Not sure if you’re in America but credit scores are some rigged ass bs. What do you mean paying off a loan made my score lower?? I have more disposable income!
What do you mean paying off a loan made my score lower??
It doesn’t, you just don’t know how it works.
You’re probably seeing that on Credit Karma, which uses a score that stops counting closed loans immediately, whereas the actual credit reporting bureaus’ systems have them stay on your credit report for 10 years from the date of closure. While they remain, they do continue to count toward your average age of accounts (AAoA) in most scoring models (including FICO). That means even closed accounts can help keep your average age higher.
And given that your average account age doesn’t need to be anywhere close to 10 for you to have ‘perfect’ (750 and above puts you in the highest tier in the eyes of every lender) credit (hell, account age is only like 15% of the score), this is actually not an issue, at all. My average account age is less than 8 years and my score’s over 800. Just make your payments on time and you’re good. You don’t even need to accrue any interest—using a credit card and paying it completely off every month works just fine, that’s what I do.
I have more disposable income!
Having income isn’t proof you can be relied on to promptly pay back a loan, having a history of having promptly paid back loans is. A third of people making over $200,000 a year live paycheck to paycheck—just because you’re making money doesn’t mean you’re a responsible borrower.
You know, I don’t even get that. Banks make a decent amount of money on those mortgages, it used to be their bread and butter after all. What is the problem, it doesn’t make enough money fast enough? Why are there no other banks filling in the obvious financing hole?
It’s designed so that “sweet spot” customers have the best credit scores, those who have enough to reliably pay but not enough to pay it off any time soon.
Bullshit, my score’s in the 800s and all I do is use my credit card for everyday purchases, and pay it off every month. I never carry a balance or pay a cent of interest, nor do I have any installment loans (car loan, etc.) at all.
Not sure if you’re in America but credit scores are some rigged ass bs. What do you mean paying off a loan made my score lower?? I have more disposable income!
It doesn’t, you just don’t know how it works.
You’re probably seeing that on Credit Karma, which uses a score that stops counting closed loans immediately, whereas the actual credit reporting bureaus’ systems have them stay on your credit report for 10 years from the date of closure. While they remain, they do continue to count toward your average age of accounts (AAoA) in most scoring models (including FICO). That means even closed accounts can help keep your average age higher.
And given that your average account age doesn’t need to be anywhere close to 10 for you to have ‘perfect’ (750 and above puts you in the highest tier in the eyes of every lender) credit (hell, account age is only like 15% of the score), this is actually not an issue, at all. My average account age is less than 8 years and my score’s over 800. Just make your payments on time and you’re good. You don’t even need to accrue any interest—using a credit card and paying it completely off every month works just fine, that’s what I do.
Having income isn’t proof you can be relied on to promptly pay back a loan, having a history of having promptly paid back loans is. A third of people making over $200,000 a year live paycheck to paycheck—just because you’re making money doesn’t mean you’re a responsible borrower.
You know, I don’t even get that. Banks make a decent amount of money on those mortgages, it used to be their bread and butter after all. What is the problem, it doesn’t make enough money fast enough? Why are there no other banks filling in the obvious financing hole?
You’re no longer proving continously that you can keep paying reliably (yes it’s dumbass logic)
It’s your credit age actually, it gets cumulatively lower because whatever loan it is isn’t adding to your credit age, which is absolutely ridiculous.
Ah, yes, “it’s taken this dude longer than this other dude to pay off his debt, surely we want to give him MORE credit”
It’s designed so that “sweet spot” customers have the best credit scores, those who have enough to reliably pay but not enough to pay it off any time soon.
Bullshit, my score’s in the 800s and all I do is use my credit card for everyday purchases, and pay it off every month. I never carry a balance or pay a cent of interest, nor do I have any installment loans (car loan, etc.) at all.
Tons of confident incorrectness in this thread.