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Ya know, the credit score system in america, while a good idea in principle, is really setup in such a stupid way.
One thing that really bugs me is one of the factors that effects your credit score is the age of your oldest account and the average age of your accounts. In other words if you cancel your oldest credit card, assuming thats your oldest account, your credit score will go down.
So for me my oldest account is 20 years old and its a really shitty secured credit card I got when I was building my credit. I had to pay 300$ to secure it (which i get back if I cancel) and it has only a 300$ limit, so it is useless to me. Moreover I have to pay 7$ every month to keep it. Worse yet the interest rate if i Put anything on it is insane. In every way its a bad investment and I should cancel it. But if I do that my credit will take a hit. So here I am forced to make a bad financial decision just to keep my credit score maxed out.... so fucking stupid.
@omicron to some extent that is true here. That being that the credit score really isnt what people making loans look at, they look at your actual history.
@freemo
Buy a cheap car, or lease a new car. And after that close ty the accounts you don't want
@pthenq1 Not sure how that would help. It would still lower the max age of my account which would be a factor against my score.
The car itself wont boost my score either as I already have well established credit and loans of various types so it wont have a positive effect. In fact since it will count as debt might even bring me down a bit.
@freemo
Oh. You have monthly payments already. Yes, when you close your account, your score will be impacted. But it will recover if you have already monthly payments.
If you could take the hit, then all good.
@pthenq1 yea I have a mortgage, several credit cards, and had a car loan up until recently, plus i have several charge cards. I didnt take a hit when my car loan was paid off because my other loans were sufficiently diversified.
@freemo
It builds super quickly.
I have no credit cards (I didn't have and I will never will). When I wanted to buy a house, I started buying 3 cars on payments. 18 months later my score was: 728. Tadaaaaaaa! LOL.
Now I need a bigger garage. ๐ค
@freemo Not only that. I've read horror tales from an American buddy of mine back then... if you buy stuff not 'on credit', so always in full every time, your credit score won't go up as swimmingly as when you buy 'on credit' and go 'pay back the debts' nicely.
I mean, wouldn't it be a lot better that you didn't create debts in the first place? But if you want to be able to buy a house or whatnot... you should have had debts in the first place? In other words, having a history of paying things nicely on time needs debts of some kind to pay.
Please tell me that ain't so or that it's at least improved now since it's been a while ago he told me about that.
@trinsec Not entierly true.. your best credit will be maintained at about 1% - 2% credit utlilization. So basically buy something small on your credit card is usually best. but at 0% youll still have decent credit. The key is to make sure you have credit cards at all.
@freemo Heh, the only reason for people here to own a creditcard is to buy stuff internationally until PayPal entered the scene.
Locally, everybody uses debit cards.
@trinsec yea america is I suppose unique in that regard. Personally I think owning a credit card for personal emergencies is the responsible thing to do. But silly that you need to own one just to get your credit up.
@freemo Agreed. There shouldn't even be such a thing as 'credit score' imo. Many companies don't even have any business knowing about your payment history. And big businesses (banks and government stuff) have a way of looking into your finances anyway.
@trinsec I'm mixed on that.. if the only people who can give you loans is your bank since they are the only one who knows your spending history then how can you shop around for the best rate on a loan?
@freemo Well, there are sites like geld.nl that gives you the top X companies that can loan you money for whatever conditions etc. I don't know, I don't have experience with this. The only (huge) debt I've ever had (and paid off) is a study debt. And when I owned a house, a mortgage that I paid nicely every month. Nothing else. But there seems to be plenty of ways of loaning money. And I'm suspecting they might be kind of licensed to check into your finances via a bank or something.
I have zero experience of getting into debt. :P
@trinsec i never borrowed money in europe or the netherlands. So I'm curious how a company other than your bank can determine your worthiness for a loan without a credit history or something that is equivalent to it.
@freemo Wellll.. I'm obviously not going to put this to the test. :D
But from what I understand.. Banks want to know your income, the kind of job contract (long term, temp, etc), your expenses, your debts, if you have a (negative) BKR-notation (sorta credit score, but I believe you only get it when you've had debts you couldn't pay back?).
If you have a negative BKR-notation, a bank might not be an option. So you can go elsewhere, but the % is higher.
There seem to be various ways of borrowing money without a bank. I'm not seeing the forest anymore because of all the trees, though. This truly is very alien territory for me. :P
@trinsec I guess that makes more sense.. its kinda the same as our credit score but with less detail.. they only see the negative and not the positive. Which seems reasonable I guess.
Then again that means getting big loans on little collateral would be more challenging as your collateral is really the only thing they use to size the loan and good credit history wont really give you a boost.
@freemo Yeah. I need to 'prove' that I can pay for it. For home owners getting a big loan, it's apparently not that unusual that their home's a collateral. Usually it gets into a 2nd or so mortgage.
@freemo It's also entirely possible that I'm talking out of my ass. :P I've never been that interested in finances, as long as I can pay for stuff, heh.
@trinsec Usually when someone is talking out of their ass you can smell it.
@freemo *Farts into your general direction*
Just wait a few months before it's crossed the ocean.
One sunny day in late may as I sit at an outdoor cafe eating lunch:
my friend: ::sniff sniff:: you smell that
me: Yea thats disgusting I wonder where that is coming fr..... TRINSECCCCC!!!!!!!! you bastard.
@freemo Perfect timing. Much better than doing it in the winter when you'd be locked up indoors anyway!
Hope you'll enjoy the extra aroma!
@trinsec homes im not too worried about as they are their own collateral. Its more business loans to start a new business that seems concerning as they dont tend to start out as being collateral.
@freemo I have no idea how I'd start up a new business. I think I need to have it very well formulated, be well documented, in order to convince a bank that I need the money to make them rich! Either that, or get a private investor who believes in me.
@trinsec @freemo
+1 there is a local job for a clearner, need a credit score as part of the sign up process, some of these employers clearly are cowboys with some weird agenda.
DBS checks yes, but why a credit score, don't they know people looking for work, may end up with financial problem at some point.
@freemo @trinsec Indeed however they should, when challenged be able to explain why these are needed.
On a similar note, given some of the disclosures on everyonesinvited.uk of teachers ignoring abuse, I would love to ask at an interview if the teachers who ignored this abuse and failed to act, should be stuck off, added to teh sex offenders register and sued by the victim.
@freemo
Wow, I can imagine the frustration.
In my country many people think credit cards are for poor, and never get them. There are no credit scores, only credit history (actual detailed info about your loans and how you paid them).
You can have no credit history and it doesn't mean anything in terms of getting your first loan.