Page 1 of 10
1
2
3
... LastLast
  1. #1
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649

    Is the "credit report" system inherently flawed?

    So I've been thinking of buying a house recently, and was talking with a banker about my credit and how it will effect my payments/any other credit options, and we went over my credit score.

    Now, I have: A student loan. Rent. Utilities. Cell phone service. Right now, those are all of my bills. I had a car payment, but I've had it payed off for over a year. Not a single time in my life did I miss a payment, but my credit rating is "Slightly above average".

    I asked reasons why its not excellent or whatever, and the explanation was that I don't have any credit cards, line of credit, enough credit history.

    So my question to him (And to you guys) why should I make bad decisions (Taking out credit when I don't need it) in order to prove to the banks that I am worthy of a "Higher score". It seems 100% counterintuitive, when they have over a decade of me making payments on things now, without a single missed/late payment in my entire history. No overdue phone bill. No late payment on my student loan.

    I haven't applied for a single loan that I was denied for in my life, so its not like I'm floating requests constantly either.

    So essentially, my credit is crippled, unless I make bad financial decisions...to prove that I am good with my finances?
    You're a towel.

  2. #2
    I have no credit atm so im unable to get any credit cards. I dont owe anyone money, i only have my cellphone rent and car insurance to pay each month. So i have no credit and no way to get more credit.

  3. #3
    The Patient majinbebi's Avatar
    10+ Year Old Account
    Join Date
    Jul 2011
    Location
    New Orleans, LA
    Posts
    279
    You need to have multiple lines of credit and a credit limit such that you spend enough to warrant people loaning money to you but not too much to give them the impression you are an overspender. I opened 1 line of credit when I started college, and 2 more within a year of graduating. My credit score is ~800 out of the 850 possible.

    Yes, it's a dumb system. No, there's no way to change it, especially as one consumer.

  4. #4
    The Lightbringer Sinndra's Avatar
    10+ Year Old Account
    Join Date
    Aug 2011
    Location
    Commiefornia
    Posts
    3,896
    its not a bad decision to take out a loan and pay it back responsibly in effort to show that you are credit worthy. anybody can lie and say "yah sure im trustworthy, trust me " you need to prove that you are, not expect them to prove that you are not. people lie by default. enough so that creditors just assume it, and anybody wanting credit needs to start small and show they understand the process and grow to bigger and better things.
    Quote Originally Posted by ablib View Post
    I do realize that this is an internet forum full of morons, however in real life, no one questions me, people look to me for the answer, look up to me, trust me. To have dipshits on a video game forum question me, is insulting.

  5. #5
    You say your credit is crippled, but you're already slightly above average. The way you build credit is by using credit. If you bought a house on loan, you would be building your credit. If you use a card and pay it off monthly (skipping interest) you are building credit. Credit is not something you just get, it has to be built over time. But I do agree that the system seems to be geared more towards those who have money. If you never had money growing up, you won't have a credit score when you first enter the world on your own. And you will have to start behind the curve a little bit.

  6. #6
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649
    Quote Originally Posted by Sinndra View Post
    its not a bad decision to take out a loan and pay it back responsibly in effort to show that you are credit worthy. anybody can lie and say "yah sure im trustworthy, trust me " you need to prove that you are, not expect them to prove that you are not. people lie by default. enough so that creditors just assume it, and anybody wanting credit needs to start small and show they understand the process and grow to bigger and better things.
    I have ten years of payments without a late one, its not just my word on it. And I have/have had loans in the past, for my car and student loans.

    - - - Updated - - -

    Quote Originally Posted by majinbebi View Post
    You need to have multiple lines of credit and a credit limit such that you spend enough to warrant people loaning money to you but not too much to give them the impression you are an overspender. I opened 1 line of credit when I started college, and 2 more within a year of graduating. My credit score is ~800 out of the 850 possible.

    Yes, it's a dumb system. No, there's no way to change it, especially as one consumer.
    So basically, I take out loans I don't need in order to prove that I am good with finances, by making a bad decision? :P
    You're a towel.

  7. #7
    Your credit rating cares little about your ability to pay rent, utilities, phones etc. A credit rating is a representation of your proven ability to manage debt. Get a credit card and buy all day to day expense with it, then pay it to 0$ every month so you don't accrue interest. You're not going to change the game, you might as well learn how to play it.
    Ridicule is the only weapon which can be used against unintelligible propositions. -Thomas Jefferson

  8. #8
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649
    Quote Originally Posted by Torgent View Post
    You say your credit is crippled, but you're already slightly above average. The way you build credit is by using credit. If you bought a house on loan, you would be building your credit. If you use a card and pay it off monthly (skipping interest) you are building credit. Credit is not something you just get, it has to be built over time. But I do agree that the system seems to be geared more towards those who have money. If you never had money growing up, you won't have a credit score when you first enter the world on your own. And you will have to start behind the curve a little bit.
    The reason I am doing this is I want the best possible "Deal" on a house loan, and it looks like to do that, I have to make stupid decisions to effect my score in a positive way. Its silly.

    I don't need a loan or line of credit right now, taking one out is irresponsible and I should have enough history of payments to prove trust.

    - - - Updated - - -

    Quote Originally Posted by Aitch View Post
    Your credit rating cares little about your ability to pay rent, utilities, phones etc. A credit rating is a representation of your proven ability to manage debt. Get a credit card and buy all day to day expense with it, then pay it to 0$ every month so you don't accrue interest. You're not going to change the game, you might as well learn how to play it.
    I thought they took things like rent/phones into account and such?
    You're a towel.

  9. #9
    The Patient majinbebi's Avatar
    10+ Year Old Account
    Join Date
    Jul 2011
    Location
    New Orleans, LA
    Posts
    279
    Quote Originally Posted by Gumboy View Post
    I have ten years of payments without a late one, its not just my word on it. And I have/have had loans in the past, for my car and student loans.

    - - - Updated - - -



    So basically, I take out loans I don't need in order to prove that I am good with finances, by making a bad decision? :P
    You put credit on a credit card. This is the "loan." You then pay it off the next month, accruing no interest. This is building credit. This isn't a bad decision. You don't seem to understand how banking works? I'd recommend talking to some or just googling for some more info.

  10. #10
    FYI, just having a credit card doesn't mean you have to make bad financial decisions. As long as you pay off any balance before it's due you pay zero interest. Get one and use it strictly to buy gas and groceries, and pay it off every month when you get the bill.

  11. #11
    You don't have to make bad decisions. Having credit card incase of emergency is always good. Having a credit card doesn't mean you have to use it or, if you do use it pay, any interest. Use it as a convenience, earn some points or miles and pay it off before any interest is charged. A history of unused but open credit accounts is useful as well.

  12. #12
    Quote Originally Posted by Gumboy View Post
    I thought they took things like rent/phones into account and such?
    Not nearly as much as loans, lines of credit, credit cards, etc.
    Ridicule is the only weapon which can be used against unintelligible propositions. -Thomas Jefferson

  13. #13
    Quote Originally Posted by Gumboy View Post
    So I've been thinking of buying a house recently, and was talking with a banker about my credit and how it will effect my payments/any other credit options, and we went over my credit score.

    Now, I have: A student loan. Rent. Utilities. Cell phone service. Right now, those are all of my bills. I had a car payment, but I've had it payed off for over a year. Not a single time in my life did I miss a payment, but my credit rating is "Slightly above average".

    I asked reasons why its not excellent or whatever, and the explanation was that I don't have any credit cards, line of credit, enough credit history.

    So my question to him (And to you guys) why should I make bad decisions (Taking out credit when I don't need it) in order to prove to the banks that I am worthy of a "Higher score". It seems 100% counterintuitive, when they have over a decade of me making payments on things now, without a single missed/late payment in my entire history. No overdue phone bill. No late payment on my student loan.

    I haven't applied for a single loan that I was denied for in my life, so its not like I'm floating requests constantly either.

    So essentially, my credit is crippled, unless I make bad financial decisions...to prove that I am good with my finances?
    Yes, the credit industry exists to steal your money.

  14. #14
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649
    Quote Originally Posted by Asmodias View Post
    Is it actually a bad decision if you use it wisely? I've been in your shoes... instead of a credit card, I got a car loan.
    I had a car loan, and paid it every single month on time :P

    - - - Updated - - -

    Quote Originally Posted by YuneKirby View Post
    FYI, just having a credit card doesn't mean you have to make bad financial decisions. As long as you pay off any balance before it's due you pay zero interest. Get one and use it strictly to buy gas and groceries, and pay it off every month when you get the bill.
    I'm aware you don't have to make bad decisions with it, but it just seems like its another hassle when I already just pay for things out of my checking account with a card...

    - - - Updated - - -

    Quote Originally Posted by majinbebi View Post
    You put credit on a credit card. This is the "loan." You then pay it off the next month, accruing no interest. This is building credit. This isn't a bad decision. You don't seem to understand how banking works? I'd recommend talking to some or just googling for some more info.
    I am already aware of how it works, but I don't need it. It just seems like they *WANT* you to have it, so you screw up/don't pay and they get the interest.
    You're a towel.

  15. #15
    The Lightbringer Sinndra's Avatar
    10+ Year Old Account
    Join Date
    Aug 2011
    Location
    Commiefornia
    Posts
    3,896
    Quote Originally Posted by Gumboy View Post
    I'm aware you don't have to make bad decisions with it, but it just seems like its another hassle when I already just pay for things out of my checking account with a card...
    all this shows is you can handle your own money. creditors want to know how you handle someone elses money.
    Quote Originally Posted by ablib View Post
    I do realize that this is an internet forum full of morons, however in real life, no one questions me, people look to me for the answer, look up to me, trust me. To have dipshits on a video game forum question me, is insulting.

  16. #16
    Create a savings account and put some money in it. Request a loan from your savings account and set the money aside. Pay it back on time.

  17. #17
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649
    It just seems like a massive hassle in order to prove a point to a bank I already paid an entire loan off for, and have made every payment to them on time for my other :P

    That is what I mean by inherently flawed, its like a ten year+ history is not enough, you have to have a credit card or line of credit hassle in your life.
    You're a towel.

  18. #18
    As flawed as you might think it is, it is obviously already too loose as 2008 showed us.
    Ridicule is the only weapon which can be used against unintelligible propositions. -Thomas Jefferson

  19. #19
    based only off what you have told us, the biggest factor is probably the student loan. even with no late or missed payments, about 1/3 of your credit score is based simply off of what you currently owe.

    obviously im not going to ask how much that is. but if its a relatively high amount compared to what your income would indicate you can reasonably pay back each month, its going to have an impact.

    i don't think the logic that a history of having credit available to you and showing that you have used it responsibly is flawed, though i can certainly see how not opening up lines of credit in the first place could arguably count for something along those lines (im not credit expert of course, for all i know it might in some way already).

    ultimately though you are talking about a system that needs to boil down an individuals credit worthiness down to a single number, and it needs to be applicable to everyone in the same way. so a history that's good is going to mean a lot more than no history at all. that alone could easily lead to "flaws" on a more personal level (such as possibly your own situation) but any more personally involved system would probably lead to less reliable results.

  20. #20
    Titan Gumboy's Avatar
    10+ Year Old Account
    Join Date
    Mar 2014
    Location
    Lost in Space
    Posts
    11,649
    Quote Originally Posted by Aitch View Post
    As flawed as you might think it is, it is obviously already too loose as 2008 showed us.
    Well, I could get a mortage right now if I wanted to; I just would like to get the best deal I can on it, and my "Slightly above average" credit apparently isn't good enough, need higher! :P
    You're a towel.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •