Received notification my credit score just dropped 40 points.
- Thread starter GON
- Start date
That my point, they are cherry picking what they want to look at to market a product (your credit score) to companies that issue loans. How they can issue a credit score without looking at assets is ridiculous
The one reason I paid off debt(home, cars, etc) is you wake up different not owing anything. Can’t explain it.
Yes I pay utilities and taxes. I feel like I am control of money and honestly choices to try new jobs etc.
Not saying what I do is better just a why for me. And yes I lack a credit score apparently now.
I had a house that was completely paid off. However, I did not like the neighborhood or the city it is in. It was also too small and pretty poorly constructed. It was time to sell and move elsewhere...
After I paid it off, I didn't wake up any different from when I owed money on it. Having it paid off pretty much meant I'd walk away with EVEN MORE money if I did sell it....and I knew I was going to sell it more sooner than later.
Why do they have to know assets as long as you pay your bills on time?
A consumer is not going to provide information for weeks to a credit card company or car loan company like they do when you buy a home. Nor will they want to pay a high cost for the process which is very expensive and even then, a mortgage company wont even help you if you have a poor score, what good would that do if your such a high risk?
This works out quite well for companies that use credit scores and why they use them. It also works out well for the consumer if your one to pay your bills.
Assets dont matter if you pay your bills on time and assets are worthless if you dont pay your bills on time.
- Payment history (35%)
- Amount owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
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Agree..but sometimes you need to go through it to talk about it and help other people... He did...
I have to update my "Balance Sheet" for my business loan every year - it's annoying for a single bank - can you imaging doing it for all three CBs whenever they asked for it?
Because humans are only honest as long as you have something to lose.
In my experience the "Exceptional" and "Very Good" tiers are usually lumped together for most loan products.
I agree. While I do agree with his comments most of the time...some things like paying cash for a car or not having at least one credit card I dont. Most people dont have a large sum of cash to purchase a car or a huge amount to put down on a house...I went through hard times in my 20s....with money...mostly my fault...over time got out of it and never looked back...I learned about how to use credit in my favor when needed and to live within my means...I am retired now with now debt and still live within my means...
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My score changes when I charge $10,000 or more. Changes back when I pay it off at end of month.
Credit scores are widely misunderstood, and discussions based on suppositions and not facts -- on what they are, and how they're used -- often only breed more misunderstanding.
To understand what your credit score is requires acknowledging the fundamental truth -- your credit score quantifies your ability to, and history of using credit responsibly. Nothing more, nothing less. If you view it as some sort of proxy for a pseudo social credit rating, or status, you're doing it wrong.
Secondly, credit scores are not static, they fluctuate normally in the course of living life, and using and borrowing money, as that activity is reported to the credit agencies. Obsessing over such changes over the normal course is unnecessary agita. The time to pay attention to your score is when you're planning to apply for new credit, when buying property, or a car, when the potential direct impact is the greatest. Landlords, insurance companies, and services like phone carriers look at them too, but for most people, it should not be a concern. Whether those entites should use them to begin with is a whole other topic.
Income, and assets are not factored into your score, and have no direct bearing on it. Yes, they certainly have an impact on your ability to pay your debts., and lenders darned sure consider them before agreeing to lend you money, and do. However, they are not a part of the formula or the score.
It is an illogical conundrum, yes, but carrying no balances, and not actually using your credit, can lower your score. As with most things, it is not black and white, or right or wrong. From a lender's point of view, someone who makes a lot of money, and pays off their debt regularly and on time does represent a good credit risk, but is not actually borrowing any money, demonstrating that they can carry debt, or more importantly, paying interest. But someone who makes little money, carries a balance, but still does make their payments regularly and on time, is a better customer for them, and can score just as highly. Remember the part about income not being an explicit factor? (Another hint, "on time" is not cited twice by accident.)
Credit scores are not considered on a granular level, but in ranges. So the points you may gain, or lose, within a period, have no significant impact most of the time.
Where it can have an impact, is for those who straddle the line, and want to qualify for a better product, or rate, but there are ways to address those situations.
For most people, the largest sums of money they'll ever borrow is to purchase property. And in that business, lenders are looking at a lot more than just your credit score, including (steady) income, and assets, weighed against how much your have borrowed, and want to borrow. Those two things are just not represented in the credit score, or expected to be. As a practical matter, there are multiple credit bureaus that provide scores, and while you may feel great about that 840 one gives, and not so great about the 780 the other gives, those are discarded and the one's that's actually used is the 820 from the third bureau, and the main takeway from that is that above 800, not by how much it is.
Call it a game, if you wish, and try to opt out, but keep in mind that most people do have to play, and the worst way to go about doing so is not knowing the rules, or their objectives.
To understand what your credit score is requires acknowledging the fundamental truth -- your credit score quantifies your ability to, and history of using credit responsibly. Nothing more, nothing less. If you view it as some sort of proxy for a pseudo social credit rating, or status, you're doing it wrong.
Secondly, credit scores are not static, they fluctuate normally in the course of living life, and using and borrowing money, as that activity is reported to the credit agencies. Obsessing over such changes over the normal course is unnecessary agita. The time to pay attention to your score is when you're planning to apply for new credit, when buying property, or a car, when the potential direct impact is the greatest. Landlords, insurance companies, and services like phone carriers look at them too, but for most people, it should not be a concern. Whether those entites should use them to begin with is a whole other topic.
Income, and assets are not factored into your score, and have no direct bearing on it. Yes, they certainly have an impact on your ability to pay your debts., and lenders darned sure consider them before agreeing to lend you money, and do. However, they are not a part of the formula or the score.
It is an illogical conundrum, yes, but carrying no balances, and not actually using your credit, can lower your score. As with most things, it is not black and white, or right or wrong. From a lender's point of view, someone who makes a lot of money, and pays off their debt regularly and on time does represent a good credit risk, but is not actually borrowing any money, demonstrating that they can carry debt, or more importantly, paying interest. But someone who makes little money, carries a balance, but still does make their payments regularly and on time, is a better customer for them, and can score just as highly. Remember the part about income not being an explicit factor? (Another hint, "on time" is not cited twice by accident.)
Credit scores are not considered on a granular level, but in ranges. So the points you may gain, or lose, within a period, have no significant impact most of the time.
Where it can have an impact, is for those who straddle the line, and want to qualify for a better product, or rate, but there are ways to address those situations.
For most people, the largest sums of money they'll ever borrow is to purchase property. And in that business, lenders are looking at a lot more than just your credit score, including (steady) income, and assets, weighed against how much your have borrowed, and want to borrow. Those two things are just not represented in the credit score, or expected to be. As a practical matter, there are multiple credit bureaus that provide scores, and while you may feel great about that 840 one gives, and not so great about the 780 the other gives, those are discarded and the one's that's actually used is the 820 from the third bureau, and the main takeway from that is that above 800, not by how much it is.
Call it a game, if you wish, and try to opt out, but keep in mind that most people do have to play, and the worst way to go about doing so is not knowing the rules, or their objectives.
GON
$100 Site Donor 2024
Just a supplemental piece of information. We typically rent, instead of buy our primary residence, as we move very often. It is a very competitive rental market for homes that are for rent (which is very different than a rental home).
I send a portfolio when I apply for a rental, pay stubs, biography of my wife and me, tax statements, bank statements, and a three in one credit report with credit scores. We believe we are more caretakers that pay rent, then renters. We have never had a penny kept of the security deposit in almost 30 years of renting. Most homeowners tell us the home is in better shape than when we took occupancy.
Having a 800 plus rental score helps us "market" ourselves. A 799 score is mentally less than a 800 score, by much more than just one point
I send a portfolio when I apply for a rental, pay stubs, biography of my wife and me, tax statements, bank statements, and a three in one credit report with credit scores. We believe we are more caretakers that pay rent, then renters. We have never had a penny kept of the security deposit in almost 30 years of renting. Most homeowners tell us the home is in better shape than when we took occupancy.
Having a 800 plus rental score helps us "market" ourselves. A 799 score is mentally less than a 800 score, by much more than just one point
Since ability to pay should be a factor if you are a good credit risk.
I wouldn't categorize it as cherry picking by the credit bureaus. The components of what make up the score calculation are known and whoever is using the score should know what it does and doesn't represent. Its also why something like a mortgage requires proof of income.No one cares about that (1) point. If a human was evaluating a rental application but they "require" an 800 or better, as long as everything else meets their criteria, that (1) point variance can be overlooked. Even if a computer analyzed the data, odds are it has a +/- allowance of "X" of points.
You can temporarily unlock any credit freeze that you put on. I generally have all four agencies locked but if I am dealing with any Financial thing with any loan or banking thing I may have to unlock one or more of them for a brief amount of time. Nowadays, usually there's no charge for that. But it may be dependent upon what state you live in, and which of the four credit reporting agencies you're unlocking.
