I live in Canada and I once went to a job interview. and in the application paperwork they asked for my credit score. I put the pen down and walked out of there. That was literally the only time it ever happened.
It was an American company...
I feel like that's the type of thing that should be illegal to ask
The system makes no sense if you try to optimize it to get the highest score possible, you will find the differences in a single point have no logic behind it. But banks also typically do not care if your score is one point lower or higher. The number is just a quick reference point to make sure you aren't someone in financial ruin, and if the score is at least mid then they will factor in things like your current income to debt ratio more than the score. If you are a normal person taking out a single loan for a house and probably a car and you know you have stable income to afford it, then you probably don't need to worry about your credit score.
yep. basically it's to determine if you're a deadbeat or not.
scores are mostly tanked by missing payments, over leveraging yourself, and doing other stupid things.
Credit just isn't my thing. It feels like a scam
Not really. Credit can be an incredibly powerful tool in right hands. It's just that a lot of people are greedy and get lured in by banks that do
GET ALL THE MONEY RIGHT NOW
~~pay twofold in a year~~
On the other hand, banking system in general is very much a scam.
Because it is. The rules are written so only the rich can navigate it intuitively
I'm Australian, and this post prompted me to research the US Social Credit system. The score can determine whether or not you're accepted for home rentals, and even determine whether or not you qualify for medical treatments
You need to engage in having debt and credit in order to appease the score.
I bought an apartment recently, and I've never had a credit card or debt of any variety. When I was younger my bank would dip into negatives or reject a payment fairly regularly. In the US that could probably cost me a place to live.
And apparently the entire credit score is built up and perpetrated by these massive corporations? Like Credit Score is not even anything to do with the government, and yet it has such a pervasive effect on people's lives and their behavior.
It's straight up creepy. Dystopian vibes. How do Americans tolerate this?
because you deeply misunderstand it.
it basically lets lenders know if you have a history of paying back your loans or not.
it's that simple. and in the USA medical treatment often requires loans, just like buying a house or car does.
missing a single payment does little to nothing to your score. missing several payments, and defaulting, tanks it.
Then why do you need to engage in having debt and using credit cards to have a good score? If having no credit score is nearly as bad as having a bad credit score then something is wrong.
when i hire someone for a job, how do I know they have experience without being able to verify they have held previous employment in a similar position?
the point of the system is to show you have experience and you pay back your debts. it's not that anything more than that.
a lender doesn't want to give someone a big loan if they have no experience. just like i won't hire you for a senior staff position fresh out of college. those things take like a decade or more to develop.
my credit score at 18 was like 500. and my credit limit was $250. now it's 830, because I've paid back all my debts in a timely manner and have access and have six figures in credit available to me.
if you want a a good credit score, go take out a card, make small payments with it, and pay them back.
it's not a conspiracy anymore than the fact it takes years to get promoted at a job.
It's so much worse than I think you even realize, but you definitely nailed some of the key pieces.
It's correct that we don't opt in, that it's strictly not govt, it's corporations (3 of them), and that modern life in the US makes it impossible to avoid playing this game.
Some additional details:
And nothing I've said is even recent insanity, all of that's been true a long time. It's really staggering just how effectively the US has systematized destroying our working class. We've been the global leader in innovating oppression for decades, it's been interesting watching the rest of the world start to catch on just how severe it is here.
How do Americans tolerate this?
Brainwashing. Americans don't realize they live in a Dystopian shithole where, since the 80s, the rules are made by the rich to keep the common person down.
We're coming to the end game of this now.
The exact same as the Chinese "social credit" system that people whine about, except this one is capitalism based, so it's ok.
Mine doesn't go down when I call the government a bunch of cunts.
And the Chinese one still goes down if you're poor.
100% correct.
Your government would just imprison you and/or deport you instead.
There are a lot of bad answers or misunderstandings about credit scores in this thread.
FICO Credit scores measure exactly one thing: How good are you at regularly paying on debt over time? Thats it.
There are some other companies that take your FICO score and make their own determinations from it, but those are not the intended purpose of a FICO score.
ANON is also saying "x raises" or "y lowers" but he's missing one other part. Some of those raises and lowers are temporary meaning for a couple of months only, and those don't have years long impacts.
Most of the big moving pieces are publicly published right on the FICO website too, so you don't have to guess:
So lets look at ANONs complaints through the lens of what FICO scores address:
Using credit lowers your score
I'm assuming ANON means "using a portion of an already established credit line." We can see in the chart that this would increase the red segment of the FICO score. FICO assumes the closer you get to your maximum credit availability, the more you're being squeezed financially reducing your ability to pay on all of your debts. From a lender's perspective, if your debts are piling up, then lending you more is a higher risk.
Not using credit lowers your score
If ANON means "using zero credit" then, yes, ANON wouldn't have a recent history of paying on debt then the Payment History section of the graph would be thin or empty. From a lender's perspective, if you haven't paid on any debt in the last 6 months, how do they know you still have the ability to do so if you want credit right now?
Paying back late lowers your score
Absolutely! Its violating the very purpose FICO is made to measure: How good are you at regularly paying on debt over time?
Paying back early lowers your score
This one is a yes or no depending on what scenario ANON is talking about. Paying back a credit card early DOES NOT lower your score. In fact, it would likely RAISE your score. Paying back an installment loan, lets say for a car, early can lower your score, but not because its early, but because the load will disappear. Without a loan to pay on, you will have less recent history of paying on an installment loan for a car, and 6 months from now a lender may not know if you still have the ability to do so, so you score falls.
Even checking your score lowers your score.
ANON checking ANONs score DOES NOT lower your score. ANON allowing a lender to do a hard pull check does lower the score, but only a small amount 10-20 points and this is temporary about a month or two. Further, do several hard pulls at once, they don't each lower by 10 or 20 points. If you do the pulls close together (within a week or two) it will be only the temporary lowering for a month or two. From a lender's perspective if you're reaching out for new lines of credit, it means you're indicating you're about to take on more debt which could affect your ability to pay on further new debts.
Taking out loans lowers your score
Temporarily, yes, but over time this can grow your score if its in a different loan type or length.
Paying back loans lowers your score
Yes and no, circumstances depending. If you pay back that one loan type lets say a car loan, and you have have no other installment loans, then you will have no more recent history of paying on any installment loans. However, if you have a mortgage which is another type of installment loan, you'll take no hit for paying back the car loan as you will continue to have a recent payment history of paying on installment loans. You could take a hit because a nearly paid off loan looks good for the "Amounts owed" component of the score, but you could use a trick like getting a credit card of the same credit line (and not charge anything on it) to avoid that if you really need to.
Not taking out loans lowers your score
Not quite true. Having no recent payment history means a lower score, but it you already have some type of loan or credit you pay on every month, not taking out more loans will not hurt your score.
One final thought I really really want to dispel: YOUR FICO SCORE IS NOT INCREASED BY PAYING INTEREST ON CREDIT CARD DEBT!
Try everything you can to avoid carrying credit card debt into next month. Interest rates are crazy high and it does nothing to help you. If you put a purchase on a credit card, make sure to pay the full statement balance every month. If you do this, you'll pay zero interest on any credit card purchases.
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Be warned:
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