A FICO score not within its range

[Anonymous]

I am told that FICO-based credit scores have a range between 350 and 850 such that one cannot have a score less than 350 or a score over 850.  Of course, there is a difference between having a score and not having a score.  If you don’t have a score, then who is correct, person A or person B:

 

Person A:  I have no debt, nor have I had debt in the last fifteen years, so I have a credit score of zero.

 

Person B: I have no debt, nor have I had debt in the last fifteen years, so I do not have a credit score, not even a credit score of zero; hence, mine reads “N/A.”

 

At first glance, I wouldn’t want to be too picky against person A since, assuming person B is correct, saying that one has a zero FICO score isn’t too terribly misleading; however, I don’t want to assume person B is correct, since person A is a financial guru that makes a living telling it like it is; however, a score of zero is outside the 350 to 850 range, so his position does make me take pause.

 

So, what say you?

 Also, rumor has it, and I can’t possibly imagine how it can be true, but the rumor is that if you pay off all your debt completely, then despite the fact good credit stays on your credit report for ten years, your score could possibly drop to zero in as little as six months (or as soon as two years for some folks).  If it wasn’t for the source that says this, I wouldn’t even bother to ask, because to me, it seems ludicrous that our good history can count so little so quickly.

Message Edited by fast2 on 02-19-2010 04:09 PM

[haulingthescoreup]

There's no such thing as a credit score of 0. Not a FICO score, anyway.

If you haven't had any credit reported in six months, and you don't have an account that's over six months old, or you're dead, then you have no credit score. Not a score of 0, just plain no score.

And that's completely incorrect about your score "dropping to 0 in six months" if you pay off all debt. We have members here with no reported debt, but who still have scores. (And good ones.)

It's true that for many people, if all your CC's report $0, your score might drop around 5 points, maybe 10. But it doesn't go away, as long as you have an active card reporting, even if it keeps updating $0 every month.

Out of curiosity, who's your source? Sadly, there are a lot of "financial gurus" who really don't understand how credit scoring works.

[Anonymous]

Dave Ramsey

[Anonymous]

I should have said paid off all debt and closed all accounts, but still, I figure if there are trade lines showing (open or otherwise), a score should still be present and reflect what is showing up in the credit files.

[fused]

Mr. Ramsey is very wrong on this topic. I have $21 in debt and all of my FICOs are well over 800.

[haulingthescoreup]

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fast2 wrote:
Dave Ramsey

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lol, ol' Dave.

Don't get me wrong, I think that he gives a lot of valuable guidance, especially to those who are enslaved to Buying Lots of Stuff with Plastic and all that, but he is willfully ignorant about credit. He preaches what he preaches, and no one is going to change him.

It is perfectly possible to have lots of credit and essentially no debt. I have a mortgage and an auto loan, plus $130-ish K in available CC credit, and I don't owe stuff.

I use credit as a convenience, to pay my bills once a month and track purchases, but I run it; it doesn't run me. There are also many advantages in having "good credit" in this society, even if you don't use it much.

[haulingthescoreup]

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fast2 wrote:
I should have said paid off all debt and closed all accounts, but still, I figure if there are trade lines showing (open or otherwise), a score should still be present and reflect what is showing up in the credit files.

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Pay off your debt, and don't close your accounts, unless there are fees or something. At least try to keep three tradelines open. This will allow you the flexibility of maintaining credit without having debt problems.

There are all sorts of things that you can do. Put a recurring donation to a charity/ religious institution on one card, your cell phone bill on a second, and buy gas with the third. In other words, things that you use checks or cash for. Pay them off every month. That's not debt, that's cash flow management.

So are you in this situation, and you don't have a FICO score?

[Jazzzy]

To the OP...I heard the same radio show you did yesterday. Simply put...Dave is not telling the truth about this aspect of credit and FICO scoring. I don't know if he knows he's wrong...but I would think he knows.

He doesn't think any of us should have credit...but he's wrong.

My husband asked, "Why doesn't someone call in and tell him he's wrong."

My response, "I'm sure they do, but Dave won't put them on the air."

I think Dave gives some good advice...and some bad advice. Take what you can use from Dave and leave the rest.

[smallfry]

LOL.

[smallfry]

I have listened to Ramsey's show a couple of times in the past few years. His advice is good for those who have no self control in handling their credit accounts. Those people are best served to have no access to credit. They might be addicted to shopping or what have you. For most other people who will buy a home or another large ticket item in the future it is important to have a decent enough credit score to be able to find affordable financing. How many people can afford to pay cash for their homes?