First World Kvetch!

Been paying off a lot of debt recently. Almost zero'd out except for a small remaining mortgage. My credit rating FICO score goes DOWN by a few points every time I close an unneeded account! Not enough to make any difference even if I were to borrow money which I don't need to and therefore won't. But there's something WRONG here.

 

I don't know for sure, @nosborne48, - but someone told me recently that one needs at least five open accounts to achieve the upper stratosphere of FICO scores. If you have less, you can get very good numbers, but not the very highest. Perhaps as you close the last remaining accounts, you lose a very few points for having a less-than-optimal number of open lines. to attain the highest possible FICO score.

I can't test this theory - I have ONE credit card that is paid in full whenever I get a statement. And I have never looked at my FICO score. Never needed to. Have no idea what it is. I know about them from my past work life. That was 30 years ago.

 

I read on Google that If you close a credit card you may lose points in the credit utilization scoring factor, which counts for 30% of your FICO score. Closing an account reduces your overall available credit, which is used in the utilization calculation.

 

Something like that must be true. What other explanation is possible?

 

I think that's EXACTLY what is best to do, with a pile of credit cards. I guess FICO does too. I think they know what they're doing, awarding extra points for that! So - you end up with a perfect score - 850 - but you can't use the cards to buy anything - or it goes down.

We live in strange times. All of us.

 

This is all very strange. It's almost like they reward you for giving banks 25% interest!

 

Naw. Couldn't be THAT. Could it?

 

I think it could. But I'll never know. Interest is haram. (Ritually unclean)

 

The age of credit accounts is important to your FICO score. So as you close accounts, the overall "age" of your credit drops, especially if the accounts being closed are the oldest ones. That's why closing credit accounts tends to lower your FICO score.

 

In other words, you can't redeem your soul!

 

I have a question about FICO scores: People obsess over them, use various methods to increase them, looking for the Holy Grail of 850 - a perfect score, and likely setting for a bit less - something humanly attainable. Why? If you play the game with some (or complete) success - what is the prize - WHAT DO YOU WIN?

As I see it, the only reward is the likelihood of being able to qualify for more indebtedness than most sane people would want to undertake. Status? I don't think so - at least not the kind of status you'd get from an Alfa Romeo 4C Spyder, or an Audemars Piguet on your wrist.

My take - I have one credit card - used for internet purchases only, because my Canadian private label debit card (Not Visa / MC) won't do that. It DOES work in all stores. I could get a debit card that works for Internet but why bother? The credit card does that. I retired from the credit business almost 31 years ago. FICO scores had only been introduced about 4 years earlier. I haven't had much occasion to think about them, since I left the business in 1993. I have NEVER seen my FICO score. I have looked at my credit report a couple of times to check that there was nothing untoward on it. There wasn't. There was probably a FICO score on it -- but I must have missed it.

I pay any obligations off as soon as I get the bill. I never pay interest - and I never buy anything I can't afford. Am I missing something? If so, what? And please don't say a mortgage. Not even with an 850 FICO score, can an 81-year-old qualify -- for obvious reasons.

Again - please tell me, WHAT CAN I WIN?

 

You don't live on credit, Johann. Americans in general do. Credit cards are convenient and horribly expensive. It can make a big difference what you pay in interest. Of course, I'm becoming more like you. My FICO score no longer matters but when I bought a house or a car, it did matter quite a bit.

 

Lower interest rates, mainly, and access to credit at all in some cases.

It's not just credit cards. Mortgages, auto loans, even job prospects, can be made more expensive--or even impossible.

 

I used to. That's why I don't now. It's a treadmill. No way I could stand that angst and live this long. If I had the "credit race" to do over --- I WOULDN'T.

People at the Credit Union probably get tired of me coming in every month and paying my phone bill (and occasionally, one credit card purchase) and saying 'There. Now I owe NO money in the entire world." But I don't care. It makes me feel so good, because back in the day, I thought I'd NEVER be able to say it.

And you talk about car loans and mortgages (which at 81 I can't get, for obvious reasons). You don't have to have 800 or 850.
Decent will do, as far as I know. People with far less get mortgages, provided they meet income criteria etc. No ninja loans here.

I think the search for the Holy Grail 850 is a false religion. Especially as you have to keep so many open accounts and juggle ratios etc. That costs in effort and possible expense. But then again, what do I know about religion?

 

If I had the "credit race" to do over --- I WOULDN'T. With the exception of a house. If you don't pay a mortgage, you have to pay rent - and you get nothing for it. As I've said before, the dumbest thing I ever did was sell my very small, but paid-for house when I retired. Over a period of years, I spent the money - but at least I've been able to save and I've got all that back now...and then some. Not that the house money would buy much more than a doorstep today... It seemed like a lot 30 years ago, but it isn't, any more...

 

That house was worth MORE to me than the money it would bring. I failed to realize that at the time. I had a garden there - a really nice one - garlic, mint, carrots, tomatoes, peppers - every year I was there. And flowers too. And a workshop. It was a home.

Garden - workshop - home. All three are missing, now.

 

Oh, if that's your only regret, you're in good shape.

 

Oh, I wish.... I've done many other dumb-ass things in my life. One dumb-ass thing often led (illogically) to another.Those mostly involved other people and I don't talk about them.

I do feel this one keenly, though. Every day. And it was 30 years ago ...