So l paid my house OFF - My credit score DROPS 60 points

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zelda

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Can you believe it? l paid off my Boflex too. Eight months later l find my credit score is down 60 points. From Excellent to Good.
The credit bureau told me all my credit was less than 5 years old because l had paid off a ten year old mortgage. They also said l over utilize my credit card because l sometime charge over 50%. My card has a $1500 limit. My Belk card for clothes on me and the kid's back are the only two.
 
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That's how it works.....

If you eliminated all of your debt, your credit would be lousy because you are a non-participant in what drives the economy. It's not so much 'good' or 'bad' as it is an activity meter. If you lived on a cash basis you are persona non grata to financial institutions. We are heavily in debt and the last time I went for a car loan I was told that my credit score was great. That's no reflection on me, it's a reflection of how happy the rest of the country is that I'm borrowing and paying back with interest. Don't worry about it. When you are out on a limb in debt, you will be a favorite customer, like I am.
 
I made a similar mistake. I had a couple of cards that were charging 21.9% to 29.9%. Since banks are paying something like .001% this seems a little ludicrous.

I contacted the credit card companies and requested a lower rate. Two guesses what they said. Sooooo, I researched and found two other cards offering 0% interest for 21 months with balance transfers. I applied and got two new cards and transferred the old balances over. In this way, at least all money paid toward the balances went directly against the balance. The 3% transfer fee was way lower than a few months interest.

My error however, was that I closed the other accounts in anger. Now my credit report is affected by the fact that my credit history is shorter as the new accounts were just opened. That combined with the fact that one of my banks was taken over and even though I have had an account with the same number for 20+ years, the credit bureau shows it as one closed account of 18 years and one new account of 2 years. Having a short time credit history is a negative.

All in all, this whole credit bureau concept is kabuki theater. If your credit rating is lower, then the banks and credit card companies get to charge you more interest for everything.

I'm 65 and have had credit for about 45 years but my average credit bureau history is only 4 years old. GO FIGURE :eek:
 
Maddog 521 said:
I do not have a mortgage, car payment or credit card debt. It's been that way for many years. Last time I checked my number is 800+.
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Same here.

The notion that you must have auto loans, mortgage and not pay your credit cards in full each month to have an Exceptional FICO score is a myth. If you're not around 800 there's something else going on.
 
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There is a threshold of income to debt ratio that directly reflects your credit score.

Interestingly enough if you do NOT own a house but have credit cards your score tends to be higher as long as you don't over extend the credit.
This obviously makes it easier for you to buy a home - which is what the government and banks want.

In the same vain, if you own a house and you have credit cards, if your debt to income ratio is over their requirements (usually it's 40%) by even 1 % you are unable to obtain more cards, unable to obtain additional loans/credit for additional properties for income purposes (to lower your debt to income ration) and your credit score seldom if ever will be higher than 650-680.

Many of you may remember when a high score was 650 - now it's 800 - thank your elected officials who offered the bank executives a "Get of jail free" card for ruining the economy and placing us in a depression (it was a depression not a recession as was widely publicized).
 
ChattanoogaPhil said:
Same here.

The notion that you must have auto loans, mortgage and not pay your credit cards in full each month to have an Exceptional FICO score is a myth. If you're not around 800 there's something else going on.
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Yup. My wife and I are 3 years into a 15 year mortgage (that we'll pay off in less than 7 more years) and otherwise owe nothing. No car loans, or school loans or loans of any other kind.

We charge a couple of hundred a month on our credit cards because they are more convenient than cash, but we pay them off every month to avoid paying interest.

We've been looking for a vacation property, so I checked our FICA a couple of months ago - the score was 860. From what I understand the second biggest factor - after your debt to income ratio - is that you have not just a history of having loans but also a track record of never missing or being late on the loan payments...
 
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I paid off my mortgage several years before I retired. Have never carried a balance on any credit card, pay them in full every month. I couldn't care less if my FICO is 0, the satisfaction of not owing anybody a dime is more than worth it. Especially in these hard times. I've had several banks where I have accounts beg me to take out an equity loan to 'take that vacation of a lifetime, buy that boat you always wanted, etc.'. I already take all the vacations I want and I don't need a boat. Why do you have to borrow money after retirement (Unless you have a medical emergency and don't have coverage) but other than that ? Those folks that pay off their mortgage and then borrow to give their kids money are foolish. Let them learn to live within their means.
 
I've been handling my home finances the same way for many years. I have a mortgage with a very low payment and a very low interest rate, I don't expect to ever pay it off and I don't care. I use debit cards for two bank accounts and I have two credit cards. I use the credit cards regularly but pay off the balances so I don't incur any interest. I lease my cars so I have a car payment all the time. I limit what that payment will be so that limit determines what cars I'll consider. I'm still able to consider very nice, well equipped vehicles and they're always under warranty.

I care what my credit score is and it's been over 800 for the last few years. I've also preached good finances with my two children and, so far, they've been handling home finances quite well, sometimes better than I do.

I think it's a very important part of family life to make sure your finances are under control no matter what your income level may be. Uncontrolled spending can result in major discord within the family.

A good example of poor financial planning was the recent mortgage crisis. Unaffordable mortgages resulted in numerous cases of bankruptcy.

Just my humble opinion.
 
My credit score DROPS 60 points"

You said that like it was a bad thing???
 
I have to laugh when I think of credit scores. My Dad moved to town many years ago and wanted buy a house.

He found what he wanted through a Realtor. When they began the process they found he had paid cash for everything all his life, and had no credit rating.
They told him they didn't think he would be able to buy the house.

He stood up and said, "Well, by gawd I may just buy this whole dammed real estate business. Then do you thing you can find a way to buy that dammed house?"

He got the house.

I'm in the same boat. Cash on the barrel head all my life. Don't owe a soul a dime. Don't have any idea if I have a credit rating or not.
 
I have always paid cash and I have have had a lot of extra money by not paying interest. We sold out in 89 and bought more land and built a bigger shack. The builder didn't finish on time and wanted a couple of more weeks and we said ok. This went on for a couple of times and we said we were moving in 2 weeks and if he wasn't done he would have to work around us living in the house. He smiled and said the bank wouldn't let us move until he was finished and he was surprised when I told him the bank wasn't involved. He finished the house the next week and we paid him. I don't care what the credit people think about me. When "CASH" talks people listen. Larry
 
No disrespect to anyone but paying cash today is just plain dumb ! I owe nobody and my credit score is close to 900, I pay for everything I can with credit cards, I have 30k limit between 2 cards and pay them off every few days. I get money back for using the cards (AM EX) is the best at cash back and I always have receipts for everything I buy and if I have a problem with something I bought I just call the credit card company and get my money back, I've only had to do this twice but had no problem what so ever, I get extended warranties on stuff I buy, I get free ins on rental cars when using my credit cards and many more benefits I can't even remember. I used to be a "cash only" guy but I saw the light and enjoy the perks of being a responsible credit card holder.
 
As long as you pay your credit card balances in full when you receive your monthly billing there is no problem using credit. I have no mortgage, no car loans, no credit card balances owed, n debts at all, but I use my credit card to purchase things through the internet (1% cash back) (Midway for example), and purchase all my gas on cr card (3% cash back). I have a Kohl's cr card which gets me lots of special discounts. I never charge anything I don't have the cash to pay in full when the bill comes. My Credit score just a couple months ago was 826, and I have one negative on my record, "I an minimal user of credit". (And I like it that way).
 
allthumbs said:
No disrespect to anyone but paying cash today is just plain dumb ! I owe nobody and my credit score is close to 900, I pay for everything I can with credit cards, I have 30k limit between 2 cards and pay them off every few days. I get money back for using the cards (AM EX) is the best at cash back and I always have receipts for everything I buy and if I have a problem with something I bought I just call the credit card company and get my money back, I've only had to do this twice but had no problem what so ever, I get extended warranties on stuff I buy, I get free ins on rental cars when using my credit cards and many more benefits I can't even remember. I used to be a "cash only" guy but I saw the light and enjoy the perks of being a responsible credit card holder.
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Wow! That sounds great. Reckon how many of them credit cards I'd need to replace the income from my full time job?:eek:
:confused:
 
zelda said:
Can you believe it? l paid off my Boflex too. Eight months later l find my credit score is down 60 points. From Excellent to Good.
The credit bureau told me all my credit was less than 5 years old because l had paid off a ten year old mortgage. They also said l over utilize my credit card because l sometime charge over 50%. My card has a $1500 limit. My Belk card for clothes on me and the kid's back are the only two.
Click to expand...

You have to understand what a credit score really is. It is your propensity to willingly serve as a financial slave to the banksters. If you are paying off debt this indicates you are not as willing to serves as a financial slave to the bankers so you get a lower credit rating. If you constantly pay many notes and much interest to the banksters, then you are a great candidate to be a willing financial slave to the banksters and your credit rating goes up. It all makes perfect sense.
 
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