Credit Bureaus

[Jamezz]

So I came here from a country where there's no such thing as a credit score so I didn't fully understand the concept behind it. Now tell me guys if this makes sense. My credit score recently dropped by 43 points only because I decided to pay off what was left of a loan I had for my car. In other words, I'm being penalized for being financially responsible. Yes you avoid paying interests in the long term but the credit bureaus still manage to stick it to you by lowering your credit score, which in turn makes it harder to get approved for another loan in the future.

I was raised with a different mentality, where it was good to save money and have a 'cushion' for emergencies. Now I'm being told that it's better to always be in debt so you can 'prove' that you pay back. Am I missing something here?

 

[Joe Bagadonuts]

Don't worry about your score going down because you have no debt. If you currently have no debt but can demonstrate a history of paying your bills on time (even if it's just utilities) and that you have the necessary income to back it up, banks will want to extend credit to you when you need it. Think of credit score as something designed by the creditors themselves Of course they want you to think it's good to be in debt. That's the product they are selling. Don't buy into it.

 

[Joe Bagadonuts]

BTW all those car ads where they advertise that they will help you rebuild your credit by getting into a new loan are pure bunk. They are not interested in rebuilding your credit. They want to sell you a car and if you're stupid they've figured out they can trick you into believing that going into debt to do it is a good thing.

 

[fishonjazz]

My credit score is 817 (which I think is really good, not really certain though) and I do things the same as you jamezz.

My car and my wife's car we both paid off way early.

I always have zero balance on my credit card, though I use it allot to get the points and then just pay it off immediately.

Keep doing what you are doing. Your credit should be fine due to simply paying all off your bills on time.

 

[Stoked]

My credit score is 817 (which I think is really good, not really certain though) and I do things the same as you jamezz.

My car and my wife's car we both paid off way early.

I always have zero balance on my credit card, though I use it allot to get the points and then just pay it off immediately.

Keep doing what you are doing. Your credit should be fine due to simply paying all off your bills on time.

817 is insanely good. To good to believe tbh.

I recently got a credit card and am playing that same game. Get a tank of gas then pay it off when the bill shows up. Does wonders for your credit.

 

[fishonjazz]

817 is insanely good. To good to believe tbh.

I recently got a credit card and am playing that same game. Get a tank of gas then pay it off when the bill shows up. Does wonders for your credit.

That's what it was last time it was checked (about a year ago)

My wife's score was 810 at that same time. (Re-financed the house)

 

[Jamezz]

My credit score is 817 (which I think is really good, not really certain though) and I do things the same as you jamezz.

My car and my wife's car we both paid off way early.

I always have zero balance on my credit card, though I use it allot to get the points and then just pay it off immediately.

Keep doing what you are doing. Your credit should be fine due to simply paying all off your bills on time.

Thanks for the advice, I guess that I just haven't been in the game long enough. And I guess that you start out at 700 or something?

I do pay my bills on time so I'm hoping I get back to where I was in the near future.

 

[Jamezz]

817 is insanely good. To good to believe tbh.

I recently got a credit card and am playing that same game. Get a tank of gas then pay it off when the bill shows up. Does wonders for your credit.

Would you think that paying bills off immediately is better than auto-paying them on a certain day each month? I love the convenience of not having to worry about paying bills off whenever I purchase something with my credit card but I wonder if this could be detrimental in the long run.

 

[fishonjazz]

Would you think that paying bills off immediately is better than auto-paying them on a certain day each month? I love the convenience of not having to worry about paying bills off whenever I purchase something with my credit card but I wonder if this could be detrimental in the long run.

That's a good question, but I don't think it would make a difference as long as the credit card bill is being paid on time. It might make a difference though. Just doesn't seem like it would

 

[Joe Bagadonuts]

817 is insanely good. To good to believe tbh.

I recently got a credit card and am playing that same game. Get a tank of gas then pay it off when the bill shows up. Does wonders for your credit.

I believe Fish's score. Mine is 817 (just pulled it 2 minutes ago) and I handle credit in pretty much the same way as him. I paid cash for my car, I charge almost everything to credit cards but I pay them off in full and on time every month, my name is on two mortgages (one for my current house and one for the house my ex wife and her creep husband are in). My biggest risk is that the ex messes things up before she is required to refinance and pay back my equity next fall.

 

[leftyjace]

That's a good question, but I don't think it would make a difference as long as the credit card bill is being paid on time. It might make a difference though. Just doesn't seem like it would

It makes no difference. In fact, credit reports don't even keep track of "on time" - what they keep track of is how many times you are 30 days delinquent and if your account is current. So if you have a hard time and don't pay your bill exactly on time, but pay it before it's 30 days out, you'll likely suffer a late fee and perhaps an interest rate hike, but your credit score won't be affected once your account is current.

As far as fish's method, I've been doing that for years. My score is insanely good as well. I have one credit card, I pay it off in full at the end of every month (and take advantage of the rewards/cash back/etc.), and don't have any other debt (except student loan debt, which is now down to 1/3 of what it was when I finished my MBA).

If you have the ability to save a huge nest egg, DO IT. But a credit card for regular transactions is a great way to build yourself some rebates/rewards, get yourself a 30-day float on some funds, and keep your credit score high as can be.

 

[Miggs]

My biggest issue with credit bureaus and agencies is how we, as consumers, are completely in the dark as to how they came to the number for our credit score that they came to. It really should be pretty simple. Use this equation based on your credit history and here is your score. But it's not. And the fact that we have no idea as to how they came to that score or how we can even truly improve upon that score is complete and utter ******** and in my opinion illegal. Maybe not according to the letter of the law. But it should be.

 

[Joe Bagadonuts]

My biggest issue with credit bureaus and agencies is how we, as consumers, are completely in the dark as to how they came to the number for our credit score that they came to. It really should be pretty simple. Use this equation based on your credit history and here is your score. But it's not. And the fact that we have no idea as to how they came to that score or how we can even truly improve upon that score is complete and utter ******** and in my opinion illegal. Maybe not according to the letter of the law. But it should be.

You honestly have no idea how they came up with the score? Pay your bills on time and it won't matter to you how they come up with the number.

 

[franklin]

817 is insanely good. To good to believe tbh.

I recently got a credit card and am playing that same game. Get a tank of gas then pay it off when the bill shows up. Does wonders for your credit.

It takes a long history to get into the 800's. It's hard to do it before your 30's from what I understand.

 

[franklin]

If you want to raise your credit, take out 3-4 no fee credit cards and cut them up. Call every six months or so and ask to have your limit raised. This seems counter-intuitive to a lot of people until you think about the cash flow aspect to it. If you can live on cards for a few months of hardship you are much more likely to have the means to pay your bills if you are laid off or have a medical emergency. They can cushion you through until you can refinance, get a heloc, title loan, whatever to set yourself straight.

 

[Siro]

If you want to raise your credit, take out 3-4 no fee credit cards and cut them up. Call every six months or so and ask to have your limit raised. This seems counter-intuitive to a lot of people until you think about the cash flow aspect to it. If you can live on cards for a few months of hardship you are much more likely to have the means to pay your bills if you are laid off or have a medical emergency. They can cushion you through until you can refinance, get a heloc, title loan, whatever to set yourself straight.

This is embarrassing, but I never requested credit line increase before. After I read your comment, I went on one of my CCs website and requested a credit line increase, and they gave me an extra $3500.

 

[fishonjazz]

It takes a long history to get into the 800's. It's hard to do it before your 30's from what I understand.

Good point

 

[Miggs]

You honestly have no idea how they came up with the score? Pay your bills on time and it won't matter to you how they come up with the number.

It's not even remotely that simple.

 

[Joe Bagadonuts]

It's not even remotely that simple.

Your score is not contingent on your payment history? My career started as a mortgage loan officer. At the time we made credit decisions based upon analysis of the credit report. Credit scoring just started coming along as I was thankfully able to leave that business behind. I've never had a problem with credit and I assumed it was because my score was high as a result of paying my bills on time. That's always been very important to me. I've never missed a payment. If you're saying the score is predicated on something else then I guess I accidentally did that something else right, even though I have no idea what it is.

 

[leftyjace]

Your score is not contingent on your payment history? My career started as a mortgage loan officer. At the time we made credit decisions based upon analysis of the credit report. Credit scoring just started coming along as I was thankfully able to leave that business behind. I've never had a problem with credit and I assumed it was because my score was high as a result of paying my bills on time. That's always been very important to me. I've never missed a payment. If you're saying the score is predicated on something else then I guess I accidentally did that something else right, even though I have no idea what it is.

Your score is also based on number of loans taken out in your past, whether they were paid in full on time or even early, total funds borrowed and repaid, if there were any delinquencies, total outstanding debt (and in the same vein, debt-to-income ratio), and a few other things.