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Credit scores could end up being 20 or more points lower, according to financial experts
This, uh.. doesn't sound terribly impactful? My score fluctuates +-50 points just from regular credit utilization, idk what throwing 60k in student loans onto the report would do but - 20 points sounds very optimistic.
A 50pt fluctuation is wild, like honestly you should look into why. Getting a mortgage didn't affect my score by 50pts...
The -20 probably assumes you're still making the loan payments.
So I checked my history and you're right, over the last 2 years the wildest swings I've had have been +-20, but I also haven't spent wildly on the cards like I used to, not exceeding 50% utilized in this timeframe.
But I think a mortage being a secured loan probably reduces impact too.
(I'm not a banker or finance person, just someone who's watched their score rollercoaster on apps in my less responsible youth lol)
Are you checking your credit score through your bank? My bank offers that kind of thing but it’s not all that accurate. I see mine go up and down Randomly. I paid off loan early and it dropped about ~~10~~ 26 points. It went back up, and is usually always hovering around the same spot.
Edit: actually went down 26 points during the month I paid off some Loans,holy shit
It makes sense that your score went down when paying off loans. I have heard that closing accounts, credit lines, and phone plans do the same too. Supposedly because now theres "less history" of your good credit, or maybe just because of lower credit utilization.
That’s so ridiculous. Either way, it’s back up again but that drop was kind of a shock.
Credit scores aren't just about how likely you are to pay back loans, they are about how much money can be made off lending to you.
Pay off loans early, and the lender makes less money, so your credit goes down.
Closed accounts, inactive accounts, those aren't making anyone else money, so less credit score.
Paying on time is the biggest risk of lending, so it has the biggest impact, but doing things that lose your creditor money can make a difference on the margin.
I’m a bad person for paying off debt! Hehe
50% utilization is still enormous. Mine rarely goes above a few % pts
Not only is a 20 point drop nothing but if everyone’s score drops 20, nothing has changed.
Credit reporting is an evil practise. It needs to end.
Before credit reporting credit decisions were literally determined based on vibes, which of course means rampant discrimination. While I can think of additional protections and reforms to credit reporting, I'm not sure there is a better option for determining credit risk than a centralized credit reporting mechanism like we have now
I don't have a specific policy proposal for you. Needing a long term loan to have access to transportation or a place to live is already a pretty grim situation, but building a punitive and dystopic privacy nightmare on top of that doesn't really meet my criteria for "unpleasant but necessary facts of life, might as well accept it".
We're miles away from a sane reality, and all I'm doing is pointing that out - we're not going to have a good time whether we decide to accept it and let things get worse or start fighting our way back. It's all a nightmare.
Needing a long term loan to have access to transportation or a place to live is already a pretty grim situation
Honestly it wouldn't be such a concern if cost of living was better balanced and a much more robust social safety net was in place. For a money-based society heavily regulated credit scores are probably the best solution to the challenges of fair lending.
I'd even hazard to say the current credit system doesn't require significant reform. There's a lot of consumer protections still on the books unlike other systems in the US that badly need reform. There's predatory credit products that need to be regulated out of existence for sure, and some of the scaled back protections need to be put back, and I can think of a few minor improvements, but it's one system that I honestly think is not far off from its ideal form.
It’s there for good reason. Credit can be used for good or ill. Just remember, anything can and will be gamified. We humans love patterns and puzzles too much.
Credit scores are barely a 40 year old concept
There is far more corporate and institutional fraud rather than individuals causing problems
Not the arbitrary made up numbers that some how go down every time I pay off a car loan!!!
I remember paying off my car loan years ago and it dropping. I'm like.. wait a minute!
It's crazy to me. I just focus on my personal debts and pay off timelines and ignore my credit score these days.
Banks were willing to give me mortgages a couple of months ago that I in no way could afford based off my score (it's actually good). None of this is grounded in reality; prior to 2020 those same fucks wouldn't even pick up the phone for me.
Credit scores are a number used by financial institutions to judge how much money they can take from your pockets. I don't have a cent of debt, and my credit score is 630.
My credit score has consistently been around 750 for a long time and it never helped me in any way at all, anyway.
Mine's been consistently 800+ for years... and it has helped me considerably... repeatedly.
Has it though? I wonder how the deals you got compared to the person who posted above you? You really wouldn't know. Maybe you got the same deal but you are happy with it and they are not. There is no transparency.
My score never really seemed to make a difference when I financed things. I have had good and bad scores over the years. For me it's usually based on what I am buying and how much I am willing to put down.
Has it though?
Yes it has... because I've attempted to take loans primarily under my wife who doesn't hold as high a score as I do for a myriad of reasons. Same shared incomes... same shared assets. Only difference is my score is higher as far as they're concerned.
Generally 750 and above are considered the same, but even if they weren't, it's not about getting a "deal" in terms of a cheap purchase price on a car but rather cheap interest rates along with all the other crap they've tied to it lately like jobs and housing. With loans, you can see what the prime interest rate is for a specific type of loan and you should be getting close to that if you're in the market for one. You're not simply reliant on what some car salesman tells you that you qualify for (in fact this is a good way to get a terrible rate) but you can shop around yourself at banks and CUs to get the best rate for example.
I have one single credit card that I use and pay back regularly. I have no other debt - school loans are paid off, cars are paid off, never late on bills, rent paid on time (they report it to credit bureaus)... I don't even have medical debt.
And yet my credit is mid 600s.
Make it make sense.
“There are 45 million people with student loan debt and 15 million with medical debt. It’s highly likely that there is some overlap there,” said Adam Rust, director of financial services for the Consumer Federation of America. “People are really facing a perfect storm here.”
Joke's on them, my credit score already sucks. I love it when some bill collector threatens to ruin my credit. Good luck, loser.
"You have until 5pm today to take a 20% off discount on your settlement payback. If you don't respond it may reduce your credit score." ¯\_(ツ)_/¯
If everyone's credit score falls, aren't we all set?
Or is every single service in the USA that depends on credit score all going to tank at the same time?
Jokes on them cause I don't even have credit.
What do you mean by soon?…mines been nonexistent for years, decades now!