Current Events > Having $0 of credit card debt lowered my score.

(+) Yeah! (+)

This is why credit scores are bullshit.

If you were debt free, your score would tank.

They just want you to borrow until youre in hell.

This house is my last debt.

Im buying everything else with cash.

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https://www.nerdwallet.com/blog/finance/credit-score-pay-debt

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That's why I always leave a few hundred dollars of debt on my credit cards, and I only get credit cards that I know I'm going to use consistently.

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Why the **** do you care then since you buy everything on cash. Jesus you Dave Ramsey fan bois are stuck up af,

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My credit score is over 800 and I routinely owe nothing. Your score doesn't tank if you're debt free.

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I am just going to take the L.

I cant afford the debt.

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theres a misconception with credit card utilization, you leave a balance on a card and when the statement hits you pay it off in full so you dont pay interest, and you continue the cycle to maximize your score if you want to apply for new credit.

Are you planning to make a big purchase any time soon that requires you to borrow money? If not then you really shouldn't worry about it. Credit scores fluctuate all the time for a variety of reasons. As long as you continue to stay out of debt. The only suggestion I have for you is to start paying for eveything with your credit card and paying it off immediately. It can help your credit score, protects you better from fraud and theft than cash and debit cards, and earns you rewards points.

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Awesome posted...

theres a misconception with credit card utilization, you leave a balance on a card and when the statement hits you pay it off in full so you dont pay interest, and you continue the cycle to maximize your score if you want to apply for new credit.

This, I pay mine off 100% every month and have a score of over 800
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I never have CC debt, my balance is paid every month and my score does not suffer from it

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You should generally use a credit card for everything and pay it off each month. There's literally no reason to use cash or debit unless required. Most credit cards give you something back. Even if it's only a few dollars, it's still better than literally nothing. The only people who shouldn't do it are those who know they're financially irresponsible.

kinetika_ posted...

That's why I always leave a few hundred dollars of debt on my credit cards, and I only get credit cards that I know I'm going to use consistently.

I hope you're paying off that balance each month and not paying interest. You don't have to pay interest to have a great score. Don't give them any extra money!

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nemu posted...

Most credit cards give you something back

the ones i wanted to apply for got denied. apparently they think i'm a liability since i pay my bills on time.
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Paying off all my credit cards raised my score into the 760+ from under 650.

Length of credit history is what's most important. edit: other than paying on time obviously

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this is why i use my card for $20 bucks every month and pay it off.

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I can't seem to get my credit score above about 780ish, but I think that's partially because I don't have/haven't had a car payment or house payment in several years.

I might end up buying a new car in the next couple of years just to increase my credit (or ideally a house rather than renting)

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What Tc is declining to mention is what else is being reported that can lower his score.

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Does 5-15 points really matter

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AlCalavicci posted...

I can't seem to get my credit score above about 780ish, but I think that's partially because I don't have/haven't had a car payment or house payment in several years.

I might end up buying a new car in the next couple of years just to increase my credit (or ideally a house rather than renting)

Eh, 780 is a really good score. I doubt you'd be able to secure better terms on a loan or whatever if your score was higher. I think most places are happy as long as you are at least at 700

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Yep, mine went down a few points right after I paid off my car.

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Sexypwnstar posted...

Does 5-15 points really matter

not usually. depends if youre close to a threshold like a 760 or 800

then the apr tends to drop significantly

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MC_BatCommander posted...

Eh, 780 is a really good score. I doubt you'd be able to secure better terms on a loan or whatever if your score was higher. I think most places are happy as long as you are at least at 700

Typically the best rates come at 760+

From all the rate sheets I've seen anyway. 760 is the low end of the highest credit tier so if you have a 760 or 850 your rates will be the same.

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The system penalizes you for not being part of the system. My wife had a very high score when we bought the house (750+) but she didnt have any recent credit use in the last 2 years or so they made it really hard for us and we had to get letter from our internet company so it could be used as an example of her paying habits.

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When I paid off $150k of student loan debt over two years, my credit score went from 780 to 720

Absolutely bull crap


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DarkRoast posted...

When I paid off $150k of student loan debt over two years, my credit score went from 780 to 720

Absolutely bull crap

Installment loans reduce your score when paid off because thats a newly closed account. So your average age of credit decreases.

But credit history trumps credit score.

So that looks better in the long run despite a drop in score.

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Credit scores, admittedly probably not deliberately, ultimately do punish people who pay early and often.

The best scores are people who have accounts forever and keep low but non-zero balances on them persistently.


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BlingBling22947 posted...

If you were debt free, your score would tank.

If you were debt free, your score would be zero.

Questionmarktarius posted...

If you were debt free, your score would be zero.

That's not actually true.

I owe literally nothing and have a credit score. I don't have a mortgage, loans, or a current credit card balance.


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DarkRoast posted...

I owe literally nothing and have a credit score.

There's a bit of a delay.

I always thought using your credit card and then paying it on time is what gives you good credit.

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Questionmarktarius posted...

There's a bit of a delay.

I owed nothing for years and have a credit score of over 800. I have a car loan now, but... I don't think having no debt hurts you. What you need is to have a number of old credit accounts.

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CableZL posted...

What you need is to have a number of old credit accounts.

Ah.
No debt and no open credit accounts causes a zero score. I forgot that other one.

cuttin_in_farm posted...

Installment loans reduce your score when paid off because thats a newly closed account. So your average age of credit decreases.

But credit history trumps credit score.

So that looks better in the long run despite a drop in score.

Seriously?

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