Paid off all my debt! And my credit score DROPPED!!! Wait, what?!?

[theclemsonkid]

This is why I know America's financial future is screwed. In the past three years, I have paid off over $8,000 of my credit card debt. I also paid off my car. I closed three of my six credit card accounts in general. I have $38,500 of available credit of which I am using ZERO. Because of all of this, I wanted to see how much my credit score improved since 2009. So I ran my credit score, and surprise!!!... My credit score DROPPED 110 points. Yes, you read that correctly, after paying off ALL MY DEBT, I am now, in the eyes of the American credit bureaus, MUCH LESS LIKELY to be offered credit. I have no late payments in four years, no derogatory accounts in four years, and have only had one credit score run.
So apparently the moral of the story is... get up to your ears in debt, make sure you pay the ridiculous interest payments on time, carry at least $10,000 in debt with you at all times, and your considered "credit worthy". Pay off all your debt and live within your means like I am choosing to do, and you are labeled a financial risk.
Only in America folks... Only in America...

 

[beth]

Last year I did another loan on my house in Key West since the equity loan I had termed out. My score at that time was 801. Now, I've sold that house, paid off my car and the house I'm living in. I have zero debt now and have no bad credit history whatsoever. I haven't checked, but I'm sure my score is now in the 650 range. LOL

 

[2quills]

Funny thing about credit is that your score goes down when you don't use it. Showing that you have some debt and are responsibly paying it off earns you more point. It doesn't take much. I keep two cards open always and simply use them for certain things with the purpose of paying them off to keep my score up.
But your debt to income ratio will still look great to investors who might be looking to loan you money. Scores aren't everything.

 

[flower]

Quote:
Originally Posted by TheClemsonKid http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534212
This is why I know America's financial future is screwed. In the past three years, I have paid off over $8,000 of my credit card debt. I also paid off my car. I closed three of my six credit card accounts in general. I have $38,500 of available credit of which I am using ZERO. Because of all of this, I wanted to see how much my credit score improved since 2009. So I ran my credit score, and surprise!!!... My credit score DROPPED 110 points. Yes, you read that correctly, after paying off ALL MY DEBT, I am now, in the eyes of the American credit bureaus, MUCH LESS LIKELY to be offered credit. I have no late payments in four years, no derogatory accounts in four years, and have only had one credit score run.
So apparently the moral of the story is... get up to your ears in debt, make sure you pay the ridiculous interest payments on time, carry at least $10,000 in debt with you at all times, and your considered "credit worthy". Pay off all your debt and live within your means like I am choosing to do, and you are labeled a financial risk.
Only in America folks... Only in America...


LOL...I was told by a banker guy that to keep my score up...I would need to keep my credit cards run up 1/2...any higher and the score drops because I would have extended debt, any lower and it looks like I'm trying to not use the card which is bot good news to the creditors, who make their money on interest.

To be honest, if you are 100% out of debt...who gives a rats behind to go into debt, just stay debt free, it's cheaper. Why pay out interest? The only thing to buy on credit is a house or a new car and you should be able to get credit for that.

 

[2quills]

You guys don't have to go into debt in order to use credit when you have the money to back your purchases. Use it wisely and credit can actually work to your benefit.
The investors that I work for will check your score if you come to buy a house from us. But they don't base their decision solely on your score. They want to see history and debt to income. Scores are fickle things.
Don't worry the sky isn't falling.

 

[meowzer]

I was told once that cancelling cards is not always the best thing to do.....I still do not quite understand that LOL...BUT the cards you have the longest SUPPOSEDLY are the best to keep

I use them once in a while....and I DO buy online a lot....BUT try to pay back the total each month

 

[2quills]

I was told once that cancelling cards is not always the best thing to do.....I still do not quite understand that     LOL...BUT the cards you have the longest SUPPOSEDLY are the best to keep
I use them once in a while....and I DO buy online a lot....BUT try to pay back the total each month
Cancelling cards decreases your amount of available credit so it can drop your scores. Having cards for a long time is good it shows a good long term history (since they never cancelled you). But without a substantial long term loan such as a mortgage along with a history of faithful payments for a number of years then you'll never hit scores over 760+.

 

[flower]

Quote:
Originally Posted by 2Quills http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534231
Cancelling cards decreases your amount of available credit so it can drop your scores. Having cards for a long time is good it shows a good long term history (since they never cancelled you). But without a substantial long term loan such as a mortgage along with a history of faithful payments for a number of years then you'll never hit scores over 760+.

That's why a new car is a good credit builder.

 

[2quills]

That's why a new car is a good credit builder.
A car loan helps. After I played off my last truck my score went from the high 600`s to low 700`s. Then I pulled my actual report, found that there were a couple of filings on there that I never knew about so I disputed them and they were dropped so then that put me over 760 and we were finally able to get a mortgage at a good rate. If you've never pulled your actual report to see what's on there I highly recommend to anyone that they do and dispute any discrepancies. I had cancelled an account with Direct TV and payed off the balance late (but I played it off) well I found that they were still reporting against me 3 years after I payed them off. Not only that but they supposedly sold the debt off to a collection agency who was also reporting against me. So my credit was being double dipped with two bad reports after the fact the debt was actually payed.

 

[phixer]

Incurring debt for anything is always bad. Always, always, always avoid debt whenever possible, treat debt like radioactive cyanide.

Other than a house or some kind of life threatening medical emergency, if you cant pay for it free and clear without incurring debt, you probably shouldn't have it because your not living within your means. The more free of credit and it's influence the better off you are. Why have to depend on a credit score for anything? Thats not freedom.

Your score is based on your ability to repay the debt according to the contract. The less debt you have, the less credit continuity you have (but the more power over your life you have) and your credit history begins to fade away unless you keep establishing debt. A misguided and toxic form of servitude IMO.

For example how does ones credit score effect how safe of a driver they are? Yet credit scores determine how much you will pay for car insurance??? What if the person was a victim of ID theft or had a moron for spouse who went nuts with a credit card. Thru no fault of their own they get screwed.

Always avoid debt.

 

[2quills]

It sucks but there are good reasons not to let your credit fall to low. Insurance, like you said but does anyone know how many employers actually run your credit nowadays to be considered for a job oportunity? It's a lot. And I've seen people with decent experience get turned down for jobs because of their scores.

 

[phixer]

Your right Quills, most employers do now days. I wonder if eventually people will be required to be micro chipped? Since there is little correlation of fairness or accuracy in credit reporting how can it be trusted to provide a fair and accurate representation of the person? Thats why I had to do away with it. Especially with rampant ID theft today.

It's hard to believe how dependent and enslaved people have made themselves relying on dysfunctional systems such as these. Kind of like the Matrix. I had to cut those ties. I work for myself now, I live a simple life and best of all Im debt free.
When I see how many people are slaves to their jobs today it's sad because that's not living, it's surviving and life is too short to merely survive it. What good is money if you have no time to enjoy it? Simplify.

 

[2quills]

Your right Quills, most employers do now days.    I wonder if eventually people will be required to be micro chipped?  Since there is little correlation of fairness or accuracy in credit reporting how can it be trusted to provide a fair and accurate representation of the person?   Thats why I had to do away with it.  Especially with rampant ID theft today. 
It's hard to believe how dependent and enslaved people have made themselves relying on dysfunctional systems such as these.  Kind of like the Matrix.  I had to cut those ties.  I work for myself now, I live a simple life and best of all Im debt free.
When I see how many people are slaves to their jobs today it's sad because that's not living, it's surviving and life is too short to merely survive it.  What good is money if you have no time to enjoy it?  Simplify.
Too late, the matrix has me. :laughing:
Is there ever truly a thing such as debt free? We all pay the piper and then there's that debt that all men pay which is kinda unavoidable. Either way you're always going to be owing someone, somewhere for something.
Personally I'd rather go into debt as an investment in my future and take that chance vs paying someone else's bills via rent for potentially what could be decades while I save. To me, not having to live in a slum or a neighborhood with bars on everyone's windows is enjoying life. But I hear ya, I used to work a job that ran me anywhere from 60-100 hours a week and kept me on the road a lot. Money was real nice but there was no life. If I'd have stayed in it I probably would have a house played off by now. But I wouldn't trade what I have now for anything. A little bit of debt is worth it to me for the experience of this life and a reef tank.

 

[phixer]

See post #4, I wrote this in 2006.

https://forums.saltwaterfish.com/t/231861/if-you-could-go-back-in-time-and-fix-one-thing-that-you-did-what-would-it-be

I hear ya Quills. Excellent points as usual. I used to live a life like you described. I missed the things in life that mattered most, one day I realized there is a pre-determined number of sunsets I will ever see before I die... and I do not want to spend one more minute chasing a buck chained to a desk. Human biengs were not meant to live that way and no one on their death bed has ever said they wish they would have worked one more hour.

Sooo, one day I walked away from it all and I will never go back to the rat race. Im much happier now because Ive learned that freedom is more important than money. To work for a paycheck and then turn right around and give it away for bills is even worse, thats not living or paying your dues, thats indentured servitude.

Is there ever such a thing as being completely debt free? Yes, we all have to live but we do not need to be reliant on others for it...forever. So yes, I believe it is possible to be %100 debt free however in doing so it would cause a disruption in the Matrix because we would need to simplyfy and agent Smith needs to take in order to feed the matrix.

Some would say complete freedom is anarchy. However nature is harmony yet enjoys complete freedom?

The Matrix is Sci Fi I know but the story relates to real life in many ways. To be free one must seek independence and be willing to stand alone without assistance. This takes a lot of effort, most will not bother and therefore will remain enslaved.

Debt or lack of it is proportional to ones level of freedom and how dependent one is on others i.e (a job) or a system for their existence is the measure of it. In terms of freedom, many people are no more free than the fish they keep. IMHO It's not what you have, it's what you own.

 

[flower]

Quote:
Originally Posted by 2Quills http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534279
It sucks but there are good reasons not to let your credit fall to low. Insurance, like you said but does anyone know how many employers actually run your credit nowadays to be considered for a job oportunity? It's a lot. And I've seen people with decent experience get turned down for jobs because of their scores.

Wow...I didn't know this. It makes no sense to me, after all...That's WHY a person needs the job, to be able to pay the bills that whatever other job didn't permit moneywise. Every time I find out stuff like this, I'm glad I'm retired and had worked at the same dead end (although well paid) job all my life. What a crazy world.

 

[phixer]

Exactly Flower, and most folks are also surprised to find out that they are liable for any financial transactions their spouses do without their knowledge or consent. Even if the account is soley in that persons name, the unknowing spouse is on the hook for it if they are married when the transaction took place.

So if one spouse was to purchase 5 tons of widgets soley in their name, then burn them into ash and then they divorce and that spouse files for bankruptcy. The other spouse gets stuck with the bill for 5 tons of ash. Welcome to the matrix.

 

[beth]

Quote:
Originally Posted by Phixer http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534401
Exactly Flower, and most folks are also surprised to find out that they are liable for any financial transactions their spouses do without their knowledge or consent. Even if the account is soley in that persons name, the unknowing spouse is on the hook for it if they are married when the transaction took place.

So if one spouse was to purchase 5 tons of widgets soley in their name, then burn them into ash and then they divorce and that spouse files for bankruptcy. The other spouse gets stuck with the bill for 5 tons of ash. Welcome to the matrix.
That would only apply to a shared loan acct. If you have separate credit cards for instance, then spouse is not liable.

Its surprising that there hasn't been law suits over potential employers using credit history against you. I can see it if you are applying for a position that relates to financing or oversight of money handling.

The lawsuit against employers requiring access to social media accts was won.

 

[2quills]

Yeah I'd also heard about some employers looking up profiles on social media. Seems nothing is sacred anymore.
Agree with maybe checking credit for certain types of positions. But you wouldn't beleive how tough it is to try and find an all around handy man that has a clean background, driving history and decent credit as well. I went though heck at my last company trying to find good help that theinvestors would approve to work their properties. Ultimately they were a little more lenient for non office staff but not much when it came to new hires.

 

[aggiealum]

Quote:
Originally Posted by TheClemsonKid http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534212
This is why I know America's financial future is screwed. In the past three years, I have paid off over $8,000 of my credit card debt. I also paid off my car. I closed three of my six credit card accounts in general. I have $38,500 of available credit of which I am using ZERO. Because of all of this, I wanted to see how much my credit score improved since 2009. So I ran my credit score, and surprise!!!... My credit score DROPPED 110 points. Yes, you read that correctly, after paying off ALL MY DEBT, I am now, in the eyes of the American credit bureaus, MUCH LESS LIKELY to be offered credit. I have no late payments in four years, no derogatory accounts in four years, and have only had one credit score run.
So apparently the moral of the story is... get up to your ears in debt, make sure you pay the ridiculous interest payments on time, carry at least $10,000 in debt with you at all times, and your considered "credit worthy". Pay off all your debt and live within your means like I am choosing to do, and you are labeled a financial risk.
Only in America folks... Only in America...
One of the reasons your credit score went down is due to the "available credit" you have on your cards. Credit reporting agencies will lower your score because you now have over $38K available credit to use. As you stated, if you cancelled some of those cards to reduce your available credit, it may also lower your score. Is it moronic? Yes in deed. I have approximately $30K on 3 various credit cards, but have over $70K credit available overall on the cards. I could easily pay the balances off, but my Accountant actually said I was better off making payments that were at least 5 times the minimum due each month. In doing that, my credit rating went from a 725 to a 795 in a matter of 6 months. Again, reverse logic.

 

[aggiealum]

Quote:
Originally Posted by Phixer http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534330
See post #4, I wrote this in 2006.

https://forums.saltwaterfish.com/t/231861/if-you-could-go-back-in-time-and-fix-one-thing-that-you-did-what-would-it-be

I hear ya Quills. Excellent points as usual. I used to live a life like you described. I missed the things in life that mattered most, one day I realized there is a pre-determined number of sunsets I will ever see before I die... and I do not want to spend one more minute chasing a buck chained to a desk. Human biengs were not meant to live that way and no one on their death bed has ever said they wish they would have worked one more hour.

Sooo, one day I walked away from it all and I will never go back to the rat race. Im much happier now because Ive learned that freedom is more important than money. To work for a paycheck and then turn right around and give it away for bills is even worse, thats not living or paying your dues, thats indentured servitude.

Is there ever such a thing as being completely debt free? Yes, we all have to live but we do not need to be reliant on others for it...forever. So yes, I believe it is possible to be %100 debt free however in doing so it would cause a disruption in the Matrix because we would need to simplyfy and agent Smith needs to take in order to feed the matrix.

Some would say complete freedom is anarchy. However nature is harmony yet enjoys complete freedom?

The Matrix is Sci Fi I know but the story relates to real life in many ways. To be free one must seek independence and be willing to stand alone without assistance. This takes a lot of effort, most will not bother and therefore will remain enslaved.

Debt or lack of it is proportional to ones level of freedom and how dependent one is on others i.e (a job) or a system for their existence is the measure of it. In terms of freedom, many people are no more free than the fish they keep. IMHO It's not what you have, it's what you own.
Is there ever such a thing as being debt free? Yes and no. Depends on what type of debt you're talking about. If you're talking about debt that also incurs some form of interest to pay back, then you can do that if you pay cash for everything - your home, your car, your high ticket items (vacations, electronics, appliances, remodeling your home, etc.). But you will always have some form of debt in the form of insurance premiums (health, home, car, life...), property taxes (if your state has those), utility bills (electric, water, gas, telephone, cell phone, Internet, Cable/satellite..), gasoline for your car, maintenance for your car, or income taxes (state and federal). Granted, you could become a hermit, live off the land, and disconnect from the grid, but I don't see that happening to the majority of Americans.