Ask dumb questions here!

[Seabiscuit36]

Your Fico and what goes into it

[Diomedes]

it's not like they're counting on you to miss a few payments so they can make more money-- they want you to pay it off every month as planned.

I dunno.  Seems to me they make the most money of people on the edge who miss a payment here or there, pay a penalty, etc.  Banks don't actually dislike check bouncers...they make hella fees on it.

[Cerevant]

Not interested in charging everything so I can pay it off at the end of the month either..that's not establishing good credit, because no one makes any money off me.

I feel your pain and I can't disagree with your overall philosophy, but this last statement is false.  The Wiki article covers it in more technical details, but here are some non-obvious factors:

Current on all payments: obvious.  Note that it doesn't show up on the report unless it is past 30 days overdue.

Number of credit sources: more is better, although acquiring a bunch of credit in a short time hurts your credit.  Cancelling unused credit cards hurts your credit.  It is better to leave it unused.

Age of credit accounts: longer is better...keep those old credit cards (or cut them up, but don't cancel the accounts)

Debt/credit ratio: lower the better - unsued credit shows discipline

Number of accounts with high debt/credit ratio - (bad) similar to last, but another reason why more accounts with 0 balance = better.

The backbone of your credit rating is credit cards, even if you don't use them.  The problem with secured debt is that when you pay it off, the account goes away and you can't establish a history.

[Seabiscuit36]

True, but that is a double edged sword when it comes to not paying your bills.  Some people are just habitually late when others wont pay period, fees dont matter and banks lose out on hundreds of millions of dollars.  

[Wingspan]

Charging and paying off does help your credit ratings.

If you say so...but it doesn't make any sense to me.  What is your credit rating if not a measure by which prospective lenders can judge how likely it is they will make money by lending to you?  If you pay off everything every month, no one is making money on you.

It's not a measure of how much money they can make off of you. It's a measure of how reliable you are to pay off the debt on good terms.

From what you have said here, you still have bad credit. Because the only consumer debt you've ever taken, you failed to meet the re-payment terms.

Beleive me when I say I had terrible credit. I had to sacrafice and rebuild good credit, with higher interest rates at first. But as I built history, I literally saw my credit score go up every 6 months, because I had active accounts that were in good standing. I never carried debt from month to month during that.

My wife was in a no credit situation, where she never really had any debt or any major problems. When it came time to look at that for our house, it turned out that I had a better credit score than her.

Her no-credit situation did not hurt in any way though. But by the end of the story now...we are paying less now, for a 4BR house, with our mortgage payment, than we were for a 3.5 room apartment, that was about 10 miles apart.

[Diomedes]

True, but that is a double edged sword when it comes to not paying your bills.  Some people are just habitually late when others wont pay period, fees dont matter and banks lose out on hundreds of millions of dollars. 

Dude.  Banks never lose out.  Come on.

[Cerevant]

I thought the point of the credit rating was the latter.

Nope.  It is about the ability to repay.

[PoopyfaceMcGee]

Debt/credit ratio: lower the better - unsued credit shows discipline

Isn't the problem with this that too much readily-available credit can be considered a risk?

IE:  If you have 8 credit cards with $15,000 limits and all have $0 balances, and you make $25,000 a year... that just might not be good for your credit.

That's the part that confuses me.

[Seabiscuit36]

True, but that is a double edged sword when it comes to not paying your bills.  Some people are just habitually late when others wont pay period, fees dont matter and banks lose out on hundreds of millions of dollars. 

Dude.  Banks never lose out.  Come on.

They always make money thats obvious but when you lose 200 million last year on chargeoff/bankruptcy's thats alot of moola

[Cerevant]

I dunno.  Seems to me they make the most money of people on the edge who miss a payment here or there, pay a penalty, etc.  Banks don't actually dislike check bouncers...they make hella fees on it.

Yes, but that is a different game.  Trust me - they'll make plenty off your mortgage.

[Seabiscuit36]

Debt/credit ratio: lower the better - unsued credit shows discipline

Isn't the problem with this that too much readily-available credit can be considered a risk?

IE:  If you have 8 credit cards with $15,000 limits and all have $0 balances, and you make $25,000 a year... that just might not be good for your credit.

That's the part that confuses me.

that used to be taken into account and was looked at negatively.  But now it shows the ability to not be tempted or just being smart.  

[Diomedes]

...you lose 200 million last year on chargeoff/bankruptcy's thats alot of moola

not compared to what they profited, it ain't.

[Cerevant]

Debt/credit ratio: lower the better - unsued credit shows discipline

Isn't the problem with this that too much readily-available credit can be considered a risk?

IE:  If you have 8 credit cards with $15,000 limits and all have $0 balances, and you make $25,000 a year... that just might not be good for your credit.

That's the part that confuses me.

That's why time is so important - you've shown that you can manage that amount of credit without getting into trouble.  Also, I'd doubt that you'd get $120,000 of revolving credit when you only make $25,000.

[Seabiscuit36]

i hear ya DIO, Thats my Bonus money though  

[Diomedes]

Yeah.  I'm talking a big game here--we'll see what I actually do--but I think I'm done having my financial well being tied directly to the well being of a big ass corporation.  It's a conflict of interest.