Credit Score!

[Krogen]

Credit scores are perplexing. Even if you pay off the card bill each month, they take a snapshot of your balance to determine usage. You may buy a lot one month and pay it off on the next bill, but they see that high balance and ding you. One way to reduce your "usage" is to ask for a credit limit increase. Counter-intuitive since I see that as a bigger risk. They see it as a reduced usage of available credit.

Also, don't close unused cards. That reduces your available credit and the length of your credit history. Use the "unused" cards once in a while to keep them active. Buy a hamburger or something small.

I've had 3 car loans in the last 15 years and two mortgages. I pay off my cards each month. The credit limits are stupidly high; I never get beyond 10%. So my credit score is good.

I expect it to go down soon. The car loans were paid off. I sold a house and paid off its mortgage. Used the proceeds to pay off the house I live in. No debt now, so I assume I'll be considered a risk and my score will suffer.

It's the way it works, insane as it seems. My insurance rates will probably go up because they use credit scores to determine risk.

It's a crazy mixed-up world, eh?

 

[UncleEd]

Look at it this way:

If you're not buying things and
running up the occasional debt,
then you're un-American and
deserve a bad credit score.

And another thing, people who
deal only in cash are very shady
critters. Something dishonest is
afoot.

 

[grover99]

If you do not have loans and credit card debt you are not paying interest to some company and that does not make them happy. So your credit score is lowered until they are getting part of your money.

 

[TTSH]

Credit scores are perplexing. Even if you pay off the card bill each month, they take a snapshot of your balance to determine usage. You may buy a lot one month and pay it off on the next bill, but they see that high balance and ding you.

I've had the opposite problem. It's probably because I pay off my many credit cards long before they ever come due, usually at least twice monthly. I also rotate them in order to keep all of them active and the issuers happy. So, for example, I will use one and then pay it off as little as one or two days later and then go on to the next one. Rinse and repeat. But my obsessive credit card over-management... necessary in my mind to manage my ultra-tight budget... makes my credit report look like I'm not using my cards at all and, therefore, don't need such big available credit numbers.

My big fear is losing any of my credit cards or having the available credit numbers sharply reduced given my advanced age and long-retired status. It has happened already and I don't need it to happen again. It has caused me problems with the building of our retirement place and I will need lots of available credit space when it comes time to move and then upgrade our current place for sale.

Scary times. Damned if you do and damned if you don't.

 

[biku324]

It took me until last year to be completely debt free after marrying too young, having kids too early, and choosing the wrong employment fields. Now, 48 years later, I finally don't care about credit scores. If possible, 'neither a borrower nor a lender be.'

 

[TTSH]

It does become difficult after retirement if you don't have many payments to make.
I don't have any car or home payments, I have a couple of credit cards that are 15 plus years old I keep a small balance on.
Last year I needed a new lawn tractor so I went to the John Deere dealer and financed a X-350 that I could have paid cash for just to maintain some sort of credit history.

I think you are smart to do that. My good wife has no debt and no payments to make and her credit score numbers keep going down because of it.

I had to buy a somewhat expensive lawnmower for the new place and found a good deal at HD. They said I'd get $100 off if I opened a credit card with them, so I did. Now I see that it is hurting my credit scores.

Again, damned if you do and damned if you don't.

 

[misswired]

My goal is achieve a credit score of 0.

Can't remember the last time having a loan or credit card. Not being in their game, pretty sure I haven't scored any points.

 

[Golddollar]

I think you are smart to do that. My good wife has no debt and no payments to make and her credit score numbers keep going down because of it.

What might help avoid this problem is to dedicate each credit card to a specific small or moderate recurring charge and then pay each in full. I have one card for the satellite TV, one for the cell phone, one for the computer service agreement and so on.

 

[TX-Dennis]

Two of my credit cards offer FICO scores on their websites. Citibank says my score is 863 out of 900. Capitol One says 806 out of 850. Both are termed "Excellent." I guess different agencies use different ratings scales? At any rate, I owe very little. Credit cards are paid off monthly and used for cash back. No car payments other than my wife's lease. House payment only because I haven't paid it off. Owe less than 10% of the current value of our home. I could write a check and pay it off today, but I have chosen to keep the cash for emergencies instead. I will pay it off before retirement, though.

 

[TTSH]

What might help avoid this problem is to dedicate each credit card to a specific small or moderate recurring charge and then pay each in full. I have one card for the satellite TV, one for the cell phone, one for the computer service agreement and so on.

Well, the funny thing is that the one credit card that we both use jointly and most frequently... she applied for it in my name!

She claimed it had to be that way (and that was technically correct at the time), but a couple very simple steps and it could have easily been issued in her name.

That credit card would have been all she needed to increase and keep her credit score high (higher than mine).

 

[BigBoy99]

I applied for a check covering loan of $500 because sometimes the wife forgets to enter in the checkbook the amount of the check she has just written and I don't want checks to bounce. I was turned down because I didn't have a mortgage, didn't have vehicle loans and not carrying a credit card balance. (The house is paid off, both vehicles are free and clear and the credit card is paid in full each month) I guess I'm a terrible credit risk as I can't qualify for a $500 loan!

 

[NYlakesider]

I applied for a check covering loan of $500 because sometimes the wife forgets to enter in the checkbook the amount of the check she has just written and I don't want checks to bounce. I was turned down because I didn't have a mortgage, didn't have vehicle loans and not carrying a credit card balance. (The house is paid off, both vehicles are free and clear and the credit card is paid in full each month) I guess I'm a terrible credit risk as I can't qualify for a $500 loan!

If your the one that balances/reconciles the check book, do a little creative math and make that $500 not show in your balance. That way you always have that extra just in case. My wife is a blond and in the first few years we were married I had to do that, she never found out and nothing bounced!

Since then we both have our own checkbook and credit cards, working well!

 

[vytoland]

a credit score = just another example of someone's opinion.....

 

[soFlaNative]

My credit score allows me to buy anything I want, paying for it is the issue.

 

[LVSteve]

I applied for a check covering loan of $500 because sometimes the wife forgets to enter in the checkbook the amount of the check she has just written and I don't want checks to bounce. I was turned down because I didn't have a mortgage, didn't have vehicle loans and not carrying a credit card balance. (The house is paid off, both vehicles are free and clear and the credit card is paid in full each month) I guess I'm a terrible credit risk as I can't qualify for a $500 loan!

That's because without rotating credit they cannot see that you have money/income. Without that knowledge they cannot tell if you are a deadbeat looking to score $500 and leave town or a miser with a basement full of $100 bills. Recall that personal history with a bank and its staff counts for naught these days.

The pervasiveness of credit in the US was summed up for me about 20 years ago when looking at cars with my then girlfriend, later wife#1. The look we got from the salesman at one place when we told him all our vehicles were paid for was priceless. I swear he was checking us out for extra heads.

 

[Old Arkansawyer]

Someone stole my identity and my credit score went up a 100 points.

 

[yaktamer]

Two of my credit cards offer FICO scores on their websites. Citibank says my score is 863 out of 900. Capitol One says 806 out of 850. Both are termed "Excellent." I guess different agencies use different ratings scales?

And there are different scores even within a single bureau. For example, FICO 8 and FICO 9. Some tend to be used for assessing credit-worthiness for credit cards, other for mortgages, etc. Nobody has just one credit score at any given time.

 

[TX-Dennis]

And there are different scores even within a single bureau. For example, FICO 8 and FICO 9. Some tend to be used for assessing credit-worthiness for credit cards, other for mortgages, etc. Nobody has just one credit score at any given time.

Thanks for that information. A fellow can learn a lot of interesting "stuff" on a gun forum.

 

[hittman77]

Credit scores are fluid and change daily.

Someone may look at your credit while you owe $1,500.00 on a credit card and determine that's too high or too near a credit limit. Then that credit card company may send updated info to the credit reporting agency overnight and BAM ..... $-0- balance and your score changes again.

Consumer Federation of America has some great info on this subject if you're interested.

Credit Score Quiz . Consumer Federation of America

Your Credit Scores . Consumer Federation of America

And yes there are many different credit scores from different companies.

Each lender or creditor makes their own decision on what is a great / good / fair / or bad score.

If someone tells you your credit score is "xxx" it's vital to find out which scoring model they use and from which credit reporting agency.

 

[hittman77]

Also, don't close unused cards. That reduces your available credit and the length of your credit history. Use the "unused" cards once in a while to keep them active. Buy a hamburger or something small.

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".

Also, I've dealt with people who were actually DENIED a new credit opportunity due to "sufficient amount of credit available in relation to your income". Generally, that happens to the folks who constantly apply for new cards in order to get something like "10% off" todays purchase.

They end up with a dozen or more open credit cards that each have a say .... $5000 credit limit. Assume that person makes $50k, already has a mortgage, auto loan(s), student loans, the credit cards they actually use AND ..... another $50k in available credit card debt and ZING .... you don't need any more.

Keep in mind each situation is unique. I'd not give the same advice to a newly married couple in their 20's or 30's as I would a more established consumer that's either older or financially well off.

Hope that makes some sense.