Credit Score!

[Krogen]

Interesting points, Hitman77 ^^^^^

Your post supports my notion that credit scores are simply baffling to a non-financial person (me).

I expected my score to begin a decline since I paid off my car loans and mortgages in recent times. I use credit cards to buy nearly everything, but pay them off each month. So I'm a reliable risk, I think, but not a very profitable one. A good credit history, but no debt except for the monthly credit card usage. Would you suggest my score will improve, decline or remain as is?

 

[hittman77]

Would you suggest my score will improve, decline or remain as is?

Yes! LOL, it will do all three.

I'd suggest folks who no longer have to rely on credit to get by forget their score. If you pay your bills on time, have no collections and aren't at or near credit limits you're gonna have a pretty good score.

 

[LoboGunLeather]

Wife uses a couple of store credit cards for routine purchases. I use my credit card for just about everything (gas, groceries, restaurants, etc), which allows me to write one check per month instead of a dozen or more. We always pay the balances when the bills arrive, but any current credit report will probably show 2 or 3 active accounts with "paid on time" ratings.

Paid cash for the home. When I purchased a new car for my wife a few years ago I was offered 0.9% financing at a time when our certificates of deposit accounts were paying 2.4%, so that was kind of a no brainer. Same when I purchased my new truck 2-1/2 years ago. On both of those I just doubled up on the payments and knocked them out in 2 years or so instead of 4 or 5 years at regular payments.

Our FICO scores are over 800. At the present time we are earning very little on deposit accounts, but we are paying absolutely nothing in interest.

As a precaution against major emergencies we have a pre-approved signature loan privilege for $25K, and a pre-approved homeowner line of credit for $100K. If the very worst things happen I can take care of business with a phone call and start writing checks anytime.

There are some advantages to 37 years of membership in my credit union. My large safe deposit box is free, I even have a coffee cup with my name on it in the lounge room, and I have been known to bring pizzas or Chinese food for the staff occasionally.

 

[Jon651]

I too was surprised by just how much my credit score varied on a month-to-month basis after I retired, even with everything paid off and no new credit applied for. I'd say it's about a 7-10 point swing up or down every month (with nothing financial going on) with a max of around 30 points from my minimum to my maximum over that time. It's always excellent, but it's like they use different criteria every time they calculate it.

One piece of advice I can give is that you really should put a "freeze" on each of your accounts with all of the credit bureaus. It is free to do so and prevents anyone from opening up a new line of credit in your name unless you "unfreeze" the account. This helps prevent fraudulent accounts from being opened in your name if somebody steals your personal info (things like a credit card, a home equity loan, etc. that can usually be done over the internet) and is an excellent added level of security.

What this means for you is there are extra steps you have to take in order for you to open a new legitimate line of credit (like buying a car, getting a loan, etc.). The credit bureaus will have to speak with you directly and verify your identity in order to lift the freeze - usually through setting security PIN numbers and/or answering security questions, etc. Fortunately, legitimate lenders work closely with the credit bureaus and can walk you through the steps.

Identity theft and credit fraud are real issues that have real consequences. I advise everyone to be vigilant. You can request a copy of your credit report for free once per year from each of the three credit bureaus. Be sure to only use the official site Annual Credit Report.com - Home Page or the direct site from each of the bureaus and not some private service.

 

[Jon651]

I would contend that YES, you should close unused cards.

Once the card (or any other account) is closed, it is not removed from your credit report. Therefore, it's "open date" still counts as length of credit history, and your credit limit, highest amount owned, current balance (if any) and payment history is still there and still "counts".

I would actually recommend the opposite - DON'T close any unused credit cards. Even though the account will continue to be listed on your credit report after it is closed, the amount of credit on the card will no longer count as part of your "Total Credit Available" number, which will skew your Used/Total ratio, potentially lowering your score. Not a big deal for someone in the 800+ range, but a genuine concern for those with a lower score.

Instead, I would suggest keeping the accounts open but cutting up the cards, then going to their website and putting a freeze on the card/account so it can't be used (as if you lost or misplaced your card but just don't request a new one). This way the account is still open, the credit line still counts towards your total credit available number, and the card/account can't be used by anybody (including yourself) unless you lift the freeze.

Yes, it all sounds like a big game - but we didn't make the rules.

 

[timjake]

The credit union we were members of in Nebraska wouldn't give my wife a $1500 loan even though her credit score was over 800. They said she didn't have any income... Actually, her monthly income was over $2500 between military retirement and VA. We also had over $7000 in our savings account in that credit union. (don't ask me why she wanted a loan when we could have paid cash)

I walked in as the loan officer was explaining to my wife that she wouldn't approve the loan. I looked at my wife, told her to close the account, and we'll find a bank that will work with us. The loan officer apparently had no idea we had almost 5 times the amount requested sitting in an account in their bank.

 

[S&WIowegan]

No debt...

...except monthly credit card bills which we pay off ASAP. My bank sends me FICO score updates which I never look at. I use credit cards because of COVID 19.

 

[NYlakesider]

...except monthly credit card bills which we pay off ASAP. My bank sends me FICO score updates which I never look at. I use credit cards because of COVID 19.

I use my CC because they pay me to do it. A far cry from the early days of CC when you had to pay a annual fee to use their plastic.