Credit score went down?

[tx2sturgis]

Oh this is effed up...



I was reviewing my FICO credit score and it actually has gone DOWN about 50 points since I paid off a vehicle loan!

The website says its because I have no recent activity paying off an installment loan...well thats BS, I thought the act of paying off the loan should INCREASE my credit rating, not put a dent in it!

Idiots....

 

[tx2sturgis]

I just now found the other thread about credit started by Queen, if the mods want to move the above item over there it's cool with me...

I had looked for a thread about credit and didnt see that one.

 

[BradKW]

I found it interesting to learn that:
1) FICO stands for Fair Isaac's Corporation,
2) FICO scores are a proprietary and licensed product,
3) There are nearly 50 different types of FICO scores, all utilizing different algorithms to calculate a score,
4) Companies that offer "Free FICO scores" have to pay to not only use the FICO name, but also to license a FICO product...and old, out-of-date FICO algorithms are cheaper.
5) "Based on FICO 8 Score" does not actually mean "this is your FICO 8 score"

Point being, I tend to doubt your score dropped 50pts...at least not for the reason given. Here's some good reading of you're interested: http://www.myfico.com/credit-education/credit-score-versions/

 

[SoulRaven]

Yes, that is the way it worked. How screwed up is that? We have been debt-free for years and were told that in order to improve our score, we need to buy on credit and make payments. I said, "We have never written a back check and never had a late payment never ever." That doesn't matter. Well, the only thing that would make us give up "debt-free" status would be a justified and necessary need.

Sadly, the country has become so accepting of debt that now it is almost a requirement. Sad.

Insurance companies and employers are now looking at credit history, hopefully, not just the scores.

 

[Trebor English]

The whole credit score business is a bank thing.  They use it to figure who to lend money to for better profit.  They don't have more profit from you if you pay off early.  A customer who keeps the loan going to the end gets them more profit.  From the point of view of the bank you are a bad little boy for keeping that money to yourself.  Shame on you for not sharing.

 

[MrNoodly]

The idea of a credit score is to get you further in debt and keep you there. The financial industry gets pissed off when you don't owe them a pile of money, so they "punish" you by making it harder to get up to your neck in debt. Since I only pay cash now, credit scores are totally irrelevant to me.

 

[tx2sturgis]

Yep....my house is long paid for, I accelerated all my vehicle loans over the last several years, paid them off with no lates, and then whittled down my somewhat substantial credit card debt to almost nothing.

My job history is stable, and I rarely apply for loans. I have never requested a credit increase on a card, nor declared bankruptcy, and of course, no student loans of any kind. Nothing delinquent at all.

Have I always had great credit? NO...20 years ago my credit was pretty bad...but I have worked hard to get the numbers up (and get myself out of debt for retirement) and it surprised me that the score went DOWN 50 points since I paid off my van last year.

Brad, I looked at the FICO info you sent...what a bunch of weasels they are....if you read between the lines it seems as if they are admitting that they have no clue WTF they are doing, but it doesn't matter as long as they convince the lenders to keep paying for their assinine scoring system.

Geeze.

 

[Queen]

Not sure how it will be in your case, but for some reason mine just went up 30 points. Really feels like they just screw with you for their own ends.

 

[jimindenver]

Mine has gone up 20-25 points depending on the time of month. I maintain two credit cards and it is higher after I pay them off monthly.

 

[SoulRaven]

I was told by the insurance company that just having the credit cards meant that we "could" charge up that amount of debt. We took care of that problem by bringing down all the allowed balances on the credit cards. The last time we changed home insurance, I was told by the agent we were considered highly desirable to insure, yes, 2 claims in decades on our home despite what a FICO score might say. I know one was raising the credit limit $2,000 a year without our asking, so it wasn't long before we had a LOT of credit. I have no intention of buying anything on credit from here on out unless I can pay for it monthly. Frankly, everything produced today is just junk I can do without for the most part or buy it used for a price I can afford to pay.

 

[Florida boondocker]

some new rules went into effect July 01, 17 that will help many

https://www.yahoo.com/finance/news/credit-reports-changing-impacts-score-221133006.html

 

[Land-Pilot]

Yes, you have to make CC purchases occasionally and pay them off right away to keep a high score. I was shocked when my came back lower than expected, I'm fortunate to be debt free too. I made a single purchase & payed it off that same month and my score shot up 110 points. After reading various posts on all kinds of financial & insurance topics it seems very apparent that they make it ever more difficult to get ahead or be mobile. What a sad state of affairs it all is.

 

[ProfessorChaos]

If you miss or even a couple of days late on a payment your score will drop. My score dropped 30 points when I was just a little late on payment and didn't recover for 3 weeks.

From what I understand your credit score isn't the determining factor in whether you get a loan or not.

 

[KroFlite]

Three years ago, my FICO 8 score was 585. I knew zero about how it all worked. Today, it's 815.  My financial position is not substantially different than it was three years ago, but I did learn how the credit scoring algorithms work, and exploited them to my benefit.  A lot of it is counter intuitive, and that gets people upset.  

Go to this site if you'd like to learn how to make it work for you...

https://ficoforums.myfico.com/

Don't get mad, get even.

 

[Goshawk]

My credit reports are all frozen. Previous state of South Carolina let me freeze everything at no cost. I don’t need offers of more. And don’t need identity fraud risk from someone pulling a fast move to steal my identity and get credit I do not know about.

Can turn my credit reports on that day for one day to use as needed. But did notice my scores are starting to decrease while locked.

Credit scores are only good for getting credit. If you have three zero balance credit cards with a maximum of $20k do you need more credit ?


Sent from my iPhone using Tapatalk

 

[Canine]

Credit scores are important for getting a job, renting an apartment, etc. All things being equal, if one applicant has a score of 600 and another one has a score of 700, the latter will get the job.

 

[Zil]

815. Wow.

 

[wasanah2]

I say the guy who gets the job is debt free.  My kids got nice jobs while being debt free.

I preached this to my kids.  Only thing one kid did was she took a loan (with her husband) on a 15 year mortgage after saving for half of the cost and putting that down.  They work hard and take second jobs to make bigger payments to again be debt free.  Credit used to be thought of as negative and now it's positive and gives you a better score?  So odd.  I mean in the 40s if you had to get a loan, it was considered that you had to take it because you were down on your luck.  People whispered about it behind others' backs.   Folks generally saved for anything they couldn't afford at the moment.  If you mortgaged the farm, you were in sorry circumstance.

I dunno.  I'd rather own something that's mine than owe someone for it. 

Credit keeps changing, so it doesn't surprise me that they change the rules.  Best thing I did was get my kids listening to Dave Ramsey.  They will be richer for it.

 

[John61CT]

Yes the old norms were smarter.

The **only** financially smart debt is to start a low-risk business where you want to keep control and your ROI (after owner's labor is costed at market rates) is **lots** higher than the interest paid.

Housing and cars are a consumable living cost and should be saved up for in advance.

But of course the system and social status are rigged to "force" people to unwisely take on debt.

To the point where the economy would collapse if they didn't.

Almost 95% of the increases in consumer spending since the 2008 crash, has been from the lower income population financed by sub-prime debt.

Total student debt at $1.5 Trillion, is now larger than the total debt loads for both credit cards and auto loans.

House of cards. . .

 

[wasanah2]

Housing and cars are a consumable living cost and should be saved up for in advance.

Total student debt at $1.5 Trillion, is now larger than the total debt loads for both credit cards and auto loans.

John, I wasn't happy when I heard about them buying a house with 1/2 down.  But it's none of my business any more.  However, they got a VA loan with a good rate (hubby was in the military) and they throw every spare penny into paying it off.  I think they'll have it paid off in 5 years the way they're going.  With seeing them work that hard, it makes me feel less uneasy about it.  They drive beaters like everyone else in our family does. 

The kids went to college, and it took everything extra that I had as a single parent (my husband died), and with me preaching debt-free as a lifestyle, they didn't have to pay for college.  It was a monumental chore that took exceptional discipline, and today I don't have much cash on hand, but I have a small pension to see me through to the end.  I gave them a firm start to not have such debt over them.

It seems so unfair that young people get so saddled with debt, and then people say, well they chose to take out the loans, but the pressure to do it is unreal.   Just say no to debt.  Seriously.