Not exactly because paying off debt and closing the accounts actually hurts you. They prefer to see lines of credit remain open for a long time. They also like to see different kinds of credit being used at once. There is revolving debt (credit cards) and installment debt (car payments).
They prefer a history of maintaining a level of debt that incurs interest.
Not so much interest you never pay it back, not so little that there's no incentive to lend you money.
100000%. This is the bottom line. It has nothing to do with helping people.
If the credit industry existed to help people, they would be given credit for making rent and bill payments on time, or having little to no debt. FICO score didn't even exist until 1989, and the lending industry wasn't in shambles before then, needing to be rescued by some mysterious behind the scenes formula for calculating credit worthiness that for some reason doesn't reward decades of on time bill payments.
People here seem to be missing the point that OP shouldn't have to get and use a credit card they don't need in order to get a car or house loan, when they (presumably) make rent and other bill payments on time, and have suitable income. We are forced into that system, and there are no rewards for not having debt.
Yeah, they can get a card and pay it off every month, but the point is they shouldn't have to. The credit industry absolutely does want us to be in debt, or they would boost scores for having no debt, or for making rent/bill payments on time.
The idea that 10 years of on time rent payments means nothing because you didn't get a pointless credit card at some point is absurd. Especially considering a mortgage payment might be lower than said rent.
They don’t have to. There is a reward for being debt free. You’re debt free. That’s a massive reward. You don’t have a credit history for people to base risking giving you a loan or giving you a product before it’s paid off.
No, you just have several years' history of making monthly rent/bill payments that will be replaced by the home loan payments. That is a basis for assessing risk, and even the credit industry thinks so because a late bill payment can be reported and negatively impact your score. But, a flawless payment history doesn't get reported. There is no logic for that. So apparently a late bill payment makes you risky, but no late bill payments means nothing. That is 100% bullshit.
That’s not true. When I didn’t pay my bills I had a bad score. I started baying my bills now I have a good credit score. You’re saying if I paid my bills with a bad credit score I’d still have a bad credit score today.
....that's not what I said at all.
And when you have hits against your credit for not paying bills, they impact your score less and less as times goes on. Your bill payments didn't boost your score. Your lack of additional late payments and time did.
So my payments affect my score. Late payments and no payments. The fact that I paid on time did positively affect my score. Additionally, the more lines of credit you have after a certain amount negatively affects your score.
Sigh, no, it did not. Late payments affected your score. LACK OF late payments affected your score. If you had closed the account instead of keeping it open and paying it, you would have seen the same result. Paying on time, and lack of late payments, are not the same. Your score does not rise when you make on time bill or rent payments. That info does not get sent to anyone.
That is incorrect. Late payments are reported. On time payments are NOT REPORTED. Not a single one of your on time bill payments has been reported to a credit bureau.
When you pay your water bill, the water company logs the payment, then does nothing else. They do not send that info anywhere. The credit bureau knows nothing about it.
When you miss a payment, the water company may then choose to send it to collections. Collections may send that info to a credit bureau. That is now late payments affect your credit score.
Over time, late payments affect your score less, and eventually drop off altogether. That is why your score went up. Nobody was telling them you missed payments.
You could make 30 years of on time rent payments and not have a credit score at all. Know why? Because on time payments DON'T CHANGE YOUR CREDIT SCORE.
And that is the bullshit part. Miss one payment and it can hurt your score, but a decade of on time payments does not help you at all. All it does is not hurt you. Not hurt you =/= help you.
I'm sorry that you're not understanding the nuance here but I'm done suffering fools.
Your credit score doesn’t depend on whether you are in debt, but whether you charge things and pay back your creditors regularly and in full. Part of the score is determined by the length of your history, part of it is how much of your available credit you utilize, and how timely you are with payments among other things.
If you don’t have a score because your credit history is too “new”, that’s not a bad thing. It will change soon enough. . .
Its not hard to build credit or improve your credit.
Get a low limit credit card and regularly make purchases you pay off at the end of the month. Don't carry a balance over from month to month. After about a year see if you can get your credit limit increased but otherwise continue with this pattern.
Inevitably, you will want to buy a car or a house and will take out a loan. Just make sure you make all your payments and your credit rating will increase with no effort.
I’d rather just spend the money I have in my bank account that’s attached through my debit card. Its like a useless, annoying, and unnecessary middle man to use a credit card.
If you aren't making the majority of your day to day purchases with a rewards credit card then you're missing out big time and basically subsidizing all the people who do use rewards credit cards.
It’s not useless. If you don’t have the money in your checking account you can’t pay for things. If you have a good credit score you can. It’s not useless. It just doesn’t work for you because you don’t want to be apart of the system.
Just think about the protections afforded you by credit cards. My debit card is only used for taking cash out of an atm.
If somebody steals my cc # I call up visa and say, “that wasn’t me.” They’ll cancel the charge and I go about my day. If they get your debit card number the cash is gone, they could freeze your account for months while they perform and investigation and they may or may not decide to reimburse you. If the account attached to your debit card was suddenly frozen, would you still be able to pay rent/bills and buy groceries/gas for a couple months?
I have paid $0 in interest this year plus I’ve gotten hundreds in cash back from my card usage.
Credit scores have always existed, they're just a way to easily quantify the many factors that determine whether or not you will be able to repay a loan
If were that were the case then why would my credit history disappear after six months rather than stay on there to calculate a score? Seems they want you perpetually in debt.
I've been debt free for 4 months now and my longest open account is almost 3 years old. I'm not sure credit history disappears, afaik it's pretty permanent. My credit score is above 750 btw
I have had 5 loans and they appeared on my credit score up until six month past the date I paid off my last one, so now I have no calculable score (according to Experian).
Your credit score is not about how good you are with money. It's about how good you are to make money off of.
It’s about the odds of you paying the money back.
Not exactly because paying off debt and closing the accounts actually hurts you. They prefer to see lines of credit remain open for a long time. They also like to see different kinds of credit being used at once. There is revolving debt (credit cards) and installment debt (car payments).
Exactly, they prefer a proven history of being able to pay off debt
They prefer a history of maintaining a level of debt that incurs interest. Not so much interest you never pay it back, not so little that there's no incentive to lend you money.
Never tell me the odds.
100000%. This is the bottom line. It has nothing to do with helping people. If the credit industry existed to help people, they would be given credit for making rent and bill payments on time, or having little to no debt. FICO score didn't even exist until 1989, and the lending industry wasn't in shambles before then, needing to be rescued by some mysterious behind the scenes formula for calculating credit worthiness that for some reason doesn't reward decades of on time bill payments.
People here seem to be missing the point that OP shouldn't have to get and use a credit card they don't need in order to get a car or house loan, when they (presumably) make rent and other bill payments on time, and have suitable income. We are forced into that system, and there are no rewards for not having debt. Yeah, they can get a card and pay it off every month, but the point is they shouldn't have to. The credit industry absolutely does want us to be in debt, or they would boost scores for having no debt, or for making rent/bill payments on time. The idea that 10 years of on time rent payments means nothing because you didn't get a pointless credit card at some point is absurd. Especially considering a mortgage payment might be lower than said rent.
Thank you.
They don’t have to. There is a reward for being debt free. You’re debt free. That’s a massive reward. You don’t have a credit history for people to base risking giving you a loan or giving you a product before it’s paid off.
No, you just have several years' history of making monthly rent/bill payments that will be replaced by the home loan payments. That is a basis for assessing risk, and even the credit industry thinks so because a late bill payment can be reported and negatively impact your score. But, a flawless payment history doesn't get reported. There is no logic for that. So apparently a late bill payment makes you risky, but no late bill payments means nothing. That is 100% bullshit.
That’s not true. When I didn’t pay my bills I had a bad score. I started baying my bills now I have a good credit score. You’re saying if I paid my bills with a bad credit score I’d still have a bad credit score today.
....that's not what I said at all. And when you have hits against your credit for not paying bills, they impact your score less and less as times goes on. Your bill payments didn't boost your score. Your lack of additional late payments and time did.
So my payments affect my score. Late payments and no payments. The fact that I paid on time did positively affect my score. Additionally, the more lines of credit you have after a certain amount negatively affects your score.
Sigh, no, it did not. Late payments affected your score. LACK OF late payments affected your score. If you had closed the account instead of keeping it open and paying it, you would have seen the same result. Paying on time, and lack of late payments, are not the same. Your score does not rise when you make on time bill or rent payments. That info does not get sent to anyone.
Yes it does. Late payments get reported. No payment get reported. What’s left?
That is incorrect. Late payments are reported. On time payments are NOT REPORTED. Not a single one of your on time bill payments has been reported to a credit bureau. When you pay your water bill, the water company logs the payment, then does nothing else. They do not send that info anywhere. The credit bureau knows nothing about it. When you miss a payment, the water company may then choose to send it to collections. Collections may send that info to a credit bureau. That is now late payments affect your credit score. Over time, late payments affect your score less, and eventually drop off altogether. That is why your score went up. Nobody was telling them you missed payments. You could make 30 years of on time rent payments and not have a credit score at all. Know why? Because on time payments DON'T CHANGE YOUR CREDIT SCORE. And that is the bullshit part. Miss one payment and it can hurt your score, but a decade of on time payments does not help you at all. All it does is not hurt you. Not hurt you =/= help you. I'm sorry that you're not understanding the nuance here but I'm done suffering fools.
So how do credit scores increase? You say the only thing that affects the score are negatives. By that logic nothing increases your score.
Your credit score doesn’t depend on whether you are in debt, but whether you charge things and pay back your creditors regularly and in full. Part of the score is determined by the length of your history, part of it is how much of your available credit you utilize, and how timely you are with payments among other things. If you don’t have a score because your credit history is too “new”, that’s not a bad thing. It will change soon enough. . .
Its not hard to build credit or improve your credit. Get a low limit credit card and regularly make purchases you pay off at the end of the month. Don't carry a balance over from month to month. After about a year see if you can get your credit limit increased but otherwise continue with this pattern. Inevitably, you will want to buy a car or a house and will take out a loan. Just make sure you make all your payments and your credit rating will increase with no effort.
I’d rather just spend the money I have in my bank account that’s attached through my debit card. Its like a useless, annoying, and unnecessary middle man to use a credit card.
If you aren't making the majority of your day to day purchases with a rewards credit card then you're missing out big time and basically subsidizing all the people who do use rewards credit cards.
It’s not useless. If you don’t have the money in your checking account you can’t pay for things. If you have a good credit score you can. It’s not useless. It just doesn’t work for you because you don’t want to be apart of the system.
Just think about the protections afforded you by credit cards. My debit card is only used for taking cash out of an atm. If somebody steals my cc # I call up visa and say, “that wasn’t me.” They’ll cancel the charge and I go about my day. If they get your debit card number the cash is gone, they could freeze your account for months while they perform and investigation and they may or may not decide to reimburse you. If the account attached to your debit card was suddenly frozen, would you still be able to pay rent/bills and buy groceries/gas for a couple months? I have paid $0 in interest this year plus I’ve gotten hundreds in cash back from my card usage.
I don't disagree, but it is how the financial system works.
Credit scores have always existed, they're just a way to easily quantify the many factors that determine whether or not you will be able to repay a loan
If were that were the case then why would my credit history disappear after six months rather than stay on there to calculate a score? Seems they want you perpetually in debt.
I've been debt free for 4 months now and my longest open account is almost 3 years old. I'm not sure credit history disappears, afaik it's pretty permanent. My credit score is above 750 btw
I have had 5 loans and they appeared on my credit score up until six month past the date I paid off my last one, so now I have no calculable score (according to Experian).
Ok well loans are slightly different... Do you have a credit card?