People tweeting stuff. We allow tweets from anyone.
RULES:
I've only ever encountered this particular scenario once. (I live in Canada. I don't know if it's prevalent any where else).
But I applied for a job once, and got an interview. In the interview, they wanted to see a copy of my credit score. I left the interview immediately. All I'm going to say is it was an American company hiring...
Banks are not government associations. They are scammers. Don't interact with them. Take out your money. Don't get in debt
That's bullshit I keep a zero balance on my cards and have a perfect credit score. Car is paid off,I don't own a house and only have a couple hundred dollars of student debt.
Perhaps it's the lack of consistency in someone's life. A credit score is just a system to tell banks if your are going to be profitable or will you keep up payments for them. Paying a card off is the ultimate revenue loss for a credit card company.
It amazes me that the western propaganda keeps talking about a Chinese social credit system that is an extension of existing social rankings and ratings in China which have existed for millennia, but no one blinks an eye to this American credit system that is horrendous. The Chinese system is mainly in place for business, not so much the individual, like in the US.
The US credit system is a way to make the poor, poorer with insane interest rates that are illegal in other parts of the world. The matrix for the credit system is unclear as it is managed by private companies. The whole thing is insane, but no let's point at evil China where the system has no impact on normal people, unlike in the US.
Good job, comrade. Nutomic is proud. /s
I think you're overstating it by pretending that no one is paying attention to credit score. Especially when you say this under a post that literally points it out, it rings untrue
Meanwhile people mock a fabricated Chinese social credit system that doesn't exist (I know -- I've lived there)
This myth is the dumber cousin of ‘tax write offs generate income’.
when you close your credit card your credit score goes down.
i called one of the three credit companies and asked, "Why?" They said because it makes me very hard to extend credit to without a credit card so that makes my score go down.
...
i'm also not a very good sea captain because i'm not a sea captain but it doesn't cost me imaginary money points on my insurance premiums.
i’m also not a very good sea captain
It makes it very hard to extend maritime insurance to you. But you don't notice that because you don't need maritime insurance.
Part of the credit score algorithms are the amount of unused credit you have.
This makes some sense: other companies have been willing to extend you credit, and you're not using it. Therefore your less likely to default (because you have more of a buffer if you need to spend), plus if you do, there are more lenders to shoulder the pain.
So when you close a card, you're doing the opposite: you're reducing the amount of unused credit you have. So your score goes down.
Footnote 1: you can offset the hit to your credit score if you can convince another card to raise its limit.
Footnote 2: if you have NO credit cards after closing your last card, then they have no insight (or at least far less) about how your finances are going because they can't see that you're regularly paying some other company. Additionally another part of the algorithm is how old your oldest account is if you have none than that part of the score is zero.
"Fun" aside: when I left for college, my father added me to his Amex (for emergencies) and that started my credit history. But he'd had the card since before I was born. For the next several years I carried a credit card that said "Member Since" a date well before I was born (and a credit history that said the same too).
It's not poorly implemented. It works exactly as designed. What most people fail to understand is it's not a rating of how likely you are to repay a loan, it's a rating of how profitable it is to loan to you.
So if you pay off your cards completely, you aren't paying interest, and you're not as profitable a customer as someone who has 10k in debt that they're paying interest on every month.
They also don't exactly have an 850 rating if they're $10k in credit card debt though.
Still not had a credit card and pretty sure I will be able to live my entire life without knowing or caring what my credit rating is.
In my country you have to show 6 months of bank account history for all your accounts. You can have zero credit history and get a mortgage, they only really care what your income and regular expenses are. No credit score as such. If you've never applied for a loan, nobody but your own bank and possibly the government would know what your finances are up to.
Without a credit score, how does your country deal with wealthy people repeatedly borrowing money and not repaying it?
Welcome to criminal offense? You get sued, plain and simple. Bank or lender sues you, and either you cooperate or your shit gets taken and if it's still not enough, you get part of your pay docked each month for x time.
In poor people cases, that goes down to minimal pay (exceptions happen if needed, for example caring for elder I believe).
Rich people have enough shit for taking most of the time that it gets resolved at first step.
Bailiffs can place an arrest their income streams and bank accounts and sell their cars and homes.
Also there's a debt registry you can be put into if you're like 3 months overdue and don't come to some kind of agreement with whoever you borrowed from. Usually the banks are pretty lenient if you go to them with a proposal to pay off the debt in small installments because it's less messy than going to court and getting a bailiff appointed
Ok, so in your country the debt registry functions as a credit score to warn lenders about deadbeat borrowers
Yes but it's pretty difficult to end up there and most people never do. Meaning all our data is safe.
How does a credit score help? In my country we have a register for things like cars than you can see if any debt owed on it, so I guess tracking is on the asset side. Otherwise, wouldn't it just be fraud and the banks would take legal action? That would still produce a record that could be checked too.
Your score does not drop when you pay off a card. It's drops when you pay off a loan.
A lot of people in here arguing about how this works. Short answer is it doesn't work that way. Period.
Right. We use credit cards exclusively. We pay them off every month, never carry a balance. Our score is always in the high 700s sometimes 800 ish. 🤷♂️
because a lot of lemmy posters think they are geniuses, when they are simple arrogant idiots who spout ignorant propaganda to feel superior.
it's wild to me how many like basic facts of reality are viewed as some sort of conspiracy or exploitation.
credit scores are ridiculously simple, and if you have a crappy one it's because you don't pay back what you borrow. but sad losers will make up this elaborate nonsense and spout lies to make themselves feel better as to why their score is in the tank, rather than fess up that they simple don't pay off their loans.
a lot of the commentary here reminds me of weight loss people complaining they can't lose weight, when they cut back from a 4000 calorie diet to a 3500 calorie diet, but only burn 2200 calories a day... and they wonder why they can't lose weight. because if you only burn 2200 calories, you need to eat less than 2000 to lose weight.
basic arithmetic.
I realised it's all fake anyways when my back went out and I was unable to walk for 3 years while I was on the wait list for surgery (I'm ok now).
I went from high credit with a decent paying but physical job to unemployed and no longer able up work in my industry. My partner had a few months of unemployment at the same time and I wasn't able to pay my $11k credit card debt and he couldn't pay his $20k debt. We borrowed money from my younger brother to pay rent for a few months.
Spoke to a free financial councillor, she talked to the banks for us and they happily just waived both debts. She told us to ignore both of our zip and afterpay debts, and not to reply to their debt collectors. And just like that we were debt free after owing 40k between us.
Came out the other side better off financially even though our credit score has tanked. And even though I don't earn an income now or have any debt/credit, my credit score keeps rising?
Shits made up and the numbers don't matter.
I'm curious how any bank would "happily" waive a debt of tens of thousands of dollars, just by being asked. "Happily", yet they still send their debt collectors? I don't think I understand. 😅
Like others said, I'm calling bull on this. I'm young and haven't had my card for a long time, but I pay it off in full each month and I'm in the high 700s. The only things I can remember reducing my score are: 1. My credit history is too young, 2. I only have 1 line of credit rn, and 3. I had high revolving utilization one month. So now I try to keep my utilization around 30-35%.
If you don't pay off in full you are now paying interest on your card. I did take econ class in high school (basically US financial education, and if it's not federally required then it's a mandatory class in my state.) and while it left much to be desired, this was one of the few things we learned. Basically the biggest lesson from that class was interest sucks and you should avoid it at all costs in anything, wether it be a credit card, payment plan, loan, etc. Always try to pay outright if you can, and reduce your credit usage to what you can actually afford. We would literally do the math to show how much more money you spend over time.
this is not true and it keeps people paying interest they don't have to so i'm pretty sure it was spread on purpose precisely for this purpose by the banks.
paying off and cancelling a card lowers your credit score not because you paid it off but because you're down one line of credit. by far the number of lines of credit has the biggest impact on your score (aside from major shit like bankruptcy or loan defaults.)
paying off your credit card balance before it generates interest every month does not affect your score at all aside from increased age (a good thing). your utilization rate is not calculated from your end of month balance but by how much you use the line of credit regardless whether you pay it off or let it sit and charge you interest.
so do not let debt sit in your credit card balance because you think paying it off makes your score go down if you have the means to pay it off. always pay it off if you can, and never charge more to it than you can immediately pay off except emergencies.
Your score does not drop when you fully pay off a credit card. If you pay your balance in full before the due date, not only are you not charged interest for that month, but your credit score is likely to go up due to making a payment on time. I used to carry a balance but have been paying it off monthly for many years now and my score is higher.
If you close an account, the total amount of credit you have decreases and your score may drop, however this is often transient. It's not useful to worry about your score week to week unless there's an obvious problem, follow it over the long term instead.
It’s dismaying that I had to scroll this far before I encountered the correct information. Although, my own father didn’t understand how a 0% interest for 24 months credit card worked, and somehow reasoned that all he needed to do was make the minimum payment every month, and it would all just work out like he imagined. Now he’s basically paying twice for the same TV. In his mind, it’s all Best Buy’s fault though.
So I’m not at all surprised by all the misconceptions in this thread.