Here is a link to my other post where I expressed my thoughts much better, if you are interested you can take a look – https://lemmy.world/post/37101088
Here is a link to my other post where I expressed my thoughts much better, if you are interested you can take a look – https://lemmy.world/post/37101088
They’re not. They exist for a very good reason, and are purely beneficial to people who repay what they borrow. They only ‘hurt’ people who don’t repay their debts, but only insofar as it makes it more difficult for them to take more money from people that they then also won’t pay back.
They also hurt people who are the most responsible with their credit. They ding you on your score if you don’t carry a balance on your card.
This is unequivocally false. I can’t believe how pervasive this common misconception still is:
Carrying a balance on your card literally can only hurt you, as the only thing the actual dollar amount of the balance impacts is utilization, in other words, ‘what percent of your total credit limit are you using’, and for that, lower is better. Plus, carrying a balance means paying interest, which is money down the drain on top of that.
I haven’t paid a cent of interest on any of my credit cards for well over a decade; I use it for my everyday purchases, and pay it off every month—my credit score’s firmly in the 800s, and 750 is the ‘you won’t get a better rate’ threshold for 99.9% of lending.
That’s why my credit score went down when I paid off my student loans, right? Get the fuck outta here.
No, it didn’t. Maybe your score on Credit Karma did, but that’s because Credit Karma’s system of estimation (VantageScore I think it’s called) stops considering a loan the moment you pay it off, while the actual credit reporting agencies continue to consider it (re average age of accounts) for 10 years after closing if it was in good standing, or 7 years from ‘date of first delinquency’ if it was closed because of charge-off or something like that.
My own average account age is less than 10 years, yet my credit score is in the 800s, even though I have no outstanding loans, I just use my credit card for everyday purchases and pay it off every month.
So ‘get your ignorance the fuck outta here’ and open yourself to learning how things work.
So all available reporting says my credit score went down when I paid off my loans and has remained in this new lower state for months since, but the secret real number used to decide my fate maybe didn’t. Yeah you’re right that’s great. I feel better already.
Get the fuck out of here with that. Credit scores are purely a value used by lenders to determine how much money can be extracted from a consumer. It goes down if you’re delinquent, it goes down it you pay things off early without racking up all the interest they wanted, it goes down if you don’t run enough of a balance on your credit cards. It doesn’t protect consumers, it barely protects lenders, it’s purely used to determine how much can be extracted from a consumer’s bank account.