The information is ours but the formula belongs to them. That's about all there is to it.
Generally, the score and payment history let creditors know how likely they're going to be repaid and if on time. Ingnoring exceptions like mistakes or fraud, the information still represents our payment history and financial management. Shouldn't a creditor know you'll always be late, have a bunch of collections/judgements, or whatever before parting with money? If it were my money, I'd definitely want to know.
Starting Score: 675
@Anonymous wrote:Being paid in the end is all that really counts, being late is actually profitable to the lender with fees and late charges, If I was a lender all I care about is at the end of the contract am I going to get my money, thats it. It should be this simple Current debt current or not, Paid debt, and defaults.
So if your boss job paid whenever, it would be okay?
@Anonymous wrote:I somewhat agree with the OP. I feel that keeping the specifics of how our scores are generated is shady. In a lot of ways I feel that it is a way for companies to keep people in debt, charge higher rates, and make more money. I don't understand why having a $0 balance is not optimal. You MUST have debt in order to have a good credit score. Doesn't make since to me. But I want to buy a house (with little to no money down) so I must go along with the program, lol.
We do have a choice not to be a part of the "system." The only way to do this is to pay cash for everything. No mortgage loans, credit cards, or car loans. If you don't need to borrow money from anyone you have full control of your financial situation. It's your choice.
I've got to respectfully disagree with some of these statements. OP has some very valid points. One 30 day late payment doesn't equate you have bad repayment history. Unpaid collections shouldn't be scored the same as paid. Ok, so you had a collection, I can understand the importance of noting that. But once I've taken care of it, I should get some credit for satisfying my financial obligations, either by removing the collection or scoring paid collections higher than unpad collections. The system does need to be revamped. No doubt, espcially given the current economy.
The specific way the scores are calculated are hidden from the general public. But what makes up the score is, for the most part, common knowledge to those who take the time to educate themselves. What's shady about scores are the companies that are permitted to sell the so-called FAKOs with the teeny tiny disclaimer that they're useless. It's also shady that consumers don't have access to the various FICOs out there. If I want to know my auto FICO prior to getting an auto loan, I should have the option of buying it. Same for the rest of the FICOs.
Companies don't keep people in debt however, people spend more than they should and keep themselves in debt. Just because I have a credit card with a high limit doesn't mean I should go out and use it all up. Rates are rates. No one says you have to carry a balance and pay those higher rates. CCC's should say with your credit rating we can offer you a card with a limit and rate of XXXXX. Do you want to accept or decline this offer? If we decline, don't even report the account. I know if I make a late payment I'll get hit with a fee, so I make it a point not to be late. You don't have to have debt to have credit. You have to show USE of credit to have credit. If that means leaving $5 on a credit card so I can show USE, ok. That doesn't mean I have debt. If a company wants to look at me like I'm just a number, then that's not a company I would want to do business with. With or without credit every individual has control of their financial situation. If you don't want to use credit, save your cash and use it. If you want to borrow money, lenders need to see if you're a a safe investment. Does the system need to be tweaked, sure does. But there does HAVE to be some kind of system in place.
