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The numbers will determine your fate

3 years ago by The Picard Maneuver to c/microblogmemes

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kaonashi 39 points 3 years ago

Credit rating measures your profitability to the credit industry, if you pay off your loan early, they make in interest, thus less profit.

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path: 0 7598253, hotness: undefined, score: 39, children: 19
MacNCheezus 27 points 3 years ago

Not entirely true. I'm what they call a deadbeat (meaning I pay off my cards in full every month and have been doing so for the past 10 years, making them $0 profit), and I have a 800 score.

I think the more correct way to think about it is that it's an estimate of your profit potential. What everyone tells you to do with a score this high is to buy a house because you qualify for the best mortgage interest rates. But of course then they'll have me on the hook for the next 30 years, and they stand to make in excess of $100k in profit.

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path: 0 7598253 7601109, hotness: undefined, score: 27, children: 12
kameecoding 6 points 3 years ago

100K profit on a mortgage? that's insane

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path: 0 7598253 7601109 7601328, hotness: undefined, score: 6, children: 11
radix 6 points 3 years ago

That would imply people who constantly carry credit card debt would have high credit ratings, which is false as far as I understand.

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path: 0 7598253 7599253, hotness: undefined, score: 6, children: 5
KumaLumaJuma 4 points 3 years ago

It’s not, really, although it’s a bit more nuanced than that.

Credit scores are now taking in more information than ever, so things like your debt repayments as a % of your income (affordability) are feeding in as well.

For the people carrying credit card debt, one CRA might give you a better score if you carry a balance >0 but <25% of your total credit limit, and another it could be 0 to 40% so you will see some score variability.

If your utilisation is higher your score may suffer. This is only one aspect, though. Repayments on other debt (mortgages, utilities, mobile phones) play a part, as do things like voter registration and the time you have kept open your accounts. TransUnion is now incorporating BNPL (like Klarna) data for some reporting, although not sure it feeds into the score view yet).

I would highly recommend using whatever free apps are available for each of the CRAs (TransUnion, Experian and Equifax are the three main providers) to monitor your score.

For TransUnion you should be able to use the Credit Karma app in both the US and UK, and in the UK you also have the ClearScore app for Equifax score.

Experian in the UK is on the process of removing 3rd party app access (would have been MoneySaving Expert app before, but that’s moving to TransUnion).

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path: 0 7598253 7599253 7600926, hotness: undefined, score: 4, children: 3
bi_tux 2 points 3 years ago

no it wouldn't, due to the higher risk of them not peying it back

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path: 0 7598253 7599253 7600908, hotness: undefined, score: 2, children: 0
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