How will I be able to keep a high FICO score without debt?

[Anonymous]

I have just paid off my mortgage.  I have no other debt of any type.  I pay $0 in interest because I have no debt.  No car loans or consumer loans either.  No debt!

QUESTION:  How will I be able to keep a high FICO score without debt?  I use a Visa Debt card, but I read somewhere that debit cards are not report.  Now what?

If it even possible to have a high FICO score without debt?

Thanks!

Edited to remove a personal e-mail link - llecs, myFICO moderator

[llecs]

Welcome to the forums! Congrats on the mortgage payoff! WTG!

Debit cards do not report since they aren't credit-related, but rather a product of your bank account. I encourage you to pull your full, free reports from annualcreditreport.com. If the mortgage was the only thing reporting, then you shouldn't have any FICO score if that mortgage now reports a $0 balance and that was the only thing on your credit reports.

Why do you want to maintain a high FICO scores? What your goal? Do you have plans to apply for credit in the future?

If no plans for credit in the future, and content living of cash for here on out, then don't worry about your FICO. If wanting to maintain scores for future credit, then one of the requirements for FICO is that you have to have at least one open account (e.g. a CC or loan with a balance) reporting monthly to your credit reports. If that's the goal, then I recommend a credit card. You can keep it open and pay it off as you use it and remain 100% debt free and pay no interest. Just keep a zero balance on it. You don't even have to use it monthly, but use it at least every 3-4 months to keep it active. Pull it out, buy a cup of coffee on it, and pay it off the next day. This way you'll keep a $0 balance and pay no interest and remain debt free if that's the goal.

In about 10 years, that mortgage will drop from your credit reports. If a FICO score is important, then you might see a hit in the long-term as you lose that history. However, that CC will continue to help if it is still open through then.

[Anonymous]

Well, a great FICO score is important not only if you need to get a loan of some type, but also, in some cases, if you need to seek employment with a company that actually looks at the FICO scores of prospective employees.  At least that's what I've read before.  I plan on staying away from debt forever because I am finally living my dream.  For the first time in my life, and I am 47, I receive more interest than I pay.   That's easy because even $0.01 that I get in interest is more than I now pay after I paid off my mortgage.

[AndySoCal]

I would presume just paying off you mortgage means within the last couple of months. You would still have a FICO score. I would suggest a credit card use it for osmething like apying a utility bill or a dinner out doesnot have to be much  just pay the bill when it comes in. This way you would keep you FICO score and you would not be int debt either.

[Anonymous]

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@Anonymous wrote:

I have just paid off my mortgage.  I have no other debt of any type.  I pay $0 in interest because I have no debt.  No car loans or consumer loans either.  No debt!

QUESTION:  How will I be able to keep a high FICO score without debt?  I use a Visa Debt card, but I read somewhere that debit cards are not report.  Now what?

If it even possible to have a high FICO score without debt?

Thanks!

Edited to remove a personal e-mail link - llecs, myFICO moderator

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To be honest, I haven't read any of the other replies because they are simply too long (in my opinion) and probably say the same thing as I'm about to say.

You don't need to be in debt to have a high FICO score (or any FICO score).  Get a credit card, or a few, that have benefits you like - cash back, travel rewards, dining out rewards - and use those cards instead of your debit card.  Pay the credit card balances in full before the end of each statement.  Done.

[RobertEG]

Two general observations to your VERY ENVIABLE situation.....!

FICO is not an evaluation of your overall credit-worthiness, but rather an evaluation of your liklihood of delinquency based primarily on your payment history and utilization reported over the last two years.  FICO frowns on evaluation of payment risk for those who have no recent payment history.

You have a loss of mix of credit due to no open installment accounts, but at the very most, mix of credit is only 10% of your score. 

What I would avoid in your situation is the potential loss of scoring of your important revolving accounts due to extended (more than six months) inactivity.

Buy a Slurpee every two months, charge it, and let it report as activity.

Keep the FICO gods happy by ensuring a reporting of good payment history.

[Anonymous]

Well, after reading the excellent replies offered here, I have just applied for a Gold Delta Skymiles from American Express.  I'll charge everything I can on this card so I can get the miles, which is a benefit I love, and pay the card in full on the day the statement arrives.  I'll pay it online.

Thanks everybody for the excellent suggestions.  I love the idea of buying a slurpee once every two months and charging to some card.

Carlos.

[smallfry]

Get 3 credit cards. Let 1 report a balance less than 9% of the available limit every month. You do not need to do anything else.

[Booner72]

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@RobertEG wrote:

Two general observations to your VERY ENVIABLE situation.....!

FICO is not an evaluation of your overall credit-worthiness, but rather an evaluation of your liklihood of delinquency based primarily on your payment history and utilization reported over the last two years.  FICO frowns on evaluation of payment risk for those who have no recent payment history.

You have a loss of mix of credit due to no open installment accounts, but at the very most, mix of credit is only 10% of your score. 

What I would avoid in your situation is the potential loss of scoring of your important revolving accounts due to extended (more than six months) inactivity.

Buy a Slurpee every two months, charge it, and let it report as activity.

Keep the FICO gods happy by ensuring a reporting of good payment history.

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RobertEG:  Please expand on what you mean in bold - the two years??

[Anonymous]

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@smallfry wrote:

Get 3 credit cards. Let 1 report a balance less than 9% of the available limit every month. You do not need to do anything else.

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Based on what I've learned from this Forum, having 3-4 CC's are best from a FICO scoring standpoint (Installment and Mortgage Loans aside) (one of the cards being a store card, for the ""Mix of Credit") but even if you only want the one card you just received from AmEx, that should be good enough to keep your scores where they are now.

I would suggest you do what smallfry has said (and you have said you will use the card for everything) charge as much as you can on the card each month and pay almost all of the balance off by the due date leaving a very small balance to report (say $10) let the statement post (the closing date) and a day or two after the closing date pay the $10 off, you will then debt free again. Do this every month to keep your scores at their highest.

This reason behind this is because the FICO scoring system likes to see at least one CC report a small balance <9% of that CC's credit limit, doing it this way it will keep your scores maxed out every month, if that's important to you.

If "Maxing" your scores every month is not your goal, but rather you just want to keep your scores high (but not at their highest) use the card and pay it in full by the due date each month and let it report a 0 balance to the CRA's.

Whatever you decide to do, I Wish you the Best!!!

By the way, Super Congratulations on paying off your Home, you are living the dream now my Friend, Enjoy life!!