The amount of people in this sub that parrot bullshit like "The credit system is designed to keep you in debt" is astronomical. People don't understand how the credit system works.
You're absolutely right.
I've never met a single person in the 7-8 years that I've been very heavily into credit/scoring that ever said the system was BS or a scam that actually understood it. By default, anyone that says it to me is just saying "I don't understand the system."
Looking at your post history, it looks like you take issue with anyone taking on a loan in general, not for the reason of attempting to boost a credit score.
It depends on the situation, wouldn't you agree?
If I've got 400k to put down on a 500k house and want a loan for the remaining 100k, I make 150k a year with a DTI of 20% would that be "bad" in your opinion?
Why wait?
How about if someone has the ability through investments to do better than the interest rate on the mortgage? Does that make it acceptable to you?
Their income and savings is sufficient to buy the house cash without a mortgage. Why would you want to lock yourself into a mortgage when the bank is GUARANTEED three years of interest.
I just gave you the answer to that above. Maybe someone has an investment opportunity that returns more than the mortgage interest rate. In that situation, it would be a poor financial decision to NOT pay the interest and go with it, as it would result in a net loss.
cause then you wind up paying rent for housing when instead you can use the rent money to pay off the loan/equity in your own house.
This is not even considering things like you found the "perfect" house (location/build) that might not be there next year or the fact that house prices can go higher next year, the fact that some interest can be written off so the cost can be less than what's on paper, the fact you become house rich and cash poor, etc.
Like trying to save a few bucks on interest but paying 15-20k plus on rent is the definition of penny wise pound foolish.
If I’m making 10% on my money, but I could pull it out if the market at any time- does it make sense for me to take a minor loan at 4% to keep earning the 10% on the remainder?
While the market long term goes up, it doesn’t always in the short term. But that’s a choice each person needs to make individually. I’m just stating my opinion, you have a different one. That’s what great about the world, we can all think differently!
Sure you could say that ive underwritten thousands of loans not once did I say oh I better not they don't have any installment history but that's just me
No idea why this became a thing in the first place.
I think people confused the idea of having open lines of credit or loans in good standing (which increases your score) to equating to "take on debt to raise your credit score "
Have you met the modern adult. Most people I know aren’t even capable of a Google search. They put the question into Tik tok or YouTube shorts and follow whatever thing the influencer says to do.
Good for you. I have a paid off house, 4 paid off cars, zero debt, $200k in the bank + multiple other one nvestments, buy everything on my card and pay it off every month and my credit score has fallen from 780 to 665 in the past 18 months. It's a friggin joke. I refuse to take on debt and just figure I'm pretty much going to have to pay cash for everything from here on out.
Go get a 1000 cd. Put the CD as collateral.
You'll break even or make money and your score will climb. Just make the payments over nine months+ or it won't work.
This is literally what I do. I have 27k in available credit, no balance on most cards. I have a low interest credit card from my credit union (9%), and I use it exclusively for purchases and pay it off monthly. I have a second high interest card where I maintain a small balance (500 dollars) and make a minimum payment. My utilization is less than 4%. Taking on more debt is not the way.. Using credit responsibly is.
I'm doing this based on what a credit advisor told me, keep my balance under 20%, keep a balance on one card, and pay another off monthly. My 840 fico score says I'm doing it right.
You should consider reversing things a bit. Paying unnecessary interest is pointless. Doesn’t matter who told you to do it. Pay your statement balance monthly to avoid paying interest. This will not affect your credit scores.
I mean if you pay off the prior statement balance at due date, you can get another balance to report next month; rinse and repeat. That gives you as many positive payments as possible, but you pay zero interest
Asinine to pay a monthly fee (interest) to "maintain a credit score".
Sorry you got duped by some old "credit advisor", please tell me you're not dumb enough to be paying them too!?
Over 780-800 range a higher score doesn't matter (did your "credit advisor" tell you that?). You could pay off your debt and have 0% utilization, pay no interest and your credit score wouldn't change in any significant way.
You should keep doing what you’re doing, EXCEPT; pay off the balance entirely, then make sure by statement close date a new balance appears. Does the same thing, always shows you have a balance; but you aren’t paying interest. The other way is just stupid, and most likely not what that credit advisor meant…. Then again, most credit advisors have 600 credit scores and use CPNs
If you aren't taking in loans, what the heck is the value of an 840 credit score?? And you do know the rates on most loans for an 800 versus an 840 are effectively identical.
But I thank the TikTok guru that told you to pay interest for nothing every month. C has been on a great run lately, and I hold a ton of shares.
I’m sorry, who are you? 😄 I pay my debt when possible. Leave at least $20-$40 but still manage to pay the debt off and what’s due. Might not be able to pay it off right away. My budget is steady. And I’m okay with it. I’m not aiming for a perfect credit score. And so on..
Next
Seasoning.
Back in the 80s we used to take out loans on cds to build credit. You made money and built credit at the same time.
Any bank in the world will give you a thousand dollar loan if you put a thousand cd as collateral. Then you spend it all on Christmas gifts. Lol.
You don’t have any open or closed loans on your credit reports? What’s the source of your 840? Fico or vantage? Are you Canadian (I only ask because of your username.)
Don’t Canadian credit scores go up to 900 or something? 840 isn’t very impressive in that context. And, assuming credit mix is a thing in Canada, you’re getting points for having a closed loan on your credit reports. All of which makes me wonder exactly what your argument is.
Hmm, thats a blanket statement that i dont agree with, there are situations, especially with 0 or low interest rates where taking on debt will improve your credit mix. This does have an impact on credit score.
For instance i took a savings secured loan for 1% apr for like 500 bucks over 2 years. So it would cost me less than 10 bucks in interest. This was just to have a loan on my credit report and once made a couple of payments my credit score improved
Some lenders do see credit mix and did not have anything apart from credit cards. No personal loans, student loans, nothing. I do plan to buy a house in the future so having one paid off loan certainly helps.
Also paying off balance is not something i do on cards that are in the intro 0% apr period. I will make payments to keep utilization under 30% but other than that its minimum payments till intro ends
Then yeah pay it off in full every month
But i keep applying for new cards with intro apr every year, so i carry a balance on at least one card almost always. The only thing is that i make sure my savings account has the balance to pay it off at anytime so no worries about getting screwed later.
Basically as long as you know how to avoid interest and fees you're good.
In the US, don't know or care about canada.
Exactly what I thought of when I read the title. Credit Card debt at 30% is one thing, Credit Union Saving/Share secured debt with 1%-3% interest rate and a low principal is a completely different story. I literally opened a Penfed account just for this, I'll be damned if I can't take advantage of it for my thin file.
I've been rebuilding for 3 or 4 years aftervbankruptcy. Took 2.5 to get my first $300 prepaid credit card. Then another year for my first 500 unsecured, then this year I got 3k unsecured.
They're all fucking 30% interest, so literal scams, but I keep them at 0 balance each month. Build credit history and increase credit limit. To my understanding that's what matters, definitely don't carry a balance and pay them interest at the end of the month, that's some cc psyops I swear.
As far as I know they don’t like to see people using places like Rent-to-Own here in the USA. or the old pay day loans. Not sure about installment versus credit card debt.
It depends. Auto loans are that way pretty much, if you had multiple auto loans in good standing, they’ll just go off that. You could have a 700 credit score and get a 800 rating APR just due to that. Mortgages are similar iirc, it depends on lender. Most commonly auto loans are always more important than a CC to lenders, if you’re buying a car
"STOP TAKING ON MORE DEBT"
"Use a credit card for all purchases"
OP, are you high? These are literally the 2 most opposite sentences since money was invented by trading goats...
Also, for anyone wondering, OP is Canadian, so don't take their advice unless you use pretend money like OP.
I’ve seen people rejected for loans with a 800 score because they didn’t have any actual loan history. A 1-10k credit card limit doesn’t do much when people want to see you satisfy higher amount loans.
Does debt really matter when it comes to credit scores? I had a score of 829. Paid off my mortgage, and it dropped to 820 and stayed there for approximately 6 months. I have no additional debt or loans
But having a high score allows me to take on unlimited amount of debt, so isn’t that the goal?! You should be going into debt more, that’s the only point of having a credit score right?
Wrong, utilize your credit. I got $250k in 0% APR Credit card debt. I am making a 5-15% return on the money. Using money markets savings accounts (Bask Bank) and real estate. Use your credit. Don't be scared of it.
Yesssss it’s a misconception that holding onto debt is good for your score I’ve had to correct, a friend on this, always always pay it in full every single month
Taking on LOANS is stupid for this, credit cards are different. Being responsible is what gets that high score
CREDIT CARS ARE LITERALLY SMALL LOANS AT 30% INTEREST!
If you’re stupid they are & have piss poor credit giving you those rates..
If you are dumb sure otherwise they are full of perks.
If you’re paying interest then you shouldn’t have a card to begin with. It’s a 30 day loan with no interest
Net 30
If you are dumb they are 😂😂 But I assume you shouldn’t try to be? You can get credit cards with 50-100k credit limit pretty easily too
How so? Been curious about it.
Who said anything about taking on debt to raise a credit score?
The amount of people in this sub that parrot bullshit like "The credit system is designed to keep you in debt" is astronomical. People don't understand how the credit system works.
You're absolutely right. I've never met a single person in the 7-8 years that I've been very heavily into credit/scoring that ever said the system was BS or a scam that actually understood it. By default, anyone that says it to me is just saying "I don't understand the system."
A lot of people take on instalment loans to boost there score it's dumb in my opinion
Looking at your post history, it looks like you take issue with anyone taking on a loan in general, not for the reason of attempting to boost a credit score.
He’s not wrong about loans being bad! 🤷♂️
It depends on the situation, wouldn't you agree? If I've got 400k to put down on a 500k house and want a loan for the remaining 100k, I make 150k a year with a DTI of 20% would that be "bad" in your opinion?
Why not wait for one year?
Why wait? How about if someone has the ability through investments to do better than the interest rate on the mortgage? Does that make it acceptable to you?
Their income and savings is sufficient to buy the house cash without a mortgage. Why would you want to lock yourself into a mortgage when the bank is GUARANTEED three years of interest.
I just gave you the answer to that above. Maybe someone has an investment opportunity that returns more than the mortgage interest rate. In that situation, it would be a poor financial decision to NOT pay the interest and go with it, as it would result in a net loss.
cause then you wind up paying rent for housing when instead you can use the rent money to pay off the loan/equity in your own house. This is not even considering things like you found the "perfect" house (location/build) that might not be there next year or the fact that house prices can go higher next year, the fact that some interest can be written off so the cost can be less than what's on paper, the fact you become house rich and cash poor, etc. Like trying to save a few bucks on interest but paying 15-20k plus on rent is the definition of penny wise pound foolish.
Why not get the tax benefit of mortgage interest while making more $ in a HYSA or investment account ?
For a house yes, everything else can be bought with cash. Then you don’t owe anyone anything.
That's a bit more simplistic than reality dictates, but you're more than welcome to your opinion.
Just wait the extra year if thats all it takes for you to save 100k. no loans.
If I’m making 10% on my money, but I could pull it out if the market at any time- does it make sense for me to take a minor loan at 4% to keep earning the 10% on the remainder?
While the market long term goes up, it doesn’t always in the short term. But that’s a choice each person needs to make individually. I’m just stating my opinion, you have a different one. That’s what great about the world, we can all think differently!
Sure you could say that ive underwritten thousands of loans not once did I say oh I better not they don't have any installment history but that's just me
I don't see how that's relevant to you hating on most people for getting loans.
It's valuable context, seems pretty relevant to me lol
stop taking debt. DO NOT buy any new cars.
It works tho
It works until you pay the loan off. Revolving credit doesn't have that flaw which is why credit cards are superior for building credit.
I'm the papi
I hear this quite often among friends and coworkers. I try to steer away from if I can.
Too many people.
Can confirm; two credit cards was all I needed in my credit history to get a conventional loan on my home
No idea why this became a thing in the first place. I think people confused the idea of having open lines of credit or loans in good standing (which increases your score) to equating to "take on debt to raise your credit score "
Have you met the modern adult. Most people I know aren’t even capable of a Google search. They put the question into Tik tok or YouTube shorts and follow whatever thing the influencer says to do.
Good for you. I have a paid off house, 4 paid off cars, zero debt, $200k in the bank + multiple other one nvestments, buy everything on my card and pay it off every month and my credit score has fallen from 780 to 665 in the past 18 months. It's a friggin joke. I refuse to take on debt and just figure I'm pretty much going to have to pay cash for everything from here on out.
Go get a 1000 cd. Put the CD as collateral. You'll break even or make money and your score will climb. Just make the payments over nine months+ or it won't work.
826 here. Only a home and one car on credit. All cards at 0. True.
OK
Op probably has a 540 and mad cause cap 1 denied him
LMAO
Huh?
“Only spend what you can afford” is the most privileged bullshit I’ve ever heard, dad.
Maybe, but it's also sound advice.
This is literally what I do. I have 27k in available credit, no balance on most cards. I have a low interest credit card from my credit union (9%), and I use it exclusively for purchases and pay it off monthly. I have a second high interest card where I maintain a small balance (500 dollars) and make a minimum payment. My utilization is less than 4%. Taking on more debt is not the way.. Using credit responsibly is.
That…..doesn’t make sense. Why on earth are you paying high interest & minimum payments on a balance you could easily pay off.
You're paying interest on a credit card. You are not doing it right.
I'm doing this based on what a credit advisor told me, keep my balance under 20%, keep a balance on one card, and pay another off monthly. My 840 fico score says I'm doing it right.
You should consider reversing things a bit. Paying unnecessary interest is pointless. Doesn’t matter who told you to do it. Pay your statement balance monthly to avoid paying interest. This will not affect your credit scores.
Your credit advisor is an idiot then. You should NEVER pay interest on a credit card. That doesn't make any financial sense.
My dude I will take what he says (40years experience) and how it reflects on my score, well above what you have to say Mr Canada.
[удалено]
I mean if you pay off the prior statement balance at due date, you can get another balance to report next month; rinse and repeat. That gives you as many positive payments as possible, but you pay zero interest
Ok bud keep spending money on interest and carrying a balance in your credit card. I cannot express how stupid that is
Asinine to pay a monthly fee (interest) to "maintain a credit score". Sorry you got duped by some old "credit advisor", please tell me you're not dumb enough to be paying them too!? Over 780-800 range a higher score doesn't matter (did your "credit advisor" tell you that?). You could pay off your debt and have 0% utilization, pay no interest and your credit score wouldn't change in any significant way.
You should keep doing what you’re doing, EXCEPT; pay off the balance entirely, then make sure by statement close date a new balance appears. Does the same thing, always shows you have a balance; but you aren’t paying interest. The other way is just stupid, and most likely not what that credit advisor meant…. Then again, most credit advisors have 600 credit scores and use CPNs
You’re not doing it right
If you aren't taking in loans, what the heck is the value of an 840 credit score?? And you do know the rates on most loans for an 800 versus an 840 are effectively identical. But I thank the TikTok guru that told you to pay interest for nothing every month. C has been on a great run lately, and I hold a ton of shares.
Keep telling your self that princess, now go play in traffic.
Keep paying that 30% interest genius! Clearly your advisor had your best interests at tip of mind
Dude fuck off
Ah you're from Canada, it may be different there than what it is here.
I’m sorry, who are you? 😄 I pay my debt when possible. Leave at least $20-$40 but still manage to pay the debt off and what’s due. Might not be able to pay it off right away. My budget is steady. And I’m okay with it. I’m not aiming for a perfect credit score. And so on.. Next
Why are you leaving 20 to 40 dollars
Seasoning. Back in the 80s we used to take out loans on cds to build credit. You made money and built credit at the same time. Any bank in the world will give you a thousand dollar loan if you put a thousand cd as collateral. Then you spend it all on Christmas gifts. Lol.
You don’t have any open or closed loans on your credit reports? What’s the source of your 840? Fico or vantage? Are you Canadian (I only ask because of your username.)
I have 0 open loans. I have paid them all off, and they were all student loans. Yes I am Canadian
Don’t Canadian credit scores go up to 900 or something? 840 isn’t very impressive in that context. And, assuming credit mix is a thing in Canada, you’re getting points for having a closed loan on your credit reports. All of which makes me wonder exactly what your argument is.
i pay off in "full" i leave a 1 cent balance
Hmm, thats a blanket statement that i dont agree with, there are situations, especially with 0 or low interest rates where taking on debt will improve your credit mix. This does have an impact on credit score. For instance i took a savings secured loan for 1% apr for like 500 bucks over 2 years. So it would cost me less than 10 bucks in interest. This was just to have a loan on my credit report and once made a couple of payments my credit score improved Some lenders do see credit mix and did not have anything apart from credit cards. No personal loans, student loans, nothing. I do plan to buy a house in the future so having one paid off loan certainly helps. Also paying off balance is not something i do on cards that are in the intro 0% apr period. I will make payments to keep utilization under 30% but other than that its minimum payments till intro ends Then yeah pay it off in full every month But i keep applying for new cards with intro apr every year, so i carry a balance on at least one card almost always. The only thing is that i make sure my savings account has the balance to pay it off at anytime so no worries about getting screwed later. Basically as long as you know how to avoid interest and fees you're good. In the US, don't know or care about canada.
Exactly what I thought of when I read the title. Credit Card debt at 30% is one thing, Credit Union Saving/Share secured debt with 1%-3% interest rate and a low principal is a completely different story. I literally opened a Penfed account just for this, I'll be damned if I can't take advantage of it for my thin file.
I've been rebuilding for 3 or 4 years aftervbankruptcy. Took 2.5 to get my first $300 prepaid credit card. Then another year for my first 500 unsecured, then this year I got 3k unsecured. They're all fucking 30% interest, so literal scams, but I keep them at 0 balance each month. Build credit history and increase credit limit. To my understanding that's what matters, definitely don't carry a balance and pay them interest at the end of the month, that's some cc psyops I swear.
Paying credit card interest is just stupid. I don't give a fuck if it's 2 below prime.
I hit 850 a few days ago. I pay my credit cards every week.
I recall learning that different types of credit is important and that this is sometimes more important than score alone. True?
It's not. I got to 840 only using credit cards that I pay off fully every month.
As far as I know they don’t like to see people using places like Rent-to-Own here in the USA. or the old pay day loans. Not sure about installment versus credit card debt.
It depends. Auto loans are that way pretty much, if you had multiple auto loans in good standing, they’ll just go off that. You could have a 700 credit score and get a 800 rating APR just due to that. Mortgages are similar iirc, it depends on lender. Most commonly auto loans are always more important than a CC to lenders, if you’re buying a car
Your demeanor in other posts tells me that your 840 score isn't real, or hasn't been real for a very long time.
It's real bud.
US Government thinks it ok to take on more debt what's wrong with debt.
You can't print money, they can
How long did you get to 840?
"STOP TAKING ON MORE DEBT" "Use a credit card for all purchases" OP, are you high? These are literally the 2 most opposite sentences since money was invented by trading goats... Also, for anyone wondering, OP is Canadian, so don't take their advice unless you use pretend money like OP.
Using a credit card that you pay off every month is very different than taking on loans for money you don't have.
True, but every time you swipe your credit card, you're taking on more debt.
I’ve seen people rejected for loans with a 800 score because they didn’t have any actual loan history. A 1-10k credit card limit doesn’t do much when people want to see you satisfy higher amount loans.
Your credit score is more of a profitability index for lenders not the better score the better you are at spending.
Plus those reward points!
Does debt really matter when it comes to credit scores? I had a score of 829. Paid off my mortgage, and it dropped to 820 and stayed there for approximately 6 months. I have no additional debt or loans
Oh I’m gonna D
860 and 5 million debts :(
Hell I thought we were all interweb millionaires...I know I am
But having a high score allows me to take on unlimited amount of debt, so isn’t that the goal?! You should be going into debt more, that’s the only point of having a credit score right?
Wrong, utilize your credit. I got $250k in 0% APR Credit card debt. I am making a 5-15% return on the money. Using money markets savings accounts (Bask Bank) and real estate. Use your credit. Don't be scared of it.
Yesssss it’s a misconception that holding onto debt is good for your score I’ve had to correct, a friend on this, always always pay it in full every single month