LOL I don't stay up nights worrying about anything Cat. People just need to be aware their credit score not only determines if they can get credit and at what rate, it also can affect other things such as your insurance rate and Lord knows what else.
Credit Rating Nonsense
- Thread starter Henro
- Start date
Some employers pull credit reports as part of the hiring process. I think they're technically not supposed to use it in their hiring decisions, but we all know how well that sort of thing works out.
Post 2Read post #2.
OK touché' .... by the time I read through the entire thread I forgot the second post made by you already brought up credit affecting insurance. But I don't know of anyone who doesn't need credit, that keeps borrowing money in order to be able to borrow money?
The whole point is the rating system is flawed IMO. Yes people even in debt who borrow often and pay every loan back on, or ahead of, time should earn a good credit score. People with little money and no history of ever paying off loans should be scrutinized until they establish a good history of paying. But to nick the credit rating of people who have money in the bank, other assets, and no debt, seems irresponsible.
You mind as well complain about oil prices or bank fees. Bottom line is that companies err on the side of profitability.
Your thinking is all wrong - you need to start thinking like The Donald. Inherit millions from a rich daddy, claim to be self made, then go bankrupt losing other peoples money. Fake that you made it and repeat.
Making a million dollars is easy. First, you start with a million dollars....
Your thinking is all wrong - you need to start thinking like The Donald. Inherit millions from a rich daddy, claim to be self made, then go bankrupt losing other peoples money. Fake that you made it and repeat.
Making a million dollars is easy. First, you start with a million dollars....
At the low to mid credit rating levels, it is true that the algorithm that calculates a credit score is designed to spit out a number that estimates your ability to repay.
However, at the tippy top of the credit rating scale, the formula changes a bit. It’s not only based on your ability to repay, it’s also based on your use of credit, ie how good of a customer you are. Are you borrowing money and repaying on time WITH interest? They are in the business of making money so to get to that high score, you need to be actively paying interest.
If you always pay your debts on time but never incur interest, you can easily get to the low 800s. A score that any employer would be more than happy with or get you the best insurance rates.
However, at the tippy top of the credit rating scale, the formula changes a bit. It’s not only based on your ability to repay, it’s also based on your use of credit, ie how good of a customer you are. Are you borrowing money and repaying on time WITH interest? They are in the business of making money so to get to that high score, you need to be actively paying interest.
If you always pay your debts on time but never incur interest, you can easily get to the low 800s. A score that any employer would be more than happy with or get you the best insurance rates.
Nightvision
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We are old and have had credit for a long timeHow the heck are you guys getting credit scores in the 800+ range?!!I've never made it to 800 and am currently sitting around 760 or so. I guess the new tractor purchased using Kubota 0% financing will ding my credit score even more. This thread got me looking at how our credit scores are calculated. I wonder if 401K balances are figured into the calculation, or checking/savings balances.
- Payment history: The record that demonstrates whether or not you make timely payments on your account. It accounts for 35% of your credit score.
- Credit utilization: The percentage of your available credit you have used. A lower ratio is better. This accounts for 30% of your credit score.
- Age of credit: How long you’ve had credit and how old your accounts are. It accounts for 15% of your credit score.
- Types of accounts: The diversity of your credit mix. This accounts for 10% of your credit score.
- Application history: How many times you have applied for various forms of credit in the past two years. This accounts for the last 10% of your credit score.
mcmxi
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Hey, I'm no spring chicken!We are old and have had credit for a long time
I've had credit in the US since 1989 but maybe I'm just getting started compared to some on this forum! I pay off my business credit card every week, since I use it for business. My credit score changes every week, depending on how much I owe on the day that they do the reporting since I personally guarantee my credit card account. Last week, I made a payment to clear the balance for March 1st, and my automatic payment also pulled money from my checking account. Now I have in excess of $2000 positive in my credit card account. It will only take a day or two to bring that down to a 0 balance, and then it will start climbing up again. On Friday, I will pay it off again, and the cycle goes on every week of the year. It must drive the credit reporting companies crazy, and my score goes in wild swings from 840 - 860. Never got a rating higher than 860, but I Henro, I own everythng that I have, and owe virtually nothing to anyone. In business, 30 day credit is needed to keep merchandise moving in and out. When we had to shut down for Covid, all debts were paid immediately. When we reopened, the cycle repeated. That is life in the business world. Almost all business's run on credit.
The majority of the wealth in the US is self made. Also , companies don't err on the side of profitability they aggressively pursue profitability. Its survival. There is no shame in it. As a consumer you are blessed to live in the US where there are so many options available. Nuff said.
Magicman
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Credit scores do serve a purpose. It eliminates a human being to review your credit file and financial information to see if you should be granted credit. Someone punches in the info from your credit application and the system comes back with a No or Yes and how much. This way, if you are declined, you cannot complain (sue) that you were singled out.
An old line credit reviewers would say was ".. Yeah, he will probably pay the XXX...' In my book, either the loan/credit is justified and the borrower WILL repay barring a catastrophe or they are declined. I really abhor 'easy credit' and 'everyone is approved'.
An old line credit reviewers would say was ".. Yeah, he will probably pay the XXX...' In my book, either the loan/credit is justified and the borrower WILL repay barring a catastrophe or they are declined. I really abhor 'easy credit' and 'everyone is approved'.
Nuff said by me to Mikester while perched upon my powerful ,graceful, and dependable high horse. I believe this comment would have been taken as thus implied by most. Let me know if you have further questions or concerns as the stable beckons.
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Magicman
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Not a problem here and I agree with you. I was just trying to follow the topic line as it relates to Credit Ratings.
BAP
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I work for the banking industry BAP. Have a couple checking accounts and a safe deposit box we rent!
^^^ This
Yeah, unfortunately you have to keep things on credit on order to maintain credit......
I like to pay cash, still have a small mortgage, however I do maintain a couple of credit cards and try to put all my monthly expenses on them and pay them off before interest is charged just to keep my score up incase I ever need to use it, and for insurance purposes as well.
Another interesting factoid, the higher the limit on your card(s) the higher your credit score. A lower limit is a signal that you aren't capable of managing debt.
Keep in mind that when applying for a loan credit score isn't everything. The bank/lender is looking at risk and credit score is just one part of that. They'll also be looking at your income vs debt, any liens against you, your current assets and investments. So just because you have a score of 740 if you have 500k in assets, 0 debt, and an income that can support the loan term you'll most likely get not only the loan but also the lowest interest rate.
On the inverse of this someone can have a credit score of 850 but if their income vs debt is too high for certain banks they'll get rejected.
Other than that credit scores really just impact your ability to rent a car or other odds and ends things that as long as you are average or better you won't be impacted negatively.
On the inverse of this someone can have a credit score of 850 but if their income vs debt is too high for certain banks they'll get rejected.
Other than that credit scores really just impact your ability to rent a car or other odds and ends things that as long as you are average or better you won't be impacted negatively.