FICO score

MY FICO score went down because we don't charge anything and don't have any loans?

Question-- Does it I really matter what score I have?  Or am I missing something? 
I'm asking here because the mixture of people, somebody will have the right answer and not give you a sales job.
I'm not going ask to my credit union or bank, they only know "buy CD"

path said:

MY FICO score went down because we don't charge anything and don't have any loans?

Question-- Does it I really matter what score I have?  Or am I missing something? 
I'm asking here because the mixture of people, somebody will have the right answer and not give you a sales job.
I'm not going ask to my credit union or bank, they only know "buy CD"

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FYI - Your insurance rates may go up.

One of my Cowboy hired men told me once that someone stole his identity. "So now he has a lot better credit rating".

Lots of things affect the FICO number and credit history and utilization is one of them. A higher FICO score may get you better deals on loans, but if you don't ever get a loan, who cares? It may also affect insurance premiums, job applications, security clearances and similar things where the FICO score is one factor in evaluating YOU.  Just how any party uses FICO in their evaluation criteria is usually a secret.

A few points of FICO one way or the other are generally meaningless, but each organization that uses it probably has some cutoff point below which they consider it "unacceptable" and another high level they consider "Exemplary". If your score changed enough to move you from one strata to another, you might notice a difference.

Good FICO scores can save money in many different areas. I just received our homeowner's insurance policy renewal and noticed that I got a 59% financial stability discount (not sure against what portion of the premium) and a 5% personal status discount.

Why are you worried about your FICO score?  Sounds like your on the right track to begin with.
 
If you want something more than you can afford at the moment, plan and save for it.  Pay for it with cash.
If you are a Suzy Orman fan, don't listen to her.  The whole idea of living a decent life in retirement is to be debt free.  You get the most bang for your buck that way.  Most people would say that the idea is not obtainable in todays world.  It is, trust me.  I'm doing it.

We don't make big bucks.  But my house is paid for (In 17 years), 24 acres of recreational land, my TT, and 4 autos.  Nothing brand new, but it's mine.  Also, nothing we own is up on blocks in the back yard or unusable.  We worked and paid for it.  The rec. land is not some dilapidated field somewhere.  It's riverfront property.

I'm not bragging.  I am saying that we made decisions geared for the long term.  We planned, saved, and paid off our debts.  We kept it that way.  We never even cared what our FICO score was because it didn't matter.

Gary RV Roamer is spot on.  Stay true to your course.  Your FICO score is going to go down because of your lack of credit use.  What would you rather have?  Debt to have a better score (Which really means nothing, other than giving your money to someone else.), or not worrying about it because you DON'T have to give your money to someone else?

It's not so much a matter of having debt as it is showing you can use credit responsibly. One way one can maintain a higher score without going into debt is to use a credit card to pay for normal expenses, then pay it off every month (doing so also avoids interest charges). Having more than one card in use will also help keep your score higher but too many or too high of credit limits will hurt you. What's fun is the rules keep changing.

As some have pointed out, many (if not most or all) insurance companies will base your rates on your credit score. If something expected should ever happen and you do need a loan, having a high credit score will make getting the loan easier and more likely to have a lower rate.

Another problem with having a credit card and not using it is many financial institutions will close inactive accounts, three months, six months, and a year being the most common intervals. I paid off my credit card a couple of years ago (I also reduced the credit limit; doing that might have reduced my credit rating but it also reduced my liability). I wanted to keep it active for emergencies (haven't yet) so to avoid having it shut down for inactivity, I assigned a small monthly bill with a fixed payment to be paid automatically from the account and have an automatic transfer from my bill paying account pay it off five days later. No interest charge and the account remains active. All I have to do is check it online occasionally to make sure nothing went pear shaped.

Lady Fitzgerald,
The best way to not care about your FICO score is to not have a credit card at all!  I do have to admit that I do have one card in my wallet.  Credit Union issued and for emergency situations only.  No fee.  To have more than one?  You are making a grave mistake.  Unless you beat the odds.  The institutions are betting that once you have the cards, statistically, you are going to use it and go further into debt with interest.  Most people don't have that kind of discipline.  The basis of the bet. 

Look at your insurance company policy carefully.  Yes, insurance agents will give better rates to those who have a higher FICO score.  Ever wonder why?  It's because those people selling insurance (commission?) will sell a policy to anyone.  Including someone who is already in debt up to their eyeballs and wants to protect their investment.  Not rocket science.

Why do you think your credit card company issues a fee for inactivity?  Your not using it enough!  They want more of your money

Don't get me wrong, I applaud your discipline.  BUT...It's not the norm. and that is what the credit card companies are betting on.  It's worked for them so far.  They are not going to give up yet.  They are getting the hint.  Only because the money is running out!

I agree with Lady Fitzgerald -- we pay all our CCs off monthly, never incurring any interest, plus we get to use our money we spent for a couple or three extra weeks (not as lucrative as it used to be, with interest rates way down). And there are a few things (that we rarely use) for which you must have a credit card, such as car rental, on-line purchase (unless you trust PayPal), and so forth.

I also agree, however, that for those who tend to misuse their cards it's better to do without. And if it weren't for the fact that, cash or credit, you pay for the credit card anyway (through the business fees), I'd go back to mostly cash. But since we do pay for it, careful use of the CC adds convenience, at the very least. And with Discover (and now our Mastercard, too),  we get a small amount of our purchase back (1% or more, depending), which you couldn't do with cash except for those (now rare) places that give cash discounts.

OK thanks,  I got angry that our fico score went down even though we have been using credit cards less.  Maybe that is the point from the issures point of view?  We  don't pay interest.  I feel we are already paying after what the CD rates are now.  We are always looking for perks such as discounts.  Our latest is a 5% discount Mastercard on gas.  It has become my go to card for gas.  And maybe my fico score helped in getting that card, not sure.
Thanks again for the responses.

That also requires the gas retailer to raise his price of gas to cover CC charges.>>>Dan

I agree, you have to use your credit in some way or your score goes down. With that in mind we also are debt free. I have 2 mastercards, 1 with sliding scale from 5% down to 1 1/2% cash back, the other with flat 2%. When I max out rewards on 1, I switch to the other for the remainder of the year. The one card I have had since the late 1980's and haven't paid an interest charge more than 5 times. They make plenty off the merchant fees so they don't mind making 0 off me. You are not only leaving $ on the table by not having one but you are hurting your score and paying higher rates for other things. Using it and paying it off every month shows responsibility and that is what they are looking for. There is a formula for income vs. credit usage they use so you might have to raise your credit limits to raise your score also.
Forgot to add, I would never pay any kind of fee for any CC, there are too many out there that are free.

Lady Fitzgerald said:

It's not so much a matter of having debt as it is showing you can use credit responsibly. One way one can maintain a higher score without going into debt is to use a credit card to pay for normal expenses, then pay it off every month (doing so also avoids interest charges). Having more than one card in use will also help keep your score higher but too many or too high of credit limits will hurt you. What's fun is the rules keep changing.

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Nope...when you pay off your card every month, you do not have a higher score.  I had a higher credit rating than my mother years ago, and she always paid off her cards every month while I carried balances. 

Larry N. said:

I agree with Lady Fitzgerald -- we pay all our CCs off monthly, never incurring any interest, plus we get to use our money we spent for a couple or three extra weeks (not as lucrative as it used to be, with interest rates way down). And there are a few things (that we rarely use) for which you must have a credit card, such as car rental, on-line purchase (unless you trust PayPal), and so forth.

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You do not need a credit card to rent a car or make an online purchase.  All you need is a bank debit card, just as long as your card has a Visa or Master Card emblem (for lack of a better word).  Also, I've NEVER had a problem with PayPal including over 300 transactions on ebay.

StarDancer said:

Nope...when you pay off your card every month, you do not have a higher score.  I had a higher credit rating than my mother years ago, and she always paid off her cards every month while I carried balances.

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Paying off your card every month isn't the only factor that determines your FICO score. Income, net worth, age (sucks but it's true although they will never admit it), disposable assets (savings, bonds, stocks, etc.), past history, where you live, occupation, etc. all go into figuring your FICO score.

denmarc said:

Lady Fitzgerald,
The best way to not care about your FICO score is to not have a credit card at all!  I do have to admit that I do have one card in my wallet.  Credit Union issued and for emergency situations only.  No fee.  To have more than one?  You are making a grave mistake.  Unless you beat the odds.  The institutions are betting that once you have the cards, statistically, you are going to use it and go further into debt with interest.  Most people don't have that kind of discipline.  The basis of the bet. 

Look at your insurance company policy carefully.  Yes, insurance agents will give better rates to those who have a higher FICO score.  Ever wonder why?  It's because those people selling insurance (commission?) will sell a policy to anyone.  Including someone who is already in debt up to their eyeballs and wants to protect their investment.  Not rocket science.

Why do you think your credit card company issues a fee for inactivity?  Your not using it enough!  They want more of your money

Don't get me wrong, I applaud your discipline.  BUT...It's not the norm. and that is what the credit card companies are betting on.  It's worked for them so far.  They are not going to give up yet.  They are getting the hint.  Only because the money is running out!

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Some of your points are valid. Too many cards and/or too high of total credit limits will lower your score. No cards, too low of credit limits, and/or very few cards with little activity will also lower your score. And the way the scores are figured changes frequently so finding the happy balance is a bit dicey. What the credit companies need to see is that you know how to manage credit and your finances. To do that, they need to actually seeing you spending the money and managing the credit.

A fairly easy way to have a second or third card is, if you consistantly purchase necessities from certain places, such as usually getting the same brand of gas, getting that company's card and pay it off monthly. It does require some discipline to pay off the card. Again, you have to watch that your total credit limit of all your cards isn't too high or that will lower your score.

You are correct about needing discipline to avoid overspending on cards.

I never heard of a credit card company charging a fee for inactivity (that doesn't mean it doesn't happen). I have heard of cards being cancelled for lack of activity. The only credit card I have is paid off and I have no intention of using unless it's an emergency. To keep the card from being cancelled, I have arranged an automatic monthly payment taken from it and an automatic monthly transfer of the same amount to the credit card account to pay off the charge. I have ADD so keeping up with payments like that would overwhelm me.

I have only three cards:

A debit card/checking account that is strictly for paying bills. I don't carry the card with me. All but one monthly and two annual bills are paid by automatic withdrawal; I have more than enough going into the account to cover the withdrawals.

Another debit card for everyday purchases, such as gas, groceries, whatever. I found it is much easier to track my spending if I make as many of purchases as possible on a card (it's also more likely to happen because of my ADD). I can go online to see what my spending history has been plus I download my monthly statements. That account has a $500 line of credit that works like overdraft protection in case I goof up (except there is no outrageous fee for each instance). If I pay it off quickly on the rare occasions I use it, I don't have to pay any interest.

The third card is an actual credit card. It is to be used only for emergencies. All three of my cards are VISA and are issued by my credit union. There are no fees on any of them.

StarDancer said:

...I've NEVER had a problem with PayPal including over 300 transactions on ebay.

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I don't use it as often as you but I've also never had a problem using PayPal.

We don't have a problem, our scores are in the 800's, they do say it would be higher if we used credit, so who cares?

We pay cash for everything.  I do run our rental property materials through a mastercard and pay off weekly only to get money back.  I get $500 cash back each year and put in my vacation fund.  I figure one day they will stop it because we NEVER pay interest. I sure wouldn't create debt to improve your scores.

We had never even heard of a FICO score till a few years back and now that's all I hear about.  Just pay your bills on time consistently, I wouldn't go into debt at all, would just save up and pay cash for what you want or need and just go from there.  Your score will take care of itself if you do that.

Lady Fitzgerald said:

Paying off your card every month isn't the only factor that determines your FICO score. Income, net worth, age (sucks but it's true although they will never admit it), disposable assets (savings, bonds, stocks, etc.), past history, where you live, occupation, etc. all go into figuring your FICO score.

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I maintained a very high FICO score for two years without having a job just a few years ago, so over 60 too.  Before that I was a cab driver, not exactly a high income job.  Ha... (but it was fun for sure!)

Personally, I don't give a darn about my FICO score.  I think it's a terrible system, and too many people are excessively worried about it.  Now many employers check applicants' scores, which is really ridiculous.  Their credit might be bad because they didn't have a job!  What a game the powers-that-be play! 

I just "froze" my credit reports so, supposedly, no company or agency can get a credit report without me knowing about it and approving it.  Not sure I believe it but for our state it's free after 65 so thought it might be a way to go for a while.

this probably lowers the score, LOL.