I was told years ago that you should collect interest not pay it.

That was in the eighties and I adopted the Dave Ramsey method way before he was even around.
I was making good money and regularly paid into my mortgage which was 10% back them.
Soon the balance was low enough and they dropped PMI insurance part (bonus).
Then eventually paid off a 30 yr mortgage in 12 or 13 years.

Nothing but good comes out of being debt free and having the option to pay cash for whatever you want.

quote:

Originally posted by smschulz:
I was told years ago that you should collect interest not pay it.

That was in the eighties and I adopted the Dave Ramsey method way before he was even around.
I was making good money and regularly paid into my mortgage which was 10% back them.
Soon the balance was low enough and they dropped PMI insurance part (bonus).
Then eventually paid off a 30 yr mortgage in 12 or 13 years.

Nothing but good comes out of being debt free and having the option to pay cash for whatever you want.

You're right. Being debt free means security and freedom for you and yours. It's a great feeling.

quote:

Originally posted by RogueJSK:

Additionally, credit score is a factor in some job hiring decisions in certain fields.

If you're in a position of financial responsibly, security or, the position has a high risk of bribery, embezzlement or, theft, credit checks for red flags are common.

Too low a credit scores will equate to you being vulnerable to such coercion and/or, a conclusion that you're not a responsible individual.

Thanks again for all the comments and advice. Just to add a little more to my situation:

Aside from a few months while in the marines when I got a credit card to buy my blues, the only debt I have ever had is my home and car loans, and it’s been almost ten years since I’ve had a car loan. I bought my current vehicle with cash. Right now I have zero debt.

One of my cards is over two years old, the other will be in a month or so. I got them both to raise my credit limit several thousand dollars so my available credit is a bit higher now. My utilization at this moment is zero.

I have not discussed a home loan with anyone yet. I plan on meeting with a realtor soon to start the process. I have money to put at least 10% down. Unfortunately I was underemployed for the last year which forced me to use some of my savings and so I’m not at the 20% I wanted. I also have the VA loan as an option but I will have to just see what works best.

The whole thing is frustrating. I’m very responsible with my money, I live debt free, I don’t buy things I can’t afford and I never opened a credit card before I got divorced because I pay for most everything in cash. And for that I get a lower credit score than my ex wife who hasn’t had a job in 15 years and pays for everything with my money.

By the way I’m not mad about that, we both agreed that her job is stay home to raise the kids and I’m more than happy to pay her alimony to keep her from having to go to work so that she can focus on that. The kids have greatly benefited from that plan and I’m not going to punish them just because their mom and I got divorced. I just wish I could get some credit for paying her bills on time too

quote:

Originally posted by Nismo:

quote:

Originally posted by LBTRS:
More available credit (less utilization) will raise your score. I have an 830 credit score and have $300k+ available credit with almost zero % utilization. Your limited available credit (causing high utilization) is what is hurting you.

I pay my card

I'm not quite 830, but I've been playing with a credit simulator, where you can simulate different scenarios to see how it will impact your score, and it shows that even if I raise my limit to a million dollars, it will have zero impact on my score. I can't seem to play with the numbers in a way that will raise the score any more.

It isn't the available credit that changes the score it is the utilization. If you're using zero then upping it to a million credit limit doesn't affect the score because it is still zero utilization.

In the OP's case, he has low available credit so his using any of it causes higher utilization decreasing his score.

I run a significant amount through my rewards credit cards monthly and pay them off in full each month. My high available credit keeps my utilization low even when I'm charging $12k/month on the cards.

Hope that made sense.

quote:

Originally posted by PR64:
I don’t have any tips.

My credit rating went down 20 points after I paid off the house. Go figure.

The reason stated is because I only carry 2 cards and don’t use them much.

So I went from exceptional to very good because I have no debt…

Same here. Mine was hovering between 800 and 810 until I paid off the house, which was the only debt that we had (we have a CC but we pay it off every month). It immediately took a dive and now it's in the low 700s. Nothing else has changed. I don't really give a crap because I don't plan on taking out any loans...but IMO the system is idiotic.

quote:

Originally posted by Keystoner:

quote:

Originally posted by tatortodd:
They completely ignored that my salary was higher than ever

How does salary, or net worth for that matter, factor into credit score? I don't believe it does.

It doesn’t but it’s insane that it doesn’t. That’s my point.

On this scenario, who is a better credit risk?

Person A - No late payments 10 years, $100k in available credit, 19% credit utilization, oldest account 7 years, 2 credit checks, rents a home, $100k salary, $19k in 401k

Person B - No late payments 10 years, $100k in available credit, 19% credit utilization, oldest account 7 years, 2 credit checks, owns a $250k home without a mortgage, $250k salary, $760k in 401k

In the eyes of FICO, they’re equal because the score is only the first 5 variables. In reality, the last 3 variables make Person B better.

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Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.

I agree that income and savings should affect credit score.

I had a mid-600s score for some time due to having nearly maxed-out credit cards. Paying my car off didn't do anything for it. The only thing that helped was aggressively paying these balances down. Now it is hovering around 800, give or take 5. Two accounts have substantially increased my credit limits, which should bump it up. I closed one account (shitty terms, including an annual fee) after paying it off and opened a new one in its place via my local credit union. $6900 limit from the get-go.

quote:

Originally posted by Pale Horse:
I agree that income and savings should affect credit score.

I actually disagree.

Income, savings, and assets should affect loan decisions at the underwriting stage.

But credit score is a measure of how responsible you are with credit. Poor people can have good credit--and that's the point.

Conversely, lots of rich people make terrible borrowers. Money is no big deal to them so they miss payments, let things go into collections and continue spending to maintain their lifestyle long after the writing is on the wall.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by Pale Horse:
I agree that income and savings should affect credit score.

I actually disagree.

Income, savings, and assets should affect loan decisions at the underwriting stage.

But credit score is a measure of how responsible you are with credit. Poor people can have good credit--and that's the point.

Conversely, lots of rich people make terrible borrowers. Money is no big deal to them so they miss payments, let things go into collections and continue spending to maintain their lifestyle long after the writing is on the wall.

You're right.

It's certainly a crazy system. Mine to went down somthing like 25 points when I paid off my home. Just recently I had several large charges to my Visa but I despise paying interest so I always pay it off each month. Looked at my credit rating (provided by one of my CCs via their app) and my rating went down 4 points despite all three reasons given being positive with three "thumbs up". Go figure!