• Z3k3@lemmy.world
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    1 year ago

    The whole credit system is a scam.

    I was lucky enough to pay off my mortgage a few months ago due to the money saved working from home going to that since the 1st lock downs

    What happened my credit score instantly went down.

    • Chainweasel@lemmy.world
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      1 year ago

      You’re credit score isn’t about how good you are at making payments, it’s about how good you are at generating interest for your creditors.

    • partial_accumen@lemmy.world
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      1 year ago

      What happened my credit score instantly went down.

      Your credit score is just an up-to-date test of how good you are at servicing debt. If you paid off all your debt, then no one knows if you’re still good at servicing debt. For all they know you could have a $2k/week cocaine habit after paying off your mortgage and all your cash flow goes up your nose.

      Since you’re not paying on any debt today you’re not as good a credit risk.

    • SatanicNotMessianic@lemmy.ml
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      1 year ago

      Not justifying the algorithms or even the agencies, but in general your credit score reflects things like onetime payments and the balances you carry relative to your outstanding credit limits. Paying off a loan closes an account, so by the formula you’re changing your open accounts. This is going to result in a temporary dip.

      It’s annoying, it’s stupid, it’s not reflective of someone’s ability to manage debt (which is what a credit score should reflect), and if anything should be positive. The two things to remember are that it’s a temporary dip and your score will go back up without you doing anything differently, and that you do not need an 850 to get the best deals. Anything above 750 or whatever their top tier starting point is gets the same rate.

      • ShittyRedditWasBetter@lemmy.world
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        1 year ago

        People bitching about this really just want to bitch and don’t have any clue how lending actually works. My score dropped 1.5%? Literally slavery!!!

    • ShittyRedditWasBetter@lemmy.world
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      1 year ago

      🙄 nobody is changing your rates because your home is paid off and your score dropped 1.5%. It doesn’t mean any fucks when it comes to a human looking at it.