Topic: How much do you value your credit score? - page 2. (Read 10663 times)

That's not very common though. In the recent housing crisis in the US, most foreclosures were fairly new loans, and banks lost a lot of money because the houses ended up being worth less than the loans.

The other thing is that in your scenario, that interest does rightly belong to the bank. The bank doesn't have to loan you money, they only do so because they are promised interest. They wouldn't loan you money if they knew they'd only get 60% of it back (90k out of 150k), because they are losing not only the 60k you don't pay back, but also inflation and the time-value of that money.

Yeah but take a hypothetical mortgage foreclosure situation:

A 150k mortgage goes into foreclosure after 10 years.  At an interest rate of 4.5%, you've already paid the bank over 90k back.  Yet the laws still allow them to take the house completely, ruin you financially, and leave you with nothing.  They now have the house, and you have nothing, just out 90k.  So in essence, banks have no risk when lending.

True, but when you borrow money you assume the responsibility and risk for that money. That's just the way it is, and probably the way it should be.

I agree, they are a sort of measure of trust, only thing is the laws are written so that the lenders have no risk whatsoever.  If you default on a loan, the only thing guaranteed is that the lender will get something out of you, and probably ruin your credit score for years to come in the process.

Credit scores are just a measure of trust much like the trust ratings buyers and sellers in this forum use. If you want to borrow significant amounts of money without collateral, you need a means of proving you are trustworthy. Credit scores may not be perfect, but they do help lenders manage risk.

This is correct. I use my card and pay it off each month in full so it is a zero interst loan with 1-2% cash back and in March this year it was 849/850.

Debt on cards is at too high a rate.

credit to buy stuff(cars/computers/shiba dogs/etc): bad and will only inflationate the prices

credit to open a business: good. Or only people that already have money will have a chance to get money.


I value my credit because I don't want to be cut off from the second type of credit

I don't value it a whole lot, but it is nice to have better scores.

Plus, you often have to use a credit card anyway, for most things, so it is better if you own one.

I don't use mine often, however.

Those fees and interest rates... (Not that I can't pay back my bills quickly)

So how much did that $500 that you never paid cost you (even if it was a mistake)?

Not true at all.  At one point I wrote credit software for 5 years and I can tell you that I know EXACTLY how every action affects your score.  Borrowing and paying off every month will get you a very high score.

I make sure that I am not late on credit card payments.
Have not bothered to check my credit score, though.

Point taken. Anyone have on-hand studies on whether or not automated lending has actually statistically reduced the amount of discrimination in lending by race, sex, etc? I don't think I've ever even seen it discussed.

I always read about this thing, but it must be an american issue. Never heard it here in Continental Europe.

Here you get loans equal to the securities, incomes or people vouching for you, equal. And I think that is how credits should work.

Why in gods name should you be PUNISHED for not using your CC and paying off things early??

I agree, if too much leeway is given to loan officers and underwriters then the bank could easily be accused of discrimination even if it was not intentional.

I think banks need to have automated scoring methods because of the massive amounts of regulations that exist today. These regulations are nothing new and have been around for a long time. If a certain policy were to affect a particular group negatively more then others, then the bank could be accused and sued for discrimination. Even legitimate business decisions can be "discriminatory" so banks must be as automated as possible when making lending decisions to avoid these kinds of accusations.

I for one would like to be able to have the option of going into debt.  I see people who pay their bills regularly and having trouble taking out loans.  Maybe because of school debt and mistakes in the past but when their car is paid off and they have a good job, you would think there would be more trust given or atleast a way to appeal.  I don't know my score either and it has been a pain to figure out what it is.  It's like I'm not in the system which is sort of confusing.  At the same time I'm not looking to acquire debt so it isn't something I give much thought at the moment.

Your credit score essentially was able to save you money. By getting 0% APR on your loan, you were able to put the money you would have spent on paying cash in the bank, and could have earned interest on those funds. The money you earned from interest would be what your credit rating/report was worth to you for those two transactions.

I found the credit rating to be absolutely useless to me beyond when I bought 2 new cars within a week of each other about 6 years ago.  The credit score helped me get 0% APR on both vehicles but I was going to pay cash for both vehicles anyways.

I don't find my 800+ score to be much help in buying investment housing.  I'm still limited by income - which when you're self employed can be a real pain.  I can show $1 million equity in a house and I still can't get a loan for $300k - stupid system.

Many lenders use credit reports from the agencies (which are much more detailed than just a number), then use their own scoring system.

Unfortunately, some of the time (especially with credit card companies), they use the most idiotic, infuriating method humanly possible, where they offer loans, benefits, interest rates, and credit lines based on your LOWEST-scoring portion of your credit report. -So you could have otherwise perfect credit - say a house and car on loan, then three credit cards, and because you only have five (which seems like too many to me) credit accounts open or maybe only a five year history on your longest-running credit card (my credit score was devastated a couple years ago when a bank bought a credit card debt on my name for 14 years from another bank, which credit agencies then considered a new account which really sucked because my second-oldest account is only three years old), they'll try to insist (and since this is generally automated, give as a non-negotiable option) you're either ineligible entirely or that you need to pay a higher interest rate with more restrictions and a reduced line of credit.

It'd be nice for consumers if more lenders reintroduced human judgment rather than relying on algorithms and automated contract generators, but that's just not going to happen. As an aside, one of the best things you can do for your kid's future finances (and your own if you're enough of a doormat to co-sign for them when they're an adult), only because we have these stupid automated systems, is to add them to a couple or few (or ten+ if you're feeling really generous) credit cards, leave them on them until you die, and never tell them about it (though they'll see in the credit report, I suppose). You can screw them over that way, too, though - but it also gives them a lot of options for manipulating which debt "they" hold once they reach adulthood. They can drop their name off certain cards so they achieve ideal numbers for credit utilization, accounts open, as well as drop any cards which may otherwise be keeping their score from being ideal. For example, if something happens like in my case, where my debt was sold, they can just drop that card from their name entirely (assuming they have many other similarly-aged accounts) to increase the average age of their accounts, which would probably be favorable.

It depends what you want or need to do with your score. As for me my credit score has always been pretty good. Though I wouldn’t say I spend a lot to gain good credit score. Better consult your bank regarding credit scores. They are usually helpful in telling you exactly what you can do to build or repair in order to get a card or loan.