Credit Score and Sources

[steelyman]

CNBC posted an article about credit scores, which I guess everyone here knows about.

The credit cards I use provide FICO scores, each from a different source: Discover (TransUnion), AmEx (Experian) and VISA (Equifax).

Quicken Premier also offers a score but from VantageScore, of which I’d never heard.

According to the article, FICO and VantageScore differ in their scoring criteria (link follows quote):

FICO Score Factors:
Most influential: Payment history on loans and credit cards
Highly influential: Total debt and amounts owed
Moderately influential: Length of credit history
Less influential: New credit and credit mix (the types of accounts you have)

VantageScore Factors:
Most influential: Payment history
Highly influential: Age and type of credit, percent of credit limit used
Moderately influential: Total balances and debt
Less influential: Recent credit behavior and inquiries, available credit
Source: Experian

https://www.cnbc.com/2019/05/10/those-credit-scores-you-see-may-not-be-what-lenders-use.html

[ADDED] This may help explain why my VantageScore is typically below my FICO scores: no debt influences the credit type/mix.

 

[Jerry1]

Sorry, it I think credit scores are BS. DW and I have been married since our early 20’s. For almost 40 years, we NEVER had a late payment. Except for now and a short time after college, we both have worked. We never carried credit card debt. IMHO, perfect credit risk. Yet, my score remains below 800. No big deal because we don’t see a need to borrow in the future and any score in the high 700’s is going to get you the best rates on a loan, but I just can’t see why we’re not viewed as a perfect score. I get that they have a formula, but I don’t think it reflects a LBYM, debt adverse couple accurately. So, while I know mine because I check my credit report often for identity theft detection, I personally don’t care what my score is and think their formula is flawed.

 

[Car-Guy]

Sorry, it I think credit scores are BS.



personally don’t care what my score is

+1

 

[SumDay]

I check mine on Credit Karma on occasion. I don't obsess about it as we're over 800 and have no plans to borrow.

We never carried credit card debt. IMHO, perfect credit risk. Yet, my score remains below 800. No big deal because we don’t see a need to borrow in the future and any score in the high 700’s is going to get you the best rates on a loan, but I just can’t see why we’re not viewed as a perfect score.

Jerry 1, the Credit community WANTS you to carry credit debt. Apparently your score is rewarded, provided you don't care too much debt. We took out a small mortgage when we downsized and our score shot up soon after. We're the kind of customer the card companies hate - we pay our balance off every month. Convoluted thinking, I know, but that's how it works. Sad...

 

[Aerides]

Credit scores factor in how well you use credit. So, yes, someone with no loans and few cards - even if paid perfectly - is going to "score" lower than someone with more loans/cards who also pays perfectly.

The credit community doesn't so much want you to carry debt, but they want you show you can manage more than just one thing. My score indicators are tacked down a bit as I have no mortgage history showing in the past decade.

IOW, if you are a juggler who only uses one ball but never drops it - meh that doesn't mean you're a good juggler. Now, you keep 10 balls in the air and never drop, that's impressive!

As far as monitoring, Amex and CapitalOne have free services. I also use Credit Karma as they will give me weekly updates, pull two reports, and notify me of changes. All free.

 

[steelyman]

IOW, if you are a juggler who only uses one ball but never drops it - meh that doesn't mean you're a good juggler. Now, you keep 10 balls in the air and never drop, that's impressive!

I never heard that analogy before but I like it.

There are plenty of old timers/frequent posters who’ve already crossed the retirement threshold and hopefully don’t care a bit about their score. Others who are younger and still working towards ER might care a lot and unfortunately the scoring system, flawed as it is, is in place.

 

[mystang52]

Like others, my score is consistently over 800 but not that perfect number. One of the free Score sites mentioned that my score could be higher but I have no recent installment debt. The only loan I'll ever take would be for a car or maybe appliances that offer 0% financing. My score qualifies me for that, so who cares if it's not that apparently-elusive perfect score.

 

[kgtest]

Sorry, it I think credit scores are BS. DW and I have been married since our early 20’s. For almost 40 years, we NEVER had a late payment. Except for now and a short time after college, we both have worked. We never carried credit card debt. IMHO, perfect credit risk. Yet, my score remains below 800. No big deal because we don’t see a need to borrow in the future and any score in the high 700’s is going to get you the best rates on a loan, but I just can’t see why we’re not viewed as a perfect score. I get that they have a formula, but I don’t think it reflects a LBYM, debt adverse couple accurately. So, while I know mine because I check my credit report often for identity theft detection, I personally don’t care what my score is and think their formula is flawed.

totally BS. Between me DF and DW we are all around the same 810 - 815 range...and all of our credit profile's are completely different lol.

Usage, history all of that. But hey, at least we aren't in the 500s like I was in my 20s

 

[Bamaman]

Sorry, it I think credit scores are BS. DW and I have been married since our early 20’s. For almost 40 years, we NEVER had a late payment. Except for now and a short time after college, we both have worked. We never carried credit card debt. IMHO, perfect credit risk. Yet, my score remains below 800. No big deal because we don’t see a need to borrow in the future and any score in the high 700’s is going to get you the best rates on a loan, but I just can’t see why we’re not viewed as a perfect score. I get that they have a formula, but I don’t think it reflects a LBYM, debt adverse couple accurately. So, while I know mine because I check my credit report often for identity theft detection, I personally don’t care what my score is and think their formula is flawed.

FICO scores may be BS, but it's what so many financial and insurance institutions use to establish rates. And they're with us forever. A fallacy is when my wife has a 830 score and gets credit card offers virtually every day--and she has been unemployed since 2000.

But don't forget that Lexus Nexus also is a reporting agency guided by the Fair Credit Reporting Act. Their database is on Loss Reporting on automobiles and homeowners claims and violations on Personal Driving Records. Whenever you apply for any insurance policy, they check both Lexus/Nexus report and the Big 3 Credit bureaus. If you have blemishes on those records, your insurance companies are going to either turn you down or accept you with exceptionally high rates. And very often, Lexus Nexus has inaccurate entries on their report--that can be rebutted/corrected upon request. I just got through checking my Lexus Nexus report.

 

[SumDay]

But don't forget that Lexus Nexus also is a reporting agency guided by the Fair Credit Reporting Act. Their database is on Loss Reporting on automobiles and homeowners claims and violations on Personal Driving Records. Whenever you apply for any insurance policy, they check both Lexus/Nexus report and the Big 3 Credit bureaus. If you have blemishes on those records, your insurance companies are going to either turn you down or accept you with exceptionally high rates. And very often, Lexus Nexus has inaccurate entries on their report--that can be rebutted/corrected upon request. I just got through checking my Lexus Nexus report.

Thanks for the nudge. Just filled out my request: https://personalreports.lexisnexis.com/access_your_full_file_disclosure.jsp

 

[jazz4cash]

Sorry, it I think credit scores are BS. .

+2

Credit scoring is worse than BS in my opinion...it is a scam. It's just a way for the credit bureaus to generate more income from the massive data files they have amassed and protect poorly.

Credit and payment history is legit but once you start putting a generic "score" on it, you have a meaningless number. Our scores were mediocre for decades despite no late payments and just recently we have hit 850 at a couple places. Even when our scores were low 700's no one ever suggested that we could get a better rate if our scores were higher. If your scores are not terrible, it's all the same.

I track 6 different credit scores that are provided for free by various financial institutions. They use the 3 main bureaus but the formulae are varied:Fico Score 8, Fico Score 9, Vantage 3.0, and one provider does not specify. The scores generally run in two tracks that are ~40 points apart!


If you consider credit scoring as a means to assess ability to pay, you know payment history but info on income and assets is not contained in a credit score. How can you judge ability to pay with 1/3 of the data?

 

[FANOFJESUS]

I stopped using credit cards. I think like Dave Ramsey. Why play with these people. I threw my credit cards in a drawer. I use them once a year for the credit score. The score is good. I think this whole credit score stuff is a scam. I would love to close all the credit cards but then would be punished by the insurance company and a possible job offer. 30 years ago your insurance company did not care if you did not have a credit card. Like Dave Ramsey says he can buy the apartment complex but they won't rent him an apartment because he does not have a credit score. Just dumb stuff.

 

[Dtail]

I check Credit Karma once a week and it also provides notices of anything unusual.
My FICO score is always lower than my Vantage score.
As a former renter, I did care more about credit scores in the recent past.
Still like that the scores are over 800.

 

[Dtail]

I stopped using credit cards. I think like Dave Ramsey. Why play with these people. I threw my credit cards in a drawer. I use them once a year for the credit score. The score is good. I think this whole credit score stuff is a scam. I would love to close all the credit cards but then would be punished by the insurance company and a possible job offer. 30 years ago your insurance company did not care if you did not have a credit card.

If one pays off their credit debt monthly, one can score some cash rewards/travel points by using credit cards.
Might give me 3-4k by the end of the year for the minimal work of choosing certain cards for certain expenses.

 

[FANOFJESUS]

If one pays off their credit debt monthly, one can score some cash rewards/travel points by using credit cards.
Might give me 3-4k by the end of the year for the minimal work of choosing certain cards for certain expenses.

What you are saying is true and I use to do that. I did some deep thinking one day. That money has to come out of someone else's pocket. It's not really coming from the credit card company. It just was not something I wanted to be a part of. That is why Dave Ramsey calls the credit card companies snakes.

 

[Walt34]

Sorry, it I think credit scores are BS.

I agree.

A couple of credit cards and the credit union where we do most of our banking offer to show credit scores and I look at them once in a while, but I don't care much about the exact number. For example, a few months ago I finally succumbed and applied for an Amazon cc and predictably the score dropped a bit, and I expect it will creep back up as I prove (again?) that I can pay my bills.

 

[imoldernu]

Score... 796, down from 812.

32 years... no missed, no late payments, always paid 100%

What's hurting? Don't have enough credit cards.

Duh?

 

[Sunset]

What you are saying is true and I use to do that. I did some deep thinking one day. That money has to come out of someone else's pocket. It's not really coming from the credit card company. It just was not something I wanted to be a part of. That is why Dave Ramsey calls the credit card companies snakes.

Lots of things are like that, welfare , SS , Medicare, etc.

Sure you pay into SS and Medicare, but if you live, you collect far more than you paid into it.
I bet even Dave Ramsey will accept SS and Medicare.

 

[Jeffman52]

I stopped using credit cards. I think like Dave Ramsey. Why play with these people. I threw my credit cards in a drawer. I use them once a year for the credit score. The score is good. I think this whole credit score stuff is a scam. I would love to close all the credit cards but then would be punished by the insurance company and a possible job offer. 30 years ago your insurance company did not care if you did not have a credit card. Like Dave Ramsey says he can buy the apartment complex but they won't rent him an apartment because he does not have a credit score. Just dumb stuff.

My wife and I do the same. Although not retired yet, we have one CC that we use for company travel. If the company is paying, we might as well get the points since the risk if a corporate card not being paid is still on you.

I stopped playing with snakes cause eventually when you aren't paying attention you will get bitten.

 

[steelyman]

I think that credit cards (a different topic than credit scores) are very useful tools if used responsibly, in particular never carrying a balance which is easy to do with auto-pay on or before the due date.

 

[RobbieB]

I don't know what my credit score is and I don't care.

 

[jazz4cash]

I agree.

A couple of credit cards and the credit union where we do most of our banking offer to show credit scores and I look at them once in a while, but I don't care much about the exact number. For example, a few months ago I finally succumbed and applied for an Amazon cc and predictably the score dropped a bit, and I expect it will creep back up as I prove (again?) that I can pay my bills.

The Chase credit card website for the Amazon cc has a very comprehensive free credit report. It even has a credit score simulator tool. I could care less about that but it has details for all accounts and updates weekly so it’s good for monitoring.

 

[Sunset]

If one pays off their credit debt monthly, one can score some cash rewards/travel points by using credit cards.
Might give me 3-4k by the end of the year for the minimal work of choosing certain cards for certain expenses.

I don't spend wildly or more than I would if spending cash, but I find my CC's handy and safer than carrying cash around.

In terms of value, the rewards I've gotten from CC have been:
2017: $2,500
2018: $ 700
2019: $ 850 so far.

The amounts are lumpy, as I only count them if they save me money when used example airline miles. So some years I'm just building up points to be used later.

 

[Dtail]

I don't spend wildly or more than I would if spending cash, but I find my CC's handy and safer than carrying cash around.

In terms of value, the rewards I've gotten from CC have been:
2017: $2,500
2018: $ 700
2019: $ 850 so far.

The amounts are lumpy, as I only count them if they save me money when used example airline miles. So some years I'm just building up points to be used later.

I convert the points to cash on a regular monthly schedule and move the cash to the emergency fund. Nice and clean.

 

[CRLLS]

I check mine on Credit Karma on occasion. I don't obsess about it as we're over 800 and have no plans to borrow.



Jerry 1, the Credit community WANTS you to carry credit debt. Apparently your score is rewarded, provided you don't care too much debt. We took out a small mortgage when we downsized and our score shot up soon after. We're the kind of customer the card companies hate - we pay our balance off every month. Convoluted thinking, I know, but that's how it works. Sad...

They still get 1-4% of each purchase from the seller plus a small transaction fee. I'd walk a hundred miles to get, say, 1.5% return on my money every month. Of course that is not taking into consideration the CC's rebate to the user of 0-2% or "points. But not all holders have cards that give that benefit. And many carry a balance and pay interest.

Back on the subject of this thread, our credit score is over 800 and bounces around +/- 15 points. Like many, we pay off all credit cards every month and have several credit cards, a mortgage etc. We mostly use 1 specific card, the one that gets us 2% cash back. Sometimes that preference affects the credit score as the debt to limit ratio can reach close to 50% on a month that we have a big purchase. That will lower the score a handful of points.