Credit score witchcraft...

nooshinjohn

These past couple months, I have been on a tear of sorts paying down debt. I sold the house in Indiana, and have paid off several cards, and the rest paid at least half of the outstanding balances.

My reward for all the hard work is to see my score reduced across all bureaus by at least 75 POINTS! I have not missed a payment on anything in almost 20 years... EVER, so how is this even possible?

nooshinjohn

True that... I would think the elimination of almost 100k of debt would be a plus.

nooshinjohn

Speaking of Hawaii... I am looking for some Old Hawaiian BBQ sause

nooshinjohn

Keohe smoke or something like that

ken brydson

Keiko wrote: »

Lol! Pork b/u/t/t is censored?

Have to say ****

ken brydson

Well crap, that didn't work either

ken brydson

Yay, I can say crap but not **** or butt...

nooshinjohn

Thanks slick... But in fairness I took the first dump.

coolsax

John.. in case your frustration was more than rhetorical... did you close any of those cards that you paid off? If you did, then that is likely what lowered your score, because you have taken away available credit, a big part of your score is balance to limit ratio so if you closed the paid off cards then you took away a lot of limit, so initially it is going to hit your score until you get your balance to limit ratio down some more.. now if you kept the accounts opened and just paid them off then the score hit should only be temporary.

tonyb

This ^^^

Spot on....also, they want you to keep the CC accounts open, even if you never use them. Why ? So they can charge you that yearly fee. Nice gig huh, these banks have.

If you have no credit, you pay a higher interest rate because your more risky. To get credit, you have to open numerous CC's, pay your interest and yearly fee's on time. If you decide you no longer want the CC's, your score is hit so they can what...charge you a higher interest rate when you go to borrow money again.

nooshinjohn

I sold the house, but intend on keeping all other lines open. The goal here is to be able to start buying apartment buildings here in CA...I would like to have 50 units or perhaps a few more when I retire in 20 years...

EndersShadow

^ So your gonna be a CA slumlord huh john

I jest of course.....

When's your flip this house show going to start airing

tonyb

Tag team with Vanilla Ice ?

ZLTFUL

John,
For the longest time, my biggest negative on my credit report was a *lack* of revolving credit.
I simply didn't buy anything that I couldn't pay cash for immediately.
The problem with that is, even though you make sound financial choices, you never have anything for the credit bureaus to "see" as to your dedication to making payments.

These days, I take advantage of the 0% interest specials on the cards I do have and always have things paid off before the 0% expires.
I *HATE* carrying debt when I don't have to but my credit score is astronomically good because I do now.
These days I even get gas on my credit card as it shows up as a balance even though the cards are paid off every month. It helps a LOT when your only real debt is a small mortgage payment.

cnh

They hold any DEBT against you for a LONG time before they adjust that credit rating. You also need to constantly generate minor debt and repay it quickly and never carry too much debt. They don't even like it if you have SEVERAL credit cards you NEVER even use, because each credit line is HELD against you as a "possible" debt, WTF! $100K is a lot in their book. I haven't ever carried more than a little less than $50K even on the bank loan for the house which we paid off in ten years on a 15 year mortgage.

Banks S U C K! It's as simple as that. When it comes to THEM using YOUR money to make money for NOTHING. They're good. I am currently initiating a bank to bank wire transfer that is almost INSTANTANEOUS, but the boys have a three to ten day period that they can use YOUR money to make a little extra for themselves above the standard FEE they already charged you for the transfer. GOT BANKS? Sure! lol

madmax

ZLTFUL wrote: »

These days, I take advantage of the 0% interest specials on the cards I do have and always have things paid off before the 0% expires.

These days I even get gas on my credit card as it shows up as a balance even though the cards are paid off every month. It helps a LOT when your only real debt is a small mortgage payment.

I do the same things and it does wonders for the credit score. Although I never plan on being in debt for anything I don't see any reason to let the score die, especially since insurance rates are now tied to credit score.

Nightfall

cnh wrote: »

Banks S U C K!

I agree. Do you know some banks charge as much as $20 just to cash one of their own checks if you don't have an account with them. Asinine. They have so many ridiculous fees they can charge you too, if you do have an account with them. It's lose/lose. I haven't had a bank account in several years because I just don't like them and it's only been a minor inconvenience. I can cash my payroll check at the grocery store for $3, cheaper than the bank. Money orders are a dollar.

Strong Bad

I went on a tear with closing CC accounts that I simply didn't use any longer. They were all store cards. Yup, my credit score dropped. Recently though, it's made a jump back up. Paid off one of my long time CC's and now use it month to month for literally everything. I put everything from groceries, gas, EZPass (for tolls), FIOS bill, cellphone bill, you freakin name it and I put it on there. I always pay off the balance every month now.

Great thing is, this CC has an excellent Rewards Program and the points rack up quick with doing it this way. All my spending is centralized.

tonyb

If your the type that likes to keep a CC to manage your spending, get one with airline miles attached to it. By the end of the year you'll have enough to go visit Skip....or John, and give them grief.

You have to pay off that balance every month though. The interest won't make any rewards worth it.

muncybob

As mentioned, the score will come back up probably in the next 6 to 12 months. I have not had to carry a CC balance in many years but I do play their game. I get regular offers of 20-40k points or $100-$200 if I open a card and purchase some things in the 1st 90 days or so. I use their card to get my "bonus" and then cancel the card. My credit report probably has as many opened & closed accounts as there is of cable debate threads on the internet yet my score is consistently in the very upper range.

Wait a few months and your score will rebound, then buy some beachfront property that your CP buddies can visit

jflail2

Furthering what most have said, a credit card that has been held for a long time, and in consistently good standing has a very positive impact on your credit score. Never close that old faithful card you opened 20 years ago.

When buying my house, it was suggested that I keep the 2 credit cards I've had forever in play, spend a little on them each month, and always pay on time. You'll want a low leverage metric as well, meaning you don't really ever want to have more than 1/2 the balance borrowed on the card (with 25% probably a better ceiling.)

Selling the house, as crazy as it sounds, may have had an impact as well. You're now flush with cash, but the credit bureaus don't look at cash. They look at leverage (debt/assets basically.)

Rather simplistic, but there's my hay penny's worth.

hawk4

Your score may have went down as you closed your mortgage account by paying it off. The same thing happened to me recently. We sold our house and as soon as the payoff of the mortgage hit the credit report my score went down about 40 points. I thought it would be the other way around but I guess closing the account hurt the score temporarily.

cincycat13

I always thought credit scores were ruled by voodoo. You may be on to something John...it may be witchcraft! All I know for certain is I find them annoying because if I live a life by cash my insurance rates are affected and when I apply for mortgages the offered rates are impacted by a number which does not directly correlate to my ability to service the loan. If you have never seen a wholesale rate sheet for mortgage interest it can be an eye opener.

gurot1

I was informed to keep a few of my CC's that I was going to close, active for the same reason about credit rating.

PSOVLSK

Strong Bad wrote: »

Paid off one of my long time CC's and now use it month to month for literally everything. I put everything from groceries, gas, EZPass (for tolls), FIOS bill, cellphone bill, you freakin name it and I put it on there. I always pay off the balance every month now.

Great thing is, this CC has an excellent Rewards Program and the points rack up quick with doing it this way. All my spending is centralized.

This.