I ran into some financial issues 2015-2016. Had a bunch of late payments on credit cards,car loan etc. My credit went from the mid 700’s at the time into the tank. All that stuff got paid off in late 2016 (except for 1 that didn’t get cleared up till fall 2017). but i have gone credit free since.
I decided i’d like to rebuild a score so I checked back in late summer and I was in the 650’s range with the 3 agencies. But after all those years, I guess that 2015/2016 stuff has all fallen off. I applied for and was approved for 1 credit card in the fall. Made a few small purchases and paid the balance.
I checked my score again last week and i’m back in the 730’s. Is that normal? It seems like a dramatic jump for such a short time. Granted I was basically back to a blank slate before getting a new credit card.
And that’s why I hate credit scores, or more precisely, the way they are calculated. They favor the credit card industry and influence people to get more credit than they need. My credit score has been hovering around 800 for years, but I only have one credit card. So whenever I make a big charge, I get a big hit on my credit score even when I pay it off within a couple of weeks. Last month my score went down 40 points because I charged the airfare and hotel for a vacation we’re taking next month. So any more I pretty much don’t pay any attention to my credit score. Fortunately I don’t see any need any time soon to apply for any sort of loan.
It is a stupid metric. Anything 750 or above (850 is the max possible) is considered Excellent so 751 and 850 are effectively equivalent. I did a lot of remodeling on my house last year so I had them increase my limit so my score wouldn’t drop. It’s like 810 now since my balances are super low.
When my daughter left college, we had a discussion about finance and her creditworthiness was one thing to consider. Apart from her student loan (which doesn’t count) she had no debt and very little cash.
I was buying her a [cheap] car, so instead of making it an outright gift, she bought it and raised a loan in her own name. This showed that she was capable of paying off a debt (even though it was really me) and started her on the ladder of becoming a good credit risk.
I have no debt nor have I used a credit card for many years. My credit must be in the toilet. Thank goodness I don’t have to rent a house anymore and plan to drive our Hondas until I’m too old to drive.
I have a trick I play with stores like J.C. Penney, which has a policy that mandates closing your account if it is not used for two full years. I let that happen and THEN go shopping there. When I get to checkout, they will always ask, “Do you want to get a J.C. Penney credit card? It’s 30% off of all purchase on the first day.” I say, sure, and I get a big discount. Then, when the new card arrives in the mail, I tag it with a date and put it in my drawer for two years. Rinse and repeat. LOL
But isn’t there is a point where more cards lower the rating also. I recall anything over 3 cards was a negative, that included store cards.
When I applied for my last mortgage just over 3 years ago, there was some small difference between a rating of 751 and >801. Even 1/8th of a percent can add up to a lot of money on a mortgage. Are you sure about that fact? Maybe it varies by Bank/Mortgage Company.
In this context, a bill you pay means money coming from you to a service provider. Paying those bills consistently on time shows that you reliably have the financial resources to do so, and the discipline to follow through on sending those payments - whether that’s by automatic debits from your bank account, checks you write by hand and put in the mail, or cash you hand over at a payment window. In the absence of a history of credit cards or loans, this is useful information that helps inform lenders of your credit worthiness.