topic Re: lower than expected score in General Credit Topics

lower than expected score

Anonymous — Wed, 04 Feb 2015 13:59:47 GMT

My credit score is in the lower 700's. I have maybe 8 credit cards with high limits, no debts. I pay everything off immediately and have done this for the last 7 years. I owe not a penny to anyone. The reason given is 'lack of recent installment loan information' explained as little current credit activity. **bleep**? Who makes up this stuff?? Now they WANT me to charge to my accounts? What does that prove? This is all so stupid. I'd like to strangle the people who thought this up.

Re: lower than expected score

Duke84 — Wed, 04 Feb 2015 14:05:08 GMT

Your 8 credit cards are revolving accounts and serves as 1 of the 4 credit types. Having a mortgage, installment loans (student loans for example), and store cards are the other 3 types.

Diversifying credit shows lenders you can manage various credit. Because you have a long history of paying your cards off and resulting in low/no balances, your score is up. But having no other type of credit could also be viewed negatively.

Re: lower than expected score

Gunnar419 — Wed, 04 Feb 2015 14:45:39 GMT

When you pull your CRs and score they'll ALWAYS give you some negative comments even if your scores are in the 800s. Mine are all over 800 and I ALWAYS get that notation about lack of recent installment history because my credit consists only of credit cards.

If your scores are lower than you think they should be, then an installment loan might be one factor that could help, but it then you'll also need to realize that once the loan is paid off, it's helpfulness will drop off and so will your score. Good long term management of credit cards is the best thing for your score, and that includes showing use of the cards and always letting at least one card report a small balance.

Re: lower than expected score

Gunnar419 — Wed, 04 Feb 2015 14:49:02 GMT

@Anonymous wrote:
My credit score is in the lower 700's. I have maybe 8 credit cards with high limits, no debts. I pay everything off immediately and have done this for the last 7 years. I owe not a penny to anyone. The reason given is 'lack of recent installment loan information' explained as little current credit activity. **bleep**? Who makes up this stuff?? Now they WANT me to charge to my accounts? What does that prove? This is all so stupid. I'd like to strangle the people who thought this up.

BTW, I agree that the system has a lot of stupid elements from a credit user's point of view. You need to understand, though, that the credit scoring system isn't designed to rate how responsible you are with money. It's designed to rate how profitable a customer you are. Profitable customers ARE responsible with money, but they also use their credit.

Re: lower than expected score

Anonymous — Wed, 04 Feb 2015 14:55:59 GMT

I use a couple of my cards a lot, but always pay off the balance. In that way, they are not able to charge me interest. I am to be punished for that?...for not allowing them to make money off of me?? And I disagree...profitable customers are NOT responsible with money...they spend it and they pay unnecessary interest charges. That's may be why the credit card companies like them...and people like me who are VERY responsible with money get punished. I DO use my credit but I pay off the balance. Seems to me I am MORE responsible than those who just pay the minimum payment and then have to pay interest charges. Please clarify. Thank you.

Re: lower than expected score

Anonymous — Wed, 04 Feb 2015 15:43:20 GMT

BINGO! You answered my question! Thank you so much!

Re: lower than expected score

Anonymous — Wed, 04 Feb 2015 15:44:29 GMT

Thank you so much. That info helps me A LOT!

Re: lower than expected score

Anonymous — Wed, 04 Feb 2015 15:46:12 GMT

Just one more questions: Would leasing a car help or hurt my score?

Re: lower than expected score

Revelate — Wed, 04 Feb 2015 20:41:00 GMT

@Anonymous wrote:
Just one more questions: Would leasing a car help or hurt my score?

Both.

Mix of credit boost, new account / inquiry damage. Regarding auto loans, don't finance or take a loan for FICO purposes - always do what's right financially for you. Can solve the installment loan mix of credit issue with a share secure loan from a number of different credit unions where you'd only have to pay on the order of a yuppie foodstamp ($500 at 2% effective APR over 4 years as one such) to get pretty much the same FICO benefit as leasing or purchasing a car.

@Anonymous: don't think it's ever been conclusively demonstrated that a store card rounds out mix of credit under a standard FICO pull; the bureaus all list it under revolving though Equifax does break out mortgage loans looking at their report. I know that's not reference either, just suggesting there's no reason to carry a store card unless it makes sense from a spending/rewards perspective.

Re: lower than expected score

Gunnar419 — Wed, 04 Feb 2015 21:07:36 GMT

@Anonymous wrote:
I use a couple of my cards a lot, but always pay off the balance. In that way, they are not able to charge me interest. I am to be punished for that?...for not allowing them to make money off of me?? And I disagree...profitable customers are NOT responsible with money...they spend it and they pay unnecessary interest charges. That's may be why the credit card companies like them...and people like me who are VERY responsible with money get punished. I DO use my credit but I pay off the balance. Seems to me I am MORE responsible than those who just pay the minimum payment and then have to pay interest charges. Please clarify. Thank you.

Oh, believe me, nobody is questioning your responsibility with money. Your idea of responsibility is just a little different than the bank/credit system favors.

And here's some good news. You don't have to be punished for paying off all your balances. A lot of people here advocate doing exactly that every month, but the trick (and it is a TRICK) for scoring is to allow one balance to REPORT every month. That doesn't mean you pay interest on it, just means you pay it off after the statement cuts (and of course BEFORE the next month's due date and BEFORE the zero interest grace period runs out).

Re: lower than expected score

Anonymous — Wed, 04 Feb 2015 21:12:02 GMT

I wouldn't worry about it. All scores over 700 with a perfect record and clean files will get you any additional credit you desire. Which is the only value of the scoring system.

Re: lower than expected score

Revelate — Wed, 04 Feb 2015 22:35:36 GMT

@Anonymous wrote:
I wouldn't worry about it. All scores over 700 with a perfect record and clean files will get you any additional credit you desire. Which is the only value of the scoring system.

For the most part that's true; however, there are certain products even in today's credit card space where the minimum UW hurdle might be higher than a 700; that's certainly the case for mortgages, so it's worthwhile taking the time to figure out how to optimize balances as Gunnar suggests.

Re: lower than expected score

takeshi74 — Thu, 05 Feb 2015 14:30:36 GMT

@Anonymous wrote:
My credit score is in the lower 700's. I have maybe 8 credit cards with high limits, no debts. I pay everything off immediately and have done this for the last 7 years. I owe not a penny to anyone.

As stated above even those with scores in the 800's have reasons listed. You need to carfully review your own credit reports with an understanding of how the various factors impact your scores to see what you can do. Start with this:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

And keep in mind that reported utilization should not exceed 30%. Ideal utilization is much lower -- typically 10% or less. Fewer balances is generally better as well. The general recommendation when optimizing utilization (i.e. when applying) is to allow only one balance to report at 10% or less.

Pull all your reports and carefully go over them. If you have derogs then address them. If your utilization isn't in check then get it in check. "Paying off immediately" doesn't really tell us what your reported utilization looks like. Don't assume that you have no reported balances if you're paying statements in full. Most cards report on statement date so if you have a balance on that date then that is the balance indicated on your reports.

@Anonymous wrote:
Who makes up this stuff?? Now they WANT me to charge to my accounts? What does that prove? This is all so stupid. I'd like to strangle the people who thought this up.

No, they're suggesting that an installment may help your scores but, as stated above, an installment only benefits your mix of credit while it's open. If you pay it off you'll lose the benefit to mix of credit. We generally don't recomend adding an installment just to improve scores. Howeever, if you need an installment then certainly get one.

The system is designed to allow creditors to assess risk. Whether or not you agree with it it is the very same system that we're all subject to.

Are you actually intending to apply for anything? If not, why are you worrying over your scores?

@Anonymous wrote:
I use a couple of my cards a lot, but always pay off the balance. In that way, they are not able to charge me interest. I am to be punished for that?...for not allowing them to make money off of me?? And I disagree...profitable customers are NOT responsible with money...they spend it and they pay unnecessary interest charges. That's may be why the credit card companies like them...and people like me who are VERY responsible with money get punished. I DO use my credit but I pay off the balance. Seems to me I am MORE responsible than those who just pay the minimum payment and then have to pay interest charges. Please clarify. Thank you.

You're not getting punished. In the link I provided above you can see that scoring has nothing to do with interest paid. You just don't understand the system. You can be repsonsible, not pay interest on revolving accounts and have a good score. You just need a better understanding of how the system works and how to manage your accounts leveraging that knowledge.

Something in your credit is holding your scores down. You just have to determine what it is and address that. We can probably help you to determine what it is but we'd need more information.