Community Chat

[Lipstickdiva]

There is a fine line with credit scores.  If you have too many balances on too many cards, you are dinged for that. 

Back in the late 90's my DH and I applied for a mortgage loan for a second home that we were buying to rent out.  I had a lot of open credit cards but nothing on them.  The bank we were using wanted me to close all the cards because they said my debt was too high.  They considered all that open credit to be debt because it was possible that after they gave us the loan, I could go out and run every card up to the limit and then have all those monthly payments.  I had purposely not closed the accounts thinking I would get hit with my score being lowered for closing them.

All 3 agencies aren't the same either.  Your score can be higher or lower depending on what agency the lender pulls from or they can get an average of all 3.  Our local credit union looks at your FICO score first off on car loans.  If you score is over a certain number, you qualify for a loan regardless of anything else.  

I paid off a Visa card I had and my credit score went down 6 points.  It has to be from that because absolutely nothing else changed.  Made no sense to me. 

[Bird mama]

I just paid my house off, so it will be interesting to see what kind of hit my FICO score takes.

[onlyshopsonline]

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@Bird mama wrote:

I just paid my house off, so it will be interesting to see what kind of hit my FICO score takes.

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We paid ours off last year. Didn't make a difference at all!  

[Bird mama]

@onlyshopsonline   Wow, that makes me happy.  I had been cruising along at 850 and my score dropped to 841 a few months ago and I still haven't figured that out.  I just want to keep a decent score since State Farm uses credit score for insurance which I think is hysterical.

[Bri36]

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@Bird mama wrote:

@onlyshopsonline   Wow, that makes me happy.  I had been cruising along at 850 and my score dropped to 841 a few months ago and I still haven't figured that out.  I just want to keep a decent score since State Farm uses credit score for insurance which I think is hysterical.

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I wouldn't worry about a few points when you're up in the highest range anyway. 

[onlyshopsonline]

@Bird mama  It's a game to me lol. We were at 850 for quite some time. But if we use more than one credit card in a month it will go down a little. We always pay our balances, but sometimes one card offers really good rebates.  Paying off every month doesn't count. However we paid a car off one year early, and bought another more expensive car, and our score went up.  

[Bird mama]

@onlyshopsonline  You got that right - it is a game.  I get my Fico score with Amex.  So, if I keep zero balance on everything my score goes down a little.

If I use my Visa and Amex for a little something and pay it off before Amex runs the Fico score - it goes down a little.

If I pay the balance after the week Amex runs the Fico score, it's up a little.

It's one big crock.

It's stupid that insurance rates are based on a person's credit score.  I could have a good score and be a menace on the road (I'm not, just saying) and my rates stay lower.

[Ibby114]

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@HappyDaze wrote:

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@Ibby114 wrote:

They don't want you to have more debt, they want you to have more available credit.  The better you manage your debt percentage is what boosts your credit rating.  It makes perfect sense to me!

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Ah well I used to think this were true until I had no debt and I've always had much more available credit than debt. I have 4 credit cards open, 2 of which are only used once a year just to prevent the banks from closing them, and they are all paid off every month. So the available credit is very high (my debt to income ratio is very low, which is suppose to be a positive). However, now even that is considered a negative based on the description in the reason for my credit score (which is still high, just not perfect). According to them, they do want to see month to month carry over debt to make sure we can handle making timely payments. Weird- i thought paying off my debt every month  is doing that very thing, same with making timely payments and never once a late payment for 26 years ?

So it is not as black and white as you stated. It SHOULD be, but it isn't. 

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I don't think 'seeing month to month carry over debt' is the priority - it's about using the cc in general (vs not).  I love  cc rewards - I literally get free money with some of the rewards offered.  Bank of America for example -  when my rewards accumulate to a certain level I can either apply that to my cc balance.  Or take that  dollar amount  - plus another 50%-  for my savings account!!  $100 becomes $150 ...

[gidgetgh]

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@151949 wrote:

I get an e mail that they lowered our score and I should check it out. After I go there - they lowered it 4 points so I look into why. It was because they want us to have more than the 2 credit cards we have. How bogus is that! In order to improve our rate by 4 points we need more debt. They can put their 4 points - well you know where.

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@151949- you got an email saying that your credit score had lowered????Was it one of the credit bureaus that emailed you?  I find that very odd. 

Mine fluctuates all all the time. I wouldn't even blink for 4 points. 

[Moonchilde]

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@LTT1 wrote:

I agree it is pathetic and wrong.

You can take out two cards, make a minimal charge (couple of dollars) pay it right off and then cancel it.

This way it goes on your history as paid in full.

what a hassle for nothing, right?

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Officially "cancelling" a credit card with the company, vs just not using it, is known to lower credit ratings. It signals to the credit monitors that you think your debt is getting out of hand.