100% spot on.

It's absolutely a scam designed to extract even more wealth from the poors.

No joke, I've had a car dealership tell me they can't sell me the car I want because my credit score was nonexistent (no credit history in 7 years). I was paying in full, in cash, literally in an envelope in my hand.

Grand total of 8k, all in 100s, super easy to count.

But no, I didn't have a "good enough credit score" so I couldn't buy that car from them, despite having the money to do so.

Mental gymnastics on that one.

There are a lot of bad answers or misunderstandings about credit scores in this thread.

FICO Credit scores measure exactly one thing: How good are you at regularly paying on debt over time? Thats it.

There are some other companies that take your FICO score and make their own determinations from it, but those are not the intended purpose of a FICO score.

ANON is also saying "x raises" or "y lowers" but he's missing one other part. Some of those raises and lowers are temporary meaning for a couple of months only, and those don't have years long impacts.

Most of the big moving pieces are publicly published right on the FICO website too, so you don't have to guess:

source

So lets look at ANONs complaints through the lens of what FICO scores address:

Using credit lowers your score

I'm assuming ANON means "using a portion of an already established credit line." We can see in the chart that this would increase the red segment of the FICO score. FICO assumes the closer you get to your maximum credit availability, the more you're being squeezed financially reducing your ability to pay on all of your debts. From a lender's perspective, if your debts are piling up, then lending you more is a higher risk.

Not using credit lowers your score

If ANON means "using zero credit" then, yes, ANON wouldn't have a recent history of paying on debt then the Payment History section of the graph would be thin or empty. From a lender's perspective, if you haven't paid on any debt in the last 6 months, how do they know you still have the ability to do so if you want credit right now?

Paying back late lowers your score

Absolutely! Its violating the very purpose FICO is made to measure: How good are you at regularly paying on debt over time?

Paying back early lowers your score

This one is a yes or no depending on what scenario ANON is talking about. Paying back a credit card early DOES NOT lower your score. In fact, it would likely RAISE your score. Paying back an installment loan, lets say for a car, early can lower your score, but not because its early, but because the load will disappear. Without a loan to pay on, you will have less recent history of paying on an installment loan for a car, and 6 months from now a lender may not know if you still have the ability to do so, so you score falls.

Even checking your score lowers your score.

ANON checking ANONs score DOES NOT lower your score. ANON allowing a lender to do a hard pull check does lower the score, but only a small amount 10-20 points and this is temporary about a month or two. Further, do several hard pulls at once, they don't each lower by 10 or 20 points. If you do the pulls close together (within a week or two) it will be only the temporary lowering for a month or two. From a lender's perspective if you're reaching out for new lines of credit, it means you're indicating you're about to take on more debt which could affect your ability to pay on further new debts.

Taking out loans lowers your score

Temporarily, yes, but over time this can grow your score if its in a different loan type or length.

Paying back loans lowers your score

Yes and no, circumstances depending. If you pay back that one loan type lets say a car loan, and you have have no other installment loans, then you will have no more recent history of paying on any installment loans. However, if you have a mortgage which is another type of installment loan, you'll take no hit for paying back the car loan as you will continue to have a recent payment history of paying on installment loans. You could take a hit because a nearly paid off loan looks good for the "Amounts owed" component of the score, but you could use a trick like getting a credit card of the same credit line (and not charge anything on it) to avoid that if you really need to.

Not taking out loans lowers your score

Not quite true. Having no recent payment history means a lower score, but it you already have some type of loan or credit you pay on every month, not taking out more loans will not hurt your score.

One final thought I really really want to dispel: YOUR FICO SCORE IS NOT INCREASED BY PAYING INTEREST ON CREDIT CARD DEBT!

Try everything you can to avoid carrying credit card debt into next month. Interest rates are crazy high and it does nothing to help you. If you put a purchase on a credit card, make sure to pay the full statement balance every month. If you do this, you'll pay zero interest on any credit card purchases.

I've had a consistent score of a little over 800 before and after purchasing my house by paying off my credit cards ahead of time. I had no major long term debt other than a mortgage either. That said, this is pretty much the equivalent to that Chinese social credit score crap but it's real in this case. It just means you're ranking high in some opaque game on your financial prospects that the banks are playing.

Remind me, were we supposed to be disgusted and afraid of the Chinese social credit score system because it included woke BS like how nice you are to others, and how things you do improve society, rather than just laser-focusing on the only important thing— whether your existence can be monetized by rich assholes?

Paying your utility bills on time for your whole life will not raise your credit score one point.

FICO Credit scores measure exactly one thing: How good are you at regularly paying on debt over time? Thats it.

Utility bills are generated and cleared every month (assuming you pay). If you got in a financial jam, you could probably lower how much HVAC you use or lower your water usage while times were tight. You can't do that on installment loans. The full loan payment is due every month. Utility bills are not a great measure of the ability to regularly pay on debt over time, which is what FICO scores measure.

No joke, I’ve had a car dealership tell me they can’t sell me the car I want because my credit score was nonexistent (no credit history in 7 years). I was paying in full, in cash, literally in an envelope in my hand.

There are car dealers (especially at the low end of used cars) that don't make money selling cars. They make money with horrible debt and payment terms trying to trap vulnerable people. The worst of these dealers may end up "selling" the car 2 or 3 times repoing it each time when the buyer can't pay.

So its first possible that this dealer didn't want to sell you a car for cash because its against their business model.

Grand total of 8k, all in 100s, super easy to count.

$8k in cash is super sketchy for a single purchase. Its untraceable and that sets off fraud alarm bells. The dealership also may not be set up to deal in large sums of cash like that lacking the security to do so. Lastly there are laws at the state and federal level called KYC (Know your Customer) for some transactions that require the seller to verify the money is legit. With cash, thats nearly impossible.

You might have had more luck showing up with an $8k cashiers check or offering an $8k wire transfer from your bank. Both of these are exempt from lots of regulations (because there's a paper trail) where cash would not have that luxury.

But no, I didn’t have a “good enough credit score” so I couldn’t buy that car from them, despite having the money to do so.
Mental gymnastics on that one.

I'm guessing that was just an excuse to not sell to you because either they're the sketchy dealer (that likes to sell loans not cars) or they thought you were super sketchy as a buyer.

No, because the writing was weird and foreign.

You were supposed to he disgusted at the other stuff.

"Weird and Foreign" has entered the chat.

Well that's why you're supposed to be afraid of it.

There was some conservative user a while ago on lemmy that thought I was a "Chinese Bot"/"Scammer" because of the "Asian Writing" in the username, I'm an American citizen lmfao

Fucking sinophobia lol

Great write-up, thanks!

Having said that, it's hard not to feel that these rules have been semi purposefully left vague so that people take the wrong actions that will cost them extra money

To add on-top of that, I feel like this system, and most systems around this, are all setup to work great for the rich and the "providers" and just plain less good for us. It's almost like a casino in that the house always wins

Having said that, it’s hard not to feel that these rules have been semi purposefully left vague so that people take the wrong actions that will cost them extra money

This sounds like perhaps you believe this is an intentionally convoluted process designed to trap people. Like it is a set of financial gymnastics that borrowers must learn and perform before getting a loan.

I don't think thats the case or the origin. I think its much more likely that, prior to FICO scores, lenders went looking at people that successfully pay on debt and then started analyzing those borrowers choices. They found those that were successfully followed a set of behaviors, and then Fair Isaac (the company behind FICO) created a FICO score (there are actually a whole bunch of different FICO scores) baking in those behaviors.

I will admit that companies that have no business using credit scores are now using them for various other aspects of life, but that wasn't the intent for FICO scores to begin with from the outset.

To add on-top of that, I feel like this system, and most systems around this, are all setup to work great for the rich and the “providers” and just plain less good for us. It’s almost like a casino in that the house always wins

The truly rich likely don't have to deal with FICO scores as the lending products they're using are asset based anyway. I will say that this system is NOT designed to help borrowers. Its not meant to hurt them, but its certainly to let lenders know who has a better chance of servicing a loan or not.

One arguably unjust part about credit scores is that the actions of people related to you, or simply sharing the same surname as you, can affect it! E.G i have heard that a friend-of-a-friend’s dad took out too many loans and now their credit score suffers.

You're mixing things here that led you to a wrong conclusion.

Credit scores are based upon credit events. The credit events come from your credit report which is separate from your credit score. The only things on your credit report should be your credit events. Not someone with the same name, nor someone from your family. If either of those things are on your credit report, that is and error you need to go through the paperwork process to get those removed from your credit report.

There was some conservative user a while ago on lemmy that thought I was a “Chinese Bot”/“Scammer”

Clearly they were an idiot too because if they knew anything about China, they should have seen the Taiwanese flag and known were you not from or supportive of the PRC. Seriously, people need to pick up a history book now and then. There's a good chunk of American history mixed in there too with how Taiwan came to be (or stay being a nation).

Oh I mean I am from PRC, that's more like an opposition thing I do because I don't like the 5 star red flag since its associated with ccp, so I use this flag in the ROC context.

是吗? I wouldn't have guessed that. I didn't think ROC flag was tolerated well 在 大陆. I still have a lot to learn about the culture.

In mainland China, probably not tolerated outside of like the context of museums. Idk about the laws, but at the minimum, cops will probably visit you and "have a chat"

I'm Chinese-Amercian, I was born in Guangzhou, but I'm no longer PRC National anymore so I don't give a shit what mainland nationalists think.

I think ROC flag is fine overseas...

I mean look at this lol

In mainland China, probably not tolerated outside of like the context of museums. Idk about the laws, but at the minimum, cops will probably visit you and “have a chat”

Gotcha, that's closer to what I had thought.

I’m Chinese-Amercian, I was born in Guangzhou, but I’m no longer PRC National anymore so I don’t give a shit what mainland nationalists think.
I think ROC flag is fine overseas…

Oh certainly! It was not rare when I visited Flushing.