Do retirees care about their credit score?

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betterfinances
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Do retirees care about their credit score?

Post by betterfinances » Tue Jan 19, 2016 4:40 pm

Saw a financial advice article on Marketwatch where a woman was worrying about her husband's credit score if his kids default on student loans that he cosigned for. From what I could tell, it sounded like he was in retirement age.

It got me thinking - do retired folks really care what their credit scores are? I mean it can be a point of personal pride to have the highest possible credit score, but what does it do for them?

I can see that it is beneficial to have credit cards because it is simpler to pay with card than to pay cash. I suppose if your credit score goes too low the accounts will get cancelled. I cannot fathom that a retired person would care what their interest rate it because it would be a really bad idea to rack up credit card debt in retirement. I assume retirees don't carry a balance on their credit card?

I don't think they would care about mortgage rates, since they are probably not buying houses with a mortgage in retirement.

I would think that a lot of retirees pay cash for their cars? Or do they still finance? Perhaps they finance and credit scores would be helpful here. Personally I wouldn't think financing anything is a good idea in retirement.

It would not be typical that a retiree would care about a credit score affecting getting a job, a tenant screening for an apartment, etc.

Curious for your thoughts.

(FYI - I just checked my credit score and it was 818. It was 829 in November. I've seen it as high as 847 some months.)

sport
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Re: Do retirees care about their credit score?

Post by sport » Tue Jan 19, 2016 4:46 pm

Some auto and homeowners insurance rates are affected by credit ratings. Apparently, those with lower credit scores are more likely to file claims.

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Re: Do retirees care about their credit score?

Post by kaudrey » Tue Jan 19, 2016 4:48 pm

I think you are making a lot of assumptions about what retirees do and don't do in retirement.

Many people carry mortgages and car loans into retirement, and many retirees carry balances on their credit cards; just like many working people do.

People on these boards are generally not reflective of most Americans.

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Re: Do retirees care about their credit score?

Post by Ged » Tue Jan 19, 2016 4:51 pm

sport wrote:Some auto and homeowners insurance rates are affected by credit ratings. Apparently, those with lower credit scores are more likely to file claims.
My auto insurance renewal this year stated that my rate was lower because of my excellent credit rating.

So it does matter.

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Re: Do retirees care about their credit score?

Post by mickroark » Tue Jan 19, 2016 5:19 pm

Insurance companies use companies like Nexus Lexus to obtain an insurance score. It gives them much more information about you than just a credit score. But it is part of it, I am sure. Insurance companies like to know other types of risk they are taking on, besides just how you pay your bills. Maybe you are a criminal that pays his bills on time, things like that.

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Re: Do retirees care about their credit score?

Post by lawman3966 » Tue Jan 19, 2016 5:36 pm

In addition to the insurance references above, I'd add that a good credit score can be very helpful for anyone trying to rent a residence.

Most B-heads are wealthier than average and don't need to worry about that. However, I currently share a residence, and having a good credit score is indispensable to passing the background checks commonly conducted these days prior to accepting anyone as a tenant.

To me, Bogleheadism includes spending efficiently (which sounds much better than being cheap) in addition to investing efficiently. Accordingly, I care very much about my credit score.

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Re: Do retirees care about their credit score?

Post by Fallible » Tue Jan 19, 2016 5:46 pm

kaudrey wrote:I think you are making a lot of assumptions about what retirees do and don't do in retirement.

Many people carry mortgages and car loans into retirement, and many retirees carry balances on their credit cards; just like many working people do.

People on these boards are generally not reflective of most Americans.
Agree with much of this, especially the Bogleheads. Here's a good article on the subject from Bankrate:
http://www.bankrate.com/finance/credit- ... ers-1.aspx
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

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Re: Do retirees care about their credit score?

Post by Levett » Tue Jan 19, 2016 5:49 pm

This retiree cares a lot about his credit score.

I also cared just as much when I wasn't retired.

Lev

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Toons
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Re: Do retirees care about their credit score?

Post by Toons » Tue Jan 19, 2016 5:54 pm

I know I care that my credit score has always been excellent and is source of pride.
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Re: Do retirees care about their credit score?

Post by Phineas J. Whoopee » Tue Jan 19, 2016 6:04 pm

betterfinances wrote:Saw a financial advice article on Marketwatch where a woman was worrying about her husband's credit score if his kids default on student loans that he cosigned for. From what I could tell, it sounded like he was in retirement age.

It got me thinking - do retired folks really care what their credit scores are? I mean it can be a point of personal pride to have the highest possible credit score, but what does it do for them?
...
The person in the article (will you provide a link to it so we can read what you read without searching?) may be concerned about a credit score, but she should be concerned about a lawsuit and judgement by the lenders against her and her husband's assets. Presumably retirees with any assets do care about those sorts of things.

I agree with others a good, doesn't have to be top-notch, credit score is always at least potentially useful. Keep paying all of your debts and other charges on time every time with a (metaphorically speaking) check that doesn't bounce, and barring errors or fraud the score will take care of itself.

To detect errors or fraud one can do several things, among them request a credit report, on which scores are based, annually from the three major credit bureaus, using http://www.annualcreditreport.com. Per federal law, it's free.

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FreeAtLast
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Re: Do retirees care about their credit score?

Post by FreeAtLast » Tue Jan 19, 2016 6:07 pm

You bet I do. When I bought a car in September 2014, my credit score (815 at that time) got me a rapid approval and a low interest rate on my loan. Also, the credit card companies keep sending me applications for new cards carrying a 0% interest rate on purchases for 12-24 months, which I love having. I also think the good credit score keeps my insurance premiums down, although I am not positive about that.

(Yea, yea, I know. I am not a true Boglehead because I didn't purchase the car outright.)
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obgyn65
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Re: Do retirees care about their credit score?

Post by obgyn65 » Tue Jan 19, 2016 6:08 pm

Nope. Not one bit.
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Re: Do retirees care about their credit score?

Post by psychodoc » Tue Jan 19, 2016 6:19 pm

Not sure about retirees, but even 20 years away from retirement, I couldn't care less what my credit score is. Don't know how much of an impact it has on insurance rates, but without doing anything that would signal a problem (like late payments, default, etc), I'll bet it would be hard to get a score low enough to make a significant difference

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Re: Do retirees care about their credit score?

Post by SQRT » Tue Jan 19, 2016 6:20 pm

Not much other than my insurance in the US. Might make a small difference. Will never need to borrow so can't see why else I would care. People should care more about their net worth than credit score.
Last edited by SQRT on Wed Jan 20, 2016 11:18 am, edited 1 time in total.

Dantes
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Re: Do retirees care about their credit score?

Post by Dantes » Tue Jan 19, 2016 6:46 pm

I don't care. As far as I am concerned they are one more gimmick to promote credit cards. Credit cards are the enemy. (I'm almost retired, and DW is retired, so I'm pretty close to OP's base population).

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Re: Do retirees care about their credit score?

Post by BahamaMan » Tue Jan 19, 2016 6:56 pm

obgyn65 wrote:Nope. Not one bit.
+1 --

Me neither !! --- It's actually quite silly.... Mine is around 780 --- and there are a few different ones, giving me different scores. I looked in detail what it would take to raise it....... I don't have enough creditors, but if I would start to increase them, it would 'ding' the amount of times I have asked for credit and that would lower my credit rating.

Banks are conservative and so are credit ratings.... They are willing to lend you money when you don't need it.

I will never need to borrow money again in my lifetime, so I don't care.

When I needed money when I was 20 years old, I applied for a Mastercard with no Credit at all and just a job. They gave me a Credit Card and I paid my Bills on time for 40 years..... I have never been denied credit since..........Except once when I asked my Bank of 20 years if they would give me a loan, just based on my signature, so that I could buy some real estate when I found it. They wanted me to sell my Stocks and deposit it in their Bank, so they could lend me my money.............What a Joke !!

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Re: Do retirees care about their credit score?

Post by 6miths » Tue Jan 19, 2016 7:27 pm

To be honest, I've never cared about my credit rating or known what it was. Always paid every bill on time, credit card(s) in full by due date, etc.

I continue not to care about it in retirement.
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Re: Do retirees care about their credit score?

Post by denovo » Tue Jan 19, 2016 7:28 pm

kaudrey wrote:I think you are making a lot of assumptions about what retirees do and don't do in retirement.

Many people carry mortgages and car loans into retirement, and many retirees carry balances on their credit cards; just like many working people do.

People on these boards are generally not reflective of most Americans.
+1
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Re: Do retirees care about their credit score?

Post by davidlhanson » Tue Jan 19, 2016 7:41 pm

When we purchased a new Subaru 2014 Outback two years ago, I cared (I have been retired since 2009). I used Subaru's 0% financing so I could withdraw funds from my IRA over 3 years instead of at once. BTW, in case you are wondering, I don't think that I could have negotiated a lower purchase price because I already was getting the Subaru VIP program price (2% under invoice plus I also negotiated away the dealer's junk charges).

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Re: Do retirees care about their credit score?

Post by gardemanger » Tue Jan 19, 2016 7:51 pm

I'm not a retiree, I'm disabled, so this sort of applies to me and sort of doesn't.

To the extent that a good credit score is the natural result of having and using credit responsibly, I'm glad to have a good one even if I don't "need" it for any immediate or obvious reason.

Although I have no plans to borrow money, I also acknowledge that it's better for me to have the option open, regardless of whether I use it. I like to have options, because all kinds of stuff happens in life that you can't plan away completely. And (although I don't necessarily agree with this) it seems that often the credit score is used as a proxy for "good character" or something, and gives you other advantages, like better insurance rates.

I am interested in checking my credit report regularly, because I want to keep an eye out for possible fraud. I check it as often as I can get the mandated free credit reports, which is once a year, but not oftener. If I had a major identity theft episode, I'd have to do more, but I'm not sold on "credit monitoring services" and the like. I know what's available to me without charge if I do have a security breach, and I'd make maximum use of those things.

I have zero interest in fancy "strategies' to raise my credit score because it is already quite high, which is the natural consequence of using credit responsibly over a long period of time. That's not a "strategy" but what I wanted to do anyway. Too much weight is given to these minor re-jiggerings of the credit score that involve opening more accounts than you want or need. I doubt they would move the needle enough to make any real difference in most people's lives.

What would 'not caring" about one's credit rating look like? Checking it is mostly about safeguarding against fraud, for me. Otherwise, it just naturally got to be a big number over years of good money management and modest credit use. Even my last car loan has dropped off my report because it was paid off (early) over ten years ago.

If I was for some reason personally opposed to using credit cards BUT I wanted to build a good credit history for some other reason, I suppose I would be in a bind, but I just look on credit cards as a convenience. There certainly are people who are "recovering" spend-a-holics who do better abstaining from credit cards, but might still need a mortgage or even *shudder* a car loan at some point. I can't dictate what those people ought to do; I'm just glad I don't have that dilemma.

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Re: Do retirees care about their credit score?

Post by jrtexas » Tue Jan 19, 2016 7:54 pm

I have a better question. Though I have no debt,cash cars,no mortgage,pay CC off every month. I have my credit frozen. Does this affect your credit score? Just wondering.

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Re: Do retirees care about their credit score?

Post by Sheepdog » Tue Jan 19, 2016 7:57 pm

Yes, I do.
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gardemanger
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Re: Do retirees care about their credit score?

Post by gardemanger » Tue Jan 19, 2016 8:02 pm

...and in case anyone has been following me closely (I can't think why, you'd die of boredom) yes, I am fixing to buy a condo, and yes, I was asking on these boards a while ago about mortgages and if my credit score was high enough. (A seeming humblebrag; it's high.) As it turns out, I am not getting a mortgage, but rather help from my family. You know, because of the disabled thing.

Nevertheless, I established with my family that I had excellent credit and the ability to get my own mortgage (though for a lesser amount b/c my disability income is low), or just to keep renting instead. THEY did not require this of me: I did it anyway because I required it of myself. They want to help me regardless, and they (many times reiterated) do not want me living in poverty or substandard conditions when they are very able and willing to help me without sacrifice on their part. If I didn't have this incredible advantage working for me, I'd figure something else out - I always do - but it would make my life much harder (and not do my health any good.)

So I guess my argument is that I want to hold up my end just as well as I can, but I also acknowledge that my advantageous situation is NOT 100% about my good habits and good character. The most I can claim for myself is that I always handle the gifts that are freely given just as carefully as if I *did* have to earn them.

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Re: Do retirees care about their credit score?

Post by betterfinances » Wed Jan 20, 2016 1:04 am

kaudrey wrote:I think you are making a lot of assumptions about what retirees do and don't do in retirement.

Many people carry mortgages and car loans into retirement, and many retirees carry balances on their credit cards; just like many working people do.
Many retirees may have a mortgage or car loan that they acquired prior to retirement and carry it into retirement. The rate you pay on these loans will not change if you credit score goes up or down. Only new debt acquired during retirement would be affected by a credit score.

I think it would be highly surprising that an 70 or 80 year old would ever buy a house and sign up for a 30 year mortgage....I suppose banks would issue the loan but it is unlikely to ever get paid off.

I suppose some retirees still get car loans. Wouldn't think this is wise in retirement though.

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Re: Do retirees care about their credit score?

Post by reason-logic » Wed Jan 20, 2016 1:24 am

If you have enough cash then credit score is meaningless.

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Re: Do retirees care about their credit score?

Post by White Coat Investor » Wed Jan 20, 2016 2:13 am

betterfinances wrote:[
I suppose some retirees still get car loans. Wouldn't think this is wise in retirement though.
You mean you think it's wise prior to retirement? It seems wiser in retirement than before to me. In retirement, hopefully you can afford to do whatever numbskull thing you want to. Or perhaps your plan is to simply have the car repossessed at death. You get to drive a new car you never actually have to pay for!
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Re: Do retirees care about their credit score?

Post by betterfinances » Wed Jan 20, 2016 3:11 am

EmergDoc wrote:
You mean you think it's wise prior to retirement? It seems wiser in retirement than before to me. In retirement, hopefully you can afford to do whatever numbskull thing you want to. Or perhaps your plan is to simply have the car repossessed at death. You get to drive a new car you never actually have to pay for!
I dunno, I've never had a car loan (always paid cash for my cars). But if I were to go get a different car now, I have income that I am using to justify to the bank that I am able to repay the loan.

Folks that have a healthy pension continue to have income in retirement that they can use to repay a car loan and put down on an application. I wouldn't think that as a stretch.

But for the rest of folks (those that have IRAs/Roth IRAs/401ks), they don't really have "income". True, whatever they pull out of a 401k gets recorded as income for tax purposes, but this really isn't income in the traditional sense. They could pull out a lot the year before they get a car to show the bank they have a large "income" but in reality it may not be sustainable. I wouldn't know if banks accept "income" as money pulled out of a 401k?

If they don't, what would one use to show they could pay back the loan? I wouldn't think a bank would accept social security income as that money provides for basic things (food, etc). But maybe they don't care.

I dunno, I just don't think that taking out a loan in retirement when you have no actual income stream to repay it makes sense.

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Re: Do retirees care about their credit score?

Post by Mrs.Feeley » Wed Jan 20, 2016 6:06 am

Our insurance company (Amica) pulls our credit reports once a year. When I asked an Amica rep whether they use credit scores to determine insurance rates like many other insurance companies do, the rep hemmed and said are were not allowed to reveal how insurance rates are set or what factors they use, but credit scores do play a role in the equation if the scores fall below a certain number. I have heard the same from insurance agents.

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Re: Do retirees care about their credit score?

Post by The Wizard » Wed Jan 20, 2016 7:15 am

A couple of points.
Retirement doesn't necessarily mean austerity. Some of us have comparable or greater net income compared to working years.

And secondly, the thing to be caring about in retirement SHOULD BE proper management of your finances and investments, whether you still have a mortgage or car loan or not.
A good credit score is simply a reflection of proper financial management...
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Re: Do retirees care about their credit score?

Post by VictoriaF » Wed Jan 20, 2016 9:16 am

I care about my credit score to the extent it enables me to apply for new credit cards. New credit cards come with travel bonuses which I find very useful in retirement.

I always pay credit cards in full and on time, usually before the payment is due.

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Re: Do retirees care about their credit score?

Post by HoopDiddyDiddy » Wed Jan 20, 2016 10:09 am

betterfinances wrote:
I think it would be highly surprising that an 70 or 80 year old would ever buy a house and sign up for a 30 year mortgage....I suppose banks would issue the loan but it is unlikely to ever get paid off.
My mom took out a mortgage after she was 80- old house hadn't sold yet and she was opposed to dipping into her retirement money for the new house. She had planned on keeping the low % mortgage and investing the proceeds of the old house sale, but ended up paying off the mortgage. She had never paid interest on anything in her life and it ticked her off so badly she couldn't tolerate it.

I can say with confidence that she did not care about her credit score at all- likely didn't even know what it was.

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Re: Do retirees care about their credit score?

Post by bertilak » Wed Jan 20, 2016 10:29 am

VictoriaF wrote:I always pay credit cards in full and on time, usually before the payment is due.
Be careful of that. Before due is OK but before statement date can be a trap.

If you pay the card off before the statement is produced the credit bureaus will consider the card inactive even if you put thousands of dollars through it every month. That in itself is not a problem.

The problem is that IF after some time paying way ahead you suddenly let your statement show an amount due the credit bureaus see that as "inactive account becomes active" and that is a negative hit! I know. That showed up on my credit report once! I guess they figure it is a sign you might be digging yourself into a debt hole.
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Re: Do retirees care about their credit score?

Post by ChrisC » Wed Jan 20, 2016 10:42 am

HoopDiddyDiddy wrote:
betterfinances wrote:
I think it would be highly surprising that an 70 or 80 year old would ever buy a house and sign up for a 30 year mortgage....I suppose banks would issue the loan but it is unlikely to ever get paid off.
My mom took out a mortgage after she was 80- old house hadn't sold yet and she was opposed to dipping into her retirement money for the new house. She had planned on keeping the low % mortgage and investing the proceeds of the old house sale, but ended up paying off the mortgage. She had never paid interest on anything in her life and it ticked her off so badly she couldn't tolerate it.

I can say with confidence that she did not care about her credit score at all- likely didn't even know what it was.
My MIL refinanced her loan at 85 with a 30 year maturity; she's 96 now. She's not interested in her credit score and I doubt she knows it too, but surely the bank knows it well. She still uses credit cards. Of course, the banks, when they issue loans to senior citizens whose life span might end before the loan matures, know that a loan made to a good credit risk will get paid off from the borrower, or from heirs or the estate, or from the house/real estate that serves as collateral for the loan -- just like a loan that would be made to Betterfinances. :D

BTW, I'm retired and I care about my credit score for a number of reasons too.

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Re: Do retirees care about their credit score?

Post by VictoriaF » Wed Jan 20, 2016 10:51 am

bertilak wrote:
VictoriaF wrote:I always pay credit cards in full and on time, usually before the payment is due.
Be careful of that. Before due is OK but before statement date can be a trap.

If you pay the card off before the statement is produced the credit bureaus will consider the card inactive even if you put thousands of dollars through it every month. That in itself is not a problem.

The problem is that IF after some time paying way ahead you suddenly let your statement show an amount due the credit bureaus see that as "inactive account becomes active" and that is a negative hit! I know. That showed up on my credit report once! I guess they figure it is a sign you might be digging yourself into a debt hole.
Thank you, I have not thought of this. The likelihood of me getting into this trap is low. Usually, when I get a new card, I put a lot of spending on it to qualify for a bonus. After I get the bonus, I charge a card occasionally with small amounts to keep it alive. But it's good to be aware of various pitfalls.

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Re: Do retirees care about their credit score?

Post by jebmke » Wed Jan 20, 2016 11:05 am

I probably should care but I don't know what mine is ... so I think by definition, I don't care.
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Re: Do retirees care about their credit score?

Post by takeshi » Wed Jan 20, 2016 11:10 am

betterfinances wrote:Do retirees care about their credit score?
No group of people is all identical. Retirees are definitely not all the same. Some care about their credit score. Some do not. What's popular doesn't even really matter. Each needs to do what works best for the individual. As stated in prior replies, credit isn't just for credit accounts these days. Credit based scoring is used for insurance as well.
betterfinances wrote:I can see that it is beneficial to have credit cards because it is simpler to pay with card than to pay cash. I suppose if your credit score goes too low the accounts will get cancelled.
It's never just about about score. Creditors routinely check one's credit reports and activity that exceeds their risk tolerance for the given credit profile can lead to adverse action which may be a decrease in limit, balance chasing, account closure, etc.
betterfinances wrote:I cannot fathom that a retired person would care what their interest rate it because it would be a really bad idea to rack up credit card debt in retirement. I assume retirees don't carry a balance on their credit card?
"Bad idea" is not the same thing as "no one does that".

"I cannot fathom" is not the same thing as "does not exist".

Again, people in any group, including retirees, vary. Some do carry balances. My wife's grandfather passed away with a note on his car and a mortgage on his home. People and situations vary. Don't just follow the herd. Do what makes sense for you. if you think your credit score will matter then keep it in consideration and work to maintain it, if needed.
betterfinances wrote:FYI - I just checked my credit score and it was 818. It was 829 in November. I've seen it as high as 847 some months.
If you are going to be concerned about your credit scores keep in mind that you don't have just one credit score. There are many models used by creditors. For most models you have a score with each of the 3 major CRA's.

FICO 8 is the most commonly used model but it's not the only model used by creditors.
Dantes wrote:I don't care. As far as I am concerned they are one more gimmick to promote credit cards. Credit cards are the enemy.
Scores are used for much more than just credit cards. Credit cards are just tools. It's how they're used that determine if they are an issue or not.

That said, again, each has to do what works for the individual. If credit cards don't work for you then you don't have to use them.
bertilak wrote:The problem is that IF after some time paying way ahead you suddenly let your statement show an amount due the credit bureaus see that as "inactive account becomes active" and that is a negative hit! I know. That showed up on my credit report once! I guess they figure it is a sign you might be digging yourself into a debt hole.
It's more a warning than a serious concern, generally speaking. Reasons cited always require careful interpretation and consideration.

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