Keeping your credit score from going down

[Rmtt]

Oddly enough though....I took a small hit when paying off my daughter's car loan as it list the account being closed.

I figured an auto loan would be treated differently.

[type-dRew]

Originally Posted by Rmtt

Oddly enough though....I took a small hit when paying off my daughter's car loan as it list the account being closed.

I figured an auto loan would be treated differently.

Depending on interest rate, it's usually beneficial to let a auto loan either run its course or not pay it off any faster than half the time originally requested. Its odd but thats how its viewed for some reason.

Of course if interest rate sucks, then yeah, just pay it off asap, no reason to worry about credit if its costing you money.

After about 6 months, the score should recover from paying it off early or improve.

[DETRoadster]

Originally Posted by bimmer456

Pretty lame that I would be punished if I didn't charge anything to the card. Seems counterintuitive ya think?

No, not really. your credit score is a measure of your credit worthiness, or in other words, the risk a lender takes on in extending you credit. If you have an open card with no balance and an available limit of $X, there's a risk you suddenly max it out and get yourself into repayment trouble. Lenders can feel more at ease that you wont do that if you have a long history of charging less then the max and then paying it off responsibly. You did not have that track record with your unused card. Thus, the risk is higher.

[rcracin]

Originally Posted by G35POPPEDMYCHERRY

credit score is such a fuckin sham lol.

like my credit score just dipped 50 pointd because I charged like 8k on my Credti card for rewards.

salary+liquid a majority of any credit approval process.

Originally Posted by bimmer456

I think I lost 15 points because I paid my property tax on a card to get 5% back which was more than the fee the county charged me to use a credit card. Not a biggie as I'm still in green territory. I knew I would be fine before charging the card.

Make the charges, pay it before the closing date. No balance gets reported to the credit bureaus. You get your credit card points and your score is unaffected.

[bimmer456]

Originally Posted by Rmtt

Oddly enough though....I took a small hit when paying off my daughter's car loan as it list the account being closed.

I figured an auto loan would be treated differently.

A car loan isn't a credit card that is weird paying off debt should be good.

[bimmer456]

Originally Posted by rcracin

Make the charges, pay it before the closing date. No balance gets reported to the credit bureaus or whatever they’re called. You get your credit card points and you score is unaffected.

I usually just pay when it is due don't know if paying earlier makes that much different at least for me but might help if your utilization is high maybe reducing the average daily balance or something.

[type-dRew]

Originally Posted by DETRoadster

No, not really. your credit score is a measure of your credit worthiness, or in other words, the risk a lender takes on in extending you credit. If you have an open card with no balance and an available limit of $X, there's a risk you suddenly max it out and get yourself into repayment trouble. Lenders can feel more at ease that you wont do that if you have a long history of charging less then the max and then paying it off responsibly. You did not have that track record with your unused card. Thus, the risk is higher.

Right, they base the score on a revolving understanding of your credit uses.

If you aren't using it, the score isn't going to reflect positively because they have no idea how much they can trust you with the credit line, they just know you aren't using it.

Always carry a small balance. $1-$5, whatever, just don't pay it to zero. Helps immensely.

[bimmer456]

Originally Posted by DETRoadster

No, not really. your credit score is a measure of your credit worthiness, or in other words, the risk a lender takes on in extending you credit. If you have an open card with no balance and an available limit of $X, there's a risk you suddenly max it out and get yourself into repayment trouble. Lenders can feel more at ease that you wont do that if you have a long history of charging less then the max and then paying it off responsibly. You did not have that track record with your unused card. Thus, the risk is higher.

I pay off all my other cards so my risk is low to lenders. Also, my newest account is over a year old. Low credit utilization ratio to total credit limit raises your score.

[bimmerfrk]

whats credit card,? is that something you use to buy that you dont have money to pay for?

We dont use those....

#debtfree

[David70]

Originally Posted by type-dRew

Carrying a balance is better than never using it. No reason to avoid using it if you can pay it off. Using the card up to just over half the limit will not affect your score adversely, over that and it becomes counter productive.

Use it for gas. Pay off everything but $5 every month. Watch your score go up.

If card A has a reward system that is better than card B, this would be the reason to avoid using card B even if you can pay it off.

For the "Use it for gas. Pay off everything but $5 every month" - carrying a balance also comes with a fee and you can build up your low or mediocre score without paying for it.

[DETRoadster]

Originally Posted by type-dRew

Right, they base the score on a revolving understanding of your credit uses.

If you aren't using it, the score isn't going to reflect positively because they have no idea how much they can trust you with the credit line, they just know you aren't using it.

Always carry a small balance. $1-$5, whatever, just don't pay it to zero. Helps immensely.

Yes, exactly. Well said.

It's kind of a "the risk you know vs. the risk you don't know" sort of situation.

For years my step dad had a single credit card that he kept in a drawer for emergencies (that never happened) and bought everything with cash. When he and my mom got married he had literally no credit score. He was a ghost. No credit extended or used in like 25 years.

[David70]

Originally Posted by bimmerfrk

whats credit card,? is that something you use to buy that you dont have money to pay for?

We dont use those....

#debtfree

No, it's for getting roughly 2-3% of everything I purchase with the credit card back as some type of reward, either hotel, travel or flights absolutely free.

[type-dRew]

Originally Posted by David70

If card A has a reward system that is better than card B, this would be the reason to avoid using card B even if you can pay it off.

For the "Use it for gas. Pay off everything but $5 every month" - carrying a balance also comes with a fee and you can build up your low or mediocre score without paying for it.

I don't completely disagree. But the fee is usually so minor that its worth the minor spend to keep your score in view.

If I have the card, it gets used and paid off nearly completely. Benefits of the better card means it gets the most use. But they all get at least 1 swipe a month to keep usage and visuals up.

[DETRoadster]

Originally Posted by bimmer456

I pay off all my other cards so my risk is low to lenders. Also, my newest account is over a year old. Low credit utilization ratio to total credit limit raises your score.

To a certain point it does, then it begins to work against you I believe.

Bottom line, it's all just a algorithm, whether we agree with it or not. We provide the variables and the program spits out a verdict.

When my wife and I leased her car they pulled our scores. She had a score of 871. The theoretical max is 850 so figure that one out. Everyone was dumbfounded. Must have been some bug in the program. It's like scoring 25,000 on your SAT.

[type-dRew]

Originally Posted by bimmerfrk

whats credit card,? is that something you use to buy that you dont have money to pay for?

We dont use those....

#debtfree

Liquid money is great, buying power is potentially even better. Nobody is talking about racking up stuff you can't afford. Just using the card for purchases you need to make anyway and reaping benefits from that. Much smarter than using cash with no paper trail, unless you're trying to keep the feds off your back.

Use a card, get points/rewards, whatever. But keeping your credit open and visible is beneficial in every way for future purchases.

[type-dRew]

Originally Posted by DETRoadster

To a certain point it does, then it begins to work against you I believe.

Bottom line, it's all just a algorithm, whether we agree with it or not. We provide the variables and the program spits out a verdict.

When my wife and I leased her car they pulled our scores. She had a score of 871. The theoretical max is 850 so figure that one out. Everyone was dumbfounded. Must have been some bug in the program. It's like scoring 25,000 on your SAT.

I sold a guy a car once that had scores of 903 and 901 from two different bureaus.

No clue how.

[bimmer456]

Originally Posted by bimmerfrk

whats credit card,? is that something you use to buy that you dont have money to pay for?

We dont use those....

#debtfree

I have money to pay off the balance so I don't incur interest. I think it's better to have some credit history if you need to get a loan to buy a house unless you have cash.

[DETRoadster]

Originally Posted by type-dRew

I sold a guy a car once that had scores of 903 and 901 from two different bureaus.

No clue how.

The aggravating thing is that my wife is 10x the credit risk I am. She's accidentally bounced checks, forgotten to pay bills, maxed out a credit card, has 25x the debt I have (student loan) and makes 1/2 what I make. Yet she has the higher credit score and teases me all the time about it. I should sue Experian for the emotional distress this has caused me.

[TXSTYLE]

Big Banks, being the Total VAMPIRES that they are, are ONLY concerned with profiting off of you... Period! No more of this, "just having a place for your money to sit bullshit". If you aren't in Debt to them... You're Dead to them.

[bimmer456]

Originally Posted by TXSTYLE

Big Banks, being the Total VAMPIRES that they are, are ONLY concerned with profiting off of you... Period! No more of this, "just having a place for your money to sit bullshit". If you aren't in Debt to them... You're Dead to them.

I was thinking if using my heloc money to get 40 percent return in the stock market while I pay them 3-6 percent doing to them what they do to us. Paying very little interest in savings accounts while they make boatloads investing our money in the stock market.

[bimmer456]

Originally Posted by DETRoadster

To a certain point it does, then it begins to work against you I believe.

Bottom line, it's all just a algorithm, whether we agree with it or not. We provide the variables and the program spits out a verdict.

When my wife and I leased her car they pulled our scores. She had a score of 871. The theoretical max is 850 so figure that one out. Everyone was dumbfounded. Must have been some bug in the program. It's like scoring 25,000 on your SAT.

Yeah different banks use different algorithms. Some might even have a range above 850 so your score will vary from lender to lender even if it's with the same credit bureau on the same day.

[Pauldunlop13]

Originally Posted by type-dRew

Carrying a balance is better than never using it. No reason to avoid using it if you can pay it off. Using the card up to just over half the limit will not affect your score adversely, over that and it becomes counter productive.

Use it for gas. Pay off everything but $5 every month. Watch your score go up.

Using half the limit is too high
29% and under is where you want to be.