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Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

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Established Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

Oldman, fall asleep watching TV again?

I missed the good stuff as well... the mods are just too quick.
Message 11 of 21
New Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

I would like to actually read the story of what happened and how it affected the OP....maybe others can read it too and learn a little something?


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STARTED FEB 2017
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Message 12 of 21
Super Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

Back in Post 8 I referenced the 2 things that usually get people up in arms over regarding scoring penalties. Those two points are usually the ones that lead people to make statements like "FICO wants us to be in debt!" and the like.
Message 13 of 21
Valued Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

I’m not really sure why it’s hard to understand that in order to have high scores, you have to demonstrate that you can responsibly manage debt. With no debt to manage, how can your risk be assessed?


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Message 14 of 21
Valued Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

Even if you're debt free, you still need credit for Auto Insurance, Renting, etc. And the only way to build that up is with CC usage. As utilities/basic living expenes do  ot report. And even if you pay in cash for everything, a person still needs a CC for Hotel/Car reservations.

 

It's not that scoring is a joke, it's that some people simply do not understand how their scoring method works.






Message 15 of 21
Super Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

You can have great credit and no CC debt by controlling the reported balance on your credit cards and PIF'ing each month.  No interest and say $1 reported on your CR is the gold standard.

 

10/11/2019: FICO 841 EQ 838 TU 850 EX
Message 16 of 21
Community Leader
Super Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.


@Redtab78 wrote:

I would like to actually read the story of what happened and how it affected the OP....maybe others can read it too and learn a little something?


@Redtab78 , Dont believe that will happen. Once a Moderator has decided to remove certain aspects of a post/thread permanently,  its not up for discussion anymore and is final. Sorry..


My rebuild worked for me, but won't necessarily work for you!
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Message 17 of 21
Super Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.


@ImTheDevil wrote:
I’m not really sure why it’s hard to understand that in order to have high scores, you have to demonstrate that you can responsibly manage debt. With no debt to manage, how can your risk be assessed?

If one has a track record of having managed debt responsibly, and paid off all of his or her obligations on a timely basis, that is the most perfect demonstration of responsible management of debt possible. The fact that one has managed one's obligations so well that they have all been paid off should be a plus, not a minus, across all scoring models.

 

 


Total revolving limits 720500 (594000 reporting) 10/2/19 FICO 8 scores: EQ 744 TU 782 EX 746
Message 18 of 21
Frequent Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.


@Janus wrote:

Even if you're debt free, you still need credit for Auto Insurance, Renting, etc. And the only way to build that up is with CC usage. As utilities/basic living expenes do  ot report. And even if you pay in cash for everything, a person still needs a CC for Hotel/Car reservations.

 

It's not that scoring is a joke, it's that some people simply do not understand how their scoring method works.


In CA and a couple of other states it is illegal to use credit scores to determine insurance rates.

Message 19 of 21
Established Contributor

Re: Credit scoring is a joke. I paid off all credit cards; I want 0 debt ... my scores dropped.

I agree about posting how and what you have overcome you don't have to use ALL of your credit you can keep it 3% and below and it still help your score so you are not in debt like you may think is it better to use as much as your limit as possible and then pay it off before your payment due YES and that is actually what I do, then us a very little bit before the statement to help your score jump and show good usage and help to get you a good CLI but nobody said you have to use your whole limit and keep yourself in horrible debt that would be awful.....

Starting Score: 537
Current Score: 642
Goal Score: 775


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Message 20 of 21
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