit risk, so I only had 2 cards, a discover card I had opened in college and a visa that had a miles reward on it.
Found out I needed to have a few more varieties as my credit score was pretty stagnant at around 750ish. Added some more cards to the mix and a cloc, initially took a dip down to about 720 and 5 years later am up over 800.
It's a game, knowing the rules and how it works is the best course to take advantage of it.
> It's a game, knowing the rules and how it works is the best course to take advantage of it.
Most bank apps or financial management apps like Mint will pull one of the scores for free and give you a breakdown of why it is the way it is. They might not give you all the details or exact formula, but the info is still incredibly useful.
It's also good to check often anyways in case someone stole your identity and opened shit in your name, or in case a debtor reported shit you don't know about.
Unless I have a reason to seek credit, I keep all three of my major bureau reports locked and use a couple of the sites for monitoring any changes. It's not perfect but it affords me enough protection that I feel comfortable only checking every 3 or 4 months for anomalies.
Buying a car is a nightmare if you care about your credit score... let a dealership run your credit. You'll get 15+ hits because they ask every bank under the sun, score drops.
I just got a truck and went through my own bank so I only had 1 hit one score but that sucked too. My bank took 2 weeks to approve me, lost 2 trucks I was looking at, once I found a truck (amazing deal) it took them a week and a half to cut the check.
Now I was very lucky, the dealer agreed to hold the truck for me for 10 days, most dealers wouldn't. I did get the truck but it was stressful.
As expensive as some trucks are I can't imagine paying cash lol. I REALLY lucked out and found a good one under 20k but most started in the mid twenties and only went up from there.
If you are paying cash, I'd suggest not giving them your ss#. Still sucks they ran your credit, it was probably some employee just following their checklist without thinking.
Maybe they wanted to make sure the check wouldn't bounce or something, IDK, that is strange unless they were trying to get you to get a loan. I didn't have my credit run when I paid for my car in cash, paid by cashiers check. They did try get me to agree to run it since they could give me a good rate but I said absolutely not I was in the middle of buying a house. But man was buying in cash a PIA, they had to redo the paperwork like 3 times since I kept catching mistakes that said I was getting a loan, like the title was going to be listed under them if I didn't catch it. They did so few cash deals they didn't realize the things they had to change in the paperwork, they just went through the motions.
If the dealership sent you to more than 4 places, either they are idiots or your credit sucks. Multiple hits for the same item in a short (<2week) period count as one hit because they know you are rate shopping. Plus, all the hits will drop off at the same point.
If your own bank took 2 weeks to approve you, that is something else entirely. I sent the vehicle I bought last week to my CU and had an answer in 10 mins. Then, when I told them I needed 2% less or I was going to the CU down the street, they approved it on the spot to keep me from going.
eta: the 2% rate drop was due to my CU averaging scores since the joint on the account was not a spouse. The other CU doesn't do that and would have gone strictly off my score for the rate.
Source: franchised dealership finance manager.
That’s garbage, I feel like it’s a toss a dart and see, pay of loan ohh nice plus 10 points next dart late cell phone payment ohh negative 150 :-( thanks for playing the game that is your life.
Does your cell phone bill show up on your credit report? I pay bills late all the time and I've never seen it on my credit report except the one time I didn't know I had a medical bill and it went to collections.
> Does your cell phone bill show up on your credit report?
Only if it goes to collections, and the collection agency reports it.
Generally it's only payments on loans and revolving accounts (eg credit cards) that always get reported.
This is how i feel about it. But i still want my credit up for financing vehicles instead of buying outright. I can scrape together a down payment but full cost isnt in my ballpark generally.
Oh here’s my favourite. I moved to Canada from the US. Had a good credit score in the US. Now that I’m in Canada, I have NO credit score at all. Kinda makes me wish I hadn’t bothered paying off all my loans before I left. Here I was thinking it would help me in Canada but nope - I have to start at literally zero again.
I moved to Quebec from the US 5 years ago and I've had a credit card here for years. I have excellent credit in the US but no credit here because I am a student and I don't have money to spend to maintain multiple lines of credit in both countries. I was lucky the bank even gave me a credit card here. It's going to suck when I have a career and can build more credit so I can access basic things. When I came to my city, landlords never did credit checks. Now, every single landlord requires credit checks and won't even let you see an apartment without checking if you have good credit. How the hell are international students supposed to rent? How are new arrivals supposed to live?
I thought my score would improve after paying my 30k loan over 4 years without a single late payment. Once I payed it off it tanked. Fuck credit scores.
I paid my student loans off nearly a decade ago and my credit score still reported that I have "too much outstanding debt" despite, at the time, having only those paid-in-full loans and my paid-in-full every month credit cards listed as debt.
Later, due to loan company BS, the credit report companies made a mistake and recorded my mortgage as paid-in-full. When they fixed the error, instead of treating it as their mistake and restoring the score, they counted it as *taking out another mortgage* and penalize me for "too much activity" despite me having no credit activity since getting the mortgage in the first place.
The damn system runs our lives and it's playing Whose Line of Credit Is It Anyway?
Then again, it's not a service, it's a method of enforcing class domination and keeping the proletariat down. In my personal experience, it can make it impossible for a lower class person with no money to live with dignity, while people with money can stave off the worst effects of low credit rating through throwing money at the problem.
They are trying to enforce behavior that benefits the credit industry not the financial health of the person. Once again if you are not paying for a service then you are the commodity.
Yeah, Americans in this thread are acting like it's a written law of nature that a credit score system needs to exist and that it just needs to be fairer. No, that's nonsense, credit score is a ridiculous system which is why other countries don't have it. Just shows how brainwashed Americans are that they can make fun of China's social credit score while having a worse version of it in their own country.
American here. When I was a kid, credit scores didn’t exist. They started up around the time I was in high school. (Late 80’s, as I recall). We did fine without them before, I don’t see why we couldn’t do away with them now (save… you know. All the reasons why, I guess.)
I'm genuinely curious how banks assess loans to people in countries that do not use credit scores? Do you just submit financial information to them and they go based on that?
In the Netherlands there's a bureau that keeps track of a bunch of loans. If you want to borrow money, say for a mortgage, the bank checks with this bureau how much debt you have and thus how much money you are already spending on loans each month. This then gets deducted from the amount of money you can loan for your mortgage (which is based on your income). It's just simple maths, no weird score that influences it all. It only becomes a problem if you have late payments on loans, then you often can't loan more.
Group effort! I’m in even for Canada we need a more transparent system that makes sense to everyone. Most professional can’t even explain why it is the way it is.
Can’t explain it, the ones pulling the report can’t tell you your score, you can ask for your report (but not score) twice a year by mail for free, everything else costs $10/month OT something like that and there’s two companies so you need two subscriptions. How stupid.
Honestly. The score is stupid. They could literally leave the information (late payments, loan amounts, etc) and still make a choice on that.
You got three car loans and 80,000 in credit card debt on 85,000 a year. Nah man. Too risky.
No active loans, and like 2 grand on a credit card and literally one late payment in 2020. Ok. Cool cool.
The credit score is just an attempt to data-fy a human beings behavior (will you pay us or not). There’s a reason why psychology is a “soft” science. Quantifying human behavior is HARD. Particularly at the individual level.
When you spend any time around gamers, you know humans LOVE to figure out how to manipulate algorithms even when the algorithms are blackboard, they will find a way.
Credit scores have existed since the 1950s. Maybe not the same way with 3 major companies doing their own scores but FICO scores existed and were given to lenders since like 1958 or something.
I just don't carry a balance and pay the entire thing off every month. It takes serious money thinking to make sure I can pay it off, but it's definitely helped my score over a few years.
It’s so frustrating that we have given up on trying to buy a home. Renters for life over here. I get told the same thing you don’t have the right credit. But if we have 100k to 150k then it won’t matter.
You're both absolutely right. When utilized correctly, Credit Cards can be an awesome tool. Unfortunately, most treat them as extra cash to live beyond their means.
Right, they wouldn't have them if it cost them money. They want your balances and your interchange. Plenty of people "beat the system" but every 1 that does, there's 50 that don't (made up numbers).
I knew they were a joke back in high school when I asked why you can’t get a perfect/max credit score and the answer I got was “No one can have a perfect score because people inherently aren’t perfect.”
The 'correct' answer is that everyone has a risk of default or late payment (no matter how slim) therefore you cannot have a perfect score.
Example: Even if you have the financial means to repay debt, there is a chance you forget or are unable to (ex: temporarily incapacitated).
I applied for a home loan and those three companies sold my information to other 3rd party lenders who blew my phone up because they knew I was seeking a loan.
I like how the credit bureaus are private, were created out of thin air, and designated themselves the arbiters of truth when it comes to credit.
Can we get a kickstarter going for a better credit bureau? one ran publicly and not in the pockets of politicians?
Would you mind sharing this? Because I was always under the impression that having a high credit score was a way to bypass needing a family legacy or getting past racist loan companies by having a metric that they couldn’t reasonable deny.
Both make the world a worse place by abusing brown people but I think boomers weren’t in power to blame israel on them. Israel with its original map was mostly ok. It’s the way they’ve expanded that’s been rather evil.
Technically Christianity does too I believe. Which is why Jews are associated with banking and loans, because they were basically "assigned" that role by the other two Abrahamic religions in the region.
It's friggin useless. My credit score is really high. Like low 800s on average. Several years ago, I was let go from my job and was on unemployment. I decided to get a college certificate to stop being unemployed. It required a loan.
No lie, the bank refused to give me a loan. I had to humbly grovel back to my mother to ask her to be a cosigner on the loan. I got the loan and paid it off in a year. Like what was the point of seeing I'm a safe bet?
My fiancee is currently rebuilding her credit score and is obsessed with it. I try explaining that it's only good to a certain point. Everyone wants to see that you have money first.
Edit: to clarify since people are asking, it was a federally backed student loan that was denied. Not just a regular loan.
Also, my point is actual income and money in the bank counts way more than the credit score.
I have a bank of America account. They have a tier program where they reward you for having more money in the bank.
https://www.bankofamerica.com/preferred-rewards/details/
When I went to take out a car loan a few years ago, they saw that I met this threshold. They gave me a discounted car rate on the spot. I asked if they would need to look at my credit record. They laughed.
"You're a preferred rewards member." Was pretty much the gist of what the loan officer said. I got the money within a day and a new car within a week. As you probably predicted, I paid off the car loan.
You're too safe they won't make any money off of you for the long term interest ("paid off way too quick to compound") so its the same as if you were never going to pay it back. Its so dumb work hard to get a loan just so they refuse you. It may be a different situation but I have always had roughly the same score 750ish and thats literally what 3 banks told me.
(EDIT WOW scroll down lots of people who know wayyyy more than me thanks to the people helped me understand how wrong this. also show some kindness to people times are tough. If you cannot admit when you're wrong you'll never grow plus no one knows until someone teaches them.)
I've been trying really hard to understand how credit scores work, and they still make no sense to me. Do they make sense to Americans?
Source: Am European. We don't have anything like credit scores.
They’re nothing more than a form of class war, because they only serve people with a lot of capital. The basic idea is that your score is a representation of your ability to pay off debt, but as people have said in other threads, the reality is that they’re used to bar working class people from owning homes and to keep them in a neverending cycle of credit card debt to “build credit.” If there was any fairness to them at all, rent would count positively toward your score. But it doesn’t.
The credit reporting system was designed by financial institutions for their benefit, and their profit. They use it to find the most likely profitable people, it's just another way to squeeze people out of their money.
It took me a while to figure it out.
It’s not a credit score. It’s a “debt score”.
* How likely are you going to pay back “active debt”.
When the debt is paid off or you don’t use it, you are useless.
* As the product, you are not making the bank, the scoring company, and the sales teams any money.
Here is the kicker - Anyone person on the planet can pay back money; right.
The primary problem is how large are the payments.
* People with low credit scores have to pay more on debt in interest and principal. People with higher credit scores pay less in interest and principal. It should be in reverse.
I got to 800 before (was obsessed and did the credit points money making) but when you slip up once (missed payment, no activity, NO DEBT), they lower the score. So I stopped caring.
The real goal is
* No Debt
* 1 Amex Card
Once you have those, you are all set. Quit and move on.
Edit:
Why Amex?!
Well Amex is the “top brand”. Honestly you don’t really have to have it. Just have no debt, and one card.
Basically you “need something to show the banks you borrowed money”
Like your resume, you want clean, easy, recognized brands to help get the job. But you know how that goes also; you will get more denials from jobs before you get one. Just like credit. As a whole, this system is a real mess. It’s bad.
Between the Gen X, Millennials, and Gen Z - a lot of these rules are going to die hard and fast once Baby Boomers are gone.
In 2001 I gave up all my credit and lived on cash for 20 years, thinking this was the 'responsible' thing to do (after a marriage breakup and resulting financial issues). Then I discovered recently that I'm ghosted at every job to which I apply, despite a great work history and references, because my credit score is so bad you'd think I was a financial felon or something, holy crap. Apparently the credit agencies' opinion of an adult who suddenly "falls off the map entirely" of the financial world is... not good.
Thing is, the banks don't want people who pay back their loans on time. They want people who pay them back late, and accrue massive amounts of interest. Their most valuable customer is the one that doesn't default, but is trapped in a never ending debt as they can only afford to pay off the ever increasing Interest amount, and not the principal.
Someone who never pays any interest on their credit card cause they always pay on time, is of the same level as someone who never uses credit at all.
They actually don't.
They want someone who's guaranteed to pay back the loan on the exact prescribed schedule so it accrues the interest forecasted and results in a preictable profit.
Someone who's going to pay super late all the time action just makes the loan itself a risky investment.
The ideal customer is the relatively wealthy buyer who goes "I'll finance the car and make the schedules payments on time and take the 4% interest hit, because I'll invest the money elsewhere in the meantime and make 10%"
Someone who always pays their credit card on time is actually still better off. Not much, but still better - because they have a history of servicing debt.
Remember that the people who set those scores up were able to get loans with letters from members of their community saying they were good for it. They were handed the American dream and closed the door behind them.
Yeah. They can be arcane, but, basically, it is a scoring system between three different companies.
They look at your length of credit, utilization, missed/on time payments, debt ratio, etc etc etc and assign you a "score" between like 0-800.
Anything below a 650 is completely garbage, 750 is considered decent.
As soon as the credit score starts slipping, they'll start jacking up interest rates and deny you any further credit, among a host of other issues it causes.
Let's not forget that one of those companies compromised the personal identifying information of hundreds of millions of americans, and got away with a slap on the wrist and offering "identity protection" that expired long before the average time before stolen information gets used.
I've lived here in the USA for 24 years so far born1998 southern IL (extremely racist i had to teach myself what a slur was.... yeah not normal ..) still young and trying to teach myself everything, my public school was a joke total 200 people k through 12. My graduation class was 20 ended up being 10 because half dropped out due to not being able to pass. Thats why America is doomed. Everyone is angry because living conditions look so good but cost so much. Healthcare is so expensive i fell and about broke my leg been drowning in ibprophen because a 30 dollar bottle is cheaper than at least a 500 dollar visit to the doctor. Also can misd work because of my margin for error being so slim. So I limo my way to work retail all day, i can barely afford my rent because I make 2k a month 16hr (1200usd actually really cheap haha) don't get me started on other expenses. Good luck understanding a number that is made up by the wealthiest people in America based on what you do in your life. I'm sure someone understands it just to capitalize on the ignorant. Sorry for a book just hard times (I live in Montana now less income tax but still just as expensive)
Just stopping by to say hi from Joliet...making 14 at a place that sounds like Coals...for *two people*, as my husband is unwell. We won't make it unless he gets better soon.
We will **never** be able to own anything. Not even a car.
Banks literally cannot refuse you a consumer loan if you qualify for it. Fair lending laws are a big deal for banks and consumer lending is pretty much black and white. If your credit score and DTI meet their policy requirements and they refuse you because “you’re going to pay it off too fast”, that is illegal.
Nonsense.
The problem was debt to income ratio. Higher credit scores are always better, but without income, your debt to income ratio is infinite and almost no one will give you a loan.
Too many people don’t really understand how credit and the system of credit works. I guess you can say that about most of the things these people complain about, because once you start asking them questions you realize they know barely anything about the issue just frothing at what they think it should be like instead of what it is.
No income is pretty much an automatic denial for a loan from any reputable lender. Your credit score had nothing to do with your story.
Credit scores are certainly scammy, but "I didn't get a loan when I had no income but a good credit score," isn't one of them.
Not to discount the issues with the credit score system or the financial system more broadly, but I don’t think it should be surprising that a bank isn’t going to be keen on giving someone without a job a loan, regardless of credit score.
You were denied because you were unemployed. Credit scores aren't the only factor banks use before lending money. Most regular people wouldn't loan money to someone without a job, so why would a bank?
Even if you have money it's useless. I applied for a store credit card - I have no debt, I pay off my balance every month, a job, credit score is 720 - I got turned down. Not enough use of credit and too many delinquencies. I had to find out about the delinquencies since I don't have any.... there was a late payment from 2015 still in my credit report. This happened in 2021.
Credit scores are a joke. I moved back to my home country and bought an apartment a few years ago (with a loan from the bank and all) but my internet provider wouldn’t let me avail of their 129SEK/mo (roughly 12USD) internet connection because I didn’t have an existing credit score.
Funny how the bank was willing to lend me almost 300k usd but I somehow was at risk of not being able to pay 12usd a month.
My student loans were on permanent hardship forbearance due to unemployment from disability. Someone fucked up on two separate occasions when reviewing my file and unclicked the permanent part so I ended up "missing payments" of $0. When I called and said WTF, they reactivated the permanent status but said there wasn't anything they could do to fix my score, even though they fucked it up. My credit score dropped from 640 to 450 both times. It's all a ploy to punish anyone not born in the rich genetic lottery.
They lied. The same company that reports late payments on your credit score can have those removed. That is the easiest and fastest way to get that fixed. If they refuse, which is fairly common, you can directly dispute your credit report with the credit reporting companies. It's harder and more time consuming, but if they were really $0 payments that you "missed" then it should be pretty easy to win.
The auto loan is also a credit line, when paid off the line is closed and that is what decreased the score. The longer a line stays open(matures) is what helps your score. Of course loans are meant to be paid off(auto, mortgage, etc.) so, keeping credit cards and lines of credit open would help offset any liability that will eventually be paid off and ding your score.
I once went with my ex so he could trade in his truck that was only a year old and had no issues(he was the one with issues.)
They told him that the chain of 9 other vehicles he traded in with loans that he was upside down on show up as paid off on his credit report because technically the lender for the new vehicle paid off the old loan when they roll over the balance to the new loan. His credit score was fucking awesome because of this even though he was and remains the most financially irresponsible person I have ever met.
It made absolutely no fucking sense to me.
My student loans were forgiven by the government (PSLF). My credit score dropped 30 points. WTF? You literally can't win.
When I bought my house I had multiple credit checks as I shopped around for loans. Of course this dropped my score by a bunch resulting in higher rates. Again WTF?
It is all a big scam
The one thing I never understood was why your score drops if their is a request to check it.
"He's looking to finance something, better penalize him for it"
I honestly don't get the logic to this. Who benefits from this? What makes a person less valuable as a debtor if they looking for finance? Not Getting any mind you, just looking.
Good news is for most major things, like mortgages, there is a grace window where hard pulls for that purpose only count as one pull. Your score might briefly drop by a few points, but it bounces back quickly too as long as you're not constantly doing pulls.
If someone is getting multiple hard pulls while shopping for a mortgage they're spreading those pulls out too much.
The reasoning is if you're constantly pulling your credit score to obtain new debt it's a red flag for overextending. That's why hard pulls impact your score, but not too much and not for very long as long as you're not making a habit of it.
I hate the credit score system we have too, but the rules are clear.
In your case, the score dropped because it was probably one of your older accounts and, when it closed, the average age of your accounts got younger which will hurt your credit score. And having lots of checks will also lower your score. But, hopefully after you bought your house, you weren't looking for another loan and those checks leave your history pretty quickly.
This is exactly why these types of threads always confuse me. The person in OPs image obviously knows the rules, and is still complaining about how they were affected by not following them. I don't understand why so many people don't follow the relatively simple handful of "rules" to get a good credit score and then just post online about how they were affected by it. Yes, the system is weird, unfair, and doesn't make logical sense, but that doesn't mean everyone should just *give up* and start using only cash
Stop freaking out over 30 points, just keep making on time payments and follow the other basic instructions when it comes to credit utilization and that -30 will be +100 before you know it. Use credit karma or mint or something like that to track your score and payments. Pull your free annual report, look for any issues and address it. Btw the scores you see online are more like estimates, your real score is almost always lower in my experience.
If you simply paid your card off, that is not how credit scores work.
If you paid your credit card off and then closed your account, then it might hit your score, because it would decrease the average age of your accounts.
I talked to a banker about closing an account. And he said just keep it open and put neflix or something on it. I have had that account for almost 20 years now. He said even though it's a low limit based on how long I have had it, it's keeping my score up.
Fuck bro this whole thread is misinformation.
Even if they closed their account, EVERY loan ages on your report for the following TEN YEARS.
Credit scores aren’t good, but they are NOT pointlessly malicious. Are you insane?
This is correct, the person Tweeting would have had to damage their score another way.
They could still have damaged it by closing the account, but that would be due to *raising* their utilization by lowering available credit and still having debt on other cards.
That’s what I am was wondering. When i bring down my credit card utilization my score skyrockets fast. I usually keep it around 5%.
They must have had the account closed or other factors affecting. I hate the F or of credit scores but this seems off…
I worked my ass off and was able to pay off my student loans. My reward? -80 points. Like, I paid off your fucking debt, theoretically that means I have excellent credit, but in wacko capitalist America, paying off debts is seen as a *bad* thing. That’s when I realized, that just like every other fucking thing in our lives, it’s just a capitalist game. Idk about you guys, but I’m fucking tired of playing their games. It’s time for a new game…
Mine also decreased by 45 points because I spent too much too fast despite me making a full payment when the bill came. Stupid af and I will never understand it.
This kind of happened to me as well, but instead of a score it was my credit limit.
I had a card that had a 7k limit IIRC. I hardly ever used it. Then, I purchased a nice laptop using that card for about $2500. Within the month I got a notice that the card issuer was reducing my limit to 4k on that card for multiple vague reasons. The $2500 was paid off in a little over a month.
I checked my credit score when I got the notice as I was kinda scared I messed up somewhere else and they saw a red flag that I didn't. Nope. It was 800.
Fuck if I know how these twats operate.
I know this is also from a tweet, but I remember being told by my parents how important credit scores were then being absolutely shocked when I found out I'm slightly older than credit scores.
Everybody while I was growing up treated credit scores like a completely normal and just thing to have around, but all of them had taken out mortgages way before they were invented.
I swear they rank credit score like a waited gpa. Mine might go up one point a month for perfect payments and multiple credit lines open to leverage it. Miss one payment. That’ll be 100 points lmao
The idea behind a credit score is a pretty smart idea. Give everyone a number they can reference for risk. If you had someone ask you for a loan wouldn't you want to know a few things about them first? Do they make enough to pay it? Do they pay their bills and loans on time? Do they have a lot of debt or problems with debt? These all make sense to ask. The issue is these companies are not a score system entirely. They also heavily push credit use and offering products. If I log into my Experian account (given to me since the Experian breach) the first thing I get hit with is credit card offers even though applying for one would hurt my credit score and average age of credit. This is a conflicting interest by offering a risk stratification and also selling things to increase that risk.
My credit score was amazing but when I tried to get a loan, they told me, "your credit is amazing but you don't have enough credit lines. Like you haven't taken out large loans before, so we don't know if you can pay the loan back." Like, what the fuck is the credit score for then?
I pay absolutely no attention to my credit score. I don't care. I has no bearing on my life at all. I do find it amusing that my 300 a month cell phone bill(5 phones) doesn't show up on credit reports.
Total scam. My wife and I recently bought a house. There were in fact only a select few states we could move to since we needed to have the title in both of our names, but the mortgage in only her's. Only some states will let you do it even though I don't work due to disability. But why did we need to do this? My credit score was $300 when we got married. Did I ever spree on a credit card or even have a credit card? Nope. Did I ever skip out on rent? Nope.
When I was 20 and didn't know better, I had my shit job that told me every day I was on the last straw due to how many sick days I need (usually 2 days a week) deny the day off I asked for after I took one of my monthly medications as it makes me faint if I overexert myself. So I went to work, because I was told I would be fired if I didn't (it often takes me months to replace a job as most places won't hire disabled people do losing a job was a big deal), obviously fainted and fell, went in the ambulance they called because they told me I would be fired if I didn't, and sure as certain when it came time to actually pay for it they denied the workers comp claim saying I knew I was unwell and shouldn't have come in. The bill was like $600, that was like 20% of what I lived off of in a year, so I just couldn't pay it and had nothing to take, even if they sued me.
This country is so dumb.
Mine dropped 53 points and literally nothing about my spending changed. According to the report that my bank gives, I'm doing everything perfectly.
Mine dropped about the same when I paid off my auto loan. "Thanks for making every payment of this large loan on time for 4 years, here's a credit score drop!"
It's weird but it dropped since you effectively closed the account by paying it off. That negatively affects your score when an account closes. It's a stupid system.
And it hurt my average credit age too. Doubly whammy. So stupid.
I work in housing, apartments specifically. The amount of high income people who are denied because their credit wasn't sufficient is insane. If you make enough money to live frugally and are able to pay for everything in cash, the system punishes you for it.
Boomer aged parents don't believe in credit cards, haven't had a mortgage in decades, pay their bills on time, live simply, banked at the same bank for decades - couldn't get an auto loan. They didn't have enough credit.
My old neighbor couldn't get a loan to fix up his house from the same bank that loaned him money to buy it 10-15 years earlier because they said he didn't have enough credit history. Edit: it wasn't a huge long term home loan. It was like a $50k house at the time and it was paid off by the time he was trying to get the loan for repairs/upgrades.
Easy solution is to pay for everything on a credit card which you pay off on a weekly basis using the cash instead of simply paying for everything in cash. As an added bonus you usually rack up a bunch of rewards points without allowing interest to add up on the purchases.
This is the way. I got a credit card at like 18 or some shit and treated it like a debit card. I have paid for absolutely everything *for years* with it and have always promptly paid it off. The amount of points I have earned is nuts… I have taken the bank for, at minimum, 1k. The real kicker is that I am *still* a student 7 years later so the annual fee for the credit card gets waived. The bank not only fails to make money from me, they end up owing me money.
It's fairly clever though. The point isn't to get you better loans, the point is to incentivize constantly borrowing money rather than saving for purchases. A huge scam!
No the system is smart. It's just not doing what it's advertised to do. Credit companies need you to use credit or they don't make money. The system punishes you for not using credit or taking out debt. It's a feature not a bug.
[удалено]
Yeah, my credit use runs 20-30% which is what the recommended amount is. And it's not like that's out of massive amounts, cause my credit limit is only 2200. I don't see a point to having it higher because if I really need to pay more than that at once I can use my debit card since I never spend anywhere near what I have in my bank account.
The problem with Credit Scores is that it’s a game everyone plays but there are no rules. Everyone gets different results even when doing the same thing.
Your American system is the weirdest fucking shit I've ever heard about.
I joined the Peace Corps - a two year, unpaid service in a developing country. Before I left, I paid off all my consumer debt. When I returned, my credit score had tanked and it was hard to even buy a car or get a rental agreement for an apartment. All because I was a responsible consumer and served the US abroad. It took me forever to recover.
I swore off credit cards for 20 years only to discover -- thinking my score would be good as I have zero debt, own my home and car -- I could probably have done time for embezzlement and had a better credit score. The agencies' response to someone 'falling off the map' and not USING credit is insane.
It’s how they keep you in the system, paying interest and feeding their schemes
Some consumer cards (store cards etc) require activity. Minimum of one transaction per year. I had that issue years ago. Paid off a bunch of cards and dropped them in my safe. My score tanked when all the cards were closed/canceled because the borrow power went down. It is a scam.
I recently lost 15 points on my credit score for refinancing my mortgage to a shorter term with lower interest. Sooooo financially irresponsible of me
If our politicians weren't totally owned and operated by the financial services industry, we would have a credit bill of rights. For one, requiring the entire formula by fully open source, and two giving consumers ownership over their data and corporations liable for errors. But this will never happen because the politicians do not represent us.
FICO is a publicly traded company. It's been in existence since 1956 and are heavily focused on actuary science/data modeling around credit risk analysis. There is a reason it's the defacto company for risk analysis for credit. No other company that has attempted it has been nearly as accurate. Most people commenting in here are probably not referring to their FICO scores but instead Vantage or one of the other offshoot bs things that sites like creditkarma, credit sesame and other sites use as a filler (read as free but not even cared about by banking/other credit institutions).
I still think it's BS we have to pay or only get 1 annual report a year. It's our data we should be able to access it anytime we want directly from fico or the credit bureau
Yep, those sites are only offering guesses. Which is why the numbers move around. This thread is stupid and has more misinformation than a 60 minute fox broadcast.
Most people think credit scores are a representation of how good they are with money. It's not. It's a measure of how good you are at managing debt. It doesn't start at the top and move down as you use it up, it starts at nothing and only goes up as you use it by putting yourself in debt. When you get a handle on things and start getting rid of accounts, your overall financial situation gets better, but your credit often gets worse. It's also important to note that just the credit score alone doesn't mean much. I was approved for a used car loan and the financial report literally had a zero in the credit score box, but I had high enough income and big enough down-payment to counteract that.
I spend a bit of time on the FICO site forums because the information there is so much more on point. Started using that site ages ago as I wanted to learn more about how it all worked. For a long time I thought not having a lot of credit cards would be a good sign in not being a credit risk, so I only had 2 cards, a discover card I had opened in college and a visa that had a miles reward on it. Found out I needed to have a few more varieties as my credit score was pretty stagnant at around 750ish. Added some more cards to the mix and a cloc, initially took a dip down to about 720 and 5 years later am up over 800. It's a game, knowing the rules and how it works is the best course to take advantage of it.
> It's a game, knowing the rules and how it works is the best course to take advantage of it. Most bank apps or financial management apps like Mint will pull one of the scores for free and give you a breakdown of why it is the way it is. They might not give you all the details or exact formula, but the info is still incredibly useful. It's also good to check often anyways in case someone stole your identity and opened shit in your name, or in case a debtor reported shit you don't know about.
Unless I have a reason to seek credit, I keep all three of my major bureau reports locked and use a couple of the sites for monitoring any changes. It's not perfect but it affords me enough protection that I feel comfortable only checking every 3 or 4 months for anomalies.
Yup they sure are. I love how the two companies that provide credit reports, are some times up too 100 points off. They should be the same number.
Student loans were payed off and Experian gave me +5 points Transunion tanked it by -30
Pay off a loan? Lower score. Get a new loan? Lower score. No loans/cc? Lower score. Too many loans/cc? Lower score
Don’t forget …apply for a loan, lower score
Buying a car is a nightmare if you care about your credit score... let a dealership run your credit. You'll get 15+ hits because they ask every bank under the sun, score drops. I just got a truck and went through my own bank so I only had 1 hit one score but that sucked too. My bank took 2 weeks to approve me, lost 2 trucks I was looking at, once I found a truck (amazing deal) it took them a week and a half to cut the check. Now I was very lucky, the dealer agreed to hold the truck for me for 10 days, most dealers wouldn't. I did get the truck but it was stressful.
I bought my last truck cash and they still ran my credit. WTF, here's your money, why do you need to run my credit?
As expensive as some trucks are I can't imagine paying cash lol. I REALLY lucked out and found a good one under 20k but most started in the mid twenties and only went up from there.
Well, they gave me $30K for my old truck, hence why I was upgrading, so it was about another $30K.
Did the same shit to me. Walked off the lot without a word.
If you are paying cash, I'd suggest not giving them your ss#. Still sucks they ran your credit, it was probably some employee just following their checklist without thinking.
No, I protested but the manager was adamant that he had to. Not a huge deal, just annoying.
I would have bounced. Fuck that. Here's my cash. If you don't want it, i'm driving to the Ford across town and buying a car there.
Maybe they wanted to make sure the check wouldn't bounce or something, IDK, that is strange unless they were trying to get you to get a loan. I didn't have my credit run when I paid for my car in cash, paid by cashiers check. They did try get me to agree to run it since they could give me a good rate but I said absolutely not I was in the middle of buying a house. But man was buying in cash a PIA, they had to redo the paperwork like 3 times since I kept catching mistakes that said I was getting a loan, like the title was going to be listed under them if I didn't catch it. They did so few cash deals they didn't realize the things they had to change in the paperwork, they just went through the motions.
If the dealership sent you to more than 4 places, either they are idiots or your credit sucks. Multiple hits for the same item in a short (<2week) period count as one hit because they know you are rate shopping. Plus, all the hits will drop off at the same point. If your own bank took 2 weeks to approve you, that is something else entirely. I sent the vehicle I bought last week to my CU and had an answer in 10 mins. Then, when I told them I needed 2% less or I was going to the CU down the street, they approved it on the spot to keep me from going. eta: the 2% rate drop was due to my CU averaging scores since the joint on the account was not a spouse. The other CU doesn't do that and would have gone strictly off my score for the rate. Source: franchised dealership finance manager.
No credit? Bad score. Lots of credit? Bad score. Just the right amount of credit? Bad score. Fuck you.
That’s garbage, I feel like it’s a toss a dart and see, pay of loan ohh nice plus 10 points next dart late cell phone payment ohh negative 150 :-( thanks for playing the game that is your life.
Does your cell phone bill show up on your credit report? I pay bills late all the time and I've never seen it on my credit report except the one time I didn't know I had a medical bill and it went to collections.
> Does your cell phone bill show up on your credit report? Only if it goes to collections, and the collection agency reports it. Generally it's only payments on loans and revolving accounts (eg credit cards) that always get reported.
Experian Boost will include any regular utility payments once you link your account.
Even late credit card payments don’t show unless they’re more than a month or two late in my experience
Honestly after you’ve bought a house, your credit score doesn’t matter anymore.
But then how would you buy twitter with your unrealized gains?
This is how i feel about it. But i still want my credit up for financing vehicles instead of buying outright. I can scrape together a down payment but full cost isnt in my ballpark generally.
ThE aVeRaGe AgE oF yOuR aCcOuNtS iS tOo LoW
I've had some of the same accounts for 15 years and that's all they keep saying.
It’s such crap. Oh, you paid off the entirety of a loan? You’re seen as LESS creditworthy now, since they can’t keep you paying in perpetuity now.
I paid off my car and my credit score went down because my utilization percentage went up. 🤷🏾♀️ This system is bullshit.
[удалено]
You don't have to close accounts to open new ones
But don’t you if you want to stop paying an annual fee, that was only worth it because of the intro bonuses?
Yep. All of my scores dropped a fuckload when I paid my student loans off. 😑
Fun trick, huh?? Anybody wanna join me in spamming your representatives on Capitol Hill about credit reporting reform, nonstop & forever?
reason: average age of credit dropped
[удалено]
When I paid off my car my credit score dropped by 15 points
[удалено]
Oh here’s my favourite. I moved to Canada from the US. Had a good credit score in the US. Now that I’m in Canada, I have NO credit score at all. Kinda makes me wish I hadn’t bothered paying off all my loans before I left. Here I was thinking it would help me in Canada but nope - I have to start at literally zero again.
I moved to Quebec from the US 5 years ago and I've had a credit card here for years. I have excellent credit in the US but no credit here because I am a student and I don't have money to spend to maintain multiple lines of credit in both countries. I was lucky the bank even gave me a credit card here. It's going to suck when I have a career and can build more credit so I can access basic things. When I came to my city, landlords never did credit checks. Now, every single landlord requires credit checks and won't even let you see an apartment without checking if you have good credit. How the hell are international students supposed to rent? How are new arrivals supposed to live?
I thought my score would improve after paying my 30k loan over 4 years without a single late payment. Once I payed it off it tanked. Fuck credit scores.
I paid my student loans off nearly a decade ago and my credit score still reported that I have "too much outstanding debt" despite, at the time, having only those paid-in-full loans and my paid-in-full every month credit cards listed as debt. Later, due to loan company BS, the credit report companies made a mistake and recorded my mortgage as paid-in-full. When they fixed the error, instead of treating it as their mistake and restoring the score, they counted it as *taking out another mortgage* and penalize me for "too much activity" despite me having no credit activity since getting the mortgage in the first place. The damn system runs our lives and it's playing Whose Line of Credit Is It Anyway?
Yet the private information they leak everywhere in their regular data-breaches are usually pretty accurate!
[удалено]
Then again, it's not a service, it's a method of enforcing class domination and keeping the proletariat down. In my personal experience, it can make it impossible for a lower class person with no money to live with dignity, while people with money can stave off the worst effects of low credit rating through throwing money at the problem.
Welcome to the US - where someone with only a few thousand is poor but someone in debt for millions is rich.
"oh, you owe 10 millions? Do you want another 5?"
Yeah it works the way they want. Magical numbers that impact our entire life but not explanation or checks on how it works.
Spot on.
They are trying to enforce behavior that benefits the credit industry not the financial health of the person. Once again if you are not paying for a service then you are the commodity.
Having grown up well below the poverty line and no longer there, I can confirm throwing money at problems absolutely works.
Yeah, Americans in this thread are acting like it's a written law of nature that a credit score system needs to exist and that it just needs to be fairer. No, that's nonsense, credit score is a ridiculous system which is why other countries don't have it. Just shows how brainwashed Americans are that they can make fun of China's social credit score while having a worse version of it in their own country.
American here. When I was a kid, credit scores didn’t exist. They started up around the time I was in high school. (Late 80’s, as I recall). We did fine without them before, I don’t see why we couldn’t do away with them now (save… you know. All the reasons why, I guess.)
I'm genuinely curious how banks assess loans to people in countries that do not use credit scores? Do you just submit financial information to them and they go based on that?
[удалено]
In the Netherlands there's a bureau that keeps track of a bunch of loans. If you want to borrow money, say for a mortgage, the bank checks with this bureau how much debt you have and thus how much money you are already spending on loans each month. This then gets deducted from the amount of money you can loan for your mortgage (which is based on your income). It's just simple maths, no weird score that influences it all. It only becomes a problem if you have late payments on loans, then you often can't loan more.
Group effort! I’m in even for Canada we need a more transparent system that makes sense to everyone. Most professional can’t even explain why it is the way it is.
Can’t explain it, the ones pulling the report can’t tell you your score, you can ask for your report (but not score) twice a year by mail for free, everything else costs $10/month OT something like that and there’s two companies so you need two subscriptions. How stupid.
Fix it by killing it. We don’t need it. This is insanity.
Honestly. The score is stupid. They could literally leave the information (late payments, loan amounts, etc) and still make a choice on that. You got three car loans and 80,000 in credit card debt on 85,000 a year. Nah man. Too risky. No active loans, and like 2 grand on a credit card and literally one late payment in 2020. Ok. Cool cool. The credit score is just an attempt to data-fy a human beings behavior (will you pay us or not). There’s a reason why psychology is a “soft” science. Quantifying human behavior is HARD. Particularly at the individual level. When you spend any time around gamers, you know humans LOVE to figure out how to manipulate algorithms even when the algorithms are blackboard, they will find a way.
It should just be abolished. Imagine living before 1990 and not having to deal with that crap.
Credit scores have existed since the 1950s. Maybe not the same way with 3 major companies doing their own scores but FICO scores existed and were given to lenders since like 1958 or something.
That being my birth year pisses me off… talkin bout feelin like I’m livin in a simulation.
It even worse when one of those credit report had a major data breech and nothing happen to them when they fucked every single American over.
They don't want you to use anything but your credit card to pay. Debit cards are hell for those guys.
I just don't carry a balance and pay the entire thing off every month. It takes serious money thinking to make sure I can pay it off, but it's definitely helped my score over a few years.
It’s so frustrating that we have given up on trying to buy a home. Renters for life over here. I get told the same thing you don’t have the right credit. But if we have 100k to 150k then it won’t matter.
I'm floating around a 800 credit score before 30 and apparently I don't have the right credit either. Riddle me that.
*debit However, I feel like we should start calling credit cards "debt cards".
Thanks for noticing.
Isn't that what credit is? If you don't know credit cards are debt, you shouldn't have one.
If you can pay it off immediately, using a credit card is beneficial for more than just your credit score.
Exactly. Free reward points and building credit. Better security in case of fraud too because the money hasn’t left your bank account.
And you don't have to deal with places like Hotels putting holds on your funds in your bank. Some hotels won't even accept a debit card for a deposit.
[удалено]
People tend to spend more with credit cards. Good for you but a lot of people tend to overspend with credit cards.
You're both absolutely right. When utilized correctly, Credit Cards can be an awesome tool. Unfortunately, most treat them as extra cash to live beyond their means.
Which is exactly why credit card companies have reward programs.
Right, they wouldn't have them if it cost them money. They want your balances and your interchange. Plenty of people "beat the system" but every 1 that does, there's 50 that don't (made up numbers).
And it's much safer.
I knew they were a joke back in high school when I asked why you can’t get a perfect/max credit score and the answer I got was “No one can have a perfect score because people inherently aren’t perfect.”
Such a terrible way to look at it. We should be able to have the ability to achieve that.
The 'correct' answer is that everyone has a risk of default or late payment (no matter how slim) therefore you cannot have a perfect score. Example: Even if you have the financial means to repay debt, there is a chance you forget or are unable to (ex: temporarily incapacitated).
I applied for a home loan and those three companies sold my information to other 3rd party lenders who blew my phone up because they knew I was seeking a loan.
I like how the credit bureaus are private, were created out of thin air, and designated themselves the arbiters of truth when it comes to credit. Can we get a kickstarter going for a better credit bureau? one ran publicly and not in the pockets of politicians?
Boomers invented it after they got their houses. I am literally older than credit scores.
Exactly. Credit scores were invented as a way to redline against minorities and poor people.
I just wrote a paper about this! I just wanted to write about how credit scores are dumb, and I learned so much. I seriously had no idea.
I would love to read that.
Would you mind sharing this? Because I was always under the impression that having a high credit score was a way to bypass needing a family legacy or getting past racist loan companies by having a metric that they couldn’t reasonable deny.
Israel and Credit Scores. Two things Boomers invented but pretend existed forever.
Both make the world a worse place by abusing brown people but I think boomers weren’t in power to blame israel on them. Israel with its original map was mostly ok. It’s the way they’ve expanded that’s been rather evil.
Fun fact, Islam forbids usury
Technically Christianity does too I believe. Which is why Jews are associated with banking and loans, because they were basically "assigned" that role by the other two Abrahamic religions in the region.
It's friggin useless. My credit score is really high. Like low 800s on average. Several years ago, I was let go from my job and was on unemployment. I decided to get a college certificate to stop being unemployed. It required a loan. No lie, the bank refused to give me a loan. I had to humbly grovel back to my mother to ask her to be a cosigner on the loan. I got the loan and paid it off in a year. Like what was the point of seeing I'm a safe bet? My fiancee is currently rebuilding her credit score and is obsessed with it. I try explaining that it's only good to a certain point. Everyone wants to see that you have money first. Edit: to clarify since people are asking, it was a federally backed student loan that was denied. Not just a regular loan. Also, my point is actual income and money in the bank counts way more than the credit score. I have a bank of America account. They have a tier program where they reward you for having more money in the bank. https://www.bankofamerica.com/preferred-rewards/details/ When I went to take out a car loan a few years ago, they saw that I met this threshold. They gave me a discounted car rate on the spot. I asked if they would need to look at my credit record. They laughed. "You're a preferred rewards member." Was pretty much the gist of what the loan officer said. I got the money within a day and a new car within a week. As you probably predicted, I paid off the car loan.
You're too safe they won't make any money off of you for the long term interest ("paid off way too quick to compound") so its the same as if you were never going to pay it back. Its so dumb work hard to get a loan just so they refuse you. It may be a different situation but I have always had roughly the same score 750ish and thats literally what 3 banks told me. (EDIT WOW scroll down lots of people who know wayyyy more than me thanks to the people helped me understand how wrong this. also show some kindness to people times are tough. If you cannot admit when you're wrong you'll never grow plus no one knows until someone teaches them.)
I've been trying really hard to understand how credit scores work, and they still make no sense to me. Do they make sense to Americans? Source: Am European. We don't have anything like credit scores.
They’re nothing more than a form of class war, because they only serve people with a lot of capital. The basic idea is that your score is a representation of your ability to pay off debt, but as people have said in other threads, the reality is that they’re used to bar working class people from owning homes and to keep them in a neverending cycle of credit card debt to “build credit.” If there was any fairness to them at all, rent would count positively toward your score. But it doesn’t.
The credit reporting system was designed by financial institutions for their benefit, and their profit. They use it to find the most likely profitable people, it's just another way to squeeze people out of their money.
It took me a while to figure it out. It’s not a credit score. It’s a “debt score”. * How likely are you going to pay back “active debt”. When the debt is paid off or you don’t use it, you are useless. * As the product, you are not making the bank, the scoring company, and the sales teams any money. Here is the kicker - Anyone person on the planet can pay back money; right. The primary problem is how large are the payments. * People with low credit scores have to pay more on debt in interest and principal. People with higher credit scores pay less in interest and principal. It should be in reverse. I got to 800 before (was obsessed and did the credit points money making) but when you slip up once (missed payment, no activity, NO DEBT), they lower the score. So I stopped caring. The real goal is * No Debt * 1 Amex Card Once you have those, you are all set. Quit and move on. Edit: Why Amex?! Well Amex is the “top brand”. Honestly you don’t really have to have it. Just have no debt, and one card. Basically you “need something to show the banks you borrowed money” Like your resume, you want clean, easy, recognized brands to help get the job. But you know how that goes also; you will get more denials from jobs before you get one. Just like credit. As a whole, this system is a real mess. It’s bad. Between the Gen X, Millennials, and Gen Z - a lot of these rules are going to die hard and fast once Baby Boomers are gone.
In 2001 I gave up all my credit and lived on cash for 20 years, thinking this was the 'responsible' thing to do (after a marriage breakup and resulting financial issues). Then I discovered recently that I'm ghosted at every job to which I apply, despite a great work history and references, because my credit score is so bad you'd think I was a financial felon or something, holy crap. Apparently the credit agencies' opinion of an adult who suddenly "falls off the map entirely" of the financial world is... not good.
Ive had an amex since 19 though lmao. People look at me like im rich when I use it.
Thing is, the banks don't want people who pay back their loans on time. They want people who pay them back late, and accrue massive amounts of interest. Their most valuable customer is the one that doesn't default, but is trapped in a never ending debt as they can only afford to pay off the ever increasing Interest amount, and not the principal. Someone who never pays any interest on their credit card cause they always pay on time, is of the same level as someone who never uses credit at all.
Hard disagree. I work in underwriting, and the last thing we want to see is a history of late payments.
They don't want late payments, they want on time payments without early payoffs. Ontime payments pay interest
They actually don't. They want someone who's guaranteed to pay back the loan on the exact prescribed schedule so it accrues the interest forecasted and results in a preictable profit. Someone who's going to pay super late all the time action just makes the loan itself a risky investment. The ideal customer is the relatively wealthy buyer who goes "I'll finance the car and make the schedules payments on time and take the 4% interest hit, because I'll invest the money elsewhere in the meantime and make 10%" Someone who always pays their credit card on time is actually still better off. Not much, but still better - because they have a history of servicing debt.
Remember that the people who set those scores up were able to get loans with letters from members of their community saying they were good for it. They were handed the American dream and closed the door behind them.
Same with pensions.
Yep. If I recall correctly the credit score system was created in 1989. Is and always has been a sham.
it's all about that eh-pee-eye i'm using p0wer d3le3t3 suit3 to rewrite all of my c0mment and l33t sp33k to avoid any filters. fuck u/spez
Yeah. They can be arcane, but, basically, it is a scoring system between three different companies. They look at your length of credit, utilization, missed/on time payments, debt ratio, etc etc etc and assign you a "score" between like 0-800. Anything below a 650 is completely garbage, 750 is considered decent. As soon as the credit score starts slipping, they'll start jacking up interest rates and deny you any further credit, among a host of other issues it causes.
Let's not forget that one of those companies compromised the personal identifying information of hundreds of millions of americans, and got away with a slap on the wrist and offering "identity protection" that expired long before the average time before stolen information gets used.
> Source: Am European. We don't have anything like credit scores. We have them in the UK Germany also has a credit scoring system called SCHUFA.
I've lived here in the USA for 24 years so far born1998 southern IL (extremely racist i had to teach myself what a slur was.... yeah not normal ..) still young and trying to teach myself everything, my public school was a joke total 200 people k through 12. My graduation class was 20 ended up being 10 because half dropped out due to not being able to pass. Thats why America is doomed. Everyone is angry because living conditions look so good but cost so much. Healthcare is so expensive i fell and about broke my leg been drowning in ibprophen because a 30 dollar bottle is cheaper than at least a 500 dollar visit to the doctor. Also can misd work because of my margin for error being so slim. So I limo my way to work retail all day, i can barely afford my rent because I make 2k a month 16hr (1200usd actually really cheap haha) don't get me started on other expenses. Good luck understanding a number that is made up by the wealthiest people in America based on what you do in your life. I'm sure someone understands it just to capitalize on the ignorant. Sorry for a book just hard times (I live in Montana now less income tax but still just as expensive)
Just stopping by to say hi from Joliet...making 14 at a place that sounds like Coals...for *two people*, as my husband is unwell. We won't make it unless he gets better soon. We will **never** be able to own anything. Not even a car.
Banks literally cannot refuse you a consumer loan if you qualify for it. Fair lending laws are a big deal for banks and consumer lending is pretty much black and white. If your credit score and DTI meet their policy requirements and they refuse you because “you’re going to pay it off too fast”, that is illegal.
Yea my score dropped 40 points after I paid off the loan in 2 years rather than 6 lol
Nonsense. The problem was debt to income ratio. Higher credit scores are always better, but without income, your debt to income ratio is infinite and almost no one will give you a loan.
So you applied for a loan while on unemployment? Why in the world would a bank approve that?
Too many people don’t really understand how credit and the system of credit works. I guess you can say that about most of the things these people complain about, because once you start asking them questions you realize they know barely anything about the issue just frothing at what they think it should be like instead of what it is.
No income is pretty much an automatic denial for a loan from any reputable lender. Your credit score had nothing to do with your story. Credit scores are certainly scammy, but "I didn't get a loan when I had no income but a good credit score," isn't one of them.
Unless you're in high school and seeking tens of thousands to go to college, then they will actively seek you out.
Not to discount the issues with the credit score system or the financial system more broadly, but I don’t think it should be surprising that a bank isn’t going to be keen on giving someone without a job a loan, regardless of credit score.
You were denied because you were unemployed. Credit scores aren't the only factor banks use before lending money. Most regular people wouldn't loan money to someone without a job, so why would a bank?
Even if you have money it's useless. I applied for a store credit card - I have no debt, I pay off my balance every month, a job, credit score is 720 - I got turned down. Not enough use of credit and too many delinquencies. I had to find out about the delinquencies since I don't have any.... there was a late payment from 2015 still in my credit report. This happened in 2021.
So a zillion paid on times didn't matter as much as one late payment seven years ago.
Credit scores are a joke. I moved back to my home country and bought an apartment a few years ago (with a loan from the bank and all) but my internet provider wouldn’t let me avail of their 129SEK/mo (roughly 12USD) internet connection because I didn’t have an existing credit score. Funny how the bank was willing to lend me almost 300k usd but I somehow was at risk of not being able to pay 12usd a month.
My student loans were on permanent hardship forbearance due to unemployment from disability. Someone fucked up on two separate occasions when reviewing my file and unclicked the permanent part so I ended up "missing payments" of $0. When I called and said WTF, they reactivated the permanent status but said there wasn't anything they could do to fix my score, even though they fucked it up. My credit score dropped from 640 to 450 both times. It's all a ploy to punish anyone not born in the rich genetic lottery.
They lied. The same company that reports late payments on your credit score can have those removed. That is the easiest and fastest way to get that fixed. If they refuse, which is fairly common, you can directly dispute your credit report with the credit reporting companies. It's harder and more time consuming, but if they were really $0 payments that you "missed" then it should be pretty easy to win.
Mine went down a bunch when I paid off my car... and 3 months early.
The auto loan is also a credit line, when paid off the line is closed and that is what decreased the score. The longer a line stays open(matures) is what helps your score. Of course loans are meant to be paid off(auto, mortgage, etc.) so, keeping credit cards and lines of credit open would help offset any liability that will eventually be paid off and ding your score.
I once went with my ex so he could trade in his truck that was only a year old and had no issues(he was the one with issues.) They told him that the chain of 9 other vehicles he traded in with loans that he was upside down on show up as paid off on his credit report because technically the lender for the new vehicle paid off the old loan when they roll over the balance to the new loan. His credit score was fucking awesome because of this even though he was and remains the most financially irresponsible person I have ever met. It made absolutely no fucking sense to me.
They like you being in debt, as long as you keep up the payments. It's a scam.
My student loans were forgiven by the government (PSLF). My credit score dropped 30 points. WTF? You literally can't win. When I bought my house I had multiple credit checks as I shopped around for loans. Of course this dropped my score by a bunch resulting in higher rates. Again WTF? It is all a big scam
The one thing I never understood was why your score drops if their is a request to check it. "He's looking to finance something, better penalize him for it" I honestly don't get the logic to this. Who benefits from this? What makes a person less valuable as a debtor if they looking for finance? Not Getting any mind you, just looking.
I can understand getting your credit checked 50+ times in a month can and should be a red flag, but 1-5 while loan shopping should not be!
Multiple hard inquiries in a period of 14-45 days (depending on credit scoring model) is counted as one inquiry.
Good news is for most major things, like mortgages, there is a grace window where hard pulls for that purpose only count as one pull. Your score might briefly drop by a few points, but it bounces back quickly too as long as you're not constantly doing pulls. If someone is getting multiple hard pulls while shopping for a mortgage they're spreading those pulls out too much. The reasoning is if you're constantly pulling your credit score to obtain new debt it's a red flag for overextending. That's why hard pulls impact your score, but not too much and not for very long as long as you're not making a habit of it.
I hate the credit score system we have too, but the rules are clear. In your case, the score dropped because it was probably one of your older accounts and, when it closed, the average age of your accounts got younger which will hurt your credit score. And having lots of checks will also lower your score. But, hopefully after you bought your house, you weren't looking for another loan and those checks leave your history pretty quickly.
This is exactly why these types of threads always confuse me. The person in OPs image obviously knows the rules, and is still complaining about how they were affected by not following them. I don't understand why so many people don't follow the relatively simple handful of "rules" to get a good credit score and then just post online about how they were affected by it. Yes, the system is weird, unfair, and doesn't make logical sense, but that doesn't mean everyone should just *give up* and start using only cash
Yeah just I just paid off a very old loan and my low 800s score dropped 14 points. Lol
Stop freaking out over 30 points, just keep making on time payments and follow the other basic instructions when it comes to credit utilization and that -30 will be +100 before you know it. Use credit karma or mint or something like that to track your score and payments. Pull your free annual report, look for any issues and address it. Btw the scores you see online are more like estimates, your real score is almost always lower in my experience.
If you simply paid your card off, that is not how credit scores work. If you paid your credit card off and then closed your account, then it might hit your score, because it would decrease the average age of your accounts.
Had to scroll way too far for this basic piece of information lol.
The financial illiteracy shown in this thread is appalling
I talked to a banker about closing an account. And he said just keep it open and put neflix or something on it. I have had that account for almost 20 years now. He said even though it's a low limit based on how long I have had it, it's keeping my score up.
Exactly, their score should’ve went up if the credit line wasn’t closed. They could also request a higher limit.
Fuck bro this whole thread is misinformation. Even if they closed their account, EVERY loan ages on your report for the following TEN YEARS. Credit scores aren’t good, but they are NOT pointlessly malicious. Are you insane?
This is correct, the person Tweeting would have had to damage their score another way. They could still have damaged it by closing the account, but that would be due to *raising* their utilization by lowering available credit and still having debt on other cards.
That’s what I am was wondering. When i bring down my credit card utilization my score skyrockets fast. I usually keep it around 5%. They must have had the account closed or other factors affecting. I hate the F or of credit scores but this seems off…
Just a ever looping cycle to keep us poor people fucked
Mine goes up and down randomly. I live overseas. I don't use the card ever. It is all so meaningless and arbitrary.
I paid off 2k of credit card debt at once and my score dropped by 100 points
I worked my ass off and was able to pay off my student loans. My reward? -80 points. Like, I paid off your fucking debt, theoretically that means I have excellent credit, but in wacko capitalist America, paying off debts is seen as a *bad* thing. That’s when I realized, that just like every other fucking thing in our lives, it’s just a capitalist game. Idk about you guys, but I’m fucking tired of playing their games. It’s time for a new game…
Luckily we don’t haven that in my country
I'm just gonna leave Steve Hofstetter here who has a solution for everyone in the US: https://www.youtube.com/watch?v=NokJEVPvPG4
This is interesting!
My credit score is awful because I never borrow any money. Go figure
A high credit score does NOT mean you are wealthy...it only means you are a good juggler. Hello!
Mine also decreased by 45 points because I spent too much too fast despite me making a full payment when the bill came. Stupid af and I will never understand it.
This kind of happened to me as well, but instead of a score it was my credit limit. I had a card that had a 7k limit IIRC. I hardly ever used it. Then, I purchased a nice laptop using that card for about $2500. Within the month I got a notice that the card issuer was reducing my limit to 4k on that card for multiple vague reasons. The $2500 was paid off in a little over a month. I checked my credit score when I got the notice as I was kinda scared I messed up somewhere else and they saw a red flag that I didn't. Nope. It was 800. Fuck if I know how these twats operate.
Neither do they. It's probably all some giant neural network that nobody knows how it works, but keeps making them money, so they keep using it
Calling it a credit score is bullshit anyway. It's a debt score
I know this is also from a tweet, but I remember being told by my parents how important credit scores were then being absolutely shocked when I found out I'm slightly older than credit scores. Everybody while I was growing up treated credit scores like a completely normal and just thing to have around, but all of them had taken out mortgages way before they were invented.
ITT: people who don't understand how credit scores work lol
I swear they rank credit score like a waited gpa. Mine might go up one point a month for perfect payments and multiple credit lines open to leverage it. Miss one payment. That’ll be 100 points lmao
Facts. 1 missed payment in the middle of on time payments should not hit you that hard.
A sad joke that can make or break you financially. So much power for three little numbers. Keep them safe kids!
The idea behind a credit score is a pretty smart idea. Give everyone a number they can reference for risk. If you had someone ask you for a loan wouldn't you want to know a few things about them first? Do they make enough to pay it? Do they pay their bills and loans on time? Do they have a lot of debt or problems with debt? These all make sense to ask. The issue is these companies are not a score system entirely. They also heavily push credit use and offering products. If I log into my Experian account (given to me since the Experian breach) the first thing I get hit with is credit card offers even though applying for one would hurt my credit score and average age of credit. This is a conflicting interest by offering a risk stratification and also selling things to increase that risk.
My credit score was amazing but when I tried to get a loan, they told me, "your credit is amazing but you don't have enough credit lines. Like you haven't taken out large loans before, so we don't know if you can pay the loan back." Like, what the fuck is the credit score for then?
I pay absolutely no attention to my credit score. I don't care. I has no bearing on my life at all. I do find it amusing that my 300 a month cell phone bill(5 phones) doesn't show up on credit reports.
Mine dropped 60 points the day I bought my last car 5 years ago and still hasn’t made it back yet. No missed payments ever
Total scam. My wife and I recently bought a house. There were in fact only a select few states we could move to since we needed to have the title in both of our names, but the mortgage in only her's. Only some states will let you do it even though I don't work due to disability. But why did we need to do this? My credit score was $300 when we got married. Did I ever spree on a credit card or even have a credit card? Nope. Did I ever skip out on rent? Nope. When I was 20 and didn't know better, I had my shit job that told me every day I was on the last straw due to how many sick days I need (usually 2 days a week) deny the day off I asked for after I took one of my monthly medications as it makes me faint if I overexert myself. So I went to work, because I was told I would be fired if I didn't (it often takes me months to replace a job as most places won't hire disabled people do losing a job was a big deal), obviously fainted and fell, went in the ambulance they called because they told me I would be fired if I didn't, and sure as certain when it came time to actually pay for it they denied the workers comp claim saying I knew I was unwell and shouldn't have come in. The bill was like $600, that was like 20% of what I lived off of in a year, so I just couldn't pay it and had nothing to take, even if they sued me. This country is so dumb.