Why Your Credit Score Matters

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Why Your Credit Score Matters

At Credit Karma, we talk about credit scores a lot. It is in our name, after all. But while we cover credit myths, how to improve your credit health and a multitude of other financial topics frequently, we don't spend much time answering one important question: Why should you care? Does this three-digit number only matter when you apply for credit? Can it really affect your day-to-day life? Let's explore why your credit score may matter more than you'd expect.

What is a credit score?

In order to explain why credit scores are important, we need to start at the beginning. Simply put, a credit score is a three-digit number that uses information from your credit report to assess your creditworthiness. Basically, it's an indication of how likely you are to repay debts in a timely manner.

Why does my score matter?

Your credit score plays a pivotal role in your financial journey. As far as numbers go, it's one of the most important digits that'll ever be attached to your name. Here are some key aspects of your life it could impact:

  • Whether or not you're approved for credit. Many people scorn credit, but the simple fact of the matter is that in most situations, your credit score is a deciding factor in whether you'll be approved for a mortgage, car loan, credit card or another type of loan. Lenders want to be paid back, so if your score indicates that you're an unreliable borrower, you may not get the credit you need. And although there are loans available to those with weaker (or no) credit, you probably don't want to rely on payday loans, pawn shop loans or other loans with sky-high interest rates and fat fees.

  • How much you pay in interest. Want to save a lot of money? Improving your credit health can help you qualify for the best rates and terms. It may sound simple or too good to be true, but the higher your score, the less interest you're likely to pay each month and overall. Did you know that if you have a credit score of 650 and get a 30-year, $400,000 mortgage, you could pay over $70,000 more in interest than someone with a 750 credit score and the same mortgage? That's huge! Forget clipping coupons-- your credit score probably has the most potential to save or cost you your hard-earned money.

  • Other factors. If you don't plan on applying for credit in the near future, you may think that your score isn't that important. However, your score doesn't just affect your ability to get favorable loans and great credit cards. If you're looking for an apartment, your score may impact your probability of getting approved, the size of your security deposit and how much you pay in fees. It can also impact how much you pay for home and auto insurance and might even decide whether you're approved for a new cell phone plan. Clearly people other than lenders care about your credit score-- and you should too!

What should I do now?

Even if the credit scoring system doesn't seem fair to you, rebelling against the system by not monitoring your credit health isn't going to change the process. If anything, it may hurt you. At Credit Karma, we think that credit scores matter, so we offer a host of services that allow you to see where you stand in the credit world, get helpful tips for improving your credit health and utilize other tools and resources-- all for free. Try it out and let us know if you have any questions! We're here to help.

All things said, we'd like to end by emphasizing that you are not your credit score. Taking steps to improve your credit health is great and highly encouraged, but never let your credit score define you--it'll only drive you crazy.

About the Author: is Credit Karma's Social Media Manager. Although her specialty lies in creating witty post-it notes, she also enjoys sharing all the financial information she's learned since joining Credit Karma in February 2012. When she's not working, you can probably find her trying out a new dessert recipe or learning/perfecting any musical instrument she can get her hands on. Say "hi" @leejennaa!

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

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1 Contribution
282 People Helped

Helpful to 282 out of 312 people

Credit scores are adversely affected by inane things.  Because I used over 50% of one cards availabe credit (It has the best money back rewards), my score was downgraded even though I was under 10% of credit available on all of my cards.

If I open a new card because of a better interest rate I am penalized because the average life of my credit cards is lessened.  The same thing happens if I close a very old account.

If I shop my mortgage, looking for a better rate, I am downgraded because of hard inquiries.

If I get a gas company credit card to take advantage of the reduced prices for using it to purchase their gas, then close the account, I am penalized.

These items need to be addressed as it costs theconsumer money to comply with these "rules".

Reply by
Birdman330032

1 Contribution
58 People Helped
Helpful to 58 out of 119 people

Enter Your Reply  Hey Gary - Credit UTILIZATION, stop using so much on one card, Stop "shopping"  This is common credit score sense.  Also how any many cards, accounts do you have?  I love Credit Karma.  It shows you an "Approx" score a person is sitting at, it's not the be all end all.  Go to FICO if you want the exacct score and see how you stack up.

Reply by
42mabel

1 Contribution
75 People Helped
Helpful to 75 out of 102 people

Or you could just die. My husband died 2 years ago but I never closed his  CK account. His credit rating just keeps climbing.......

c

reit Karma accoun

Reply by
TogaLady12866

1 Contribution
69 People Helped
Helpful to 69 out of 82 people

Hi Gary B...you have opened 2 new accounts...you have closed 2 old accounts.

Don't close old accounts...just let them sit there...eventually they will come off your credit report. 2 new cards within a short period of time doesn't look good to them...I can't remember why but if you click on one of the tabs at top...it will show you what activities are high importance &  which are low importance.  I personally know paying your bill on time is  a big deal...also the length of your credit history is important so don't close those old accounts! Hope that helps a bit. Best wishes for gaining a higher credit report score.

Reply by
FGSJ

1 Contribution
8 People Helped
Helpful to 8 out of 10 people

Gary, you forgot to mention, if you pay off all your debts and try to live debt-free, your score falls to the bottom...

The US "credit score" game is all a big lie, another clever invention of bankers to enslave people by forcing them to be perpetually in debt.

If you are smart enough to understand this and to take action (to live within one's means, buying only what one can afford with ONE's OWN money, then you are automagically a risk for "the system" and you get penalized.  

The saddest thing is that these bankers own everything (the law and the law makers) so their greed and voracity is legal (institutionalized ripoff)

There are countries where this is not the case.  People don't get penalized for living debt-free, closing accounts, shopping around for mortgages, etc.  Solution?  Educate yourself, your family, your community, your town, your city...Help build a snow ball of educated people that will eventually put a stop to the abuses of bankers.

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Reply by
MoonWoof

14 Contributions
61 People Helped
Helpful to 3 out of 3 people

You're exactly right Gary! Another thing that they'll do is punish you for whats they call, "excessive use of a financial intrument".

I very rarely use cash, instead I use one specific card for all of my routine purchases, Gas, Groceries, Restaurant, etc. I have a set monthly allowance (budget) that I stick to and then pay it off every month so as to avoid any interest charges. By doing so, I also earn 1% cashback on all of my purchases (something I would be out if using cash) and every quarter this particular card offers 5% cashback on specific purchases, ie. the 1st quarter of the year I received 5% cashback on all of my Gas and transportation charges, who wouldn't like that? This current quarter I'm earning 5% cash back on restaurant and entertainment charges. None of which I would have gotten back had I used cash. That's called smart money managment, aka: getting the most bang for your buck! Another nice part is that I see my cashback balance on my monthly statement and can have it direct deposited into my personal bank account anytime, FOR FREE! If I happen to be shopping on Amazon I can also use whatever amount of my cashback balance, should I choose to, towards the purchase price of whatever I buy on Amazon.

But shame on me, we're going to have to shave some points off of that precious credit score because you're just a little to financially savy with your money. lol............... Go for it credit score police!

@TogaLady, Most companies will still close your old accounts within two years of being inactive anyway, so if you've had the card for 20 years and stopped using it, you're going to end up losing that time anyway. Also, If they close and tag them "CBC, Closed By Consumer" you're fine, but they will also close and tag them "CBG, Closed By Grantor" meaning the card company closed the account and they usually won't give a reason why. That's a red flag when creditors run a credit check on you.

@FGSJ, You're also correct, and even if you have credit cards that you use, your score will still be limited as far as how high it will go unless you diversify your credit with other types of loans such as Home or Auto loans.

Your best bet is just to do business, preferably with one Bank/Credit Union and deal with the same people. Years of faithful reliable financial history with one particular financial institute will serve you better than any credit reporting agency and credit score will.

Reply by
andreasj64

4 Contributions
3 People Helped
Helpful to 1 out of 1 people

The point Gary is making is that you shouldn't be penalized for making smart financial decisions.  If we were able to shop rates, dump useless cards, move debt, open new accounts, etc, without being penalized, we'd force competition and lower rates.  The rating system does not benefit consumers.  It's designed by the lending companies to invoke fear and complacency in consumers.  They don't want you to move your debt for a better rate.  They want you to fear credit ratings to keep you complacent, regardless of how much you could save getting a better deal elswhere after the fact.  It makes sense for Gary to use the best card, because he's getting the best return on his spending habits. 

I think Birdman330 makes my point perfectly clear.  " stop using so much on one card, Stop "shopping"  This is common credit score sense."

Stop shopping?  Really?  That is exactly what the creditors want you to think Birdman330. 

Credit scores aren't a game where high score wins.  Your objective is to be somewhere between 720 and 800.  I have 35 accounts and a 761 transunion credit score and a 725 equifax.  I am satisfied with where I'm at.  I'd like the equifax a bit higher, but they hit me with 15 inquiries.  I regulary open cards when there's a deal in it for me.  I move loans as well.  For example, I bought some bike parts on Amazon for $70.  They had an offer of $50 if I opened an Amazon card.  I took it.  Another example was some furniture I bought.  3 years no interest.  I took it.  Why not keep my money in my account as long as possible?   Although I don't get a lot of interest in my savings, it still beats no interest.  Either way I was going to spend the same amount on my furniture, so why not spend it slowly?  I also moved a car loan recently to save 1.5%.  Why not?  It didn't cost me anything but time, and it dropped my payment a little.  Over time it's a few hundred bucks. 

It's all about managing your money properly.  I manage mine well.  My credit card utilization is 4%-6%, and I pay 0 interest.  I try to make money off my cards whenever possible, and pay them off before interest hits.  If there's some introductory offer when I go to spend a chunk of money, I take advantage of it.  I pay bills with my credit cards, like my cell phone and cable bill, and then pay them off automatically when the statement comes out.  It's easier to manage your money with all the automated tools.  I wouldn't ever do that when I was writing checks.   

I don't worry about my credit score all the time.  I watch it and pay attention, but I'm not trying to move it above 800.  There's no real benefit to me.  I get the same great deals where I'm at. 

Reply by
eddiesanta

2 Contributions
0 People Helped

Hey birdman, the point is that someone shouldn't have to walk on eggshells in their credit life and be at the mercy of what "someone says you can or can't do" with your own credit habits without being penalized. It's not "common sense," like you so condescendingly put it; it's called control issues by the credit powers that be, sorry to say.

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Reply by
MoonWoof

14 Contributions
61 People Helped

Creditcard companies charge a higher interest rate if you have the so called, negative tick marks, on your credit score that you mentioned in your comment. Higher interest = more $ to the card issuer. Don't look for any changes anytime in the near future. It's a sophisticated scam.

I had an error on one of my cards in one of my credit reports that stated I had gone over my credit limit. I contacted the reporting agency, mailed them the proper paperwork stating what my real balance was from the very card company that they had errored on my credit report. They simply inserted a note next to the error that said I had disputed the amount without even correcting it. That after sending them paperwork from the card issuer correcting their error. I thought, that looks about as good to a lender as a prisoner always saying, "I didn't do it", lol..............

Your best bet is to try and borrow from the same lender all of the time, car, personal, home, etc. and make payments on time. It's nice once you're established and get to the point where they look at your track record (with them) and cut a check on the spot without hesitation or even checking your score, except perhaps a home loan, that's obviously more involved, but car loans, personal loans, etc. are a snap.

Reply by
Coloradogirl65

1 Contribution
0 People Helped

Do not ever close any accounts,I did that to a credit card years ago and my fico score went down,the information that was written down was that thr creditor closed the account,,which was wrong! if your tempted to use your card,just cut it up,if they send you another one when that expires cut it up again,but don't call it in to cancel,it brings your credit worthiness down.

Reply by
Suncali54

1 Contribution
0 People Helped

Also, if a creditor closes your account becaue of non usage, we get penalized!!!

Top Contributor
23 Contributions
183 People Helped

Helpful to 114 out of 122 people

I'm buying a house.  Take ALL your credit scores from EVERYWHERE and throw them out the window.  The mortgage company pulls from their own special credit score calculator and it's nowhere near the same as the three credit bureaus, FICO or the scores you see here on CK, nor the scores your credit card companies claim your scores are.  Captial One 'tracks' your credit score via Transunion but it's stayed the same for the past 9 months.  Discover uses FICO which is completely different from the FICO score at Bank of America.  The scores my mortgage broker pulled vary by almost 100 points, they're from Equifax, Experian, and TransUnion.  Naturally, they take the smallest score of the three.  They don't average them.  They don't pick the high score.  They don't throw the three in a hat and draw one.  They simply pick the lowest score and base everything on that ONE number. The most defining score, regardless of  ANY OTHER FACTOR WHATSOEVER, is what they'll base the entire mortgage process on, from what plans you qualify for, to interest rates, to how much you'll need to put down and pay in closing costs.  That single three digit number, which will be the determining factor above all else as to what house you can buy.  A 30 year loan is based on one number.  Your house is based on one number.  Your most  (for many people) expensive purchase in your life is based on ONE NUMBER. Well, that one number won't be what you think it is.  The one that they pulled out of their *** for my mortgage is lower than ALL my scores reported EVERYWHERE else.  Even the bogus TransUnion score Capital One claims I have.  

So, credit scores ARE a joke.  If you think different, more power to you. The entire financial industry is here for one purpose. To make obscene amounts of money. They can't do that if they calculate credit scores 'correctly'.  

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Reply by
love14mr38

134 Contributions
171 People Helped
Helpful to 32 out of 35 people

BanksStealE. You have written a correct statement. The FICO Credit Bureau is one most people do not know exist. It's offices are in Illinois. That is were all  credit scores are compiled. It's office is in Illinois. FICO is Fair Issac Corproation Organization. It was established in 1950. That is where the 'real credit score is being compiled' and the others Equifax, TransUnion,  Experian is just wjere our credit is being reported. The other businesses goes to FICO for oxmpiling of our scores. The three bureaus will only keep records when they are reported by the companies or establishment we have business with on a day to day or month to month or  every three months. It depends on the business, but making a purchased on credit the companies has their own soure of how to approve your credit and what the score is or not. Right message and it is very true.

Reply by
Gooddayguyz

2 Contributions
24 People Helped
Helpful to 24 out of 26 people

Thats so true..No one ever got to know the algorithm these 3 so called credit companies use..and consider this, how can your score be different in these 3 different agencies and why should they be after all. You are same person, your mosr important number remains same, everything you do remains same...if you think rational and logical, they don't want you to understand..they really want to fool common people (99% of total population), by showing some crap and letting them believe happy or pitty...you ask anybody (even one of the top boss in these 3 companies) they will take you for a ride around the universe telling all kinda stories but make you more confused that wha you were...they will tell you it DEPENDS on so many factors etc. etc. thats while lie..YES, all lenders want to make most money out of these 99% group..thats the truth and thats going to be this way until a mass movement starts to either clarify this whole mistery or change the entire system...its has something to do with all of us as well...those of us who have high scores they are happy and content with the interest rates they gate, so they don't complain..whereas others complain, cry, shout...isn't it the responsibility of one and all to shout loud to have this explained how they come to these scores (not the foolish points they keep reiterating)...Good day all.

2 Contributions
28 People Helped
Helpful to 6 out of 8 people

As far as I know both my Mortgages were based on the "Mid" score.  (Not the average.  The score remaining when you discard the highest and the lowest.)

1 Contribution
70 People Helped

Helpful to 70 out of 80 people

You guys also have to understand that while you're looking at your credit report showing 700 or whatever and CK is showing 640, its all different based on where your credit is actually located. For instance, I went to look at a car and had my credit pulled through transunion and had a 750 credit score, I went to a bank to have a credit card added to my account, they pulled from transunion and it was 700. So there is never a "for sure" number to be completely specific. I had a credit specialist explain this to me in greater detail but hopefully this will help you guys understand that there are different factors as to why each credit place such as equifax transunion and experian are all going to show a different number. Heck even my FICO score number was different than the one the bank pulled...it just depends on specifics needed for each report. If that doesn't help maybe contact a credit specialist at your bank and have them explain it to you.

Credit Karma Team
Top Contributor
2949 Contributions
5341 People Helped
Helpful to 20 out of 23 people

Thanks for posting. There are too many credit score models to count! It sure can be confusing. 

Reply by
EternalBro

1 Contribution
31 People Helped
Helpful to 31 out of 34 people

As a guess, I'd suspect the car dealer ran your credit (that is put a hard inquiry on your credit report), thereby lowering your score the 50 points by the time the bank also pulled your credit.  Car dealers a notoriously bad at placing hard inquiries on people's credit reports, ostensibly to get them the "best" (or at least accurate) rate for financing, but if you're anything other than ready to sign, it's just harmful to your credit score.

Reply by
pageoellein

1 Contribution
4 People Helped
Helpful to 4 out of 8 people

Fiest you have to know your own number that is good for you. must do all income stuff before like six months ahead and already know kind of vehicle, set at four month check score at that point wait till the next four make sure no crazy buying, so at six month mark able to make big purchace. that simple to be preappove with proof. GOOD LUCK

Reply by
FreeWoman54

1 Contribution
0 People Helped

When you apply for a car loan, your credit rating takes a hit. Several years ago I made the mistake of going to two places simply to inquire about a car loan. Each credit union/bank rep said "Do you mind if I pull your credit score?" Stupidly, I said "go ahead". Those two inquiries made my credit score dip. I noticed only last year that these two inquiries from 2011 are no longer effecting my score--they don't show up on my report. Every time you apply for a credit card, your score takes a hit. I think it's best to pay your bills on time and work with the cards you currently have to lower your interest rate, rather than taking on a new card. 

Reply by
salim20001

5 Contributions
4 People Helped

First time you have pulled your credit score it was 750 but you will get penalized for that after a week (hard inquiry) so if you go a loan for a car you will also be penalized for the short period. It make sense that your score will drop to 700 after 1-2 weeks. Kepp tracking of your score on credit Karma every week to see how  it get affected.

1 Contribution
24 People Helped

Helpful to 24 out of 24 people

I had a credit score of 834, but because I used my Target card (just so they wouldn't cancel it ) my credit score drop to 817.   Limit was for $200 and I charge $98. 49% usage--Who gives out a card with a $200 dollar limit? stupid  I didn't realize it was such a low limit.  Live and learn

Reply by
carvols

1 Contribution
10 People Helped
Helpful to 10 out of 11 people

I got one with a &100 limit. I'm not going to use it and let them cancel it. What can they do? Take my birthday??

Reply by
Martinkoshy

3 Contributions
19 People Helped
Helpful to 6 out of 7 people

you could always request a credit line increase

1 Contribution
38 People Helped

Helpful to 38 out of 40 people

Paying off a bill/credit card and closing it should not have a bad effect on your score...since when is that the American Way?  At least there should be NO impact. I am 73 and guess I just hate the changes that are stupid but I grew up thinking that was the right thing to do.  Changed my mind when my 94 year old neighbor had her paid off home's homeowners insurance quadruple...because she paid all her bills as soon as she got them...and had no credit cards. They considered her a "poor risk"...and that is really stupid...of them...

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Reply by
love14mr38

134 Contributions
171 People Helped
Helpful to 16 out of 16 people

They will consider you a credit risk when you do not own several credit cards or loans some where. I know I am one of those consumer. No credit oinly with my belated husband. That account of my husband is close and I have build my own personal credit. The system is false and does not care about the elderly any way. But we are still living.

2 Contributions
53 People Helped

Helpful to 50 out of 59 people

they should pass a law stating a hard inquiry is about to apply when you choose us, or just THINKING  about using out service.  I was zapped 4 times looking for the best cable phone etc. who knew?  not me.  if some places can make a hard inquiry for rent and others not!  I have good credit and would decline that renter and look elsewhere.  Seems the public is penalized for trying to better their own income by looking for a better deal.  I feel sorry for young adults with no credit history or pay cash for items because they do not want a bill hanging over their head.  It will take them years to establish decent credit.  I am 62, and have helped my children countless times by being the one to buy the car, fix the car, furniture, etc.  they me on time every month.  when is comes to 2% or 29.99% so you can get tires for your car, makes you wonder why the economy is so poor.  dont let people keep charging when they miss payments.  i remember when i was late on a cable bill and they turned it off.  i came up with the money pretty quick. Charge card people just let them dig deeper and deeper.

Reply by
Robley08

4 Contributions
39 People Helped
Helpful to 27 out of 27 people

Last summer I went to a car dealership to see about trading my SUV in for a newer one (mine had 253,000 miles on it) and the dealership (without my consent) ran my credit 9 TIMES! I noticed it on my credit report when I bought my new SUV in November. I've tried contacting the credit bureaus to get them removed but they said I gave them consent and they didnt need a signiture. They somehow got my social security number and thats all the proof they need to say in court that I gave it to them. It KILLED my credit score and now I have to wait 2 years for those hard inquries to fall off my report. 

1 Contribution
80 People Helped

Helpful to 80 out of 128 people

My Goal is to have a zero credit score, which means i am not in debt to build a three digit number that means absoutley nothing.  Pay cash for everything in life and don't worship at the alter of fico!

Reply by
ca8050

5 Contributions
47 People Helped
Helpful to 31 out of 49 people

Perfect!  It's the Dave Ramsey philosophy...

Reply by
dano1188

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11 People Helped
Helpful to 11 out of 22 people

Excellent!!

Reply by
Milk82

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18 People Helped
Helpful to 18 out of 25 people

I totally agree! People overspend if they have to borrow money to pay for something! Stop overspend and start saving at least 10% of your income, then start paying for things cash. You might not have money for a new car, but you can still buy a decent car that takes you around. At least you don't have to pay interest and think about your credit score all the time!! 

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Reply by
Pat593949

16 Contributions
36 People Helped
Helpful to 1 out of 1 people

I grew up feeling the same way as you. Paid my rent and all my bills on time. Never wanted a credit card. Paid for everything with cash. I dont know what your money situation is, but it's hard to buy a house when you are paying rent. So I broke down and got a few credit cards. Started with a secure card for 6 months. It's been just over a year now and I have 5 cards. My goal is to never pay them any interest. They have actually paid me over $240.00 in cash back rewards in just one year. And I only bought things with the cards I would have bought anyway whether I had the cards or not. You don't have to be in debt at all to have a great credit score.

I don't know about you but it would be impossible for me to afford a house without getting a loan. I think that applies to most other people also. Plus there are other reasons to keep a good score. Some insurance companies charge you more if you have a bad score.

But maybe your situation is different. Maybe your one of the lucky ones that paid cash for your house. Not everyone can be that lucky.

Believe me I don't worship anything about FICO, but I am going to play the game for awhile so a bank will want to give me a loan. So I can use my rent on a mortgage and start building equity.

Reply by
itzsaga

4 Contributions
39 People Helped

Great goal. The little known fact of manual underwriting is how to live in our current society without a credit score. I'm going through it right now for a mortgage. Yes it takes more time and isn't as "easy" but I'll have a fixed rate lower than everyone I know with no money down and no PMI. These companies do exist, you just have to find them.

Reply by
Jim5599

2 Contributions
0 People Helped

You can have a good credit score and not be in debt.  Just pay off the credit card in full each billing cycle.  I haven't paid a dime of interest in years.  My score?  800+.

Reply by
geo455

5 Contributions
20 People Helped

Could not agree more! Just closed my last credit card account. Feels awesome.

Reply by
omaha51

6 Contributions
12 People Helped

Enter Your Reply So why are you here?

4 Contributions
54 People Helped

Helpful to 15 out of 15 people

I am going to give a few pieces of advise. We know what advise is everybody has one...oh that's an opinion.

If you miss a payment pay it immediately. I have missed payments, by accident and they have never gone to the credit report. Call do what you need to asap to pay that bill.

I do not run a balance on any card that charges interest. Paid in full every month.

The only ones that do not get paid off each month are zero interest (usually) store credit cards. Six months to pay, 12 months to pay. When I do this I figure the amount due and schedule "X" dollars each month to pay off the card in four months for a six month, and 10 months for a 12 month. I bank online and have these amounts paid on time every time and in plenty of time so I can catch an error.Nothing get charged until the balances are paid in full. More charging screws up the system don't do it!!!!  Pay off the balance first. An example of this is I purchased a new washer , dryer, and refridgerator with a 24 month no interest. I not only got a good price on the trio but saved over $800 in interest.

I do not use those checks they send me as there is a 3 to 5% one time charge. Nope don't want to pay any interest at all.

Probably the most important I saved for last. If you are using what I have stated above I encourage you to call customer service (the number is on the back of the card) and get your balance. A few years back I was depending on the card companies to send me a bill every month. On occasion, for reasons I cannot explain, them or bad postal delivery, I would miss a payment. Yes, I paid right away thus no bad remarks, but I was handed a $35 late fee. Maybe 10 over a couple of years and it was no particular card. So...Now when I charge something, if I do not go home and pay it right away, I call the card companies every two weeks to check my balance. I use cards to save money, get points, help my credit score, etc. 5% off at Lowes, and Homedepot, point for book purchases. So, by checking the cards' balance quickly I see what I have charged and I pay it before the bill even arrives. I have eliminated all late fees using this method. All other bills that are on a time payment plan are paid "on time" through my computer and my bank. Examples are I have 15 years of mortgage payments...never late. Eleven years of car insurance, never late. Student loans 10 years, never late. I have not one late payment or derogatory remark on the credit score. Another thing to watch is if you use a card, that you rarely use, watch out. I had an emergency surgery for my dog and slapped in on a card that I rarely ever use. I waited a couple of weeks and no bill. At the third week, no bill, I called the card, got my balance, and paid it in full, w/o the bill. The bill finally showed up "seven" weeks after the charge. Of course it was paid. My wife has a card that she never uses, and my normal card of choice was not working. ( I had forgot to revive it) and the same thing happened. No bill. After a couple of weeks I had her call and get the balance (had to do it twice) and paid it off. (twice). I wonder if these card companies hold these balances to give you enough rope to forget about it and then become a late payer. I have even paid bills that I didn't even know I had a bill, just to make sure they received a payment. If you over pay they usually send you a check back. What I am trying to say, is it is a part time job to keep yourself from tripping up and missing a payment, DON'T!!!  If you find you did pay it at once. I am also going to say that even if you do pay it at once, yes you get a late charge, but doing that too often will probably sour their thoughts of you and send a report to your credit score.

Another set-up I don't like is getting your bill through your email account. Well, if your email account is like mine it is cluttered with all kinds of crap so finding a due bill can be missed. No email billing for me. I did have an email billing from one card, and I was looking for the bill, (i'm not perfect), never saw it in my email. Sure enough a paper bill showed up saying I was late. Some how the email billing fell off and I didn't catch it. No email billing for me.

I close with, I am somewhat fluid. But I made myself that way. After crashing and burning with a bankruptcy and foreclosure, I went to work to be right from then on, and it took years. But, it has paid off. You can do it too. Remember, your score is determined by the amount you carry and the payments you make, as in more than the minimum? Read what CreditKarma says in their various articles, all about how to better your score, they are correct and through some of their suggestions and actions of my own, stated above, my credit has climbed. If your credit score is not where you like it, read your score information and see what you have done. Also remember, if you are beginning this adventure at a 500 score, you have to know it will take years to raise it to 700+ and then keep plugging from there.

Credit Karma Team
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Thank you for sharing your experience!

Reply by
Sk1744

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Here's a piece of advice: You spelled advice as advise.

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Last summer I went to a car dealership to see about trading my SUV in for a newer one (mine had 253,000 miles on it) and the dealership (without my consent) ran my credit 9 TIMES! I noticed it on my credit report when I bought my new SUV in November. I've tried contacting the credit bureaus to get them removed but they said I gave them consent and they didnt need a signiture. They somehow got my social security number and thats all the proof they need to say in court that I gave it to them. It KILLED my credit score and now I have to wait 2 years for those hard inquries to fall off my report. 

Reply by
salim20001

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If your credit score is screwed up you can fill a banckrupty like Trump and call it business :)

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Why does CK not match Transunion and Equifax?   The Scores are not even close.   Transunion direct - 794 - Credit Karma 724.   Huge gaps folks..  Inaccurate information greatly reduces the overall integrity of this website.  The whole website appeares to be a selling tool for different credit card companies and services.   I haven't had a score below 770 on all three Companies in 20 years.    

Credit Karma Team
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Hi Bcobbs,

Each credit bureau has many different proprietary algorithms they can use to calculate your credit score, depending on the intended use of the credit account. For example, an auto loan uses a specific formula that weighs your past experience with auto loans more heavily. We provide the VantageScore 3.0 from TransUnion and Equifax, which is a more general score model. 

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So much devious activity on the search engines now that it is a joy to get a site like Credit Karma!  Thank you so much for your service and info.  We really do appreceiate it all.  If you ever make mouse traps available we promise we will not purchase any other!      RAD AND BEV TUCKER

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So my FICO credit score is 806 through my American Express Account, 817 through my CitiBank Account, 828 with Experian, and 830 through TransUnion. My scores are "so low" because I have no recent mortgage payments, and "time" since I opened my accounts is too short. Funny! my oldest credit card on their records goes back to 1991, although I have one card I've had since 1984. I have two fully paid for houses, two fully paid for BMWs (paid cash for both) I have 22 open credit card accounts, but my total use is only 4% of my total credit line. The bottom line is that the credit bureaus reward you for being in debt... you get no points for paying your accounts in full. And when I went to the bank to inquire about a Home Equity Loan (HELOC) the bank didn't even use FICO, Experian, or TransUnion. So I take this whole credit scoring account business with a grain of salt.

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I think this credit score thing is a joke, i owe no one, have no morgage, pay bills ahead of time and use credit card for most things which i pay off early every month. But score just dropped. This is a joke just so lenders can rip people off....

Reply by
samoting

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Same ol' thing here. I buy something, my score goes down. I pay off the bill in full, the score goes up. No other changes.

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You know what really sucks is when you don't owe a debt that was reported and now it's on your credit score.  Try geting it off.  You have to hope the people that put it on your report will go through the work it takes to get it off.  If they don't want to bother it will stay there and you get screwed for a debt you don't owe.  

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I would like to say that the credit scoring system is complete garbage ! I have a payment record of 100% on time payments to ALL of my accounts going back over 16 years . I currently have no adverse comments on my record and earn a decent amount of income . However , my score is always in the 660 to 680 range . My brother in law has no job and NO credit history other than a REPO AND HAD A 700 CRDIT SCORE and was given a loan ! How is it possible that a person with no job and only bad history can be a better risk than a person with a great track record ? The laws need to be changed to reflect real life and scores that are based on logic ! Why would you loan money to someone you don't know as opposed to someone with a good history ?

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Try getting something off your score. Our bank reversed my sons SS numbers and their credit scores are screwed up. Oldest kid has youngers college loan showing up on his report. Two places all we had to do is call and explain and send in a copy of ID. Not Equifax-they wanted pages and pages of info. After we sent in two different sets of forms they wanted a copy of birth cert., & copy of SS card. They already have Drivers license, so.... Identity theft anyone!

It's crazy.

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My credit score dropped when:

  - I paid off my mortgage- "age of credit" was reduced!  (big hit- about 50 points!)

 - Shopping for the best cable TV deal- 3 inquiries!

THIS MAKES NO SENSE!!!!! THE SYSTEM NEEDS TO BE CHANGED!

Reply by
lther92

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Yeah, Icancelled high interest and yearly fee cards that I haven't used and had no intent on using and I had the same issue. Just plain wrong.

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According to CreditKarma, my Credit History is schizophrenic.  TransUnion says I'm 100% (Excellent) and the new the put up here, Experian, says I'm 91.x% (Very Poor). How anyone is supposed to glean accurate information from two wildly diffferent reports is beyond me. Good thing I'm not applying for credit anywhere these days. If I was, I'm sure I would be denied.

Credit Karma Team
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Hi Beel98,

We currently display reports from TransUnion and Equifax. Your creditors are not required to report to multiple bureaus, so one report may contain information about late payments that the other report has no record of. Each bureau is responsible for the accuracy of the information that is reported to them. If it wasn't reported, they won't have it on file. 

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I have been using Credit Karma for a couple of years now and my credit history is excellent according to them. I have only 10 accounts,[poor] according to CK but my score is reported at over 800 which is hard to believe because FICO says it is much lower. I never have any trouble getting car loans with great rates and I always pay everything off early no matter what. [Credits cards and car loans]. I was told by credit specialists that this is a bad thing so with that info, I no longer care what my score is even though I do follow it. I have never missed a payment or ever been late and always pay much more than the minimum so why should I care what my score is? I think it is only an inacurate way to scare people. Lighten up and enjoy life!

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Just want to say thanks to CK.

I am a 100% disabled vet and through the use of CK my wife and I will finally be able to build our dream home.

We bought property last year and have been able to work on our credit score through CK.

It is very frustrating to watch your credit score go up and down like a rollercoaster, But with CK

you know the areas you need to work on. It takes alot of patience, and can be very frustraiting at times.

Credit is not a short term fix. I have been working on my score through CK's tools for 18 months now and never dreamed I

Would have a score in the exellent catagory. I still have work to do on my score, But should be where I need to be

next year sometime. If not, I know My dream is close through CK tools.

Thanks CK and staff.

To all of you out there, Be diligent, Be patient, and reach for the stars with CK.

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What the ?!?!

According to CK, my TU credit score increased by18 points, it's now at 632 (although still at Poor), but my EF credit score DROPPED 43 points in a week! It's now at 561.

For NO reason.

I have 100 % perfect payments, no derogatories, 22 total accounts, I just recieved a $500 CL increase on one of my cards, I recently disputed and had a hard pull removed. I do have 17 inquiries on TU, only 13 inquiries on EF, and a high utilization, 69 %, but I just payed dowm several cards by $940 total...

But EF is now Very Poor. I've checked my credit reports, there is NO reason for this huge drop.

Any explaination?

Reply by
Kennyb900

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The EF Vantage score that CK uses, like most scoring models, evaluate several factors in determining your credit score. The factors are based on historical credit bureau data showing which borrowers are most likely to pay back their loans and which borrowers are most likely to default. Virtually all credit scoring models place the highest weight on your repayment history and credit utilization rate. Your utilization rate of 69% is too high and is weighing down your credit score. A credit utilization of rate of 30% of less is recommended and 10% or less is ideal if you're looking to maximize your score. The other issue is the high number hard inquiries. The credit scoring models treat a large number of inquiries as a sign of credit risk-- you're applying for a lot of credit because you're in financial distress. The credit bureaus remove hard inquiries two years after the date they were entered. Typically, the negative effect of a hard inquiry diminishes over time -- before the inquiry drops off your credit report, provided you do not add any more hard inquiries.

So to improve your credit score, you need to drop your utilization rate to below 30% and stop applying for new credit. If you drop the utilization rate, you will see an immediate improvement when your credit card balances with the lower rate are reported to the bureaus. For the hard inquries, your score will gradually improve over time as you get further away from the dates the inquiries occurred. 

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Very True but no one cares!!

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Change my home address:  It is now - 900 Antique City Dr.  Apt. 507, Walnut, Iowa  51577.  My email and cell phone numbers remain the same.

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My credit score began at 0, since I had been travelling for 10 years-right off the map! I had to start from scratch.  Since this site's credit anyliser says that keeping the oldest card active is a good thing, how can I keep it open if it is a secured card, my oldest. It is two years old and has a balance of $2,000.00 of the $3,000.00 that i put on it to get started again.  My average lenght of card ownership is now 7 months, considered very poor on your site.  The money is mine, and although the interest is very low on MY money,  can I reduce the balance to say 50.00 bucks and keep it open or just dump it to reduce my overall spending which is at 17% of available credit?

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Thats so true..No one ever got to know the algorithm these 3 so called credit companies use..and consider this, how can your score be different in these 3 different agencies and why should they be after all. You are same person, your mosr important number remains same, everything you do remains same...if you think rational and logical, they don't want you to understand..they really want to fool common people (99% of total population), by showing some crap and letting them believe happy or pitty...you ask anybody (even one of the top boss in these 3 companies) they will take you for a ride around the universe telling all kinda stories but make you more confused that wha you were...they will tell you it DEPENDS on so many factors etc. etc. thats while lie..YES, all lenders want to make most money out of these 99% group..thats the truth and thats going to be this way until a mass movement starts to either clarify this whole mistery or change the entire system...its has something to do with all of us as well...those of us who have high scores they are happy and content with the interest rates they gate, so they don't complain..whereas others complain, cry, shout...isn't it the responsibility of one and all to shout loud to have this explained how they come to these scores (not the foolish points they keep reiterating)...Good day all.

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