Someone explain to me how credit works?

Knightshade_Dragon
Knightshade_Dragon
...because things like this make me think it doesn't operate the way it should.

https://imgur.com/vGp65Ce

Ron Burke
Editor in Chief
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Comments

  • EngineNo9
    EngineNo9
    GT Member
    Yup. A couple years ago I gave up on caring too much about it when they told me that the only way to raise my credit score any more was to take out significantly more debt. :confused:
  • Isgrimnur
    Isgrimnur
    GT Member
    One of the elements is age of accounts. If it was an old loan and one of your longest-running debts, that could have an impact.
  • TheEgoWhip
    TheEgoWhip
    GT Member
    Managing credit well raises your creit score. Closing/paying off accounts just drops them off. If it was a well managed accout "Long term, no late payments" then when it dropped off the active credit section of your report, the positive effect it had on your score dropped off with it.

    That's why mortgages are so good for credit. They generally last a very long time. Credit cards are the same way. They can show a long term magaing of credit. Buying a new car ever 4 years, making every payment on time, still drops off your active list when you sell a car or pay it off.

    Maintaining active accounts for long terms, keeping payments on time, and keeping balances below 30% of your maximum allowed are three of the biggest, fastest ways to boost your credit score.
  • EngineNo9
    EngineNo9
    GT Member edited September 2017
    Yeah, that just doesn't make sense to me. Paying off a debt should be the best sign you can manage your credit, not something to be ignored.

    I paid more than the minimum amount for my car payments every month, always paid on time, and closed the debt 2 years ahead of time. Worse for my credit than if I still had $10,000 of outstanding debt. :confused:

    If this was a game that would be a balance fix in like the first week.
  • rittchard
    rittchard
    GT Member
    I never understood it myself but it's clear there are different tiers and how you improve the credit score likely depends on which you are in. Meaning my credit score was at it's peak I think when I had the most credit card debt and the least amount of money saved/available.

    Now that I am financially much more sound, with a house and some savings and less credit card debt, I seem to be in some tier where any little thing gets me dinged downward really quickly.

  • Isgrimnur
    Isgrimnur
    GT Member
    EngineNo9 wrote: »
    Yeah, that just doesn't make sense to me. Paying off a debt should be the best sign you can manage your credit, not something to be ignored.

    I paid more than the minimum amount for my car payments every month, always paid on time, and closed the debt 2 years ahead of time. Worse for my credit than if I still had $10,000 of outstanding debt. :confused:

    If this was a game that would be a balance fix in like the first week.

    This isn't a AAA title where they hope to sell you a DLC pack or sequel down the road. This a free-to-play, pay-to-win game where they hope to keep you attached deeply enough that you never get free. T

    The agencies get paid every time someone pulls your credit. The more credit you apply for, the more credit pulls they get to charge for.
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