Responsible Behavior Punished by FICO Scoring

Discussion in 'The Okie Corral' started by MurrayNevada, Oct 19, 2020.

  1. MurrayNevada

    MurrayNevada USMC (MOS 0369) (RVN 69-70)

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    My daughter, always financially responsible and with a very high FICO credit score, paid off her car loan about eight months early. Her reward was a lowering of her credit score because she paid off the loan. Looking into it this is what happens when one shows good financial management and pays off a loan early. Everywhere I look things are opposite of what they should be.
     
  2. Doc Holliday

    Doc Holliday CLM

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    The lenders want their interest money, probably don't like it when you cut it short like that.

    The banks, lenders, credit companies....they're all in it together.
     

  3. Rick James45

    Rick James45

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    It BS - the whole system. I learned the hard way years ago when I closed some unused credit cards. My score went down.
     
  4. pittpa

    pittpa What did I come in here for?

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    What %/amount did it drop? Small or large? I've paid off or closed accounts without negative effect. I paid off my mortgage in 2017 when I sold my house and have no mortgage to replace it. I paid off the $13,000 balance of my car loan in March with no negative effect. My only loans are the other car loan of $15,000 and a small line of credit.
    My score dropped from 825 to 710 recently when the bank stopped taking automatic payments on my line of credit in July without telling me and missed 3 payments. (I've had auto pay in place for years and don't look at the statements. They still can't tell me why they stopped auto-pay after looking into it for two weeks.) I've filed disputes with all 3 credit bureaus on that fiasco to give PNC a chance to correct it.
     
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  5. Jack Ryan

    Jack Ryan NRA Life Member.

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    Don't borrow money.

    Problem solved.
     
  6. RenoF250

    RenoF250

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    The whole credit bureau system is a scam. I do not understand how they got it in place. They get all of your personal information without your permission and then use it to make decisions that affect your finances and you have minimal input to change.

    I really don't understand why everyone did not go crazy and demand those Equifax weasels go to jail. I have to quit thinking about it before my blood pressure goes up.
     
  7. czsmithGT

    czsmithGT

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    Most people who have to buy a house or even a car need to borrow money. Very poor advice to not borrow so long as you can repay as required.
     
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  8. peng

    peng

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    I don't think you understand. FICO is not a score of intelligent and responsible use of money, or good financial decision making.

    It is a score of how you manage and deal with credit to help people who lend money make better decisions themselves.

    The less credit you have the lower your score.
     
  9. bfg1971

    bfg1971

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    I would like to know why the exact formula isn't required to be public knowledg. Your credit score effects too many things now for the formulas to be concealed from the evaluated party.
     
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  10. RenoF250

    RenoF250

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    Not really, cell phone carriers look at it as well as prospective employers. There are probably others as well.
     
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  11. ReaPer105

    ReaPer105

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    You just have to know how their system works to keep the best credit score.

    They don't tell anyone exactly how their system works tho. :drink:
     
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  12. Braveheart1

    Braveheart1

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    I work in banking and the whole credit collection and scoring system is a mess. Remember probably 10 or so years ago sitting through an Equifax presentation where the instructor admitted that he was a baffled as consumers. He was trying to purchase home and managed to drop his score 20 points by following his own recommendations.

    I’d say conservatively 30-40% of credit reports I pull, contain some type of derogatory information that is either in error or consumer has no knowledge. Trying to get it removed or corrected is beyond the ability of most consumers. It is time consuming and oftentimes futile.

    Interestingly there have been many congressional hearings but here is the kicker. Certain Americans credit reports are flagged by credit repositories including members of Congress. Their reports are handled with kid gloves - so they do not personally experience the pain that their constituents experience!

    Generally today we advise to not close out revolving accounts even if zero balance. But definitely keep balances as low as you can. Keep at least one installment account open. Limit the number of inquiries and periodically review your report for derogatory. Most of the derogatory credit I see are medical collections and satellite or cell phone service. Many times consumer is totally unaware and assumed insurance had paid the medical and they turned in all the satellite equipment.


    Sent from my iPhone using Tapatalk
     
  13. czsmithGT

    czsmithGT

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    If closing the accounts increased your % credit utilization or if the cards were ones you had for a long time it can cause a temporary drop. That is why I keep my old cards and charge something on them maybe twice a year to be sure they stay active.
     
  14. peng

    peng

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    Really?

    Fair Isaac is a company that sells a product to the world who thinks it's useful.

    If they disclosed it, anyone could calculate their score.

    Same reason we don't know the formula for Coke or KFC's secret spices.

    It is well know what the factors are, just not the exact weighting.
     
  15. bubbatime

    bubbatime

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    My credit cards are paid off, I have never missed a single payment since I turned 18, and have good credit. It fluctuates monthly, sometimes up 40 points, sometimes down 40 points. It makes no sense...
     
  16. nikerret

    nikerret Mr. Awesome

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    A friend of mine was trying to buy a house. He couldn’t understand why his credit score didn’t qualify him for the best rates. He had one credit card, but had never used it. There was nothing bad, he just hadn’t used enough revolving credit to count as much. I recommended he get a couple more credit cards, charge some things to each and make the minimum payments while keeping the balance low (but enough to make payments) for a few months. Less than four months later, he bought a house at the best interest rate possible. He never paid interest on the credit cards as the ones he got had 0% introductory rates.

    Yes, it’s stupid, but it worked, in this case.
     
  17. nikerret

    nikerret Mr. Awesome

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    Yep. In most cases, you can raise your credit score by raising the maximum limits on credit cards.
     
  18. Z71bill

    Z71bill

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    IDGAF and only looked it up because of this thread.



    Here's your FICO® Credit Scorecard as of 10/14/20

    Based on TransUnion® data


    • FICO score796[​IMG]
    • 5 Total Accounts
    • 34 years Length of Credit
    • 0 Inquiries
    • 10% Revolving Utilization
    • 0 Missed Payments
    Very Good Your responsible use of available credit is considered very good
    Did you know?

    The total balance on your last statement is generally the amount that will show in your credit report, even if you pay in full each month.

    Why does revolving utilization matter?
    Revolving utilization is one indicator of how much you owe on your accounts. The amount you owe lenders is one of the most important factors that impacts your credit and makes up about 30% of your FICO® Score.Opens modal dilog [​IMG]

    Your revolving utilization is determined by:

    • Your total balance owed on your revolving accounts
    • Your total credit limit
    You've used $3,532 of your available credit, which is 10% of your total credit limit.

    I am guessing having no debt other than credit cards which get paid off every month hurts my score - and prevents me from ever getting into the 800+ category.
     
  19. jeff22

    jeff22

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    Last edited: Oct 19, 2020
  20. MurrayNevada

    MurrayNevada USMC (MOS 0369) (RVN 69-70)

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    [QUOTE="Jack Ryan, postvehiclesney.
    Don't borrow money.
    Problem solved.[/QUOTE]

    You know I completely forgot that Glock Talkers pay all cash for their houses and vehicles. I'll try to remember that in the future.