@Anonymous wrote:The answer to my question is no.
My argument:
1. We carry very little consumer debt and never carry a CC balance unless it is a 0% promotional offer.
2. To reduce the chances of fraud, we close any accounts we are not activly using.
3. Our DTI ratio is 12%.
4. We both have fully funded pensions, excellent health insurance and adquate life insurance.
5. Our liquid assets exceed our current liabilities., current debt is less than 1/2 our annual income.
6. We have never defaulted on a loan or filed bankrupcy.
7. We are both 55+, college educated, and have a long history of financial responsibility.
A FICO score rewards you for having debt and managing debt, but punishes those of us who choose to live a debt free life.
Why do I care? A low FICI score enables lenders to charge higher interest rates to those least able to pay. It also is used to justify higher insurance rates.
Why should an algorithum determine my credit worthiness vs evaluating me on my own merits?
1. You're not "debt free". You have credit card accounts, avail yourselves of 0% promotions, you have open accounts and closed accounts, you have debt which is 12% of your income, you have liabilities, and you have a "long history of financial responsibility" which presumably means you had debts and paid them.
2. FICO scores do not reward you for having debt. If, e.g., you had 3 credit cards with combined limits of $30,000, one of which reported a $20 balance, you could have an 850 score. If, on the other hand, you had combined balances of $27,000, your FICO scores would be crippling. So the correct statement is that FICO scores reward you for having small, even nominal, debt, and punish you for having excessive debt.
I will be the first to say that the FICO algorithms have certain illogical quirks, especially the "all zero penalty" and the "no open installment loan penalty", which do seem to be based on the concept that everyone should have some debt, but that is far from saying that they reward debt.
@Anonymous wrote:The answer to my question is no.
My argument:
1. We carry very little consumer debt and never carry a CC balance unless it is a 0% promotional offer.
2. To reduce the chances of fraud, we close any accounts we are not activly using.
3. Our DTI ratio is 12%.
4. We both have fully funded pensions, excellent health insurance and adquate life insurance.
5. Our liquid assets exceed our current liabilities., current debt is less than 1/2 our annual income.
6. We have never defaulted on a loan or filed bankrupcy.
7. We are both 55+, college educated, and have a long history of financial responsibility.
A FICO score rewards you for having debt and managing debt, but punishes those of us who choose to live a debt free life.
Why do I care? A low FICI score enables lenders to charge higher interest rates to those least able to pay. It also is used to justify higher insurance rates.
Why should an algorithum determine my credit worthiness vs evaluating me on my own merits?
One problem the CRAs face is using algorithms that will pass muster with federal regulators looking for any kind of discrimination. "Your own merits" is a very subjective standard, and one I suspect in practice would be a field days for the regulatory crowd, particularly on the "discrimination" issues. As others mentioned FICO does NOT reward you but having debt, but for managing(albeit those of us who know "the game" can appear more far creditworthy than someone unaware) debt. You are not subject to any fraud using a credit card, and I've had at least a dozen hacked in my lifetime; apparently, about 10 years ago I had a subconscious thing for Asian porn 
You can get extended warranties, CDL-exemption on rental cars, and cash rewards for using cards just to name a few. As was mentioned by @Anonymous judicious use of credit can put $$ in your pocket. Both my wife and I have side gigs, and we use rewards cards extensively to keep our cash invested. Every year, I get a free NASCAR experience thanks to Amex, Citi, and Sync(24 laps at Pocono for some minor bookeeping is truly Heaven on Earth). I also get to smile at smarmy people on social media and blogs telling me how foolish I am to have 11 credit cards.
@Anonymous wrote:The answer to my question is no.
My argument:
1. We carry very little consumer debt and never carry a CC balance unless it is a 0% promotional offer.
So why not use your cards which we dont know what you have for the rewards and then pay them. You make a profit.
2. To reduce the chances of fraud, we close any accounts we are not activly using.
Closing cards doesnt help scores especially if they are older accounts.
3. Our DTI ratio is 12%.
4. We both have fully funded pensions, excellent health insurance and adquate life insurance.
5. Our liquid assets exceed our current liabilities., current debt is less than 1/2 our annual income.
6. We have never defaulted on a loan or filed bankrupcy.
7. We are both 55+, college educated, and have a long history of financial responsibility.
None of the blue makes up a credit score.
A FICO score rewards you for having debt and managing debt, but punishes those of us who choose to live a debt free life.
Why do I care? A low FICI score enables lenders to charge higher interest rates to those least able to pay. It also is used to justify higher insurance rates.
Why should an algorithum determine my credit worthiness vs evaluating me on my own merits?
Use your cards. Have 1 report a small balance and pay it off before the due date. Its a numbers game to gain higher scores. (Which you didnt provide) This will raise scores and you wont have to worry about interest rates and insurance scores. They cant guage you if you dont use it.
@Anonymous wrote:A FICO score rewards you for having debt and managing debt, but punishes those of us who choose to live a debt free life.
Why do I care? A low FICI score enables lenders to charge higher interest rates to those least able to pay. It also is used to justify higher insurance rates.
Why should an algorithum determine my credit worthiness vs evaluating me on my own merits?
It's nothing personal. Issuers issue tens of millions of credit cards and they don't have the resources to look into every individual situation. That's why they use FICO scores which they believe to be predictive over a large population. This controls their risk in the aggregate. They don't really care about you and me personally, nor about whether or not we believe the process is fair. They just care about the process being objective and the losses being predictable.
@Anonymous wrote:
Why should an algorithum determine my credit worthiness vs evaluating me on my own merits?
Because they had to come up with SOME METHOD of scoring people for financial purposes, and FICO ended up being it.
With a population of 350 million (in the US), it's unrealistic to think that bankers can *personally* know and vouch for customers like back in the old days. A century ago you could get credit based on your reputation in your neighborhood/city, how well your banker knew you and your financial situation, etc. Things changed! Are the credit scoring algorithms perfect? No, not by a long shot. But, generally speaking, they do their job.
As for being rewarded for carrying debt, no, as others have explained, that's really not how it works. It's very easy to have a score in the 800s without being in significant debt. It's how you *use* credit that determines your score, not how much debt you carry. If anything, you're penalized for having too much debt, not the other way around. Scores go down as balances go up, i.e., as your utilization rates increase, your score goes down.
I have no mortgage or other recent loan activity of any kind, carry very little debt, and have FICO scores in the 820s. I do *not* close accounts that are inactive; I keep them open to boost my total credit limit, using them occasionally just to keep them active. Having fewer cards won't necessarily protect you from fraud. If you have a card you like, it makes better sense to keep it--and let its history and age increase your score--rather than close it to reduce the risk of fraud. You're not responsible for charges made fraudulently, so why bother closing accounts proactively? You're hurting your scores when you do that.
If you're interested in getting specific help/guidance on increasing your scores, just post! There are many very knowledgeable people here who will be happy to help.
