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pettie4sox

Credit Scores

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Mods do you work if this thread is redundant.

 

So I guess I thought I was being slick when a tragedy occurred with my credit score.

 

I had 3 credit cards before of varying limits. I decided to tell capital one to kick the can down the road because they were charging me annual fees for their cards. I in tune raised the limit of my freebie credit card to the combined of the 3 plus or minus 1K or so. Apparently, that's a colossal no no. My score took a huge hit as a result. I'm shocked and can't believe this is happening. I tried to re-fi my student loans recently and was denied do this.

 

Why in the world is the credit system so f***ed up like this?

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QUOTE (pettie4sox @ Nov 22, 2013 -> 05:11 PM)
Mods do you work if this thread is redundant.

 

So I guess I thought I was being slick when a tragedy occurred with my credit score.

 

I had 3 credit cards before of varying limits. I decided to tell capital one to kick the can down the road because they were charging me annual fees for their cards. I in tune raised the limit of my freebie credit card to the combined of the 3 plus or minus 1K or so. Apparently, that's a colossal no no. My score took a huge hit as a result. I'm shocked and can't believe this is happening. I tried to re-fi my student loans recently and was denied do this.

 

Why in the world is the credit system so f***ed up like this?

 

Which part was the mistake? Closing a line of credit will always hurt your score. I didn't think a higher limit would hurt.

 

My suspicion is though your score will bounce back quick if you don't over spend.

 

I've had this happen though. I corrected an error on my report and my score dropped 40 points and almost caused a problem for my mortgage. It bounced back in a month. It was just a weird thing.

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QUOTE (pettie4sox @ Nov 22, 2013 -> 04:11 PM)
Mods do you work if this thread is redundant.

 

So I guess I thought I was being slick when a tragedy occurred with my credit score.

 

I had 3 credit cards before of varying limits. I decided to tell capital one to kick the can down the road because they were charging me annual fees for their cards. I in tune raised the limit of my freebie credit card to the combined of the 3 plus or minus 1K or so. Apparently, that's a colossal no no. My score took a huge hit as a result. I'm shocked and can't believe this is happening. I tried to re-fi my student loans recently and was denied do this.

 

Why in the world is the credit system so f***ed up like this?

 

Credit scores fluctuate for a number of reasons, such as simple credit checks, late payment of loans, etc.

 

Usually, opening and closing of cards and credit checks will only give you a temporary credit score hit, and it will revert back rather quickly.

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I use Credit Karma for my score and my score has not moved for about two full months now. I just opened up a Chase Sapphire card, so I assume it may go down the next time it updates, but I've found it real weird that I haven't had a change in my score for so long.

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QUOTE (RockRaines @ Nov 23, 2013 -> 01:03 PM)
It's funny to me that having less credit cards can lower your score.

 

Your credit score is basically how good of a customer you are for companies who want you to spend $$$$ on finance charges. The more money you pay in interest, the higher your score. The person who actually pays for things immediately instead of taking out a series of micro-loans receives a lower score. Put money in the bank and pay for those new clothes when you buy them, lower score. Take out a $150 loan to buy those jeans, higher score. Best of all, when you have a high enough score, when you take out that loan for dinner, the interest will be lower. You want a lower interest, just not 0% from paying upfront. Again, nice racket and the credit card industry has done a remarkable marketing job as will be witnessed by the following posts that will defend taking out loans via credit cards.

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QUOTE (Tex @ Nov 24, 2013 -> 07:53 AM)
Your credit score is basically how good of a customer you are for companies who want you to spend $$$$ on finance charges. The more money you pay in interest, the higher your score. The person who actually pays for things immediately instead of taking out a series of micro-loans receives a lower score. Put money in the bank and pay for those new clothes when you buy them, lower score. Take out a $150 loan to buy those jeans, higher score. Best of all, when you have a high enough score, when you take out that loan for dinner, the interest will be lower. You want a lower interest, just not 0% from paying upfront. Again, nice racket and the credit card industry has done a remarkable marketing job as will be witnessed by the following posts that will defend taking out loans via credit cards.

Money paid on interest doesn't help your score. They want to see how responsible you are with your available lines of credit and they also don't want to see you carrying very much credit. If you had access to 100K and had no defaults and had a 1K balance, they wouldn't care at all. The actual payments don't matter.

 

The key is if you are going to close your credit card or a line, just do so at a time when you don't have any major lending needs (e.g., buying a car or a house). That said, there is good interest and bad interest and unless you are in dire straights, credit card interest is BAD interest (of you are doing some promotional thing I suppose).

 

PS: Tex, I'm definitely not telling someone to take a note out on a credit card or anything like that. I've never paid any interest and put everything on my cards. The benefits and card holder protection are fantastic vs. cash. Of course we have strict budgets laid out for each month, etc, and track everything (my wife and I are accountants) so if people don't have the discipline and end up carrying a balance, then I agree with what you are saying.

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I just used that Credit Karma thing and it's not very accurate, because it's counting 3 offers that Discover Card made for credit which I never even accepted and counting them as loans or balances.

 

My score was 763, supposedly. The last time I checked (the official one with the 3 companies), it was in the 810-820 range.

 

Then it's counting a small student loan (around $500) AND another student loan which has already been paid off.

 

It's almost like it's forcing the system to keep these things in my report in order to show that I have some balances or debts, since I don't have a car or mortgage payment at the current time.

 

Or maybe Credit Karma wants you to see these incorrect loans/balances on your report/score and use their services, in the same way you'll get these alarming warnings or messages on your computer that tell you that you just HAVE to use their services/products or your computer will be at risk, blah blah blah.

 

The one thing that was accurate was the credit card statement for last month, which I always pay off the balance in full.

 

 

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QUOTE (Tex @ Nov 24, 2013 -> 09:53 AM)
Your credit score is basically how good of a customer you are for companies who want you to spend $$$$ on finance charges. The more money you pay in interest, the higher your score. The person who actually pays for things immediately instead of taking out a series of micro-loans receives a lower score. Put money in the bank and pay for those new clothes when you buy them, lower score. Take out a $150 loan to buy those jeans, higher score. Best of all, when you have a high enough score, when you take out that loan for dinner, the interest will be lower. You want a lower interest, just not 0% from paying upfront. Again, nice racket and the credit card industry has done a remarkable marketing job as will be witnessed by the following posts that will defend taking out loans via credit cards.

Not sure this is accurate at all.

 

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

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QUOTE (Chisoxfn @ Nov 24, 2013 -> 11:10 AM)
Money paid on interest doesn't help your score.

 

Payment history helps your score. Payments typically include interest. I should have been clearer. Bottom line you have to open accounts and use them at least a little to improve your score. That typically means having a balance and paying it off. I agree that there are great advantages with using a credit card instead of a debit card, checks, or cash. But for the vast majority of people credit cards become a way to buy things faster, they replace savings, and in the end hurt a person's finances more than help. It's a terrible crutch. And one way the credit industry sucks people in is with making credit scores something desirable and worth working for.

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QUOTE (caulfield12 @ Nov 24, 2013 -> 04:30 PM)
I just used that Credit Karma thing

Nice. I'd never heard of this. Just pulled the report (I always refused to pay $1 and give my details).

 

Credit Rating: Excellent

Updated Nov 25, 2013

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Not sure if this would be the appropriate thread but since when do you need to be a spouse or a significant other to cosign on a loan for a relative?

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Credit scores are crap.

 

The more in debt you are, the better your score.

 

How does having less money to spend equal a better credit risk?

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I received a letter in the mail from Chase informing me they are closing a credit card account of mine due to inactivity and that there's nothing that I can do about it. Have any of you had this happen? It doesn't bother me aside from the negative hit to my credit score.

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QUOTE (pettie4sox @ May 31, 2016 -> 10:15 AM)
Not sure if this would be the appropriate thread but since when do you need to be a spouse or a significant other to cosign on a loan for a relative?

 

Usually due to lack of income or credit history/score.

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QUOTE (knightni @ May 31, 2016 -> 12:24 PM)
Credit scores are crap.

 

The more in debt you are, the better your score.

 

How does having less money to spend equal a better credit risk?

Agreed they're crap, but paid debt is more valuable than anything really. Paid debt is essentially credit, and therefore improves you debt to credit ratio.

 

Once you own a car and have a mortgage, credit isn't super meaningful, but I sympathize with those with bad credit.

 

I encourage parents out there to co-open a credit card with their children and only use it to pay the cable bill or something along those lines. That's a huge benefit for them going forward and you don't have to give them the card.

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QUOTE (southsider2k5 @ May 31, 2016 -> 12:34 PM)
Usually due to lack of income or credit history/score.

 

I know why you need a cosigner but why the f*** would a bank care if the person cosigning was not a spouse or significant other. If a cosigner is is credit worthy and would get approved his or herself then why the f*** does it matter?

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QUOTE (pettie4sox @ May 31, 2016 -> 12:48 PM)
I know why you need a cosigner but why the f*** would a bank care if the person cosigning was not a spouse or significant other. If a cosigner is is credit worthy and would get approved his or herself then why the f*** does it matter?

 

Probably because even though that person is putting their credit on the line by co-signing it is still riskier in their eyes to have it be a non spouse (less responsibility to take over payments)? I dont know, that's all I can think of off the top of my head.

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QUOTE (pettie4sox @ May 31, 2016 -> 10:15 AM)
Not sure if this would be the appropriate thread but since when do you need to be a spouse or a significant other to cosign on a loan for a relative?

 

I work with automotive financing, and it is not required, but most lenders prefer or take into account the closeness of a cosigner to the buyer. They usually want it to be a parent/close family member. They figure even with ok credit, your short term girl friend, or your coworkers cousin are a lot less likely to make good on the loan themselves should you not be able to pay.

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QUOTE (joemg311 @ May 31, 2016 -> 01:31 PM)
I work with automotive financing, and it is not required, but most lenders prefer or take into account the closeness of a cosigner to the buyer. They usually want it to be a parent/close family member. They figure even with ok credit, your short term girl friend, or your coworkers cousin are a lot less likely to make good on the loan themselves should you not be able to pay.

 

You could break up with gf the next day though. My brother asked me to cosign on a small loan and they said no because they want him to use a spouse or significant other. I'm his f***ing older brother FFS.

 

It doesn't get any closer relative wise than that.

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It's all about getting repaid. They also are looking for someone that will kick your ass to get the loan paid.

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QUOTE (pettie4sox @ May 31, 2016 -> 01:58 PM)
You could break up with gf the next day though. My brother asked me to cosign on a small loan and they said no because they want him to use a spouse or significant other. I'm his f***ing older brother FFS.

 

It doesn't get any closer relative wise than that.

 

I have never hear of that before. I don't think a lender can tell you whom you can use for a cosigner, they can just tell you if you are approved or not. On demanding a spouse as a cosigner, the only situation I could see that happening is if you are married and your spouse has good credit and or a nice granishable long term employement, and you just flat out refuse to give them your wifes information or say she won't cosign. A lender might get scared off that your wife will not be part of a loan, but If you do not have a spouse, or they have bad credit, a sibling or parent is the best possible cosigner.

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QUOTE (joemg311 @ May 31, 2016 -> 02:45 PM)
I have never hear of that before. I don't think a lender can tell you whom you can use for a cosigner, they can just tell you if you are approved or not. On demanding a spouse as a cosigner, the only situation I could see that happening is if you are married and your spouse has good credit and or a nice granishable long term employement, and you just flat out refuse to give them your wifes information or say she won't cosign. A lender might get scared off that your wife will not be part of a loan, but If you do not have a spouse, or they have bad credit, a sibling or parent is the best possible cosigner.

 

Who would it benefit if they can't tell you exactly under what circumstances they would extend the credit?

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