Credit Scores

Reply

  #1  
Old 11-02-16, 10:51 AM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
Credit Scores

I received a new MasterCard the other day. Today I went on-line to activate it and I find I now have an option of checking my FICO score. When I did it came up as 818 as of September 27. Going to a different "credit rating" site, after logging in I see my Vantage score from each of two credit reporting agencies. Both had dropped approximately fifteen points over the last month, one now being 805 and the other about 810. Now I know that having score in the 800+ range are excellent but the logic for my never going over about 820 totally escapes me.

What burns me is the REASONS given for the drop.

1. I increased the balance on each of my two credit cards.
2. My credit union closed an open "signature" loan account that I had paid off more than ten years ago and had not used since.
3. There was no history on any non-mortgage loans.

I USE my two credit cards like cash. The balances fluctuate all the time and I pay them in full every month. The ONLY outstanding loan I have is a mortgage that resulted from a Home Equity Line of Credit (HELOC) that I opened when I retired. When the "draw" period ended, earlier this year, the outstanding balance was made into a 15 year mortgage. The balance is approximately $7,000. and I am on track to having it paid off in about fifteen months.

Previous reports have stated that while I use my credit wisely, do not have high balances and have a perfect repayment record, my credit score is lower because I do not have more accounts. What kind of stupid "reasoning" is this? I have absolutely NO NEED FOR MORE CREDIT ACCOUNTS but I am penalized for being prudent and living without debt. I would think that PAYING ONE'S DEBTS and not increasing the possible credit load would weigh much more heavily than it obviously does.

This society is crazy.
 
Sponsored Links
  #2  
Old 11-02-16, 11:49 AM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
My credit score [according to Discover Card] was 840 until I paid off my jeep - then it dropped to 827 and has stayed there for the last year or so. Back when I was young I never could understand why those waist deep in debt could borrow more but those that mostly paid cash [no debt] had a hard time getting a loan. I know a lot has to do with payment history but it does seem like there is less of a reward for being prudent with your finances .... other than not having to pay the extra bills
 
  #3  
Old 11-02-16, 01:37 PM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
I can understand how a repayment history is important to a lender but a person needs to start somewhere.

I remember when I was in my early twenties I applied for either a Visa or a MasterCard and was rejected. At that time a person could make a telephone call and actually talk to a real live person so I did that. I asked how a person could establish credit if it required a history before someone would extend them credit. He was very nice and explained to me that since both Visa and MC could be used in so many places for so many different items they were a little harder for a first timer to obtain. He suggested that I instead apply for store credit cards, Sears, JC Penny and any local stores that offered cards.

I did and in most cases was granted a card with a fairly low credit limit, usually between $200 and $500. I bought stupid stuff like kitchen towels or a frying pan, things I would have normally paid cash for, but put them on the card. I always paid the bill in full each month. I also had a Chevron card for gasoline.

After about a year, maybe a year and a half, I again applied for a major credit card and this time I was approved. I probably had a half-dozen cards when I got married and then my bride wanted to open several more accounts at other stores. I demurred, stating that the other stores took both Visa and MasterCard so why should we also get their store card? Her answer was so we could have more credit. To me that just seemed like a means to get into debt faster and farther so I never applied for any more cards. When we got divorced I closed all the store cards since except for Sears they were all accepting the major cards. Since that time I have had Visa cards issued by several different banks but only one at a time. My current Visa is issued by one of my two credit unions as over the years each of the other issuers gave me good reason to terminate the arrangement.

I dropped my gasoline card decades ago because all gas stations I have gone to in the last thirty years accept major cards or in a pinch, cash. I have two or maybe three times gotten a Goodyear card when I bought new tires but I never used it EXCEPT to buy tires so they would usually cancel the account in a year or two. Technically, I may still have a Sears account but the card was destroyed decades ago. I never found a way to close the account at a store like I did with all my other store cards. Then again, I haven't bought anything at Sears for at least ten years and maybe closer to twenty.

My point is, I have zero use for any more cards or any kind of time payment accounts. The only time I haven't paid cash for a car was the first car I ever bought and that time I only financed about 25% of the total cost. I think the last time I had to carry over a balance on my cards was when I bought a new refrigerator, dishwasher and range for my previous house, more than 17 years ago. When I had a new patio door installed some 15 years ago I was offered a "six months, no interest" loan and I did take that, making a single payment for the entire balance five months later. Fact is, I think I've twice had that offer and taken it.

Yet my friend that has 47 cards and loans along with still having a mortgage and HAS to work even though she is 68 (and in excellent health) has a higher credit score than do I.
 
  #4  
Old 11-02-16, 02:43 PM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
My first CC was a Sears card, I needed a new washing machine and they gave me a card that had a limit about $10 more than the washer cost I think the minimum payment was something like 3-4 yrs but I was determined to have it paid for before the warranty ran out. I think I then graduated to gas cards although I no longer have any. The only CC I have that can't be used most anywhere is my Lowe's business card.

Probably my main aversion to multiple cards is the hassle of having to pay off multiple bills
 
  #5  
Old 11-02-16, 04:01 PM
Norm201's Avatar
Member
Join Date: Sep 2013
Location: USA
Posts: 6,039
Any credit card or qualification and sign up for a loan or credit line (even if it's not used) is considered a debt or "active" credit. A request for a loan will be based on many things including the number of credit cards and the limit of each card, weather or not it is or ever was used.
 

Last edited by Norm201; 11-02-16 at 04:52 PM.
  #6  
Old 11-02-16, 04:36 PM
Handyone's Avatar
Forum Topic Moderator
Join Date: Aug 2000
Location: U.S.
Posts: 5,451
I think an 805 credit rating is very good, excellent. I would say someone with a 740 could qualify for any type of credit they may want. Not just credit, but the customer can be choosy and get the best deals on interest.
 
  #7  
Old 11-02-16, 07:22 PM
Member
Join Date: Jan 2011
Location: United States
Posts: 2,446
Not sure what my current credit score is although I know my current major bank does offer the information for free to its customers. Also I have credit protection that was offered to me for free from my health insurer because they lost some of their data to hackers. I know my data is fine though as I haven't seen any bad reports. We had CD's in another bank and when they were going to be renewed they wanted to give us ridiculous interest so we quit using their credit cards too. Just recently the CD bank informed us they were closing our credit card accounts for lack of use, I say good for them.
 
  #8  
Old 11-02-16, 07:33 PM
Member
Join Date: Jan 2011
Location: USA
Posts: 4,216
I agree 100% there logic makes no since.
It used to be if anyone checked your credit score it went down.
Go to buy a house and search for the best rate and you got hit again.
Only thing I owe on is a mortgage on a rental property I bought when the going interest rate was 6%.
I wanted to do a refi and was turned down.
I have never been late on a payment in 10 years, I have 0 debt except that one payment.
The property is worth at least $20,000 more then the loan I was asking for.
I even offered to let them lock in the amount of the loan payment X 3 from my savings account to cover if someone moved out and it was not rented.
In the summer at this same bank I've been depositing 2 to 3 hundred dollars every other day.
My payment would have been about $100.00 less a month then I'm already paying and they still would not go for it because I have no credit history for the past 5 years.
If I want something I pay cash or use my debit card.
I guess if you want to borrow money you have to prove you do not need it or be in debt.
 
  #9  
Old 11-02-16, 07:44 PM
Handyone's Avatar
Forum Topic Moderator
Join Date: Aug 2000
Location: U.S.
Posts: 5,451
closing our credit card accounts for lack of use, I say good for them
Credit cards are different. Even with a high credit score, some banks will charge you high interest.
For example Navy Federal Credit Union is probably unbeatable in service and home and other loans, but there's no way I would have a credit card from them.
 
  #10  
Old 11-03-16, 12:40 AM
Marq1's Avatar
Member
Join Date: Sep 2016
Location: USA MI
Posts: 2,674
Makes about as much sense as trying to figure out the "insurable" rate that my insurance company gives me to establish my rates. Really got into it a couple of years ago to understand why it was not a perfect score since I had never had a ticket or accident. Seems the rate is more than just your experience, the zip code you live in, your credit score are all combined to determine rates.

I can to some extent understand where you live can influence your rate but your credit rating?
 
  #11  
Old 11-03-16, 01:36 AM
Member
Join Date: Jan 2011
Location: United States
Posts: 2,446
I can to some extent understand where you live can influence your rate but your credit rating?
That isn't unusual Marq1 I had a tenant once who was a secretary for an insurance company but took college courses so eventually she could sell insurance too. She knew a great deal about the industry and said that they always looked at credit scores. By looking at your credit score they can tell whether you pay your bills on time just by that one number. They go beyond credit scores though and look at your whole credit report.

So a great deal goes into a credit score and why they look at people they way they do at banks is different as they want to know about your deposit accounts with all banks then they might issue you a credit card. Some banks though and particularly the bank that starts with a W are predatory lenders and will lend to just about anyone which helped to start the bank crisis we had a few years ago. Thankfully I can say that the government for a change was doing its job and has fined bank W.
 
  #12  
Old 11-03-16, 04:09 AM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
My credit score has been in the 800s for as long as I've been aware of it but my insurance company claims my score isn't high enough to get their good credit discount - I assume it must be a perfect score to qualify I do get the good driver's discount

Personally I don't much care what the interest rate is on my credit cards. I use my Discover Card a lot but have no idea what they charge for interest BUT since I pay the bill in full each month I pay no interest. I won't have a card that charges an yearly fee for the card!
 
  #13  
Old 11-03-16, 01:06 PM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
I'm like Mark, my credit score has been in the high 700s to low 800s for at least two decades. Although they seem to have stopped posting it, the credit reporting website I use used to have several different scores including an automobile score. Mine was never better than "Fair" but no explanation was ever offered. I suspect it was because I drove a car more than ten years old. Never mind that the car was pristine and I hadn't had any kind of violations in twenty years.

I get good driver discount as well as multiple policy discounts. I'm reticent about changing companies because I have had very good service from my insurance company, they never balked a bit to pay for windstorm damages to my house and when my car WAS hit the claim was paid without any hassle. I even got my deductible refunded a few months later when they collected from the other guy's insurance.
 
  #14  
Old 11-03-16, 02:30 PM
Member
Join Date: Mar 2007
Posts: 1,341
Brian,

Why not? I've had an NFCU card for many years (been a member since 1972) with never a problem. It's the only personal credit card I have ever had.
 
  #15  
Old 11-03-16, 02:40 PM
Member
Join Date: Mar 2007
Posts: 1,341
"The only time I haven't paid cash for a car was the first car I ever bought and that time I only financed about 25% of the total cost."

I'm the same. I have never financed a car. A guy a lot smarter than me convinced me early on that the only way to buy a car was to pay cash. I bought my 1st new car 50 years ago ('67 Camaro SS) and paid cash. However, I have made car payments for all of my adult life. I just pay myself, putting the money into a car account until I have enough for a new car.
 
  #16  
Old 11-03-16, 03:08 PM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
I have made car payments for all of my adult life. I just pay myself, putting the money into a car account until I have enough for a new car.
IMO that should be a way of life for most anything you purchase! Sometimes after you've saved the money you reconsider if it's worth spending it all on whatever it is Unfortunately my wife is the total opposite. Trying to convince her might be a lost cause, she'll listen, agree and then go out and buy something on credit
 
  #17  
Old 11-03-16, 04:05 PM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
That 25% was a whopping $1,500. (It was in 1974) and I paid it off in about a year. After it was paid I continued making the same payment to the credit union only it was going into savings rather than a loan repayment.

Every time I would get a raise I would take at least 50% of the raise and set up deductions to savings. IRA, Savings Bonds, and 401(k) accounts. I had already learned to live on the amount prior to the raise so while I was saving a significant amount I still got a modest raise in take-home pay.

The whole key to getting ahead is to spend less than you earn.
 
  #18  
Old 11-03-16, 05:33 PM
Marq1's Avatar
Member
Join Date: Sep 2016
Location: USA MI
Posts: 2,674
Personally I don't much care what the interest rate is on my credit cards. I use my Discover Card a lot but have no idea what they charge for interest BUT since I pay the bill in full each month I pay no interest.

I have to agree, when I got my first card in 74 I would carry a small balance to buy my stereo equipment, some which I still have.

I do have a card that requires an annual fee but the cash back eclipses that by 4-5 times so that should not be a factor in card choice.

Now lets have a conversation on retirement, have read where the average account is something like $20K, and you wonder why entitlement spending by the government will never be addressed!
 
  #19  
Old 11-03-16, 06:58 PM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
Now lets have a conversation on retirement, have read where the average account is something like $20K, and you wonder why entitlement spending by the government will never be addressed!
Sure, let's have that discussion. You start it and please define what you mean by "the average account" (what account?) and also how you define as "entitlement spending".
 
  #20  
Old 11-04-16, 03:00 AM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
After it was paid I continued making the same payment to the credit union only it was going into savings
I've only bought one home on credit and when I paid it off I continued to make the payments but put the money in savings instead That allowed me to finance the sale of that home and still pay cash for the home I live in now. I'm sure I could have bought fancier homes with a mortgage but I sleep better at night not having to worry about payments. I couldn't imagine being retired and having to pay a mortgage or rent. I have had mortgages for rental property and cosigned for the kid's homes.

Maybe I'm just cheap but I hate to pay interest
 
  #21  
Old 11-04-16, 05:12 AM
Norm201's Avatar
Member
Join Date: Sep 2013
Location: USA
Posts: 6,039
When it comes to a car (buy cash or on credit) or with most items I agree, pay for it or you can't afford it. However, if you look at the math and the statistics those who buy on credit and only pay the minimum get the biggest bang for their buck. Due to inflation your dollar is worth more at time of purchase than after a purchase. Of course it's living on the edge and can have dire consequences if you default. I for one could never live like that. Both my work ethic and my sense of insecurity would cause me to have a nervous breakdown. But many people have no problem with this type of life style. I also know what it's like to be without a job and the sense of safety that I had no outstanding debt and a savings to fall back on.
 
  #22  
Old 11-04-16, 01:49 PM
Member
Thread Starter
Join Date: Mar 2006
Location: Wet side of Washington state.
Posts: 18,399
I worked with a man that had a neighbor like that. This neighbor seemed to always have the latest and greatest of toys, a new car, big screen TV when they first came out, jet skis, snowmobiles, you name it. When Ronnie asked him how he could afford it the neighbor essentially replied with, "Dollar down and a dollar a week". Ronnie pressed him, asking if he wasn't fearful of having these things repossessed and the reply was, "Yeah, but in the meantime I get to play with them."

Like Norm, I could never live like that.

One time my adopted sister went out and bought a bunch of new furniture on credit. The next month she declared bankruptcy (for the second time). She told me she got the furniture because she knew the debt would be dropped in bankruptcy. I told her that she stole the furniture. She replied that if the furniture company (it was a nation-wide cut-rate company) was stupid enough to extend her credit they deserved to lose.

I didn't pay cash for either of my homes but I did pay them off way early. The first was through a refi brought about by my divorce. I went from owing about $16,00 over 11 years at 8-3/4% to owing $40,000 over 30 years at 10%. I paid that new mortgage off in eight years. About a year later I had had enough of the old place and found a new(er) home to live. I put down 10% so had to pay PMI of about $90 a month. I had a 5/25 ARM at 7.25% and vowed I would never pay a higher interest rate. I did some minor repairs on the old house and sold it in less than six months, putting the proceeds against my new mortgage, thereby eliminating the PMI. I made double and triple payments as I could, not just on the principal but double or triple the entire monthly minimum. Even after having my ideal job (paying into the low six figures) eliminated and taking about a 30% cut in pay I was able to pay off that mortgage in less than four years. Rather than doing a refi and taking out money like so many people were doing to finance an extravagant lifestyle they could never sustain, I simply increased my savings to make darn sure I would be able to retire at 55 years of age.
 
  #23  
Old 11-04-16, 02:00 PM
Forum Topic Moderator
Join Date: Mar 2005
Location: USA
Posts: 44,034
My wife has a niece that has refinanced her home multiple times over the last 20 yrs always drawing out whatever equity was in it As far as I know she hasn't refinanced in the last 5 yrs or so but she is approaching 60 - maybe she's finally getting it figured out.

I'd rather do without and have money in the bank than live high on the hog and owe everyone!
Not sure how anyone could enjoy retirement with a lot of bills to pay, especially for a place to live.
 
  #24  
Old 11-12-16, 03:18 PM
Member
Join Date: Mar 2014
Posts: 45
More cards,more money to the companies. I have even heard of people getting denied a loan with a 800+ plus score. Never met anyone personally though.
I'm assuming because those people are responsible and don't pay as much interest and have impulse control . Society thrives on lack of impulse control and lack of responsibility. Nuts ain't it?
 
Reply

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Thread Tools
Search this Thread
Display Modes