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Everything I own is paid for. I went to the bank to get a line of credit. We were doing an addition and wanted a little flexibility. Despite having paid off everything, being totally caught up on all debts, and with a 6-figure income, I was refused because I didn’t have loans or credit cards active.

I told them to get bent...
 

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Not really, cell phone carriers look at it as well as prospective employers. There are probably others as well.
Checking credit score before you hire is illegal in some states - unless you are in a job directly handling company funds.

Congress tried and failed to make it a federal law -

They say it is racist to check credit -
 

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I have been a victim of this myself. Paid off 4 new trucks over the years. Paid off my current truck 4 months early (March 2020). Paid off a motorcycle. We buy a house (June 2020). Credit report says "No history of installment payments." Huh? Then my one credit card closed itself since I never used it. Score went down about 5 points. I told my wife, the mortgage company would rather we buy the house and have 2 new car payments and a boat payment, than actually have money and pay the mortgage.

I know people, family members, who went into mortgages with car payments or bought new cars/blew a lot of cash after the closing, after buying a house. They are all renting now having defaulted on their mortgages.
 

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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
  • 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
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.
I bet you could get that score up a bit if you got that utilization down to 1% instead of 10%. Once your already near 800 territory it’s a lot harder to improve.
 

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I have been a victim of this myself. Paid off 4 new trucks over the years. Paid off my current truck 4 months early (March 2020). Paid off a motorcycle. We buy a house (June 2020). Credit report says "No history of installment payments." Huh? Then my one credit card closed itself since I never used it. Score went down about 5 points. I told my wife, the mortgage company would rather we buy the house and have 2 new car payments and a boat payment, than actually have money and pay the mortgage.

I know people, family members, who went into mortgages with car payments or bought new cars/blew a lot of cash after the closing, after buying a house. They are all renting now having defaulted on their mortgages.
Most banks sell your loan. They don’t care if you pay it off, they care that they get enough payments to sell it to someone else.
 

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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.
Yep. In most cases, you can raise your credit score by raising the maximum limits on credit cards.
Both of these are good advice and seem opposite of what you would want to do.

Never close your oldest credit card it’s one of the easiest ways to get a long history. Use it a few times a year to make sure it doesn’t get shut off due to inactivity.

Also try to keep a few cards with high limits active but using little of this available credit.
 

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Probably something else going on. Using more credit on the card, recent credit check etc. I don't recall mine ever going down for paying off a loan.
 

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Mr. Awesome
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Probably something else going on. Using more credit on the card, recent credit check etc. I don't recall mine ever going down for paying off a loan.
Every loan I got raised my score. Every time I paid one off, it dipped.
 

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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.
The scoring system is not intended to reward responsible people, it is intended to tell creditors who is the best bet to make money from.
 

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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.
No need to keep a balance, just using them and making the payment is enough.

Also, opening a new line (or lines) of credit can cause a temporary drop in your score as can multiple credit checks.
 

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"Rewarding" people to go or stay in debt seems like a bad idea. :fred:

BTW, what is the United States FICO score? :D
Credit score isn’t a reward, it is a risk calculation used by someone who you are asking to lend you money. A lender can look at your score and determine if you are high or low risk for making the payments on time.

A high score shows relatively little risk to the lender.

A low score shows someone might not be as good at managing their credit and pose a higher risk to the lender. Also if you don’t use your credit the lender can’t make a reliable risk assessment so the score will reflect that you may be a bigger risk due to unknown history.
 

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I bet you could get that score up a bit if you got that utilization down to 1% instead of 10%. Once your already near 800 territory it’s a lot harder to improve.
I don't think that would matter -

It is a double edge - can go both ways - I was CFO/controller for a finance company - so this is my real world view.

If you have a $35K credit limit and have $3,500 balance which is 10% like I do -

They will hit you because you could at any time borrow an additional $30+K -

If you have a $35K credit limit and have a $34K balance they will hit you because you are almost maxed out and may not have access to handle an emergency situation like a car repair.

I think the best thing in my case would be if I dropped my available credit down to say $10K -which would increase my % utilization to 35% - but I would only have access to an additional $7,500 - enough to cover most situations - and not as significant as being able to borrow an additional $30K.
 

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Every loan I got raised my score. Every time I paid one off, it dipped.
There's lots of factors in play like what % of your credit you are utilizing, number and history of accounts.

I currently have no loans besides my mortgage and my FICO score is 836.
 

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It fluctuates constantly, it’s a good indicator of ones ability or willingness to pay their debts.

after you get above 740 it’s bragging rights at that point. Paying off a loan does hit your credit because your average credit line age drops. But it’ll rebound and be fine a month or two later. Having a balance even if it’s paid off at the end o

Creditors are typically more concerned about dead beats who have a pattern of not paying. It allows them to raise rates for those who high risk.

That said having 4 companies run the entire system and police themselves is a entirely different problem.
 

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Credit score isn’t a reward, it is a risk calculation used by someone who you are asking to lend you money. A lender can look at your score and determine if you are high or low risk for making the payments on time.

A high score shows relatively little risk to the lender.

A low score shows someone might not be as good at managing their credit and pose a higher risk to the lender. If you don’t use your credit how is the lender going to make a reliable risk assessment?
IMHO, if one is treated differently (you get or don't a loan) it is a reward for some type of behavior.
 

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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.
It's a MADE UP BUNCH OF BULL TURD...who gave this A$$ HATS PERMISSION TO CONTROL THIS
They can also CONTROL your AUTO INSURANCE RATE.. To HADES WITH THESE CREEPY ORGANIZATIONS
 

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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.
Exactly my point. The secret coke or KFC recipe doesn't affect anyone. Knowing the factors is one thing but since the levels of concern within each factor are concealed you can't know if taking an action will hurt or help. That is my issue.
Also nothing good should ever leave your report. You paid off a home off 15 years early,10 years ago, its not on the record today. But it should be. The pattern of good behavior should be the most important factor of your credit score but it seems that the length of active credit card usage is the real determiner of length of credit.
Credit utilization ratio is also a joke. I can ask for my limits to be raised and make it better or a company can cancel a seldom used card and make it worse; however the borrower's character didn't change. That is my issue with the credit score it is a financial measure of character where one side (profits from) having total clarity and the other has an obscured view. (Costs them)
 

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IMHO, if one is treated differently (you get or don't a loan) it is a reward for some type of behavior.
You are “rewarded” with loan and possibly a lower rate if your score is high but your credit score isn’t a reward it is a calculation of past behavior which shows your risk as a borrower to the lender.
 
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