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

[beth]

To me there is a difference between owing money for something (say property taxes) and running debt on a credit card. One is paid off when due, the other is a loan of money (with interest going to the bank). That is debt, not paying for something that you owe (like a light bill).

Also, unless you plan to need a good credit score, such as you plan to buy a house within the next year, it doesn't make much sense to retain debt just for having a good score. Right now, I own my house and car clear and have zero debt. I'm not planning on asking for a loan any time in the foreseeable future so I am not fretting over a drop in my credit score because I paid off my debt. It only matters if you are looking to acquire new debt. Also, since I have paid off two homes with my bank with no untimely payments, they better offer me a darn good interest rate if I seek out another loan with them in the future! LOL

 

[phixer]

Quote:
Originally Posted by Beth http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534408
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.
Beth, Im living proof that you are financially liable for what your spouse does without your knowledge or consent (credit cards to be specific) even if you were not on any of those accounts. Most people are not aware of this. This happend to me many years ago. CA family court considered it joint property since the debt was created during the marriage and I got stuck paying it off since she didnt work? I was pretty upset and learned the hard way.

The same thing happened to my friend who's spouse filed for bankruptcy in CO. The court told her since you were married at the time the debt was created it's considered joint property. Since her x spouse filed for bankruptcy his debt has been admonished and because she did not file for bankruptcy she is responsible for his debt and is now having her wages garnished because of this dirtbag. The law and justice are often separate entities.

Proving that an employer is using your credit history against you is like proving age discrimation. Very few cases can ever be proven.

 

[phixer]

Quote:
Originally Posted by AggieAlum http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what#post_3534439
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.
I hear ya. I think in nature most creatures are debt free owing their survival to themselves.

It's like the frog in the pot of boiling water, throw the frog in the boiling water and he's going to jump out... right away. But if you put him in some nice warm comfortable water and slooowly heat it up, the frog will be boiled to death without even realizing it. Thats the situation our culture is in now in terms of consumer debt and public education. We dont even realize that on a global scale we are being boiled to death because of a lifestyle of debt and everyone is a winner.

Costs such as insurance, utilities, gasoline etc are expenses, if you stop paying them they simply cease to exist and difficult to re-posses them. Utility costs can be mitigated thru the use of solar power. Gas can be offset thru the use of ethatnol and mass transit. The rest of the expenses are luxury items factored into our culture, cell phones, TVs, (some would say professional sports) etc...they are all pretty worthless when you think about it.

Except for marine aquariums and beer, those are perhaps the best inventions/discoveries mankind has ever made IMHO. I could be wrong?

 

[aggiealum]

Quote:
Originally Posted by Phixer http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what/20#post_3534463
Beth, Im living proof that you are financially liable for what your spouse does without your knowledge or consent (credit cards to be specific) even if you were not on any of those accounts. Most people are not aware of this. This happend to me many years ago. CA family court considered it joint property since the debt was created during the marriage and I got stuck paying it off since she didnt work? I was pretty upset and learned the hard way.

The same thing happened to my friend who's spouse filed for bankruptcy in CO. The court told her since you were married at the time the debt was created it's considered joint property. Since her x spouse filed for bankruptcy his debt has been admonished and because she did not file for bankruptcy she is responsible for his debt and is now having her wages garnished because of this dirtbag. The law and justice are often separate entities.

Proving that an employer is using your credit history against you is like proving age discrimation. Very few cases can ever be proven.
Spousal debt is different between the various states. In community property states like Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, the credit card companies could try to recoup whatever debt is owed by a spouse through a divorce proceeding or during the probating of a will if the spouse is deceased. In all other states, unless the spouse is a co-signer or is on the card or loan as a joint account, the spouse is not responsible for the debt incurred. A friend of mine had a similar situation as you, except he found out about her debt when see suddenly passed away. When he was probating her will, that's when he found out she had opened about 5 credit cards on her own, and maxed them out to the tune of about $50K. His lawyer said since he wasn't a co-signer or legally on the card, the only way the banks could force him to pay off the debt is by selling off any community property they both owned at the time of the marriage. Fortunately for him, he purchased his house before they were married and it was paid off. The only real "community property" they had together was a couple of cars and whatever furnishing and other belongings they purchased throughout the marriage. The other slippery slope though was she had a large life insurance policy. Haven't talked to him in a while to see how it all turned out.

 

[aggiealum]

Quote:
Originally Posted by Beth http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what/20#post_3534453
To me there is a difference between owing money for something (say property taxes) and running debt on a credit card. One is paid off when due, the other is a loan of money (with interest going to the bank). That is debt, not paying for something that you owe (like a light bill).

Also, unless you plan to need a good credit score, such as you plan to buy a house within the next year, it doesn't make much sense to retain debt just for having a good score. Right now, I own my house and car clear and have zero debt. I'm not planning on asking for a loan any time in the foreseeable future so I am not fretting over a drop in my credit score because I paid off my debt. It only matters if you are looking to acquire new debt. Also, since I have paid off two homes with my bank with no untimely payments, they better offer me a darn good interest rate if I seek out another loan with them in the future! LOL
To be honest, I actually do it for the Rewards Points. I have an American Express that's tied to Westin/Sheraton. One of my Visa's is tied to Delta Airlines. I put all my personal expenses on the AMEX (gas, groceries, personal entertainment and other personal purchases), and most of my business expenses on my Delta Visa. This past July, my wife and I went to the Caymans for 5 days paid completely by rewards points. Now I can agree with you on just leaving the debt on the credit card for simply maintaining a good credit score. However, I find it easier to discuss with my financial institutions when it comes to acquiring certain business loans if my personal credit score is also shown to be good.

 

[beth]

You must have a good deal of business expenses if you could get a 5 day vacation paid in full out of points. Myself, I was able to buy a laptop last yr using my pts. I still maintain zero balance after monthly payment on my one and only credit card. I ditched all other credit cards long ago, though I probably still have a few unknowingly still open.

I have to say, as miserable as the the country's financial crisis has been, it was a wake up call for me. Debt does not pay, and is a good thing to avoid having. Too bad our political reps don't agree.

 

[reefraff]

I use my credit card for all my bills except for the power and trash. I make a couple grand a year off the cash back and unlike interest it isn't taxed. It's the only debt we have and pay it off every month. Our credit score hovers around 800. I think big changes, good or bad is what lowers the score, not paying off the debt.

 

[2quills]

I have to say, as miserable as the the country's financial crisis has been, it was a wake up call for me.  Debt does not pay, and is a good thing to avoid having.  
Curious. You say debt is a good thing to avoid but you've payed off two houses using credit correct? Would you go back and do it over now knowing what you know and not finance those houses? And if not do you think you would have still ended up as a two property owner at this point in your life without credit?

 

[beth]

There is nothing wrong with buying property and using a loan to do so. My question came up when it was mentioned that credit cards were being used to keep a credit score high. I said that in the absence of planning to take out a loan, I didn't see the logic of maintaining debt for the purposes of keeping a credit score high.

Credit is a personal choice we all make, and most of us use it to enrich our lives rather then we actually need it. Yes, I might have made other decisions, in hindsight, about my two houses if I had it to do over again.

 

[2quills]

Agree, if you're not shooting to get a large loan then I don't see much point in aiming for a score above 760 just for the sake of having it. I quit monitoring mine after we got our house. Fortunatly were in a unique situation to where even if we lost our house we have a way out without ending up with a forclosure on our credit. I call it perks of being in the trade. But we did good I think, we planned it out incase one of us can't work we can still make our bills with one income. We forclose on homes on a monthly basis, it isn't pretty and if you've never been through it, trust me you don't want to.
As long as my score stays at least in the high 600's then im not worried about being charged rediculous deposits for things like insurance or turning on utilities etc.

 

[phixer]

Concur, Im now free of matrix and most systems/people that try to control me...for the most part. Debt in any amount just isnt for me.

It's interesting the deceptive games some industries will play to take your money. Had to fire Dish network after they kept nickle/dimeing me to death. They kept raising my bill gradually by a couple dollars each month over the course of 3 years without any changes in programming, other than less of it. I eventually caught on to their scam and told them Im not paying for commercials, Im paying for programming.
If they wanted to force more commercials on me then either reduce my bill or create a dedicated channel for commercials only like their Dish channel or the home shopping network, ESPN for sports, or the animal channel. Got Netflix now and it's pretty good. No commercials much cheaper and can watch pretty much anything I want anytime.

 

[beth]

Yes, I gave up TV as well within the past yr. I found most of my home entertainment is internet and games and that I was basically just channel surfacing on the TV now and again (and finding very little offered there). Yet, I was paying over $100 a month and being charged for the digital boxes I was using which was necessary to see the TV. To heck with that! Also using Netflix. I got a laptop and we hooked it up for "TV" purposes and my desktop has a 27" flatscreen so I can watch internet TV there as well. I can't channel surface anymore, but I can watch just about anything I want to watch when I want to watch. Now, if you are a football fan, unfortunately, you're stuck with your standard cable/satellite company.

 

[phixer]

Holy cow, thats a lot $ for TV. Smart move, hopefully more folks will do the same and it will send a message to cable/satellite companies to lower the rates.

 

[aggiealum]

Quote:
Originally Posted by Phixer http:///t/396644/paid-off-all-my-debt-and-my-credit-score-dropped-wait-what/20#post_3534552
Holy cow, thats a lot $ for TV. Smart move, hopefully more folks will do the same and it will send a message to cable/satellite companies to lower the rates.
$100/month is cheap. I have the premium package with all the major movie channels (HBO, Showtime, Starz,...), 18MB Internet, and wireless set-top boxes, and I pay around $175/month. Sorry to say, my wife and I are addicted to the series like Boardwalk Empire, Homeland, Game Of Thrones, and my kids watch those stupid reality shows like Duck Dynasty, The Kardashians, Pawn Stars, Dance Mom, and others. Then on top of those, I also subscribe to Netflix and Hulu Plus. Then there's my home and business VOIP lines with Vonage. On the flip side, I also have four cell phones with a 8GB Data Family Share Plan that runs around $150/month. All in all, I spend around $5K per year on TV and cell phone service. It it ridiculous? In some ways I'd say yes. However, we rarely go to movies or hardly ever go out to eat at expensive restaurants. I have friends that go out for dinner and a movie twice per month, and they drop over $100 just for the two of them. If they take the kids with them, they spend at least another $50 each trip. Don't even get me started with sports events or concerts. So I suppose it all depends on your personal lifestyle, and how you like to entertain yourself.

 

[phixer]

Glad to hear... they wont miss my business then. Entertainers are amongst the most wealthy people in the world for that reason. I entertain myself with my hobbies and by competing in marathons and triathalons now days and rarely pay for any other type of entertainment. I just dont get the same return on investment that I do when putting the same time into myself or relationships.

 

[snakeblitz33]

Talking about how we entertain ourselves...

I pay for netflix and hulu. My wife only watches four shows a month on hulu (greys anatomy) but it's good for the cartoons for my daughter. I like Netflix because they have some of the shows that I like and I get to watch them every now and then. I don't watch as much TV as I used to because we don't have cable. If I want to watch a semi-recent movie, I go to RedBox. My wife and I might make it out to the movies once a month, if that.

As far as cell phones, it was only a $30 difference for us to keep a smart phone as opposed to going with a basic phone plan. Weird, but it works for us. We like our smart phones (iPhone 4S.) and I use mine daily to check on things and check in with people. I also feel it's a great tool when you own a business, like my wife does with Mary Kay. She can use the square card reader to accept debit/credit cards for people that are impulse buyers that don't carry cash. Works out for us.

We do pay for the internet at home, which we got a deal for $20 a month for the next year... every time we get an ad for cheaper internet from somewhere else, Comcast price matches it to keep our business. Paying $50 or more for home internet is crazy when my wife has access to it at work and I have it at school. Though, it does come in handy when I need it to do my homework or online quizzes,... which I could do at school if I needed to. But, now days, having home internet is like having a water line - it's just become a necessary way of life.

I'm working on rebuilding my credit score after a major hit. I want to be able to get financing for a rural development loan, but it's going to take a bit of work and time to do that... I'm kind of stuck between a rock and a hard place on this one.

 

[nukro]

score decreasing of your credit card is a great problem and i wanna tell you to take advice from a senior person as we are only give you a general knowledge but a company who is doing this kind of debt related job can give you right advice as i know. you can take advice from IVA-Advice.co who will surely solve your problem and can give you advice. thanks bro