1y ago

The numbers will determine your fate

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I paid a credit card down from $1700 to $1200. My score went from 795 to 763. Fuck 'em and their fake money.
- You're still carrying a balance of $1200 though. Pay it off and it should go up.
  
  Believe it or not, it is better for your credit score to carry a low balance on your credit accounts than no balance, because glue tastes yummy to the credit agencies, I assume. /s
  The reality is that lenders would rather have customers that utilize their credit and pay a lot of interest than ones that aren't lucrative and pay off their credit use immediately. They're looking for people willing to fall into debt traps that are ALSO able to reliably pay the interest within them without ever defaulting. That is what a perfect customer/capital battery looks like to consumer lenders.
  Which means that credit scores are just an arcane measure to determine the potential profitability of borrowers, NOT a metric of the most responsible borrowers at all, because that would mean utilizing the least credit.
  
  it is better for your credit score to carry a low balance on your credit accounts than no balance
  That's a myth that credit providers like to persist because it tricks people into paying interest. Pay off your credit card every month, don't carry a balance, and use less than 30% of your available credit. That's what's best for your credit score.
  Please don't spread that myth. You're literally helping people fall for the trap you're complaining about.
  
  https://www.cnbc.com/select/what-is-a-good-credit-utilization-ratio/
  "Why you shouldn’t go as low as a 0% credit utilization rate
  If your CUR is 0%, it shows lenders and credit card issuers that you aren’t making any purchases on your credit card. Remember, it’s important to use your card.
  “When a credit card account is reported with a zero balance, some scoring models will look at a zero balance as if the card is not being used,” Droske says. “Maybe it’s in your drawer at home, or, for whatever reason, you aren’t using it at that point. Not using it at all is not as good as using it in very small, controlled ways.”
  While a 0% utilization is certainly better than having a high CUR, it’s not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score."
  It's not a myth. I keep a 0 debt load because I don't want to be bothered playing their infantile game for another 20-30 points, but a low balance increases your score a little over a 0 balance.
  I despise capitalism, and I know my enemy well. Credit utilization matters beyond full or no utilization. This is how credit scores work.
  
  You can have debt utilization while still paying off the full statement balance each month and not being charged interest. I always have a balance, but I rarely carry the balance beyond the statement due date and interest free grace period. (I just have new charges that make the balance non zero.)
  
  Your source does not seem very definitive.
  "Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score."
  But even if carrying a single digit CUR is the optimal way to maximize your credit score, paying off your cards is going to be the best advice for 99% of people.
  And even Experian, the credit reporting agency says carrying a balance helps your score is a myth.
  
  paying off your cards is going to be the best advice for 99% of people
  No duh, this isn't asking for financial advice though. This post was about what maximizes your credit score.
  Two entirely different things.
  Also, you linked to an ad for what experian wants to sell you. The credit agencies have proven time and time again they are the last source of information you want to use regarding how they generate credit scores, when they aren't proving they can't be trusted with your data and should be dissolved by government for their constant data breaches it's almost impossible to opt out from while still participating in society.
  "Carrying a credit card balance will not benefit your credit score, but enrolling in Experian Boost®ø has helped many people increase FICO® Scores based on their Experian credit reports, and a free credit score from Experian can help you track progress toward score improvement."
  -Your source. A sales pitch is never a valid source, unless it's to prove someone tried to sell you something.
  
  You guys are talking about different things.
  Credit utilization of 0% doesn't mean paying your cards off on time every month so you avoid interest. It means paying your cards off before the statement period even closes so nothing is reported to the credit agencies.
  I do this. All my cards have a statement period ending on the 19th or 20th. Around the 17th every month I pre-pay so my statement is $0 on every card.
  When I use a card after doing this and the charge goes through before the statement closes, my FICO score goes up (vantage doesn't seem to do this).
  For the last 18 months or so my FICO has been going up 22 points every time there is at least a little balance to report and down 22 points every time my credit utilization is 0.0%.
  
  You only need a balance on the day the company reports to the credit bureaus. They have to and will tell you the day they do this. You can buy something the day before and pay it off the dat after and never have a balance on your statement and still appear to be using credit.
  
  Or, hear me out, he could go all Tyler Durden.
  
  That's probably not a good long term decision.
  
  Your face is not a good long term decision.
  
  That man had a family!
  
  Also probably not the best decision.
  
  Some institutions deserve to die.
  
  It's a good long term decision for the rest of us. I'd appreciate it if someone took that sacrifice sooner rather than later.
  
  It won’t, necessarily. They don’t want people who will pay off their debt, they don’t make money off of interest if you pay your debt off. They want people constantly in debt making monthly payments.
  Source: I paid off lots of debt and my score plummeted.
  
  Your score could have gone down because closing the account effected the length of your credit history, or because the credit mix (types of accounts) was changed, or because the account showed the entire loan amount as available credit which was removed when the account was closed. Yes they make money off of people who carry some balance but they track credit scores to attempt to predict whether a person will repay credit that is offered to them.

291 comments