lower than expected score

[Anonymous]

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.

[Duke84]

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.

[Gunnar419]

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.

[Gunnar419]

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@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.

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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.

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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

[Anonymous]

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

[Revelate]

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@Anonymous wrote:

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

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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.

[Gunnar419]

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@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.

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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).