Home buying thread

that's not how credit scores work. the account stays on your record for years. falling off won't 'hurt' your score for years after paying it off. sign up for credit karma and see what's really on his credit history.

Every place that you can get a loan from pulls a different version of the credit report and they may pull from only one credit report, or they may pull from several - Equifax, Experian, Transunion etc. and choose the highest of the three. You can look at your credit report from Experian's website and it say you're 740, go to an auto dealership and theyre pulling version 8 of 17 and get a 721 score. Go to a bank, and theyre using version 14 and its a 753 Experian, but they also pull Transunion and go with the highest - so now theyre using your 770 score.

Its a convoluted mess, and again, completely depends off who is pulling it and what score it is. The best thing you can do is keep active credit lines and pay them on time. Credit Reports have an incentive from banks right now, with their newest version, to incentivize you into refinancing your mortgage - which is totally not a fixed bullshit ass system to take advantage of you. But hey - whose keeping track of being fair in this conversation?

My wife and I both have credit scores over 800. In November of 2018 I bought her a new car. I was told over the phone that I qualified for 0% intrest but at signing time it was 3.8%. They said because I received another $1500 off I no longer qualified. I had to pay a minimum of 4 payments before I could pay it off or transfer it. I chose to pay it off after 4, and my credit instantly took a 50 point hit. Checked the big 3 and that was the only change in my credit history.

I looked into it and sure enough if you don't carry enough installment loans you can be dinged for paying it off. In my case I only have 1 credit card I pay off monthly and a mortgage, it sounds like he's in the same boat.

Lanx said:

paying off for shit too fast is not following the terms of the contract!

plus that also means ppl make less money off of you

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I waited the required 4 payments it wasn't even an option on their website until I paid the 4th payment but you could be right about it in fine print. I just paid cash for my truck in 2021 to avoid any issues and currently have a 0% loan on a zero turn mower that I could easily have paid cash for, I will let that run the full term.

Koushirou said:

Husband was extra salted earlier with credit. He doesn’t have any credit cards, just student loans and his car loan. He just finished paying his car off early, always had on time payments, etc., score dropped 40 points because the account is closed. Makes sense!

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If your husband wants good credit he needs things like credit cards. Even if he doesn't use them it contributes to credit age and responsible spending habit tracking. This is what raises your credit score and prevents things like what you and Larnix are describing from affecting your credit score.

Also, it's pretty silly to be afraid of or hate credit cards, use them as cash and pay them off weekly. You earn points you can use for other things like travel or hotel stays. You're paying the same price for things that people who do use credit cards are except you're not getting the benefits they are.

Unless you just think you can't control yourself if you see a $5k credit line.

Khane said:

If your husband wants good credit he needs things like credit cards. Even if he doesn't use them it contributes to credit age and responsible spending habit tracking. This is what raises your credit score and prevents things like what you and Larnix are describing from affecting your credit score.

Also, it's pretty silly to be afraid of or hate credit cards, use them as cash and pay them off weekly. You earn points you can use for other things like travel or hotel stays. You're paying the same price for things that people who do use credit cards are except you're not getting the benefits they are.

Unless you just think you can't control yourself if you see a $5k credit line.

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You also need to make use of some of your credit though. Just having open lines that are sitting at $0 don't do that much and using your credit, obviously may lead to getting charged interest.

It may be worth it, if your sitting at a 650 and you want get a better 30 year fixed rate by getting to 680 or 720, but anything over 720 doesn't really matter, unless you have insufficient credit history to get a loan at all. At least for the bank I was at (could have been 750, its been a while).

Koushirou If yall are looking at using your credit soon, there should still be free resources online that go through how to boost your score in around 6 months, in preparation for getting a home loan. Most/all are going to be geared for low scores and bad histories, but they should still give an idea on what all is taken into consideration. People have all kinds of crazy ideas on what affects their score, but a whole bunch of debt and late payments never get reported, since it costs money to report to the agencies, unless you are a member of their "club."

Larnix said:

My wife and I both have credit scores over 800. In November of 2018 I bought her a new car. I was told over the phone that I qualified for 0% intrest but at signing time it was 3.8%. They said because I received another $1500 off I no longer qualified. I had to pay a minimum of 4 payments before I could pay it off or transfer it. I chose to pay it off after 4, and my credit instantly took a 50 point hit. Checked the big 3 and that was the only change in my credit history.

I looked into it and sure enough if you don't carry enough installment loans you can be dinged for paying it off. In my case I only have 1 credit card I pay off monthly and a mortgage, it sounds like he's in the same boat.

Why Did My Credit Score Drop After Paying Off Debt? | Bankrate

There are several factors that make up your credit score, and paying off debt does not affect all of them.

www.bankrate.com

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Larnix said:

I waited the required 4 payments it wasn't even an option on their website until I paid the 4th payment but you could be right about it in fine print. I just paid cash for my truck in 2021 to avoid any issues and currently have a 0% loan on a zero turn mower that I could easily have paid cash for, I will let that run the full term.

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I hate to say it, but you just got lied to by the Managers at that dealership. There is no "required" finance time on a contract and in fact, they broke the law by telling you that. Also, the incentive was probably 1500 or 0% for a predetermined amount of months. Either or, basically. By what you did, you paid very little interest which is great. But that 4 months waiting time? Thats just the Finance Manager making sure he gets paid the reserve from the bank in whatever convoluted way that dealerships pay plan is set up. I understand it made very little difference to you in the grand scheme - but just wanted to set the record straight. Its best to play along with that type of BS as you'll get a better deal that way, but as soon as you get the first note - I'd pay it off.

Believe it or not, leasing is actually the better opportunity right now because car values are so extreme. But thats a different discussion entirely.

Best advice for you - if you're an 800 and above (as some versions actually cut off at 800) - you should really look into some investment opportunities. There is no reason not to have your credit working for you. Simply owning a second house and letting a property manager take care of all the headache bullshit is a suggestion that Im all too familiar with, since my business does just that.

The basic principal for retirement is to take the age you started investing, half it, and thats the percentage you should be putting away in a full time job until you retire. You can probably count on one hand the amount of people that actually put away that high of a percentage, especially with how fast inflation is eating away at its value. Real estate is the one of the only things that actually competes with inflation in terms of value.

But again, Im not a financial advisor.

Koushirou said:

Yeah, anything credit, I take care of as I take care of pretty much all the finances except his car/student loans. I defaulted on my student loans back in 2012 due to not knowing who to pay since my loaner got shuffled around and they sent that info to the wrong address, so I missed all the bills, but I’m sitting pretty around 780 these days.

He does have the whole scared of credit cards thing, but he at least recognizes that he’s shit with money, so probably for the best. I just throw everything on to my cards instead and he pays me back (almost like just paying off a credit card every month, only I don’t give cash back…). It’s a dumb arrangement, but he’s stubborn on it and it doesn’t really affect our day to day, so I stopped trying to push it. My biggest worry is if I get hit by a bus, he’s going to be in a bad spot.

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You can put him on your credit cards as an authorized user and it should raise his credit score when you use yours as well. Or just swipe his authorized user card instead and pay it off the same way since it all goes against the same account.

Sanrith Descartes said:

Credit Cards are rewards for fiscally responsible people. 2% discount on everything I buy and pay no interest because I pay it off each week? Yes, please.

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Yep. Cash back on every purchase paid for by people who pay minimum payments.

edit: replied too soon replies already covered

Daidraco said:

I hate to say it, but you just got lied to by the Managers at that dealership. There is no "required" finance time on a contract and in fact, they broke the law by telling you that. Also, the incentive was probably 1500 or 0% for a predetermined amount of months. Either or, basically. By what you did, you paid very little interest which is great. But that 4 months waiting time? Thats just the Finance Manager making sure he gets paid the reserve from the bank in whatever convoluted way that dealerships pay plan is set up. I understand it made very little difference to you in the grand scheme - but just wanted to set the record straight. Its best to play along with that type of BS as you'll get a better deal that way, but as soon as you get the first note - I'd pay it off.

Believe it or not, leasing is actually the better opportunity right now because car values are so extreme. But thats a different discussion entirely.

Best advice for you - if you're an 800 and above (as some versions actually cut off at 800) - you should really look into some investment opportunities. There is no reason not to have your credit working for you. Simply owning a second house and letting a property manager take care of all the headache bullshit is a suggestion that Im all too familiar with, since my business does just that.

The basic principal for retirement is to take the age you started investing, half it, and thats the percentage you should be putting away in a full time job until you retire. You can probably count on one hand the amount of people that actually put away that high of a percentage, especially with how fast inflation is eating away at its value. Real estate is the one of the only things that actually competes with inflation in terms of value.

But again, Im not a financial advisor.

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All great advice which, most of which we are already doing. Together we are in the 10% in the US and have lived off of roughly 50% of our income since we got married back in 2007. Both of our retirement accounts look great, and the childrens continued education funds (let's face it fuck colleges into today's form) are looking great. About 10 years ago my wife and I took our portfolio to a financial advisor and he ended the conversation telling me he didn't have any advice for us but of course let us know if you'd like us to take the burden off you.

As far as doing more with my credit, none of those options sound appealing personally. Only because I dont want for anything in life, I can pay for the few things I truly want. I already barely spend the money I have not because I'm cheap or saving but because for me I long ago learned stuff doesn't bring me happiness. Hell if I didn't have a family I'm sure I would be in a small place above a garage that would house the few things I do own.

I've been a home owner since 2015 and honestly I feel so much of my life is wasted keeping it maintained. Do you know how much fishing and mountain biking I'm missing out while mowing my lawn, fixing something, or updating something that bothers the wife

The car was no big deal, it was less then $24 in interest, and in the end a total of 7,000 off msrp for a new car. Getting the 50 points back up was another story. Like I said on the VW credit website there wasn't an option to pay off until I made the 4th payment but in retrospect I should have called somebody.

I just wanted to share my one personal experience that was on the topic being discussed. That was that paying off a loan hurt my overall credit score. Carry on with all the great advice