Personal Credit Thread

[dodint]

Yeah, my personal satisfaction of not having that loan overrides all of that. I'm trying to pay my bike off by the end of this semester just so I can feel better about financing a 35 year old car.

[tifosi77]

The only time a low credit score is really a factor is when you're seeking to open a new credit account. If you're just trundling along in your day-to-day, it's no bother. But if you're in the market, say, for a mortgage, it's definitely something to be mindful of.

[dodint]

It supposedly has some factor in determining your insurance premium. I don't know if that's only while establishing your initial policy or if they ping your report from time to time. Speaking auto here, specifically.

[tifosi77]

That's not permitted in CA, so I'm good.

[mac5155]

The only time a low credit score is really a factor is when you're seeking to open a new credit account. If you're just trundling along in your day-to-day, it's no bother. But if you're in the market, say, for a mortgage, it's definitely something to be mindful of.

Mortgage is my concern.

[Factorial]

I am now 100% debt free after paying off debts my ex stuck me with.

One of those debts was for a private school loan for $20K and after it was paid off last week and the account closed (no need for it ever again), my credit score dropped 30 points. Apparently I shouldn't have closed the account.

[NTP66]

Congrats.

Seeing a drop in score after paying off an installment loan is pretty normal, albeit counterintuitive, IMO. It’s only a small portion of the overall algorithm that is used to determine your score, so I wouldn’t be surprised if that score is bumped back up in a few weeks.

I’ve always found it odd how they calculate these things. My wife got dinged about 80 points from a single missed student loan payment [in which she is just the co-signer], yet I can open 8 credit cards in the span of 3 months and have my score actually raise.

[tifosi77]

Yeah, if you have no active accounts it will affect your creditworthiness. The wacky thing about this is credit card companies are looking to see from whom they can collect interest. They want to see lots of revolving accounts, a regular carryover balance that's a manageable level (about 20% utilization). Having paid off debt is less valuable than currently paying down debt.

Grats, Facto. All the foregoing notwithstanding, that's a good feeling.

[NTP66]

This is also why you should never pay your credit card balance before the statement is actually generated. If you show a $0 balance every single month, despite actually spending money and paying it off, it doesn't look good at all.

[tifosi77]

Spotted a roughly $600 fraudulent charge on my oldest credit card. It's one of those 'rebuild your credit' accounts with a low limit, and crazy high interest; I maintain the account only because it is now my oldest revolving line of credit, and I keep it fresh by charging my cloud storage fees with it every couple months. That's it, and it's otherwise a zero-balance card. I followed the procedures the outline on their (almost entirely useless) website, and sent the required written notice via FedEx.

They responded with five bulleted items: 1) Complete and sign an affidavit that the use in question is fraudulent; 2) an explanation of where my card was kept and how it was obtained (they aren't clear as to who they mean here); 3) they want to know if I signed up for a free trial with PFA*XIYONG XIN CO (actual name of vendor on transaction), and to provide the date and time I requested cancellation; 4) a complete list all household members and my relationship to them; 5) confirm that I have spoken to all household members about the disputed charge to verify they did not make the charge.

Don't normal banks just...... do this? Like, you call CS, and they close your account, reverse the charge, and issue a new card?

[NTP66]

I have never - not once - gone through that kind of hassle for fraudulent charges. This goes for Discover Card, Citibank, and Chase (VISA). In every one of those cases, my card company actually called me about it, removed the charge with a verbal 'not mine', and sent me a new card overnight.

Which bank are you dealing with here? If you say Wells Fargo, I will be forced to laugh.

[willeyeam]

Spotted a roughly $600 fraudulent charge on my oldest credit card. It's one of those 'rebuild your credit' accounts with a low limit, and crazy high interest; I maintain the account only because it is now my oldest revolving line of credit, and I keep it fresh by charging my cloud storage fees with it every couple months. That's it, and it's otherwise a zero-balance card. I followed the procedures the outline on their (almost entirely useless) website, and sent the required written notice via FedEx.

They responded with five bulleted items: 1) Complete and sign an affidavit that the use in question is fraudulent; 2) an explanation of where my card was kept and how it was obtained (they aren't clear as to who they mean here); 3) they want to know if I signed up for a free trial with PFA*XIYONG XIN CO (actual name of vendor on transaction), and to provide the date and time I requested cancellation; 4) a complete list all household members and my relationship to them; 5) confirm that I have spoken to all household members about the disputed charge to verify they did not make the charge.

Don't normal banks just...... do this? Like, you call CS, and they close your account, reverse the charge, and issue a new card?

I had a weird charge on my amex a year or so back. Only like 60 bucks but still. So I called and disputed it over the phone, got a new card within a couple days and after the"vendor" didn't respond in 60 days they wiped it off my account. They took it off the statement balance while it was in investigation as well. So that seems a little odd and thorough

[Willie Kool]

It's one of those 'rebuild your credit' accounts with a low limit, and crazy high interest...

[dodint]

I have had to sign an affidavit with USAA for fradulant charges but it only concerned bullet point 1 in yours.

[NTP66]

This is why credit cards are evil, chump.

[Willie Kool]

Just one of the many reasons...

[tifosi77]

First PREMIER Bank MasterCard.

The affidavit asks where the card was stolen and if I filed a police report. Because PFA*XIYONG XIN CO is totally a point-of-sale vendor and this was an in-person transaction.

This card has not physically been on my person at any point in the six or seven years I've had the account, it's strictly e-comm. It lives quietly in a metal wallet in my nightstand.

Honestly, once I square this I think I'm gonna close the account. This is stupid.

[slappybrown]

The reason I do zero card shopping is because of Amex customer service and their fraud dept. no questions, nothing. Just immediately resolved.

[Factorial]

Yeah, if you have no active accounts it will affect your creditworthiness. The wacky thing about this is credit card companies are looking to see from whom they can collect interest. They want to see lots of revolving accounts, a regular carryover balance that's a manageable level (about 20% utilization). Having paid off debt is less valuable than currently paying down debt.

Grats, Facto. All the foregoing notwithstanding, that's a good feeling.

Thanks. I have active accounts (a few credit cards) but both are paid off.

[dodint]

Imagine the points, though.

Pfft. Unless you're a really frequent flyer, miles earned through actual flying is ****. CC churning is where you're going to make bank.

I'll pull this from the flying thread since it's wandering all the way off topic.

How does churning cards like that not wreck your credit with all of those inquiries and short account ages?

[NTP66]

Imagine the points, though.

Pfft. Unless you're a really frequent flyer, miles earned through actual flying is ****. CC churning is where you're going to make bank.

I'll pull this from the flying thread since it's wandering all the way off topic.

How does churning cards like that not wreck your credit with all of those inquiries and short account ages?

It all comes down to the wacky score algorithm that is used. I have a long credit history, with two cards that I've had for 15 and 18 years respectively. I carry no balance on any card, and have no bad hits on my report (late/missing payments, etc.). Since late 2015, I have churned over a dozen Citi AAdvantage Platinum cards, most only being open for 4 months, closed immediately following the minimum spend requirement for the bonus. The largest drop my credit score - any of them - was 15 points. My score was already around 815 when I started, and as of a week or so ago, two of my three scores are still above 810 (didn't check the third). So, a good credit history with a low debt/income ratio helps a ton.

There are other threads on Reddit dealing with this topic, and I think you'd find that it doesn't really hurt your score that much if you're already in good standing. It usually takes 3-5 months for your credit score to pop back up 10-20 points, so unless you're churning every single month, it's pretty easy to see why so many are doing it now. I do know a few people who churn monthly, but that's a bit excessive, even for me.

[dodint]

It's comforting to me that you have a threshold.

[NTP66]

Based on all the reading that I've done over the past few years, I'd say I'm in the 50th percentile when it comes to churning. Some people only churn 2-3 cards/year, I churn 8-10, but others are in the 20-40 range. Those people are also the ones who do manufactured spending (spend money on your credit card to meet the bonus threshold, and redeem that money back as cash), which I don't. All of my spend is normal CC usage. Some of these people go crazy, MS'ing $10-20k/month and more. They're also the same people who churn any and every card available.

[tifosi77]

Manufactured spending. What a thing.

[NTP66]

You have to admire the beauty and creativity of legally manipulating the system.