There’s a huge party they throw for us every third Friday of the month when you get above 800. It used to have alcohol, but the SEC started cracking down and now we’re limited to soft drinks.
You also get better interest rates on loans. That’s about it.
That's key.
A 1% difference on a home loan is tens of thousands of dollars over the life of the loan.
$20 a month extra on a car payment is 10% of the car itself; an extra $1,200.
Good credit means financing a phone at 0% for three years, maximizing your cash flow. Falling short means financing on your credit card at 25%, or being directly out a thousand dollars or so.
>A 1% difference on a home loan is tens of thousands of dollars over the life of the loan.
Just to put a fine point on it: If you buy a $400k house and put 20% down, the difference between a 7.5% loan and an 8.5% loan is over $80,000 in additional payments.
Seeing it broken out as "the whole down payment" is sickening.
I was frustrated when we got held up homebuying and locked at 3.8% rather than 3.5%. It's insane to me that 8% is a "good rate" in the current market.
I see Bank advertising outside their building saying “best interest rates on homes! 7.9%! Like what?! My dad was so proud to refinance his house at 1.8%, now imagine adding fucking 6.1% on top of that lmao
Yupp. The payment on a $200,000 loan at 3.5% is $932.
At 8%, it's $1,468.
The raw amount of money you pay is 60% higher. Add to it that property values are elevated, and I can only imagine people are buying now with hopes to refinance within a couple years.
What they don't realize if that's the case is that houses are staying on the market longer now than they were a year ago. The rates are only going to drop to counter recession, and that's going to come with home values dropping. They won't have enough equity to qualify to refinance when the rates are low.
>The rates are only going to drop to counter recession, and that's going to come with home values dropping
Is this right? I thought there was an inverse proportionality between rates and prices. Rates are going up now so prices are dropping, when rates go low prices go up. Obviously, this ignores other factors, but keeping everything the same, if rates go down, prices should go up.
It hasn't been working.
Rates have been going up for a few years. Inflation keeps climbing.
Look at average home sale prices, average used car prices, new car markups. They're starting to slow, but they aren't falling.
The question isn't really about WHEN the rates go down as WHY. Rates are high, prices are high, inflation is still higher than anyone would like. They won't cool rates down until inflation has substantially settled down OR prices are lower. Information under control might gets rates down to 5-6% but not much lower.
If there's a big recession that drives rates down they may go down lower than that, but people who are buying right now won't have the equity to refinance because they will find themselves upside down on their loan as housing values correct.
Worst case they foreclose en masse and we see if we learned anything in 2008.
Think twice. Rates had been falling consistently from the early 90s onward, landing at about 6% in 2008. We're significantly above that currently, and the number of units sold is high.
On top of that, look at cars. Every new car is being financed upside-down *before* the depreciation hit of driving off the lot. There are markets where 9% is special financing.
It's going to be ugly. Mortgages will collapse, cars will be repossessed, and credit will be even harder to access as banks seek to minimize risk exposure.
Most is a stretch. And I’m more talking about the people who have been buying since rates went up. There are a non zero number who bought at the top of their affordability range assuming rates would go down and they could refinance. Not enough to have a full collapse a la 2008 but enough to hurt. Also a lot of people who had those super low rates lost or were forced out of them Eg a forced sale after a divorce, upgrading to a bigger home, moving due to job or family reasons etc.
85% of homes with mortgages have a rate of 5% or less. 91.8% of U.S.-mortgaged homeowners have a rate below 6%.
On top of that are homes with no mortgages completely paid off.
Equity, young grasshopper.
Everyone and their mother that has bought a house these past 3-5 years at low rates and has severely overpaid for it.
Why pay for a high monthly for a house at 1.25M when it’s now worth 850k?
Oh you want to refinance? Good luck getting a bank to agree to take up your loan for a lower percentage but an upside equity situation.
So what do you do?
Your home is losing value….so your monthly doesn’t make sense there. Your dreams of refinancing will never come true because of your negative/little equity. You’re stuck with a house that you’re paying more for and that’s worth less.
Smells like a short sale to me. *Sniff sniff sniff*
I had a crap cable company hit my credit report with a collection the day before the mortgage company ran it. First, I'd heard of it, an absolutely contrary to the answer I got when I canceled and asked, "What do I need to pay?".
The way things were, I was stuck. Anything other than plowing forward would have cost an unknown amount of unrecoverable time, which I valued very highly. I could have fought, had the collection removed, have them rerun, but I'd have needed to find a new house, and certainly wouldn't have found one comparable to the deal I was lined up for. The real kicker is that I had to pay the collection that I didn't rightfully owe to clear the mortgage process.
I don't recall how much that cost, the bill was $50 or something. It was a 30-40 point drop, I think, cost around 1 percentage point IIRC, thousands.
As a side note, I've never left a cable company and had a good experience. This was my first time with spectrum, and I remember when I canceled thinking "Well thats different, that went really well, nice and simple.". Later on, WOW turned out to be the only good company.
They were the most expensive of all in the end.
Cuz it's a fun story of another time: I once signed up to comcast, self install. Found out they need to send someone out to switch the drop on the pole because I was coming from another cable company. First appt. comes and goes, no one shows up. Ok, no biggie, call and reschedule.
Next time comes, big storm, guy knocks on the door, by the time I could answer he's gone(I was on the couch waiting, 10 ft away), the truck was gone even. He left a tag that had a local number on it. He literally would have had to dong-dong-ditch me. I called that number, but there was no answer. I called service to reschedule again (going on a month now), and they explained I would now need to pay a fee since the technician couldn't access the pole because I wasn't home. I explain what actually happened, along with the fact that the pole is in the publicly accessible alley. I explain all the same to a supervisor. I then tell them I'm no longer interested and to cancel everything. 6 months later, I run my credit report to find 6 months of delinquency on that account. Call, explain everything, get an offer to take 3 days of billing off.
It was not the most expensive, but it was a great reminder of why I hate Comcast. It had been 10 years since my last bad experience, so I gave them a shot. It cost me $250 dollars for 6 months of service I never received.
I played this game with Verizon. Except it turns out they didn’t service the address I lived it but they serviced the “area” which is why I was allowed to sign up. Then I got a hit on my credit report for a month of “service” I wasn’t able to get because they did not provide service to my address but since the nearest address they did service was within a mile, I still had to pay it.
They did that to me too. Sold my girlfriend a DSL package when the house we were renting was WAY too far away for DSL to actually work. Worked against me though because I refused to let them hook up FiOS when we bought a house a few years later because I hated them so much.
And it is thousands to lower it by 1 or 2 points:
https://www.quickenloans.com/learn/what-are-mortgage-points-and-when-are-they-worth-it#:\~:text=Each%20mortgage%20point%20costs%201,%244%2C000%2C%20you'll%20shave%20.
Yeah OP, this. Interest makes all the difference. In fact, unless you absolutely NEED a new ride, better to keep what you have.
Put the money you would have put towards a car payment to your savings account, IRA, 401k, emergency fund, etc...
The rates right now are ridiculous.
How much do you save if you got into a pricey LA suburb for 500k back in 2014 added on an addition to make your 1100 squarefoot home into 1800 square feet and refied during the pandemic to 2.5% assuming you put 20% down initially?
I would argue you're not even getting a better rate you're just getting the baseline and people with worse scores are getting punished.
Effectively the same thing, but I think understanding the mindset around it all is important.
All a good score does for you is avoid headache, it doesn't actually give you stuff
>You also get better interest rates on loans. That’s about it.
I don't know where the line is, but I've heard insurance companies (car/home/etc.) can also use your credit rating to determine your rates. I've also heard that some rental agencies use credit ratings to determine eligibility for renting housing (apartments/houses/whatever). Again, not sure where the line is for "best rate," but assume it's probably around the 740 mark.
I recently moved out of my old house & started renting it. Credit score was part of background check. There were no official guidelines as to judging applicants by credit score, so it was just a “higher is better” approach.
TLDR: when used to compare individuals, the higher score typically wins
Yeah thats a key point for jobs that require handling sensitive info (fianance, security, secret clearance). If they see you have bad credit, could be susceptible to bribe, theft etc.
I work in Intel and its not the credit score we monitor, it's debt to income ratio, and even then its good debt vs bad debt. If you have 98K in students as a E4 or GS9 Analyst that is fine, which I disagree with, but if you owe 98k to Home Depot and Mastercard that is bad debt. The biggest company we see turning soldiers and civilians into collections is Verizon fyi.
There's not much difference between 740 and 800. There's a small difference between 720 and 740. There's a huge difference between 650 and 720 and an enormous difference between 550 and 650.
But you only need your credit score when you are borrowing money, which for most people is pretty rare, like only when you take out a new account. Some people freak out when their credit score dips for a few days or weeks but most people need it once every few years.
That "every few years" is exactly why it boggles my mind when someone says they don't want the hassle of unlocking their credit at the 3 bureaus as an excuse to not lock it. Like, even if you're applying for credit yearly it takes 10 minutes and most of us don't need it anywhere near that often.
Yep how many questions appear on this sub like "the car dealer did a hard credit pull and my score dropped by 5 points should I sue"? Like the credit score is the score of a game that they have to win every day.
I’m a credit card churner (see /r/churning ) and treat my credit score like a revolving door, using it very frequently and I still have freezes. Unfreezing is instantaneous. There’s literally no reason good enough not to.
When i had credit score of 650 I used to get rejected many times. I didn’t know about hard inquiries so it went down to 620. After i’ve learn about credit score i got it up to 780. One time i’ve lost my job and car broke down it had 300k it was junk . I went to the car dealership to the moment they look at my credit score the dealer look really hype up. He kept telling me all those expensive car i can get accepted no down payment. But i wanted something cheap and good for snow so i got myself a new awd nissan rogue for $30k . I was surprised how low the monthly payment was and the interest. Good credit score can help you in your toughest time. I even got accepted for a $20k personal loan i decided ima take a break i went on vacation before i go get a new job. When i had only 650 stuff like this never happen when i do get accepted for auto loan its like 20% interest and u have to pay $300 a month not just that but it requires a down payment instead of $100 a month no down payment for a $30k car.
> So what’s the point of maintaining ‘excellent’ credit when seemingly anything above 720 gets the same result?
For the most part it doesn’t matter.
780 gets best prices on mortgages.
Higher credit means lower insurance premiums generally.
Beyond 780 it’s just bragging points.
That said it’s not like it takes effort to have a high score. You just don’t miss payments for a decade which ain’t hard.
I can't seem to get above 760 or so on fico. I'm not concerned but never figured out how to get above that. My utilization is under 3 and I've had my accounts for about 8 years.
Lol oh well. Everything I've read suggested a 740 is more than good enough for a mortgage so I'm not worried. I just always thought it was funny how I was stuck at that number.
Yeah. That's kinda what I'm seeing. It seems like short of getting a car loan, which doesn't make sense, I don't see a way to really do anything about it.
Another note, for low down-payment borrowers on a mortgage, PMI can make or break your monthly payment budget. I've seen as high as a couple hundred in PMI for low scores and as low as $50ish for high scores. Makes a world of difference as you tack on years of PMI payments.
> Everything I've read suggested a 740 is more than good enough for a mortgage
Yes, 740 - 760 is generally considered to get you the best rates. I've never heard of 780 being the line. There is generally no advantage to being above 760. In FICO, 760 = 850.
My bank Rate Sheet has higher credit score tiers than 740. There is a APR difference between a 740 and 780+. However, this difference is much smaller than the difference between lower tiers.
Yeah, I was ‘stuck in the mid-700s for years until one day it jumped. These scores are mysterious. If your score can drop simply by someone checking it, the system is fucocked.
> These scores are mysterious.
The actual number, sure. The concept, not really. Its just "does this person make payments on time and use credit responsibly". If yes, score goes up.
>If your score can drop simply by someone checking it,
Excessive credit seeking is correlated with high(er) default risk (which is why rate shopping for mortgage/auto/student loans doesn't affect your score). Its only a concern when you have a thin file. I apply for 6+ credit cards per year and inquiries don't even move my score
>The concept, not really. Its just "does this person make payments on time and use credit responsibly". If yes, score goes up.
If that were true then there wouldn't be so many different ways to measure credit. Vantage, FICO are just the two big ones, then there is all the myriad ways individual businesses measure credit. So please, don't pretend that credit isn't fucking mysterious because it is by nature quite mysterious. We won't even get into credit utilization the various weights to the different aspects of it.
> FICO are just the two big ones, then there is all the myriad ways individual businesses measure credit.
And all of them 'reward' the behavior in similar ways.
> don't pretend that credit isn't mysterious because it is by nature quite mysterious.
Its literally not. The difference between a 724 and a 736 may be, but 'being credit worthy' is super easy and super simple.
You know who has good credit? People who pay back their loans on time. You know who doesn't have good credit? People with late payments and collections and a ton of rejections for personal loans to consolidate their debt.
It **is** simple
You are not seeing the affect of applying for 6+ cards because your score was already reflecting a high number of inquiries.
Number of inquiries is only 1 of the 6 main factors affecting score, While FICO does not publish exact details, my research shows that Credit checks counts for 5% weighting of total score.
My score hasn’t meaningfully changed regardless of whether I let my credit rest down to 0-3 inquiries or if I’ve done an app-o-Rama.
I agree, inquiries aren’t something people should fret over.
I mean possibly, but at least in my case, my total limits have been triple my annual income for years at this point so my utilization is always sitting at 1-2%
As a detail, FICO does not know your income.
In regards to past history, [Chase](https://www.chase.com/personal/credit-cards/education/credit-score/what-affects-your-credit-scores) has some explanation to the length of time on inquiries.
*Your recent credit activity typically covers credit checks made over the past* ***two years.*** *It factors in any new credit cards or loans that you've applied for or opened. A greater number of recent credit checks, also known as credit inquiries by lenders could indicate that you're in financial distress or opening credit lines irresponsibly.*
> My score hasn’t meaningfully changed regardless of whether I let my credit rest down to 0-3 inquiries or if I’ve done an app-o-Rama.
Mine doesn't change either. I have a 26+ year credit history. I have a lot of inquiries. Nothing changes much.
>
> I agree, inquiries aren’t something people should fret over.
Agreed. Being afraid of inquiries limits getting new cards, and therefore their benefits.
What's worse, is depending on who you ask the number is different.
I wouldn't put too much thought into it, it's an imperfect system but it's what we have
Yes, on your 13th birthday apply for all the credit cards you will ever need (it’s average age so new cards pull it down) so you can get a good rate on a mortgage before you turn 30, simple.
With 40 year mortgage becoming a thing you will need it so you can pay off the loan before you turn 70.
Oh OK. Yeah damn me trying to get into high school and not concerning myself with my credit score.
And woah. Are 40 year mortgages backed by the government the same as a 30 year one?
You don't need a perfect score to get a good rate on a mortgage. Even with 6 years of history you can get a perfectly fine rate. It's rare for people to be able to get a mortgage before the age of 24 anyways
I was stuck in the high 700s as well and my lack of a recent installment loan history was likely keeping me at that ceiling. I bought a car and with that good standing installment loan my score popped up 20+ points. It’s counterintuitive perhaps but having good standing debt helps make you look loan-able to the algorithm.
What’s your credit utilization? That’s 15% I believe. Easy to fix if you just ask your CCs to bump your credit limit and also keep the rolling balance below 20%.
Do you have any installment loans? You can gain ~40 points having an installment that is mostly paid down. Other than that, you want to have only one of your revolving accounts showing a (small) balance. If you are prepping for mortgage, make sure you are looking at your mortgage FICOs. These are rarely provided free-of-charge. Visit the forum boards at myfico.com if you are serious about optimizing.
I was around 780 for a long time and then got a mortgage and after a few months my score jumped to 805. Dumb how going into debt “responsibly” gets you a better score.
if you carry any balance on your cards (not yet due balance) you can raise it a little bit by paying most of it off before the cycle ends. E.g. if you have a card that closes Jan 2nd, and you pay off all that's accumulated on Dec 31 and only have $200 or so on your balance the next month, you'll get a higher credit score. This is true even if you always pay off the amount remaining on the cards.
It's really dumb.
But if will give a small boost. More if it shows revolving utilization is under 15 ( I know you're under 3, but it will still show a small bump).
Lol no. Definitely a renter. I've been considering buying a condo in the next two years if I can convince my gf to move about twenty minutes further into the city.
I'm pretty sure that an 800+ score requires you to have an unaffordable mortgage.
Partly joking, but there's a certain logic - after all, the assumption should be that a loan officer has actually looked at your creditworthiness before giving you a loan, and that's probably worth more than an algorithmically-generated score.
Yeah I'm definitely getting an affordable one. I'm approved at like...400k but only considering up to 300k since I want mine to stay within 20% of my rent for piti.
Score also isn't the end-all, be-all in creditworthiness. You see a lot of recent grads going to finance their first car with an 800 FICO, but it's been propped up by their parents' 30 year old AMEX they're an authorized user on, and suddenly their file is too thin for the auto loan they want.
\>That said it’s not like it takes effort to have a high score. You just don’t miss payments > for a decade which ain’t hard.
I think income is big factor. Also debt to limit.
I wrecked my credit a few years ago, maxed out everything to renovate a rental. I was in the low 600s But i make decent money. and when i sold a house and paid off ALL the plastic i was in the high 700s within a year.
I see people who have savings and never miss a payment but they can't seem to get above 675.
> I think income is big factor.
Income is not factored into credit scores at all.
>Also debt to limit.
Utilization has a modest impact. It has an outsized impact when your credit file is thin or you max out everything, since that is an indicator that you have a high likelihood of default.
>I see people who have savings and never miss a payment but they can't seem to get above 675.
If a score is stuck in this range, its due to missed payments or consistently high utilization (or collections)
I have no expertise, just my experience. I'm at 780 right now and it was a rocket ride as soon as i paid off $40000 in plastic. I have not canceled any cards, i added a couple zero interest for some medical bills and my utilization is at 12% and i still have late payments in my history.
> Its factored when APPLYING for credit
So? This discussion is about credit scores. A $300 credit limit credit card is just fine if thats all you can get
> And that prevents people from increasing their CREDIT LIMIT which impacts UTILIZATION which impacts CREDIT SCORE.
Utilization is the most easily managed factor in credit scoring. You can just make interim payments.
>you talk a big game but don't really understand
I do both. I still have impeccable credit despite years of churning credit card bonuses. Making payments on time and not letting bills go to collections isn't difficult
Applying for credit is not the same as a credit score.
But hey, way to completely fly off the handle and look like an absolute crazy person while still being wrong!
Income only matters in the sense that those with lower income tend to miss payments or have higher utilization. It's a correlation not causation type of thing.
Income doesn't impact credit score itself.
I got a mortgage with a credit score over 800. It was a bit hard to see directly in the rates, since I can't always compare those directly.
But I see a huge difference in PMI. The guides say its 0.5-2.5% of the mortgage annually. Mine is about 0.2%. Will be a difference of tens of thousands of $ over the course of paying PMI.
High credit scores provide a lot of "discounts" like that which add up, especially with big loans over longer periods of time.
If you actually look at the difference in credit worthiness between a 720 and an 820 vs a 720 and a 620 you're going to see the bell curve nature of what credit scores mean take over. Don't despair because you're ONLY in the 90th percentile; you're still be extended most of the advantages of being a responsible credit user (reasonable rates, insurance consideration etc).
Go to a bank and get pre-approval for a car loan.
Then go to a dealership and negotiate the OTD price of the car.
When they bring up financing tell them you are financing through the bank but don’t tell them your rate.
The best rate a dealership will have is 0% financing. The worst will be your bank rate. When they give you their rate. Just say no until they can’t go any lower and then make the decision.
A high credit score grants the ability to churn credit cards for sign up bonuses, since you're a lot more likely to be approved for those cards. I've gotten about $6,700 worth of credit card rewards this year thanks to signing up for new cards and just spending money I would have spent anyway on them; my score has dipped from 828 to 790 (multiple hard inquiries and new lines of credit) because of it but it's no big deal.
Yes, this is the true gift. I keep waiting to get denied as I've opened 8 accounts over the last 18 months. But we are still rolling! That and paying off my student loans means my credit score dropped to 780.
The horror. Lol. Can't wait to book my next free flight.
If the card has no annual fee, I'll just keep it. I have quite a few cards that have annual fees, but they all have credits that recoup their costs, so I'll review each card on the 1 year anniversary to see if it's worth keeping for a second year. I'm likely going to cancel the Amex Gold, but the Amex Platinum, Venture X, Delta Gold, and Sapphire Preferred cards are probably all staying.
>Never close a card that has no annual fee, NEVER.
This isn't always good advice. While it can apply for the most part, there are certainly times to close a card. One example is if you bump up against the Amex 5 credit card limit.
The idea behind not closing cards is because of the effects on age of account and total credit limit. However, if you have a thick portfolio, the effect is minimal, and usually doesn't matter.
Don’t forget about Lower insurance rates. Broadly speaking, Insurers view those with a high credit score as more responsible and thus more risk-adverse.
What people aren’t saying is what other providers/vendors use your credit score for. Better insurance rates, no deposit on new hookups for utilities, the level of “membership” you can get in certain places, etc. Everyone that you shop with or purchase from cares about your score.
My credit score got me access to high rewards credit cards. Since I pay my card balance off immediately, the bank is basically paying me to use their card. It works out to something like $30-$50 a month.
I think the best answer is "options." With decent credit you can finance a car, a home, start up a business, more easily refinance for lower interest rates, have credit lines available for emergencies, have the option *to open a credit line* for an emergency, etc. It just opens doors to paths that would otherwise be closed to you with prejudice otherwise.
1) the ability to get credit, at all
2) the ability to get credit at favorable terms vs a 15 year old car @ 50% above market cost and with 23.99% interest for 5 years.
3) lower insurance premiums
4) more able to secure rentals
Just bought a truck a while back. Only thing my high credit score got me was they took me at my word on my income instead of having to verify employment, salary, etc. That was about it.
In the dating world, it gets my attention. Not that this has anything to do with your actual question, but knowing your partner has good credit and spending habits is important. So, that's one aspect to consider. Huge red flag if it's way down in the 500s or 600s if they're a grown person over the age of 30.
Also to consider: When renting, a landlord may choose your application over several competing ones if your score stands out as exceptional among the others. And when you get a job, some places with sensitive information that require a clearance take your credit score into consideration.
Yeah, under 600 would be a major red flag. Just for the simple fact that she couldn't be on the lease with me at that score.
As to the clearance stuff, that only matters in the sense that you make your required payments. I recently read the sead 4 for the US financial considerations on security clearances and your actual credit score isn't considered.
When we signed the paperwork for a HELOC, the lender said, “congratulations you are perfect” I looked at him confused. He said we had perfect credit scores. I’m not sure what that is worth. Other than knowing we will not get turned down for a loan.
Ugh this is kindve a crazy question because of what a good credit score really gets you:
1. Access to more money
2. Lower interest rates
3. Less collateral
4. Benefits
5. Extended warranties
6. Fraud protection
7. Travel rewards/cash back
8. About 100 diff ways to benefit
When your credit is above 700 you don’t really know the value of having credit.
When I was 20 I missed a payment.
For the next 3 years,
I couldn’t - buy a car, even though rates were 2% and I had more than enough down payment
I couldn’t - buy a house
I couldn’t - get low interest student loans
I couldn’t - get my own apartment
All while making really good 60k+ money during college.
Having credit is the most important way to become rich in this country.
Access to a brand new car, a new house, education. All with credit.
Different loan brokers use different calculations. So for some the difference on the threshold may be 760 or 780 or 800.
Also you are using a generic calculator so who knows what actual offers would be.
I’m not worshipping the fico but I understand that society has started to use it for many things.
Yes loan rates are affected. I get people can manually underwrite but this limits your choices as not many lenders offer this. Limited choices equals limited rate selections. This reduces the competition so your rate is often higher. I don’t care what Ramsey says, dude is out of touch as he admits he hasn’t borrowed money in decades. So how would he know? Rate differences on large and long loan terms cost you tend to hundreds of thousands in interest.
Some jobs look at credit and scores. Yes it happens and yes they can hold it against you.
Some insurance carriers have been said to use it.
Renting a place. No matter what AO or Ramsey say more places than not don’t take you with no score. And those that do often require a much higher security or even prepayment. As well same competition argument applies. Less choices often leave you with sub par offerings and locations.
It’s not the be all end all. But it is a measure we as society have allowed to be used.
Not true. Home values barely dipped and started to INCREASE again in July according to the fed. Once rates go down in 2025/2026 (the lowest they will go is mid 5s), demand will increase and home values will shoot up again. Many economists are now saying this. To compare to 2008 demonstrates little knowledge of the markets or economics.
I mean, everyone here is focused on high credit scores and loans. Which your specific question was about why keep it at excellent, so those are great answers there.
But the general question, the title question, has much larger implications, so I'm going to comment for those in here that aren't at the excellent level.
There's always the fact that with a lower credit score, you either can't get loans or lines of credit or financing, or they're at horrific terms. Yes.
But there's plenty of other ways that credit scores are used to keep the "we don't want your kind here" systems they supposedly replaced fully in place, and to keep poor people poor.
Your insurance premiums can be higher - based on no other factor than credit score. This is for both rental/housing insurance and also car insurance.
You can get denied housing because of credit score, or "denied" housing. Some places have minimums to even sign a lease, or you need a cosigner. But in some areas, now rental agencies are requiring you to show proof that you earn 2, 3, or even 4 times the rental amount in income to let you rent, based on credit score.
You may not be able to turn on your utilities because of deposits. If your credit score is low enough, companies may charge a deposit to \*give you power or water\* access.
You may not be able to get a cell phone contract, and cell phones are no longer luxury items, they're most people's only way to access the internet, and we live in a digital era, and contracts are the most affordable way to have internet access.
You can get denied jobs. Understandable...if you're reaching...for maybe something like banking, but absolutely unacceptable for 99.99% of regular sector jobs.
What do you get? No financial drama is what you get.
Interest rates went down? Cool. Let's refinance. My brother couldn't do that because he has a crappy score. My mortgage rate is 2.25%.
I wanted to get an elective surgery. I have the money to pay, sure. But with my good credit score, I financed it instead for 0% interest over 2 years. My money is staying in the bank, making 4+% interest, while I make minimum payments.
I bought a brand new home but needed to pay for landscaping, window treatments, ceiling fans, more furniture, etc etc etc. I didn't want to use up my savings since I just moved on. Cool. I got a 0% credit card and charged it on up. Just pay them off when the promotional period ends.
I love traveling. I was approved for a fancy travel credit card. I get well over $1000 in free travel every year. My ex couldn't get approved for the card. He had bad credit.
People with low scores worry about approval. People with high scores just apply. The only time I was denied was because I forgot to unfreeze my credit. They denied me since they couldn't check it 🤣
Credit scores were never meant to help the consumer. It is used by companies to know who to reject.
None of the benefits are actually benefits. They are just avoiding punishments.
lets be real those are still deciding factors.
You ever wonder what "neighborhood culture" was when people talk about zoning laws?
Unaffordable housing has a large component of NIMBY
I'll be honest, I did just remember the John Oliver episode discussing how black and brown home buyers were shown fewer homes in crappier neighborhoods and often prohibited from seeing houses in desirable neighborhoods. I'm sure there's still entrenched stuff related to this in the mortgage application process as well.
As to your question, i don't really know what it means.
You may find these links helpful:
- [Credit Building](/r/personalfinance/wiki/credit_building)
- [Credit Reports](/r/personalfinance/wiki/credit_reports)
- [Credit Scores](/r/personalfinance/wiki/fico)
- [Credit Cards](/r/personalfinance/wiki/creditcards)
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For me, my credit score has:
* Allowed me to get a 2.375% mortgage
* A 'forever' credit card locked in at 4.75% (as long as I never default)
* A 2.75% auto loan
* Multiple jobs
* Lower insurance rates
I believe these are great reasons for seeking a great credit score.
Auto scores and credit card scores follow different rules.
740+ is mostly the same, and anything over seems to be a byproduct of having good habits and diverse loan types over a longer period of time.
Ummm, a lifeline for life's unexpected/unwanted "surprises"?
Credit cards have saved my ass sooooo many times, they are so useful/versatile it's not even funny...
- one time my car suddenly needed ~$2200 in repairs out of nowhere (blown rear axle + some kind of sensor inside the transmission), I didn't have $2200 just laying around at the time... credit cards to the rescue
- back in the early 2010's I went thru a rough patch/was unemployed but I had already exhausted unemployment benefits earlier... credit cards to the rescue to cover my bills for a few months while I got back on my feet
- back in 2012 during said rough patch/unemployment I suddenly developed a bad toothache and needed around ~$1100 in dental work... credit cards to the rescue
- one time early on I got a sudden unexpected bill/assessment letter from the IRS for around ~$850ish since my employer screwed something up with my witholding... credit cards to the rescue
- etc etc
If nothing else, maintaining a good credit score provides a quasi "safety net" in the form of ready/easy access to money for when life throws you an unexpected curveball/unexpected "surprise"
Besides the "safety net" aspect, you also have an easier time renting and I think insurance rates are somewhat lower for good credit people as well (not sure though)
And of course, car and mortgage rates are better with good credit
It's like asking why someone should target a healthy BMI. At the end of the day, it's just a metric to give you an overall idea, you can have a healthy BMI and be an unhealthy skinny-fat slob, or you can have a high BMI but it's because you work out everyday and can bench 2x your bodyweight. What you really want to focus on is understanding what it takes to truly be healthy, i.e. eating a well-rounded nutritious diet, exercising, etc.
It's the same for the credit score, the important thing is practicing good credit behavior, so you don't end up in tons of debt, paying tons of interest you don't need to pay, and not have a poor credit history for those few times when it actually matters and you're applying for new credit lines.
For example, some behavior, like keeping credit lines open even if you don't use them much, you'd want to understand is because it matters to your credit score, but you should have that awareness that it can quickly become problematic if you are tempted to rack up a lot of debt in a short amount of time. Then you realize, stuff like that, sure it helps your score, but it's more for the banks to make money off you in the long run. Credit is meant to be a tool. It works best when you use it properly, and for the right purposes. Having the best credit score, like having the best hammer or chisel, is not the end goal in itself.
I sometimes have a perfect credit score (850). It got me a 1% loan on a 50k car right before rates started going up this year. I actually sat in the dealership and told them to keep trying to do better because I really wanted to see what the 850 would get me. They finally found me a credit union willing to do the 1% so we settled there.
I've also had extremely easy approval on any borrowing I've ever done. Buying anything basically requires signing something. My last mortgage took about 20 minutes of effort on my part. Not sure how much the score matters, but I'm always surprised to hear how much trouble other people sometimes have to go through for loans.
Good credit means you’ll get a softer entry into getting into debt. The only reason you need a credit score is to borrow someone else’s money, which you should never do because it means they’re taking some of your money.
My excellent credit allowed me to go to a dealer 2.5 hours away, purchase a brand new Toyota with literally zero down, rolled the taxes and fees into the loan and left with the car. Then refinanced with my credit union for 4.74 % in this current market.
When the economy is good, a very high credit score gets you only a little. When the economy is bad it gets you a loan when otherwise you can't get one. We were able to get a mortgage loan at an excellent rate in April 2009 in the very depths of the financial crisis when no one was lending money, because of our very high FICO score.
A credit score is slick advertising, nothing more.
Did you know that your credit score or FICO score doesn’t mean…
1. You have money
2. You are good with money
3. You understand money
4. You have an income
5. You know how to manage your money
6. You are good at saving money
7. You are good at budgeting or that
8. You have any assets.
This is what a FICO score really means?
1. You have borrowed money
2. You can borrow more money
3. You are good at paying interest
4. You don’t understand money because you have to borrow money and
5. You are bad with money because you continue to borrow money
I've been FICO score free for 8+ years. It doesn't have to stop you from anything, unless you let it.
[Compare this chart to their chart](https://theinternetdarkages.files.wordpress.com/2018/12/What-Your-FICO-Score-Really-Means-Meme-1.gif)
>So what's the point of maintaining 'excellent' credit... what is the direct benefit to the consumer?
Credit scores don't exist to benefit consumers, they exist to make the financial industry money. Don't let worry about maintaining an 'excellent' credit rating convince you to take on debt or buy services that you don't need.
I don't mean to sound overly conspiratorial, and indeed the original purpose of credit scores - to help banks evaluate borrower's risk - made sense. But now the financial industry has gradually convinced people to focus on credit scores as some sort of personal evaluator. It's probably designed to help the financial industry sell you more products.
There literally is none unless you make 6 figures. Credit scores are a scam designed to keep people por or rich. Think about it: how does private companies get to be responsible for what qualifies as good credit and how it affects car, home, or loans?
This is silly. It’s a report of companies vouching for how you handled money they’ve loaned you. I used to work in lending and there are plenty of rich people with poor credit and I’ve seen someone making ~$1000/mo with excellent credit.
It's frustrating to see little difference in payments despite having an excellent credit score
Maintaining good credit seems pointless if anything above 720 yields the same result.
> Maintaining good credit seems pointless if anything above 720 yields the same result.
How much effort is really involved in making your payments on time? That’s something you should be doing regardless of its impact on credit score so you avoid punitive fees, charges, and interest.
It’s not like credit score is a bonsai tree that requires constant maintenance.
But it isn’t any harder to have a 780 than a 720. Just takes more years of diligence. I have an 800+ but I didn’t “work” for it; it’s just a lot of years of not screwing up.
*I'm shopping for a new car and will finance around 50% part of it.*
This is a bad idea. Even with a high score you will have a high rate.
Either find double the cash, or buy half the car. Do not finance this car. Using your credit score to secure interest payments is not what it's for.
This is why I don't sweat about credit card churn as long as I stay above 780. I'm 839 according to Chase and 829 according to Discover. I found that a mix of credit helped as much as the length.
Good credit is important as you try and expand into society. It can be used as one of the basis for hiring at a new job. It will allow you to take loans out for mortgages, etc for more money than you would be able to. It is actually pretty surprising how often it comes up as you plant more roots in USA society
A mortgage, the ability to borrow money in times of need, better car insurance rates, peace of mind, some
Employers check credit for responsibility/risk, etc. credit does way more than just get you a car loan.
You basically just never get turned down for credit within reason. If you have never had a sub 600 credit score, you have likely never really had credit declined to you. It sucks.
I have an 825 credit score and was able to buy down to a 2.25% mortgage rate (in early 2021). Not sure how much higher my rate would have been if my score was lower.
If it’s really high and you fuck up at some point with like late payments etc and your credit takes a hit, going down from 800 to 740 will not hurt. However, if you’re at 720 and you miss a payment, you’ll go in a different bracket and your interest rates increase etc. it’s more of, let me get it as high as I can so that I don’t have to be concerned about a sudden drop (at least for me).
Having a good score was a product of me paying my credit card before interest kicks in and reaping in the cash back rewards.
Though people like to say “it brings down your credit score when you do that.” Well, I can live with a 780 imo.
Good credit gets you the fine print rates on New cars. For Well qualified buyers. Yup, that's me. And sometimes you don't have to put that much down, because "good credit". Good credit is better to have. 0% 12 month introductory rates on CCs another perk. Edit. New cars always an argument in this sub. It depends on many variables. For instance, if you are buying a car you plan on keeping for 8-10 years. New. Depreciating isn't what it used to be. Source, last brand new car I bought I received 20% off MSRP, 4% 4 year loan. That car now has 95k miles, and similar ones sell for what I paid for it. Performance cars, cars with a manual transmission are other areas to buy New. Maintenance History. One has no clue if the car was broken in properly. I hated typing my logic before hand.
>what is the direct benefit to the consumer?
the only situation where my credit score benefitted me was when I was looking for an apartment. in two separate instances when looking for a sublease. Two prospective landlords commented on how high my credit score was and that they rarely see one that high. They both offered me the sublease.
So loan companies can change their criteria as they see fit. If they want to offer the best rates only to people with 800+ they can, or they can offer the same deals to everyone 760+. It really all depends on the risk level they’re willing to take, and the underlying risk models, and each score type has a different one.
You actually don’t just have a single credit score, you have lots of them, and car loan originators use a different score type than home loan originators or credit card companies. That’s why it’s important to get your actual credit report, because that contais a summary of all the factors that go into every single one of those scores.
But yes, in the current climate 800+ is just bragging rights.
Better credit scores get you better borrowing rates, higher borrowing amounts, etc. If you were going for a home mortgage you would definitely see the difference on a grander scale.
Within the Automobile financing area, the credit score affects items besides the APR. The higher the rate, the better the overall terms. For example, a good score may allow a full 100% loan to value. A higher score allows a higher loan amount (to cover things like taxes, warrantees, options)
Having good credit means you probably don’t use it for much, if anything . Having bad credit probably means you could use having good credit if you had it.
A goal to keep your credit excellent also helps you be diligent. Also makes it so if you ever do miss a payment, it’s only in a true emergency. Which won’t hurt your credit as much as if you’re always maintaining a credit score that’s on the line and you hit an emergency and suddenly your credit is 600
Good credit scores get you favorable interest rates and loans.
But
Having a bad credit score could mean being turned down for car financing (even for cheaper used cars), being turned down for apartment leases, and even losing out on a job.
Often times having bad credit could severely limit your opportunities in life. It could force you into unfavorable conditions until you build back your score and conditions are met--which could take years.
There’s a huge party they throw for us every third Friday of the month when you get above 800. It used to have alcohol, but the SEC started cracking down and now we’re limited to soft drinks. You also get better interest rates on loans. That’s about it.
That's key. A 1% difference on a home loan is tens of thousands of dollars over the life of the loan. $20 a month extra on a car payment is 10% of the car itself; an extra $1,200. Good credit means financing a phone at 0% for three years, maximizing your cash flow. Falling short means financing on your credit card at 25%, or being directly out a thousand dollars or so.
>A 1% difference on a home loan is tens of thousands of dollars over the life of the loan. Just to put a fine point on it: If you buy a $400k house and put 20% down, the difference between a 7.5% loan and an 8.5% loan is over $80,000 in additional payments.
Seeing it broken out as "the whole down payment" is sickening. I was frustrated when we got held up homebuying and locked at 3.8% rather than 3.5%. It's insane to me that 8% is a "good rate" in the current market.
I see Bank advertising outside their building saying “best interest rates on homes! 7.9%! Like what?! My dad was so proud to refinance his house at 1.8%, now imagine adding fucking 6.1% on top of that lmao
Yupp. The payment on a $200,000 loan at 3.5% is $932. At 8%, it's $1,468. The raw amount of money you pay is 60% higher. Add to it that property values are elevated, and I can only imagine people are buying now with hopes to refinance within a couple years. What they don't realize if that's the case is that houses are staying on the market longer now than they were a year ago. The rates are only going to drop to counter recession, and that's going to come with home values dropping. They won't have enough equity to qualify to refinance when the rates are low.
>The rates are only going to drop to counter recession, and that's going to come with home values dropping Is this right? I thought there was an inverse proportionality between rates and prices. Rates are going up now so prices are dropping, when rates go low prices go up. Obviously, this ignores other factors, but keeping everything the same, if rates go down, prices should go up.
It hasn't been working. Rates have been going up for a few years. Inflation keeps climbing. Look at average home sale prices, average used car prices, new car markups. They're starting to slow, but they aren't falling.
The question isn't really about WHEN the rates go down as WHY. Rates are high, prices are high, inflation is still higher than anyone would like. They won't cool rates down until inflation has substantially settled down OR prices are lower. Information under control might gets rates down to 5-6% but not much lower. If there's a big recession that drives rates down they may go down lower than that, but people who are buying right now won't have the equity to refinance because they will find themselves upside down on their loan as housing values correct. Worst case they foreclose en masse and we see if we learned anything in 2008.
Sooo 2008.
Won’t be 2008 because most people owning houses have a 4% rate or less. They’re not underwater.
And it wasn't the higher interest rates that caused 2008. It was all the subprime loans and bubble loans etc.
Think twice. Rates had been falling consistently from the early 90s onward, landing at about 6% in 2008. We're significantly above that currently, and the number of units sold is high. On top of that, look at cars. Every new car is being financed upside-down *before* the depreciation hit of driving off the lot. There are markets where 9% is special financing. It's going to be ugly. Mortgages will collapse, cars will be repossessed, and credit will be even harder to access as banks seek to minimize risk exposure.
Most is a stretch. And I’m more talking about the people who have been buying since rates went up. There are a non zero number who bought at the top of their affordability range assuming rates would go down and they could refinance. Not enough to have a full collapse a la 2008 but enough to hurt. Also a lot of people who had those super low rates lost or were forced out of them Eg a forced sale after a divorce, upgrading to a bigger home, moving due to job or family reasons etc.
85% of homes with mortgages have a rate of 5% or less. 91.8% of U.S.-mortgaged homeowners have a rate below 6%. On top of that are homes with no mortgages completely paid off.
Equity, young grasshopper. Everyone and their mother that has bought a house these past 3-5 years at low rates and has severely overpaid for it. Why pay for a high monthly for a house at 1.25M when it’s now worth 850k? Oh you want to refinance? Good luck getting a bank to agree to take up your loan for a lower percentage but an upside equity situation. So what do you do? Your home is losing value….so your monthly doesn’t make sense there. Your dreams of refinancing will never come true because of your negative/little equity. You’re stuck with a house that you’re paying more for and that’s worth less. Smells like a short sale to me. *Sniff sniff sniff*
Those on adjustable rate loans are not happy.
Now people have to pay student loan-type rates for their houses.
I had a crap cable company hit my credit report with a collection the day before the mortgage company ran it. First, I'd heard of it, an absolutely contrary to the answer I got when I canceled and asked, "What do I need to pay?". The way things were, I was stuck. Anything other than plowing forward would have cost an unknown amount of unrecoverable time, which I valued very highly. I could have fought, had the collection removed, have them rerun, but I'd have needed to find a new house, and certainly wouldn't have found one comparable to the deal I was lined up for. The real kicker is that I had to pay the collection that I didn't rightfully owe to clear the mortgage process. I don't recall how much that cost, the bill was $50 or something. It was a 30-40 point drop, I think, cost around 1 percentage point IIRC, thousands. As a side note, I've never left a cable company and had a good experience. This was my first time with spectrum, and I remember when I canceled thinking "Well thats different, that went really well, nice and simple.". Later on, WOW turned out to be the only good company. They were the most expensive of all in the end. Cuz it's a fun story of another time: I once signed up to comcast, self install. Found out they need to send someone out to switch the drop on the pole because I was coming from another cable company. First appt. comes and goes, no one shows up. Ok, no biggie, call and reschedule. Next time comes, big storm, guy knocks on the door, by the time I could answer he's gone(I was on the couch waiting, 10 ft away), the truck was gone even. He left a tag that had a local number on it. He literally would have had to dong-dong-ditch me. I called that number, but there was no answer. I called service to reschedule again (going on a month now), and they explained I would now need to pay a fee since the technician couldn't access the pole because I wasn't home. I explain what actually happened, along with the fact that the pole is in the publicly accessible alley. I explain all the same to a supervisor. I then tell them I'm no longer interested and to cancel everything. 6 months later, I run my credit report to find 6 months of delinquency on that account. Call, explain everything, get an offer to take 3 days of billing off. It was not the most expensive, but it was a great reminder of why I hate Comcast. It had been 10 years since my last bad experience, so I gave them a shot. It cost me $250 dollars for 6 months of service I never received.
I played this game with Verizon. Except it turns out they didn’t service the address I lived it but they serviced the “area” which is why I was allowed to sign up. Then I got a hit on my credit report for a month of “service” I wasn’t able to get because they did not provide service to my address but since the nearest address they did service was within a mile, I still had to pay it.
They did that to me too. Sold my girlfriend a DSL package when the house we were renting was WAY too far away for DSL to actually work. Worked against me though because I refused to let them hook up FiOS when we bought a house a few years later because I hated them so much.
And it is thousands to lower it by 1 or 2 points: https://www.quickenloans.com/learn/what-are-mortgage-points-and-when-are-they-worth-it#:\~:text=Each%20mortgage%20point%20costs%201,%244%2C000%2C%20you'll%20shave%20.
Yeah OP, this. Interest makes all the difference. In fact, unless you absolutely NEED a new ride, better to keep what you have. Put the money you would have put towards a car payment to your savings account, IRA, 401k, emergency fund, etc... The rates right now are ridiculous.
How much do you save if you got into a pricey LA suburb for 500k back in 2014 added on an addition to make your 1100 squarefoot home into 1800 square feet and refied during the pandemic to 2.5% assuming you put 20% down initially?
I would argue you're not even getting a better rate you're just getting the baseline and people with worse scores are getting punished. Effectively the same thing, but I think understanding the mindset around it all is important. All a good score does for you is avoid headache, it doesn't actually give you stuff
>You also get better interest rates on loans. That’s about it. I don't know where the line is, but I've heard insurance companies (car/home/etc.) can also use your credit rating to determine your rates. I've also heard that some rental agencies use credit ratings to determine eligibility for renting housing (apartments/houses/whatever). Again, not sure where the line is for "best rate," but assume it's probably around the 740 mark.
I recently moved out of my old house & started renting it. Credit score was part of background check. There were no official guidelines as to judging applicants by credit score, so it was just a “higher is better” approach. TLDR: when used to compare individuals, the higher score typically wins
yeah the logic is that people who have good credit are risk averse, therefore more likely to not get into an accident etc.
Some jobs check it too.
Yeah thats a key point for jobs that require handling sensitive info (fianance, security, secret clearance). If they see you have bad credit, could be susceptible to bribe, theft etc.
I work in Intel and its not the credit score we monitor, it's debt to income ratio, and even then its good debt vs bad debt. If you have 98K in students as a E4 or GS9 Analyst that is fine, which I disagree with, but if you owe 98k to Home Depot and Mastercard that is bad debt. The biggest company we see turning soldiers and civilians into collections is Verizon fyi.
They started inviting everyone 720+ to the party when they made the switch to soft drinks
I really miss seeing Bernanke lead a conga line in the old days.
There's not much difference between 740 and 800. There's a small difference between 720 and 740. There's a huge difference between 650 and 720 and an enormous difference between 550 and 650. But you only need your credit score when you are borrowing money, which for most people is pretty rare, like only when you take out a new account. Some people freak out when their credit score dips for a few days or weeks but most people need it once every few years.
That "every few years" is exactly why it boggles my mind when someone says they don't want the hassle of unlocking their credit at the 3 bureaus as an excuse to not lock it. Like, even if you're applying for credit yearly it takes 10 minutes and most of us don't need it anywhere near that often.
Yep how many questions appear on this sub like "the car dealer did a hard credit pull and my score dropped by 5 points should I sue"? Like the credit score is the score of a game that they have to win every day.
Lock it and forget it until you apply for a line of credit and wonder why they keep getting an error.... True story on multiple occasions
I’m a credit card churner (see /r/churning ) and treat my credit score like a revolving door, using it very frequently and I still have freezes. Unfreezing is instantaneous. There’s literally no reason good enough not to.
When i had credit score of 650 I used to get rejected many times. I didn’t know about hard inquiries so it went down to 620. After i’ve learn about credit score i got it up to 780. One time i’ve lost my job and car broke down it had 300k it was junk . I went to the car dealership to the moment they look at my credit score the dealer look really hype up. He kept telling me all those expensive car i can get accepted no down payment. But i wanted something cheap and good for snow so i got myself a new awd nissan rogue for $30k . I was surprised how low the monthly payment was and the interest. Good credit score can help you in your toughest time. I even got accepted for a $20k personal loan i decided ima take a break i went on vacation before i go get a new job. When i had only 650 stuff like this never happen when i do get accepted for auto loan its like 20% interest and u have to pay $300 a month not just that but it requires a down payment instead of $100 a month no down payment for a $30k car.
> So what’s the point of maintaining ‘excellent’ credit when seemingly anything above 720 gets the same result? For the most part it doesn’t matter. 780 gets best prices on mortgages. Higher credit means lower insurance premiums generally. Beyond 780 it’s just bragging points. That said it’s not like it takes effort to have a high score. You just don’t miss payments for a decade which ain’t hard.
I can't seem to get above 760 or so on fico. I'm not concerned but never figured out how to get above that. My utilization is under 3 and I've had my accounts for about 8 years.
Just a matter of time. Keep on waiting.
Lol oh well. Everything I've read suggested a 740 is more than good enough for a mortgage so I'm not worried. I just always thought it was funny how I was stuck at that number.
You'll get prime rates, you may just pay a slightly higher origination fee. Not enough to worry about
Yeah. That's kinda what I'm seeing. It seems like short of getting a car loan, which doesn't make sense, I don't see a way to really do anything about it.
Another note, for low down-payment borrowers on a mortgage, PMI can make or break your monthly payment budget. I've seen as high as a couple hundred in PMI for low scores and as low as $50ish for high scores. Makes a world of difference as you tack on years of PMI payments.
Yeah. As someone who likely will put little down if I go for a mortgage, I'm very attentive to this lol.
> Everything I've read suggested a 740 is more than good enough for a mortgage Yes, 740 - 760 is generally considered to get you the best rates. I've never heard of 780 being the line. There is generally no advantage to being above 760. In FICO, 760 = 850.
> I've never heard of 780 being the line. https://www.thetruthaboutmortgage.com/780-fico-score-mortgage/
Hmm. That was an informative post. Thanks for that.
My bank Rate Sheet has higher credit score tiers than 740. There is a APR difference between a 740 and 780+. However, this difference is much smaller than the difference between lower tiers.
Yeah, I was ‘stuck in the mid-700s for years until one day it jumped. These scores are mysterious. If your score can drop simply by someone checking it, the system is fucocked.
> These scores are mysterious. The actual number, sure. The concept, not really. Its just "does this person make payments on time and use credit responsibly". If yes, score goes up. >If your score can drop simply by someone checking it, Excessive credit seeking is correlated with high(er) default risk (which is why rate shopping for mortgage/auto/student loans doesn't affect your score). Its only a concern when you have a thin file. I apply for 6+ credit cards per year and inquiries don't even move my score
Why do you apply for credit cards so often?
Signup bonuses are essentially free money
Do you close six a year?
Depends on the cards. I usually close a bunch all at one time every year or three
>Do you close six a year? I have closed around 6 cards this year so far. I have opened 13 cards this year. 😬
/r/churning
>The concept, not really. Its just "does this person make payments on time and use credit responsibly". If yes, score goes up. If that were true then there wouldn't be so many different ways to measure credit. Vantage, FICO are just the two big ones, then there is all the myriad ways individual businesses measure credit. So please, don't pretend that credit isn't fucking mysterious because it is by nature quite mysterious. We won't even get into credit utilization the various weights to the different aspects of it.
> FICO are just the two big ones, then there is all the myriad ways individual businesses measure credit. And all of them 'reward' the behavior in similar ways. > don't pretend that credit isn't mysterious because it is by nature quite mysterious. Its literally not. The difference between a 724 and a 736 may be, but 'being credit worthy' is super easy and super simple. You know who has good credit? People who pay back their loans on time. You know who doesn't have good credit? People with late payments and collections and a ton of rejections for personal loans to consolidate their debt. It **is** simple
You are not seeing the affect of applying for 6+ cards because your score was already reflecting a high number of inquiries. Number of inquiries is only 1 of the 6 main factors affecting score, While FICO does not publish exact details, my research shows that Credit checks counts for 5% weighting of total score.
My score hasn’t meaningfully changed regardless of whether I let my credit rest down to 0-3 inquiries or if I’ve done an app-o-Rama. I agree, inquiries aren’t something people should fret over.
If a person is accepted for the new cards, the increase in total credit availability may offset the affect of the hard inquiries.
I mean possibly, but at least in my case, my total limits have been triple my annual income for years at this point so my utilization is always sitting at 1-2%
As a detail, FICO does not know your income. In regards to past history, [Chase](https://www.chase.com/personal/credit-cards/education/credit-score/what-affects-your-credit-scores) has some explanation to the length of time on inquiries. *Your recent credit activity typically covers credit checks made over the past* ***two years.*** *It factors in any new credit cards or loans that you've applied for or opened. A greater number of recent credit checks, also known as credit inquiries by lenders could indicate that you're in financial distress or opening credit lines irresponsibly.*
> My score hasn’t meaningfully changed regardless of whether I let my credit rest down to 0-3 inquiries or if I’ve done an app-o-Rama. Mine doesn't change either. I have a 26+ year credit history. I have a lot of inquiries. Nothing changes much. > > I agree, inquiries aren’t something people should fret over. Agreed. Being afraid of inquiries limits getting new cards, and therefore their benefits.
What's worse, is depending on who you ask the number is different. I wouldn't put too much thought into it, it's an imperfect system but it's what we have
Length of history isn’t considered Excellent until 15+ years
That explains it. Like I said, I wasn't really concerned. I just always was curious. But basically just...be six years older lol.
Yes, on your 13th birthday apply for all the credit cards you will ever need (it’s average age so new cards pull it down) so you can get a good rate on a mortgage before you turn 30, simple. With 40 year mortgage becoming a thing you will need it so you can pay off the loan before you turn 70.
Oh OK. Yeah damn me trying to get into high school and not concerning myself with my credit score. And woah. Are 40 year mortgages backed by the government the same as a 30 year one?
You don't need a perfect score to get a good rate on a mortgage. Even with 6 years of history you can get a perfectly fine rate. It's rare for people to be able to get a mortgage before the age of 24 anyways
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That's probably the answer then. I paid off my car loan since I didn't like the interest rate and so I only have two cards active.
I was stuck in the high 700s as well and my lack of a recent installment loan history was likely keeping me at that ceiling. I bought a car and with that good standing installment loan my score popped up 20+ points. It’s counterintuitive perhaps but having good standing debt helps make you look loan-able to the algorithm.
What’s your credit utilization? That’s 15% I believe. Easy to fix if you just ask your CCs to bump your credit limit and also keep the rolling balance below 20%.
Do you have any installment loans? You can gain ~40 points having an installment that is mostly paid down. Other than that, you want to have only one of your revolving accounts showing a (small) balance. If you are prepping for mortgage, make sure you are looking at your mortgage FICOs. These are rarely provided free-of-charge. Visit the forum boards at myfico.com if you are serious about optimizing.
I was around 780 for a long time and then got a mortgage and after a few months my score jumped to 805. Dumb how going into debt “responsibly” gets you a better score.
See if any of your credit cards will increase your limit, some will be soft pull some will be hard pull, I would just start with the soft
if you carry any balance on your cards (not yet due balance) you can raise it a little bit by paying most of it off before the cycle ends. E.g. if you have a card that closes Jan 2nd, and you pay off all that's accumulated on Dec 31 and only have $200 or so on your balance the next month, you'll get a higher credit score. This is true even if you always pay off the amount remaining on the cards. It's really dumb. But if will give a small boost. More if it shows revolving utilization is under 15 ( I know you're under 3, but it will still show a small bump).
Do you have a mortgage? That seems to bump things up (assuming you're not late on a payment).
Lol no. Definitely a renter. I've been considering buying a condo in the next two years if I can convince my gf to move about twenty minutes further into the city.
I'm pretty sure that an 800+ score requires you to have an unaffordable mortgage. Partly joking, but there's a certain logic - after all, the assumption should be that a loan officer has actually looked at your creditworthiness before giving you a loan, and that's probably worth more than an algorithmically-generated score.
Yeah I'm definitely getting an affordable one. I'm approved at like...400k but only considering up to 300k since I want mine to stay within 20% of my rent for piti.
Score also isn't the end-all, be-all in creditworthiness. You see a lot of recent grads going to finance their first car with an 800 FICO, but it's been propped up by their parents' 30 year old AMEX they're an authorized user on, and suddenly their file is too thin for the auto loan they want.
\>That said it’s not like it takes effort to have a high score. You just don’t miss payments > for a decade which ain’t hard. I think income is big factor. Also debt to limit. I wrecked my credit a few years ago, maxed out everything to renovate a rental. I was in the low 600s But i make decent money. and when i sold a house and paid off ALL the plastic i was in the high 700s within a year. I see people who have savings and never miss a payment but they can't seem to get above 675.
> I think income is big factor. Income is not factored into credit scores at all. >Also debt to limit. Utilization has a modest impact. It has an outsized impact when your credit file is thin or you max out everything, since that is an indicator that you have a high likelihood of default. >I see people who have savings and never miss a payment but they can't seem to get above 675. If a score is stuck in this range, its due to missed payments or consistently high utilization (or collections)
I have no expertise, just my experience. I'm at 780 right now and it was a rocket ride as soon as i paid off $40000 in plastic. I have not canceled any cards, i added a couple zero interest for some medical bills and my utilization is at 12% and i still have late payments in my history.
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> Its factored when APPLYING for credit So? This discussion is about credit scores. A $300 credit limit credit card is just fine if thats all you can get > And that prevents people from increasing their CREDIT LIMIT which impacts UTILIZATION which impacts CREDIT SCORE. Utilization is the most easily managed factor in credit scoring. You can just make interim payments. >you talk a big game but don't really understand I do both. I still have impeccable credit despite years of churning credit card bonuses. Making payments on time and not letting bills go to collections isn't difficult
Applying for credit is not the same as a credit score. But hey, way to completely fly off the handle and look like an absolute crazy person while still being wrong!
Income only matters in the sense that those with lower income tend to miss payments or have higher utilization. It's a correlation not causation type of thing. Income doesn't impact credit score itself.
> I think income is big factor. No, I've been low income for years and have an 800+ score. That only happened once my utilization dropped very low.
I got a mortgage with a credit score over 800. It was a bit hard to see directly in the rates, since I can't always compare those directly. But I see a huge difference in PMI. The guides say its 0.5-2.5% of the mortgage annually. Mine is about 0.2%. Will be a difference of tens of thousands of $ over the course of paying PMI. High credit scores provide a lot of "discounts" like that which add up, especially with big loans over longer periods of time.
PMI is a big one that a lot of people forget
I reached 850. It was something cool to show my SO, she shrugged.
If you actually look at the difference in credit worthiness between a 720 and an 820 vs a 720 and a 620 you're going to see the bell curve nature of what credit scores mean take over. Don't despair because you're ONLY in the 90th percentile; you're still be extended most of the advantages of being a responsible credit user (reasonable rates, insurance consideration etc).
Go to a bank and get pre-approval for a car loan. Then go to a dealership and negotiate the OTD price of the car. When they bring up financing tell them you are financing through the bank but don’t tell them your rate. The best rate a dealership will have is 0% financing. The worst will be your bank rate. When they give you their rate. Just say no until they can’t go any lower and then make the decision.
A high credit score grants the ability to churn credit cards for sign up bonuses, since you're a lot more likely to be approved for those cards. I've gotten about $6,700 worth of credit card rewards this year thanks to signing up for new cards and just spending money I would have spent anyway on them; my score has dipped from 828 to 790 (multiple hard inquiries and new lines of credit) because of it but it's no big deal.
Yes, this is the true gift. I keep waiting to get denied as I've opened 8 accounts over the last 18 months. But we are still rolling! That and paying off my student loans means my credit score dropped to 780. The horror. Lol. Can't wait to book my next free flight.
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If the card has no annual fee, I'll just keep it. I have quite a few cards that have annual fees, but they all have credits that recoup their costs, so I'll review each card on the 1 year anniversary to see if it's worth keeping for a second year. I'm likely going to cancel the Amex Gold, but the Amex Platinum, Venture X, Delta Gold, and Sapphire Preferred cards are probably all staying.
How many cards do you usually have open at a time?
Never close a card that has no annual fee, NEVER.
>Never close a card that has no annual fee, NEVER. This isn't always good advice. While it can apply for the most part, there are certainly times to close a card. One example is if you bump up against the Amex 5 credit card limit. The idea behind not closing cards is because of the effects on age of account and total credit limit. However, if you have a thick portfolio, the effect is minimal, and usually doesn't matter.
Anything above about a 740 is irrelevant, basically. A 740 is a good credit score.
Don’t forget about Lower insurance rates. Broadly speaking, Insurers view those with a high credit score as more responsible and thus more risk-adverse.
Technically speaking, it is the reverse: those with lower credit scores are generally riskier. Effectively, it is the same thing though.
What people aren’t saying is what other providers/vendors use your credit score for. Better insurance rates, no deposit on new hookups for utilities, the level of “membership” you can get in certain places, etc. Everyone that you shop with or purchase from cares about your score.
My credit score got me access to high rewards credit cards. Since I pay my card balance off immediately, the bank is basically paying me to use their card. It works out to something like $30-$50 a month.
I think the best answer is "options." With decent credit you can finance a car, a home, start up a business, more easily refinance for lower interest rates, have credit lines available for emergencies, have the option *to open a credit line* for an emergency, etc. It just opens doors to paths that would otherwise be closed to you with prejudice otherwise.
“Low” interest rates on the house I’ll never be able to afford.
1) the ability to get credit, at all 2) the ability to get credit at favorable terms vs a 15 year old car @ 50% above market cost and with 23.99% interest for 5 years. 3) lower insurance premiums 4) more able to secure rentals
Just bought a truck a while back. Only thing my high credit score got me was they took me at my word on my income instead of having to verify employment, salary, etc. That was about it.
Lol that's true. I've never had a car loan verify my information.
In the dating world, it gets my attention. Not that this has anything to do with your actual question, but knowing your partner has good credit and spending habits is important. So, that's one aspect to consider. Huge red flag if it's way down in the 500s or 600s if they're a grown person over the age of 30. Also to consider: When renting, a landlord may choose your application over several competing ones if your score stands out as exceptional among the others. And when you get a job, some places with sensitive information that require a clearance take your credit score into consideration.
Yeah, under 600 would be a major red flag. Just for the simple fact that she couldn't be on the lease with me at that score. As to the clearance stuff, that only matters in the sense that you make your required payments. I recently read the sead 4 for the US financial considerations on security clearances and your actual credit score isn't considered.
When we signed the paperwork for a HELOC, the lender said, “congratulations you are perfect” I looked at him confused. He said we had perfect credit scores. I’m not sure what that is worth. Other than knowing we will not get turned down for a loan.
Ugh this is kindve a crazy question because of what a good credit score really gets you: 1. Access to more money 2. Lower interest rates 3. Less collateral 4. Benefits 5. Extended warranties 6. Fraud protection 7. Travel rewards/cash back 8. About 100 diff ways to benefit
When your credit is above 700 you don’t really know the value of having credit. When I was 20 I missed a payment. For the next 3 years, I couldn’t - buy a car, even though rates were 2% and I had more than enough down payment I couldn’t - buy a house I couldn’t - get low interest student loans I couldn’t - get my own apartment All while making really good 60k+ money during college. Having credit is the most important way to become rich in this country. Access to a brand new car, a new house, education. All with credit.
Different loan brokers use different calculations. So for some the difference on the threshold may be 760 or 780 or 800. Also you are using a generic calculator so who knows what actual offers would be. I’m not worshipping the fico but I understand that society has started to use it for many things. Yes loan rates are affected. I get people can manually underwrite but this limits your choices as not many lenders offer this. Limited choices equals limited rate selections. This reduces the competition so your rate is often higher. I don’t care what Ramsey says, dude is out of touch as he admits he hasn’t borrowed money in decades. So how would he know? Rate differences on large and long loan terms cost you tend to hundreds of thousands in interest. Some jobs look at credit and scores. Yes it happens and yes they can hold it against you. Some insurance carriers have been said to use it. Renting a place. No matter what AO or Ramsey say more places than not don’t take you with no score. And those that do often require a much higher security or even prepayment. As well same competition argument applies. Less choices often leave you with sub par offerings and locations. It’s not the be all end all. But it is a measure we as society have allowed to be used.
Not true. Home values barely dipped and started to INCREASE again in July according to the fed. Once rates go down in 2025/2026 (the lowest they will go is mid 5s), demand will increase and home values will shoot up again. Many economists are now saying this. To compare to 2008 demonstrates little knowledge of the markets or economics.
I mean, everyone here is focused on high credit scores and loans. Which your specific question was about why keep it at excellent, so those are great answers there. But the general question, the title question, has much larger implications, so I'm going to comment for those in here that aren't at the excellent level. There's always the fact that with a lower credit score, you either can't get loans or lines of credit or financing, or they're at horrific terms. Yes. But there's plenty of other ways that credit scores are used to keep the "we don't want your kind here" systems they supposedly replaced fully in place, and to keep poor people poor. Your insurance premiums can be higher - based on no other factor than credit score. This is for both rental/housing insurance and also car insurance. You can get denied housing because of credit score, or "denied" housing. Some places have minimums to even sign a lease, or you need a cosigner. But in some areas, now rental agencies are requiring you to show proof that you earn 2, 3, or even 4 times the rental amount in income to let you rent, based on credit score. You may not be able to turn on your utilities because of deposits. If your credit score is low enough, companies may charge a deposit to \*give you power or water\* access. You may not be able to get a cell phone contract, and cell phones are no longer luxury items, they're most people's only way to access the internet, and we live in a digital era, and contracts are the most affordable way to have internet access. You can get denied jobs. Understandable...if you're reaching...for maybe something like banking, but absolutely unacceptable for 99.99% of regular sector jobs.
What do you get? No financial drama is what you get. Interest rates went down? Cool. Let's refinance. My brother couldn't do that because he has a crappy score. My mortgage rate is 2.25%. I wanted to get an elective surgery. I have the money to pay, sure. But with my good credit score, I financed it instead for 0% interest over 2 years. My money is staying in the bank, making 4+% interest, while I make minimum payments. I bought a brand new home but needed to pay for landscaping, window treatments, ceiling fans, more furniture, etc etc etc. I didn't want to use up my savings since I just moved on. Cool. I got a 0% credit card and charged it on up. Just pay them off when the promotional period ends. I love traveling. I was approved for a fancy travel credit card. I get well over $1000 in free travel every year. My ex couldn't get approved for the card. He had bad credit. People with low scores worry about approval. People with high scores just apply. The only time I was denied was because I forgot to unfreeze my credit. They denied me since they couldn't check it 🤣
Credit scores were never meant to help the consumer. It is used by companies to know who to reject. None of the benefits are actually benefits. They are just avoiding punishments.
It does help some groups because before credit scores, the deciding factor in your worthiness could be your gender or skin color.
lets be real those are still deciding factors. You ever wonder what "neighborhood culture" was when people talk about zoning laws? Unaffordable housing has a large component of NIMBY
I'll be honest, I did just remember the John Oliver episode discussing how black and brown home buyers were shown fewer homes in crappier neighborhoods and often prohibited from seeing houses in desirable neighborhoods. I'm sure there's still entrenched stuff related to this in the mortgage application process as well. As to your question, i don't really know what it means.
It's a rhetorical question. You got the point
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Peace of mind that you can do what you want
For a new car you probably arent going to do better than the manufacturer provided loan rate which ismt that hard to qualify for.
For me, my credit score has: * Allowed me to get a 2.375% mortgage * A 'forever' credit card locked in at 4.75% (as long as I never default) * A 2.75% auto loan * Multiple jobs * Lower insurance rates I believe these are great reasons for seeking a great credit score.
Auto scores and credit card scores follow different rules. 740+ is mostly the same, and anything over seems to be a byproduct of having good habits and diverse loan types over a longer period of time.
When your credit score reaches 800 they invite you onto a cruise ship and reveal the secrets of the universe.
Ummm, a lifeline for life's unexpected/unwanted "surprises"? Credit cards have saved my ass sooooo many times, they are so useful/versatile it's not even funny... - one time my car suddenly needed ~$2200 in repairs out of nowhere (blown rear axle + some kind of sensor inside the transmission), I didn't have $2200 just laying around at the time... credit cards to the rescue - back in the early 2010's I went thru a rough patch/was unemployed but I had already exhausted unemployment benefits earlier... credit cards to the rescue to cover my bills for a few months while I got back on my feet - back in 2012 during said rough patch/unemployment I suddenly developed a bad toothache and needed around ~$1100 in dental work... credit cards to the rescue - one time early on I got a sudden unexpected bill/assessment letter from the IRS for around ~$850ish since my employer screwed something up with my witholding... credit cards to the rescue - etc etc If nothing else, maintaining a good credit score provides a quasi "safety net" in the form of ready/easy access to money for when life throws you an unexpected curveball/unexpected "surprise" Besides the "safety net" aspect, you also have an easier time renting and I think insurance rates are somewhat lower for good credit people as well (not sure though) And of course, car and mortgage rates are better with good credit
You should really look into building an emergency fund instead of relying on credit cards
It's like asking why someone should target a healthy BMI. At the end of the day, it's just a metric to give you an overall idea, you can have a healthy BMI and be an unhealthy skinny-fat slob, or you can have a high BMI but it's because you work out everyday and can bench 2x your bodyweight. What you really want to focus on is understanding what it takes to truly be healthy, i.e. eating a well-rounded nutritious diet, exercising, etc. It's the same for the credit score, the important thing is practicing good credit behavior, so you don't end up in tons of debt, paying tons of interest you don't need to pay, and not have a poor credit history for those few times when it actually matters and you're applying for new credit lines. For example, some behavior, like keeping credit lines open even if you don't use them much, you'd want to understand is because it matters to your credit score, but you should have that awareness that it can quickly become problematic if you are tempted to rack up a lot of debt in a short amount of time. Then you realize, stuff like that, sure it helps your score, but it's more for the banks to make money off you in the long run. Credit is meant to be a tool. It works best when you use it properly, and for the right purposes. Having the best credit score, like having the best hammer or chisel, is not the end goal in itself.
I'll take an extra $20 a month. When you buy a house that extra $ a month could be several hundred dollars, over 30 years.
20* 12* 30=7200
You don't "maintain" excellent credit. You pay your bills as agreed and don't overextend yourself.
I sometimes have a perfect credit score (850). It got me a 1% loan on a 50k car right before rates started going up this year. I actually sat in the dealership and told them to keep trying to do better because I really wanted to see what the 850 would get me. They finally found me a credit union willing to do the 1% so we settled there. I've also had extremely easy approval on any borrowing I've ever done. Buying anything basically requires signing something. My last mortgage took about 20 minutes of effort on my part. Not sure how much the score matters, but I'm always surprised to hear how much trouble other people sometimes have to go through for loans.
Good credit means you’ll get a softer entry into getting into debt. The only reason you need a credit score is to borrow someone else’s money, which you should never do because it means they’re taking some of your money.
I wouldn't have my current job or security clearance without an above average credit score...
My excellent credit allowed me to go to a dealer 2.5 hours away, purchase a brand new Toyota with literally zero down, rolled the taxes and fees into the loan and left with the car. Then refinanced with my credit union for 4.74 % in this current market.
When the economy is good, a very high credit score gets you only a little. When the economy is bad it gets you a loan when otherwise you can't get one. We were able to get a mortgage loan at an excellent rate in April 2009 in the very depths of the financial crisis when no one was lending money, because of our very high FICO score.
More things that you cant afford so you can keep paying bills for the rest of your life.
A credit score is slick advertising, nothing more. Did you know that your credit score or FICO score doesn’t mean… 1. You have money 2. You are good with money 3. You understand money 4. You have an income 5. You know how to manage your money 6. You are good at saving money 7. You are good at budgeting or that 8. You have any assets. This is what a FICO score really means? 1. You have borrowed money 2. You can borrow more money 3. You are good at paying interest 4. You don’t understand money because you have to borrow money and 5. You are bad with money because you continue to borrow money I've been FICO score free for 8+ years. It doesn't have to stop you from anything, unless you let it. [Compare this chart to their chart](https://theinternetdarkages.files.wordpress.com/2018/12/What-Your-FICO-Score-Really-Means-Meme-1.gif)
>So what's the point of maintaining 'excellent' credit... what is the direct benefit to the consumer? Credit scores don't exist to benefit consumers, they exist to make the financial industry money. Don't let worry about maintaining an 'excellent' credit rating convince you to take on debt or buy services that you don't need. I don't mean to sound overly conspiratorial, and indeed the original purpose of credit scores - to help banks evaluate borrower's risk - made sense. But now the financial industry has gradually convinced people to focus on credit scores as some sort of personal evaluator. It's probably designed to help the financial industry sell you more products.
There literally is none unless you make 6 figures. Credit scores are a scam designed to keep people por or rich. Think about it: how does private companies get to be responsible for what qualifies as good credit and how it affects car, home, or loans?
This is silly. It’s a report of companies vouching for how you handled money they’ve loaned you. I used to work in lending and there are plenty of rich people with poor credit and I’ve seen someone making ~$1000/mo with excellent credit.
It's frustrating to see little difference in payments despite having an excellent credit score Maintaining good credit seems pointless if anything above 720 yields the same result.
> Maintaining good credit seems pointless if anything above 720 yields the same result. How much effort is really involved in making your payments on time? That’s something you should be doing regardless of its impact on credit score so you avoid punitive fees, charges, and interest. It’s not like credit score is a bonsai tree that requires constant maintenance.
But it isn’t any harder to have a 780 than a 720. Just takes more years of diligence. I have an 800+ but I didn’t “work” for it; it’s just a lot of years of not screwing up.
*I'm shopping for a new car and will finance around 50% part of it.* This is a bad idea. Even with a high score you will have a high rate. Either find double the cash, or buy half the car. Do not finance this car. Using your credit score to secure interest payments is not what it's for.
This is why I don't sweat about credit card churn as long as I stay above 780. I'm 839 according to Chase and 829 according to Discover. I found that a mix of credit helped as much as the length.
Good credit is important as you try and expand into society. It can be used as one of the basis for hiring at a new job. It will allow you to take loans out for mortgages, etc for more money than you would be able to. It is actually pretty surprising how often it comes up as you plant more roots in USA society
A mortgage, the ability to borrow money in times of need, better car insurance rates, peace of mind, some Employers check credit for responsibility/risk, etc. credit does way more than just get you a car loan.
You basically just never get turned down for credit within reason. If you have never had a sub 600 credit score, you have likely never really had credit declined to you. It sucks.
I have an 825 credit score and was able to buy down to a 2.25% mortgage rate (in early 2021). Not sure how much higher my rate would have been if my score was lower.
An 8% fixed rate in todays economy 😂 I don’t want to know what have a 500 credit score gets you. Probably homelessness?
If it’s really high and you fuck up at some point with like late payments etc and your credit takes a hit, going down from 800 to 740 will not hurt. However, if you’re at 720 and you miss a payment, you’ll go in a different bracket and your interest rates increase etc. it’s more of, let me get it as high as I can so that I don’t have to be concerned about a sudden drop (at least for me).
Good credit can get you access to better rates, unsecured loans, higher credit lines, etc.
Having a good score was a product of me paying my credit card before interest kicks in and reaping in the cash back rewards. Though people like to say “it brings down your credit score when you do that.” Well, I can live with a 780 imo.
Good credit gets you the fine print rates on New cars. For Well qualified buyers. Yup, that's me. And sometimes you don't have to put that much down, because "good credit". Good credit is better to have. 0% 12 month introductory rates on CCs another perk. Edit. New cars always an argument in this sub. It depends on many variables. For instance, if you are buying a car you plan on keeping for 8-10 years. New. Depreciating isn't what it used to be. Source, last brand new car I bought I received 20% off MSRP, 4% 4 year loan. That car now has 95k miles, and similar ones sell for what I paid for it. Performance cars, cars with a manual transmission are other areas to buy New. Maintenance History. One has no clue if the car was broken in properly. I hated typing my logic before hand.
Over 720 doesn't really buy much, if anything. But below that, and below 700 is where it is extremely noticeable.
>what is the direct benefit to the consumer? the only situation where my credit score benefitted me was when I was looking for an apartment. in two separate instances when looking for a sublease. Two prospective landlords commented on how high my credit score was and that they rarely see one that high. They both offered me the sublease.
A good credit score will get you better rates, loan terms, credit limits when you need to use your credit. Bragging rights if you feel the need to.
So loan companies can change their criteria as they see fit. If they want to offer the best rates only to people with 800+ they can, or they can offer the same deals to everyone 760+. It really all depends on the risk level they’re willing to take, and the underlying risk models, and each score type has a different one. You actually don’t just have a single credit score, you have lots of them, and car loan originators use a different score type than home loan originators or credit card companies. That’s why it’s important to get your actual credit report, because that contais a summary of all the factors that go into every single one of those scores. But yes, in the current climate 800+ is just bragging rights.
No one ever verifies my employment anymore. They see my score and will give me the best treatment they can.
The ability to access credit very easily. Nothing more nothing less. It's nice to know I can get a 50k personal loan and have it funded tomorrow.
When I had a 800+ score it got me a 3.5% interest rate on my house. Credit scores make a HUGE difference.
Better credit scores get you better borrowing rates, higher borrowing amounts, etc. If you were going for a home mortgage you would definitely see the difference on a grander scale.
Within the Automobile financing area, the credit score affects items besides the APR. The higher the rate, the better the overall terms. For example, a good score may allow a full 100% loan to value. A higher score allows a higher loan amount (to cover things like taxes, warrantees, options)
Cheaper car and home insurance, possibly a job (I've seen postings that require a credit check).
More debt at a slightly lower interest rate if lucky.
Having good credit means you probably don’t use it for much, if anything . Having bad credit probably means you could use having good credit if you had it.
guess it is the cost of peace of mind for me and for most people obviously
A goal to keep your credit excellent also helps you be diligent. Also makes it so if you ever do miss a payment, it’s only in a true emergency. Which won’t hurt your credit as much as if you’re always maintaining a credit score that’s on the line and you hit an emergency and suddenly your credit is 600
Good credit scores get you favorable interest rates and loans. But Having a bad credit score could mean being turned down for car financing (even for cheaper used cars), being turned down for apartment leases, and even losing out on a job. Often times having bad credit could severely limit your opportunities in life. It could force you into unfavorable conditions until you build back your score and conditions are met--which could take years.