Credit Karma

[ndws]

I paid off my car loan in early July. It wasn't scheduled to be done until Nov 2017. The bank closed the auto loan account obviously, and whammo...Credit Karma is saying I took a 60-something point hit

WTF.

That's going to take an insane amount of time to heal 60 points.

Did the bank report the account closing wrong, as if it were closed for a bad reason? Is Credit Karma full of shit?

[listopencil]

Originally Posted by JASONSAUTO

Are you saying he should have never paid the vehicle off?

It kind of depends on the situation. If the car loan is set up so that you benefit from paying it off early then go for it. I haven't bought a car using payments in forever, but the last time I did there wasn't any benefit in paying it off early. I would have had to pay the entire amount including interest on the loan that I had agreed to when I signed the paperwork. The only benefit for me would have been getting rid of a monthly payment. While that is nice and convenient it doesn't help your credit score. If you have it set up so that your payments are low then it helps your score to just keep paying those monthly payments, keep them as part of your overall credit profile.

The system they use to calculate your score has nothing to do with managing your financial life to suit you. It only applies to how you are perceived as a potential debtor. He might have considered getting a cheap 2nd vehicle, like a small motorcycle, on the longest contract possible. If he was primarily concerned with building his credit score.

[SAUTO]

What about paying it off on time? You still get the hit when the account closes

[Fansy the Famous Bard]

Originally Posted by JASONSAUTO

What about paying it off on time? You still get the hit when the account closes

Depends on what other accounts you still have open, but potentially yes.

[listopencil]

I would recommend using multiple agencies for monitoring your credit. All free:

1) Most credit card companies offer a free FICO score. They get updated at wildly different intervals and they don't always use the same system. Grain of salt.

2) Some banks do as well. I have a checking and savings account and the bank offers this as well.

3) There are several free sites. Credit Karma, Credit Sesame, Quizzle. Accuracy is a bit up-and-down on those so take them with a grain of salt. They are paid to offer lines of credit from companies that associate with them. So don't give out any of your personal information to any of those companies unless you see a deal that really works for you.

4) Experian has a mobile app in beta that lets you access your credit report. This is not a credit score, it's just a record of what is showing on your report, which is a very different thing, but still useful. Again they offer "deals" that cost money and may not be worthwhile to you so don't get hooked on the BS they are trying to sell. Just use the free product that they offer while it is available.

At one point in my life I used no credit of any kind. I'm talking substantially more than a decade. Maybe 15 years or more-can't remember exactly. About five years ago I started checking it out and found that I had no credit at all, which is worse than no credit. I couldn't even get a score because I had a "thin file." So I started with a $500 Finger Hut account and a friend added me to her credit card as an authorized user (which I've heard doesn't work anymore). I then gradually applied for cards over time. Now I have a shit ton of cards and my score is in the high 700's.

It's actually gotten kind of goofy. I get spam from companies trying to loan me money. Credit cards, car dealerships, loans, mortgages. Rather than focusing on constantly raising your score you have to focus on specific steps that benefit you long term. Like you'll take a temporary hit sometimes in order to eventually push your score over a plateau. It just depends on what your plan is and where you are in that plan.

[listopencil]

Originally Posted by JASONSAUTO

What about paying it off on time? You still get the hit when the account closes

If you're using a car purchase to build your credit then you can go buy a motorcycle (cheap one with low payments) to keep an account going. That should help.

[listopencil]

It sounds weird and backwards because it is. You're doing stuff to manage your finances, they are looking at stuff that says you're a good mark. A credit score is a reflection of how well they think they can make money off of you.

[Jewish Rabbi]

Originally Posted by Amnorix

I'm not a credit score expert by any means, but I always kind of thought of it this way:

-- WE think the score should reflect how credit-worthy a person is. Are they a reliable payer? Do they satisfy their obligations? Can they manage money well?

-- the credit score industry is actually set up to tell banks if you are a GOOD BORROWER, which means that you won't default on the loan, are a good credit risk, and -- importantly to them -- THEY MAKE EVERY ****ING DIME THEY ARE SUPPOSED TO MAKE OFF YOUR ASS.

So you close an account early, that's BAD, because the BANK DIDN'T GET ALL THOSE EXTRA MONTHS OF INTEREST PAYMENTS.

Now, I may be completely off base here, but that is how I **think** ti works, kinda sorta.

Can someone enlighten us on whether I'm anywhere close to right?

You're completely wrong, as usual.

[Jewish Rabbi]

Originally Posted by listopencil

It sounds weird and backwards because it is. You're doing stuff to manage your finances, they are looking at stuff that says you're a good mark. A credit score is a reflection of how well they think they can make money off of you.

Untrue as well. First off, Credit Karma is FAKO scores. No one looks at Credit Karma's formulas when you apply for a credit. They vastly overvalue hard inquiries and AAoA. Secondly, credit scores don't show how how much money a bank can make off you. I've made thousands of dollars each year for the last 4 years churning credit cards, never paying a dime of interest in my life. You think that's profitable for banks? Then why is my score in the mid-800s?

[BlackHelicopters]

annualcreditreport.com

[Jewish Rabbi]

Originally Posted by theelusiveeightrop

annualcreditreport.com

That's great and all, but it doesn't give you a credit score, estimated or not.

[Jewish Rabbi]

Also, any time I've seen significant jumps like you're seeing in my Credit Karma account, it balances out within a month or two. I wouldn't sweat it at all.

[listopencil]

Originally Posted by Jewish Rabbi

Untrue as well. First off, Credit Karma is FAKO scores. No one looks at Credit Karma's formulas when you apply for a credit. They vastly overvalue hard inquiries and AAoA. Secondly, credit scores don't show how how much money a bank can make off you. I've made thousands of dollars each year for the last 4 years churning credit cards, never paying a dime of interest in my life. You think that's profitable for banks? Then why is my score in the mid-800s?

Do you think the OP sounds like a guy who is trying to make thousands of dollars a year churning credit cards? Every single person is different and they have different goals, as well as different ways to accomplish those goals. Most people don't have a score in the 800's and are just trying to get their scores up over time while figuring out a responsible way to manage their finances.

[Jewish Rabbi]

Originally Posted by listopencil

Do you think the OP sounds like a guy who is trying to make thousands of dollars a year churning credit cards? Every single person is different and they have different goals, as well as different ways to accomplish those goals. Most people don't have a score in the 800's and are just trying to get their scores up over time while figuring out a responsible way to manage their finances.

I was just trying to correct the misconception in this thread of what a credit score shows by using an example.

[listopencil]

Originally Posted by Jewish Rabbi

I was just trying to correct the misconception in this thread of what a credit score shows by using an example.

Sounds like it would be helpful if you posted some step-by-step recommendations to help people out who are trying to raise their scores.

[displacedinMN]

It is a rip off. Pay cash-lower the credit score. It makes me think the credit reporters wants people to have more credit (debt) to make themselves look good.