# why do I have a credit rating? And why ...? **URL:** \ **Category:** Factual Questions\ **Created:** [August 2, 2013, 9:29pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190 "2013-08-02T21:29:30Z")\ **Posts on this page:** 16\ **Page:** 2
**Author:** ![Telemark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/telemark/32/372_2.png) [@Telemark](https://boards.straightdope.com/u/Telemark)\ **Post date:** [August 3, 2013, 5:56pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/21 "2013-08-03T17:56:51Z")
> [@drewtwo99](#): > > Is it unethical to dispute late payments that I know really were late and my fault? Possibly. No, it’s not really in dispute. But that’s a discussion for another forum. 🙂 ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [August 3, 2013, 7:05pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/22 "2013-08-03T19:05:49Z")
> [@Chessic\_Sense](#): > > Now, where in the world are you getting this idea? Disputing credit reports is easy as pie. If a creditor posts a payment very late, you will have to prove (or at least convince them) that you didn’t mail it late. If you are successful at that :rolleyes:, next you have to submit the admission of the error to the credit bureau. _Three_ of them. It’s a lot of work if the offense is seemingly minor, and there’s no guarantee your claim will be accepted. I had one rejected, and the only explanation was “We won’t change it. Nyaah, nyaah.” Sue? Usually it isn’t worth it. My main point is that _there is no provision for error detection or correction_ prior to a customer’s complaint. If the customer doesn’t subscribe to a reporting service (Zendough is $30 per month), he may not know about the error until months later, because there is _no provision to notify the customer._ I think my favorite example of an egregious error was once when a wholesale supplier who I did frequent business with suddenly refused my check, saying I was on the “bad check” list. A phone call to the credit bureau did nothing. I had to write some threatening letters, and I eventually found out that someone with a different name, different SSN, different address, different bank, in a different state on the opposite side of the continent, had passed a bad check. Presumably some dumbass clerk keyed in the wrong information and I never knew about it until years later when I tried to buy something. The minute an intelligent being saw the situation, it was obvious that the bad report had absolutely nothing to do with me and it was removed. _There was no provision for error detection or correction._ What the clerk enters stays entered _until challenged._ ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [August 4, 2013, 9:30pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/23 "2013-08-04T21:30:41Z")
The thing I can’t figure out is why someone would create a system where ratings go from 300 to 850? Why on Earth wouldn’t they normalize it to run 0-\>100 or 0-\>1000 if they need more granularity? > [@Musicat](#): > > Of 3 revolving accounts, including one that I have had for 45 years, the total amount of available credit is $10,000. Since I pay cash for most everything, including computers and automobiles, I never need more. I have never asked for more. Big mistake. Once upon a time, I was turned down for a loan. I asked why and the loan officer went over my credit reports with me. It turns out my wife and I had too many credit cards with too much credit. We canceled two cards and asked that our limit be lowered on the remaining three. That increased my credit score and I got the loan. For years, the credit card companies had been offering to increase our credit limits. We had always accepted (one card was up to a $30,000 limit), not having any idea that we were lowering our credit scores by doing so. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [August 4, 2013, 9:35pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/24 "2013-08-04T21:35:13Z")
[quote=“Gary “Wombat” Robson, post:23, topic:665190”] …We canceled two cards and asked that our limit be lowered on the remaining three. That increased my credit score and I got the loan. For years, the credit card companies had been offering to increase our credit limits. We had always accepted (one card was up to a $30,000 limit), not having any idea that we were lowering our credit scores by doing so. [/QUOTE] That is contrary to what Zendough says (quoted in post #10): > [@](#): > > The available credit on your open revolving credit accounts is too low. > Having a healthy amount of credit available to you is a sign of responsible financial management. Unless – and I have never heard this – having too much or too little credit both count against you. If true, then it’s harder than ever to anticipate what they want, making it a big crapshoot at the customer’s expense. ---
**Author:** ![BorgHunter](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@BorgHunter](https://boards.straightdope.com/u/BorgHunter)\ **Post date:** [August 4, 2013, 10:17pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/25 "2013-08-04T22:17:33Z")
> [@Musicat](#): > > Unless – and I have never heard this – having too much or too little credit both count against you. If true, then it’s harder than ever to anticipate what they want, making it a big crapshoot at the customer’s expense. I’ve never heard that either. Credit Karma lists both “Credit Card Utilization” and “Total accounts” on my so-called “Credit Report Card”. An “A” for the former is 1-20%, and for the latter is 22+ (which seems like a totally absurd number of open lines of credit, to me). The only fly in this ointment is the fact that 0% utilization is a “C”, and I don’t know if there’s any rounding involved there. As has been mentioned numerous times, these scores are proprietary and it’s sometimes difficult to—apologies to Neal Stephenson—condense fact from the vapor of nuance, when credit agencies are involved. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 4, 2013, 10:27pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/26 "2013-08-04T22:27:29Z")
> [@Musicat](#): > > That is contrary to what Zendough says (quoted in post #10):Unless – and I have never heard this – having too much or too little credit both count against you. If true, then it’s harder than ever to anticipate what they want, making it a big crapshoot at the customer’s expense. A large part of it is that they don’t want to to know exactly what they want so that you can just game the system. Plus, I see the validity of a lower score because of too much available credit. If I have $50k worth of credit cards and $0 balance, you may worry that if you lend me money I can get into serious debt really fast and have trouble paying you off… Also, about your erroneous lien, you can certainly get that removed. Send a copy of the document from the state, and demand that they remove it. Also send a copy to the person that placed the lien. The credit bureau’s and the person who placed the lien are slandering your credit and committing a tortious act. ---
**Author:** ![jacobsta811](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jacobsta811/32/2893_2.png) [@jacobsta811](https://boards.straightdope.com/u/jacobsta811)\ **Post date:** [August 4, 2013, 10:48pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/27 "2013-08-04T22:48:29Z")
We’re conflating a bunch of different things here: 1. A Credit Score, generated by Fair Isaac (FICO), or by some other entity (FAKO). 2. Any entries about deliquent bank accounts, bad checks passed, etc, which are part of ChexSystems, and don’t impact your credit score at all unless they also result in a court judgement or collection action against you. 3. Actually being approved for a large loan, which is a combination of having a good credit _score_ and whatever criteria the bank itself sets. This is where the “lots of credit is good and bad” thing comes in. Your credit score is higher with lots of $ of credit open (to some undefined max), and it brings down your utilization percentage, (% of open credit in use). If utilization % gets really high, that really kills your score. But the bank itself doesn’t necessarily want to see an enormous amount of open credit - they worry you might take out a big loan and then also max out your credit cards. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [August 4, 2013, 11:09pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/28 "2013-08-04T23:09:11Z")
> [@jtgain](#): > > Plus, I see the validity of a lower score because of too much available credit. If I have $50k worth of credit cards and $0 balance, you may worry that if you lend me money I can get into serious debt really fast and have trouble paying you off… This was precisely how they explained it to me. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [August 5, 2013, 12:54am UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/29 "2013-08-05T00:54:09Z")
[quote=“Gary “Wombat” Robson, post:28, topic:665190”] This was precisely how they explained it to me. [/QUOTE] May I ask how long ago this was? Perhaps a few decades ago? The attitude ha changed dramatically in the industry. Indeed it used to be that lenders, especially mortgage lenders, would be worried that you would take out a loan and then next day run out and max out all your credit cards. But as credit cards became more ubiquitous and much easier to get, lenders realized that you could close all your accounts the day before applying for a mortgage loan and then get ten new cards the day after you get the money. And, additionally, experience has shown lenders that the credit score is a much better predictor of repayment probability than the many more subjective factors that they had been using in the past. And your credit score is helped by having additional available credit, assuming you don’t use it all up and you pay on time. I can’t say that there is absolutely no lender out there that would get spooked if you had too many credit cards, but such lenders are rare. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [August 5, 2013, 1:57am UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/30 "2013-08-05T01:57:48Z")
> [@jtgain](#): > > Also, about your erroneous lien, you can certainly get that removed. Send a copy of the document from the state, and demand that they remove it. Also send a copy to the person that placed the lien. The credit bureau’s and the person who placed the lien are slandering your credit and committing a tortious act. The state placed the lien. The state placed the info on the credit reports. The state has admitted the error. I have a letter from the state. The credit bureaus have been notified. Or, as I said in post #16: > [@](#): > > I have an official document from the state saying that the lien “was placed in error” (their exact wording) and has been removed. My point is that the entire burden to detect, prove an error, and correct an error rests on the consumer. You are guilty until you take measures to prove your innocence. And there’s no requirement that you be told of an accusation. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [August 5, 2013, 1:27pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/31 "2013-08-05T13:27:30Z")
Well, hopefully the [$18.6M awarded to a woman suing Equifax](http://www.upi.com/blog/2013/07/29/Woman-sues-Equifax-wins-186-million-over-credit-report-mistakes/9711375146362/) over mistakes in her credit report will light a fire under the asses of credit reporting agencies to do their job in regards to disputes. ---
**Author:** ![janeslogin](https://avatars.discourse-cdn.com/v4/letter/j/df788c/32.png) [@janeslogin](https://boards.straightdope.com/u/janeslogin)\ **Post date:** [August 5, 2013, 2:42pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/32 "2013-08-05T14:42:25Z")
I will invite one more conjecture from people here and then leave this topic. Why do auto dealers want a credit score on customers who pay in cash? ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [August 5, 2013, 3:12pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/33 "2013-08-05T15:12:42Z")
> [@janeslogin](#): > > I will invite one more conjecture from people here and then leave this topic. Why do auto dealers want a credit score on customers who pay in cash? Who says they do? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [August 5, 2013, 5:14pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/34 "2013-08-05T17:14:50Z")
> [@pulykamell](#): > > Well, hopefully the [$18.6M awarded to a woman suing Equifax](http://www.upi.com/blog/2013/07/29/Woman-sues-Equifax-wins-186-million-over-credit-report-mistakes/9711375146362/) over mistakes in her credit report will light a fire under the asses of credit reporting agencies to do their job in regards to disputes. Miller had attempted to dispute her account [eight times over the course of two years](http://media.oregonlive.com/business_impact/other/Miller%20v%20Equifax.pdf), so there are likely to be very few people with as strong a case. > [@janeslogin](#): > > I will invite one more conjecture from people here and then leave this topic. Why do auto dealers want a credit score on customers who pay in cash? They don’t. If you tell them you’re paying cash they might want one because lots of people say that and then finance (like me). ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [August 5, 2013, 5:38pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/35 "2013-08-05T17:38:13Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Miller had attempted to dispute her account [eight times over the course of two years](http://media.oregonlive.com/business_impact/other/Miller%20v%20Equifax.pdf), so there are likely to be very few people with as strong a case. Yes, I read that. But it seems some posters are saying that disputing is futile. Hopefully, not so much after that case. ---
**Author:** ![Gary\_Robson](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gary_robson/32/3448_2.png) [@Gary\_Robson](https://boards.straightdope.com/u/Gary_Robson)\ **Post date:** [August 5, 2013, 8:53pm UTC](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190/36 "2013-08-05T20:53:30Z")
> [@Alley\_Dweller](#): > > May I ask how long ago this was? Perhaps a few decades ago? Roughly ten years ago. Eleven at the most. [Previous page](https://boards.straightdope.com/t/why-do-i-have-a-credit-rating-and-why/665190.md?page=1)