The Big Problem With Credit Scores
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Жыл бұрынCredit scores, which represent how likely a person is to pay his or her bills, affects almost every aspect of an American's financial life.
One key benefit built into the credit scoring system is its nondiscriminatory practice of using just numbers to determine a person's creditworthiness.
"Credit scoring when it was first developed was an advancement," said Chi Chi Wu, staff attorney at the National Consumer Law Center. "It is better than having some banker sit across from you and judge you and read the information in your credit report, because they bring a lot of their subjective analysis and their own life experience into the analysis. And if their life is different than your life, that analysis can be flawed."
But despite the good intentions of credit report companies, many experts argue that the current system is still discriminatory.
A survey of 5,000 U.S. adults found that more than half of Black Americans reported having a low or no credit score, compared to 41% for Hispanics, 37% for whites and 18% for Asian Americans.
Having a low or no credit score can often bring severe financial consequences. Forty-two percent of Americans said their credit scores prevented them from accessing financial products like credit cards or loans.
Sally Taylor, vice president and general manager at FICO, added, "It's important to note that credit scores didn't create some of the social economic disparities. They simply reflect the social economic disparities that are out there. The conversation should focus on addressing the root cause of these differences."
Watch the video to find out more about how credit scores can help - and hurt - consumers.
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The Big Problem With Credit Scores
@kineticstar Жыл бұрын
I went to war in 2003 and when I came home the credit companies killed my credit score because my car title holder reported me as defaulted for not paying. I had given them a written notice of deployment which is protected by law but they illegally reported me and repoed the car. I won a judgement against the title company but the credit report companies did nothing to correct the error.. it took a long time to get my credit back to the high 700s
@itsesmir6218 Жыл бұрын
That failure was on your chain of command and a bit on yourself, depending on your pay grade. Essentially you are supposed to contact the bank and advise them of your deployment, and they would have processed it. Your CoC should have given you a copy of the orders and advised you to call banks...etc I had BoA pause my loan for a few months before deciding to make payments while deployed.
@kineticstar Жыл бұрын
@@itsesmir6218 that was done. The title company was crooked. They were known for doing this to many Sailors and Marines in Norfolk.
@clarencewarren1549 Жыл бұрын
Not excusing their action but institutions always make stupid mistakes. Sometimes they put illegal claims on people's cars, other times they illegally invade a country on false charges, killing 100s of thousands of people and destroy their nation.
@SP4NKH4RD Жыл бұрын
This happened with me through Mitsubishi motors. Came back and car was gone.
@dercooney Жыл бұрын
@@kineticstar oh right, nor-fuc; i'm assuming it's one of those dealerships set up right outside the base? isn't that one of the things they warn noobs about on the first week?
@greg2141 Жыл бұрын
I spent years paying off my mortgage. I’ve never missed any payments. When I finally paid my mortgage off my credit score decreased 40 points! I would say paying off my mortgage is a pretty good indicator that I will pay lenders back… so why did my score go down? Because FICO credit scores are BS.
@coldham77 Жыл бұрын
yep, mine went down 80.
@N0Xa880iUL Жыл бұрын
Lol how does that work.
@davidp3473 Жыл бұрын
I'm not sure if this was a recent incident but it should go back soon. It only goes down because that account "closed" because you paid it off and for some reason the account goes down because the credit beaureaus only see that there's an closed - regardless of the reason. But once they realize that the amount of debt under your name decreased, then your credit should skyrocket back up. Congratulations on freeing yourself from debt by the way!
@TheRealoldcar Жыл бұрын
Same here
@FKS1994 Жыл бұрын
Sounds like you don't understand how credit scores work, then. When you pay off your mortgage, you are basically closing off an account. Because your credit score depends on your account age and credit mix, to them, you 'closing' off your debt means you aren't as diversified. It's not a huge drop and works to your advantage when creditors pull up your credit report. Credit score isn't all that matters. A 20 year old with a 780 score doesn't have a better credit portfolio than a 35 year old with a 700 score but has a history of paying off auto and mortgage payments. Credit score isn't all that matters. When I was 22, I had a 800+ credit score strictly by paying off my credit card bills on time. It's not difficult but it only plays one role in getting a huge loan issued to you. They aren't issuing a mortgage to a 22 year old regardless of their credit score unless that 22 year old is earning millions.
@Chris-ng8du Жыл бұрын
i love hearing credit reporting executives explain to me why their credit reporting system they make money on is perfect
@nathanr5825 Жыл бұрын
Welcome to a CNBC video. They are all like this.
@CarsandIcedCoffee Жыл бұрын
literally they said how they are improving it with trying to include rent payments and utility payments. They are right that Credit Scores are a good thing.
@austinduke8876 Жыл бұрын
If you can cook up a better one you will fly into the 0.01%
@dhirajmeenavilli5508 Жыл бұрын
@@austinduke8876 Well not necessarily, even if your system was more "fair" in a sense, with no proven track record or brand name you're really not really going anywhere. These are businesses with high moats and low fade rates. If you can cook up a better system and beat the current companies then you will fly into 0.01%, and also even if the system was more fair there may be no incentive for a bank to use it, forget that the executives get cushy benefits from the FICO, TransUnioun etc. a more fair system may not help make safer loans in the aggregate enough to justify such an immense overhaul in procedure and tech. So I don't think it's fair to say just because it hasn't yet been disrupted that they must be using the best system currently available.
@austinduke8876 Жыл бұрын
@@dhirajmeenavilli5508 Yes necessarily. The purpose of credit scores is not to be "fair". The purpose is to assess the likelihood that the borrower can pay back the debt on time and in full. If you can build a better model that is even 0.1% more accurate at properly profiling risk then that model is worth hundreds of millions annually.
@checkforme234 Жыл бұрын
Too many people are out here living a lifestyle they can’t afford, to impress people that don’t care. Quit hustling backwards & start putting yourself ahead. Establish the right mindset, focus on making the best version of YOU, & invest in your future.
@kimyoung8414 Жыл бұрын
All to impress broke folks while also putting themselves in debt to do so.
@erichkraetz2622 Жыл бұрын
every $1 you invest today is a little bit of time that you buy back in the future, the more you invest, the more free time you can afford in the future, having time and the freedom to choose what to do are the ultimate investing goals.
@alexyoung3126 Жыл бұрын
@@erichkraetz2622 Building a portfolio of investments that is well-structured is a terrific thing to do while investing. I have been dealing with "Eileen Ruth Sparks" for this reason. When it comes to stocks, I've learnt to remain patient because most traders want to enter and exit the market rapidly in order to make 10% or 20% profit. However, they miss out on the substantial gains because it trades at a P/E ratio of 40-50.
@joesphcu8975 Жыл бұрын
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@alexyoung3126 Жыл бұрын
@@joesphcu8975 she popular and has quite a following, so it shouldn't be a hassle to find her, just search her
@ninabeena83 Жыл бұрын
The fact that there are multiple credit bureaus that can and usually _do_ show completely different scores for a person - based on completely different data and scoring metrics - says it all for me 😑 AND the fact that one payment or account mishap an eon ago can drop a score drastically whereas it can take yearsssss of on time payment to recoup those points…insane
@nataliefontane Жыл бұрын
Honey, they show different scores because not every debt or payment is reported to all three bureaus.
@nathanr5825 Жыл бұрын
@@nataliefontane No Natalie, they have different scores for different types of lending. Auto lenders use one of the versions of FICO Auto (of which there are 5). Credit Card companies use one of the 6 versions of FICO Bankcard. Mortgage lenders use FICO 2, FICO 4 or FICO 5. I am not aware of any large lender that uses the FICO score that you and I can actually see, to make a lending determination.
@anthonyscott5134 Жыл бұрын
@@nataliefontane , and that’s part of what’s wrong with the system. I sure he, like the rest of us already know/knew that. Sounds like you think you’ve just imparted some sage info, but it isn’t. It’s just one of many issues with the current system that needs to be corrected. And no, I don’t have a solution for it, I just know that it needs fixing.
@BTrain-is8ch Жыл бұрын
They have access to mountains of data. If one screwup results in a significant change it's because the data shows that one screwup tends to be a good predictor of additional screwups. I've never seen any of my credit scores reported as meaningfully different from each other. 10-20 points shouldn't be making or breaking anyone's application for financing and if it is they probably couldn't afford whatever they were trying to buy anyway.
@lynnjudd9036 Жыл бұрын
Yup, been there, done that.
@mrprogrammer2817 Жыл бұрын
When referencing corporate America, he said “They don’t really care about you as they make it seem” realest thing he said...I’ve seen experienced it first hand in the DMV. Black ppl aren’t really respected in corporate America. Glad that he was able to get out of there and become his own boss MYSTICFLIP
@hackerdunyasi9312 Жыл бұрын
MYSTICFLIP is young. Holding almost anything mentioned here is a good hold because the VHS or Beta will only show in time. I want to hold them early. Its sad that most dont think of these things as good future holds instead of being out of the market and bottom hunting. Are we the adopters or are we scavengers? surely one of these layer ones will become the standard and i dont want to sell any of them too early.
@theskycrafter20twitch44 Жыл бұрын
You should do a new video about MYSTICFLIP ! I really like you’re mellow delivery and you seem like you’re very knowledgeable. I watch lots of influencers and you always seem very calculated and know exactly what you’re talking about and understand it. You’re better at explaining complicated things simply, than any other person on youtube keep it up brother!
@CreativeMindsAudio Жыл бұрын
literally the last statement happened to me. got in a nasty car wreck, had mental health issues from it plus injuries, couldn't work easily, eventually let go, blew through savings even with disability in about a year as i recovered, but the stress led to other health issues, rising living costs didn't allow me to get a job of similar pay easily at all, so after a couple of years of barely holding on and having towering medical and credit card debt (also from medical bills), I went bankrupt. I have been working the last few years to build up my score, still not great either, but i went to look at an apartment and they said they don't take people who went bankrupt. my bankruptcy lawyer said it won't effect my life other than not being able to buy a house or take out a loan. This has been a BIG lie. If universal healthcare was law I would not be in this situation. or rather if i was born in any other country in the world than the US. Also 2/3rds of all bankruptcies in the US are medical related. I went from a credit score of OVER 800 and over 10k in savings, to bankrupt because of something completely out of my control. This country needs serious improvement. almost dying in a car accident from some idiot driving on the wrong side of the road shouldn't be a financial death sentence (grateful my parents were able to take me in even if the living situation sucks the last few years), nor should having a bad credit score prevent you from being able to survive. If my parents weren't alive anymore, I'd be homeless and likely dead by now. Think about that for a bit.
@zenwilds2911 Жыл бұрын
I feel you. I was diagnosed with two types of cancer in the past few months. I'm in my 30s. If it weren't for my mother, I'd be homeless. Health insurance in the US doesn't even provide post surgery care. So I had to be by myself at home after my kidney removal surgery. Fell twice. There is no post surgery center for patients. Hospitals won't keep you until you can at least sit up and lay back down on your own. Right now if I pick up a part time job I lose my insurance. I'm taking a credit hit because I'd rather have medical access to make sure I don't die. Healthcare and credit are both broken systems in the US.
@janmeyen8227 Жыл бұрын
That's rough, but I also heard "that's crazy!" and thought "well what do you think credit scores are supposed to do lady?" It's a measure of your likelihood to pay back your debt- massive debt, job loss, etc- definitionally those are things preventing you from paying any loans offered to you. There are two different conversations to be had here- one about the credit system and the other about our welfare system. Getting in an accident putting you in debt speaks to the latter, the accident preventing you from obtaining critical credit is the former. I don't see fault anywhere here in the credit system- they're just looking to see they're paid back which is common sense. The issues are the costs associated with an accident and our reliance on credit in the first place. Our society is broken because you need two people working high income careers to afford an average home they'll pay off on credit by retirement in many areas- the fact that the credit system exists in its current state is simply a symptom of the disease. You're concerned about medical debt? Seek the AMA being defanged and doctor's salaries capped at 125k per year as in other countries and reduce the bureaucratic state by 80%. We're attacking the wrong parties if we're focusing on the debtors- they're just the end product of this all.
@MartineReed Жыл бұрын
This makes me sad. I am so very sorry this happened to you and millions of other Americans. What’s so great about America again?
@CreativeMindsAudio Жыл бұрын
@@MartineReed no idea. We (used to?) produce a lot of products and food for the world? Our companies are the biggest and most powerful?
@thanosianthemadtitanic Жыл бұрын
This is a major flaw with the American society in general. There is virtually no public safety net. All it takes is one bad day and you fall straight to the bottom with almost impossible climb back up. Doesn't help that the average person is barely making ends meet as well.
@ynsbozkurt1341 Жыл бұрын
Thank you for being there MYSTICFLIP when I wanted you to..... I was lost in this new world that I was hassled to start with ....you not only guided me along the way but you also showed me the proper way....whatever little I have been able to achieve in life is because of you today ..... I want to thank you for being there and showing me the proper way of doing thing for me you are my best guide as you truly showed me the way to life....once again , I would like to tell you a heartfelt thanks for being there.
@dercooney Жыл бұрын
it's perfectly fair if it's only used to answer questions like "is joe consumer going to pay on his loan?" and not "what premiums should i charge?". landlord stuff sould be limited to things like eviction history, history of nonpayment, and so forth
@KEE_Wii Жыл бұрын
It’s weird that more than half the people in this video have a vested interest in the credit reporting industry. There are positives and negatives but giving a platform for industry insiders to preach about their own product is an odd choice.
@itsesmir6218 Жыл бұрын
How else are we going to hear both sides?
@Hans-gb4mv Жыл бұрын
@@itsesmir6218 do we need to hear both sides? Why not just listen to independent, and hopefully objective, experts?
@nathanr5825 Жыл бұрын
Just another bought and paid for CNBC video. Nothing new here.
@jddonmoyer2489 Жыл бұрын
@@Hans-gb4mv yes but not for the reason you think. The government is hearing both sides: voters and then the special interest groups. We as voters have to a right to know why the special interest groups tell the government.
@Marchusv Жыл бұрын
CNBC has been doing a lot of these company propaganda pieces lately. Built up a viewership doing actual educational bits and then started using it to astroturf.
@TheRealoldcar Жыл бұрын
The problem I hate about the 3 credit companies like experian is when they have errors regarding your financial info, it negatively impacts your ability to correctly any challenge questions during proof of identity processing such as applying for a loan or credit card. Even IRS uses the challenge questions during the online user account creation process
@AlexMint Жыл бұрын
Seriously I once got locked out of an account based on not selecting an address I never lived at.
@BewareTheLilyOfTheValley Жыл бұрын
I hate those questions. I don't really talk to the majority of my family (not out of spite or anything, but my branch of the family lives very far away from everyone). I don't really know anyone on my dad's side and they always want to ask questions about that side. I feel like I'm being punished for not having family reunions or something. For me to get my Transunion credit report now, I need to send in several pieces of identifying information.
@TheRealoldcar Жыл бұрын
@@BewareTheLilyOfTheValley yes, total noise bleed. They do not seem to care if it is accurate nor do they care to fix it.
@keilongeorge6027 Жыл бұрын
They don’t have to fix any issues or errors for you, can you imagine how much man power and how expensive it would be if the bureaus decided to look into each persons info to make sure its correct, not to mention the violation of privacy. However, you have the right via the FCRA to challenge and dispute any information on your report you think is incorrect. The responsibility is yours to fix things not theirs and that’s your advantage.
@AlexMint Жыл бұрын
@@keilongeorge6027 legally they have to given how much power credit reports have over consumers.
@SCIFIguy64 Жыл бұрын
I paid my car off with no missed payments and my reward was a 60 point decrease because it was the only debt I had.
@Wileyg4lify Жыл бұрын
I should get ready because I only need 2 payments more to finish paying my car
@nisaozdinc 9 ай бұрын
I recognized all your hard work, and I say a massive thank you. I think I have never seen such a reliable and trustworthy individual like you for a long time. Excellent work!
@xygomorphic44 Жыл бұрын
Credit executives trying to explain why their system isn't flawed, discriminatory and anti-consumer is like listening to an abusive boyfriend/girlfriend talk about all the horrible things they'll do and how miserable you'll be if you break up.
@AlexMint Жыл бұрын
I've met people at 18 who had 800 credit scores because of their parents, but I worked hard to get mine and it hasn't gotten me jack because I don't make a lot of money. Your credit score is absolutely a function of your income when usage % makes it easier for buying and being frugal with groceries to put you above an arbitrary % when when the same amount of money is spent by a less responsible rich person.
@good-tn9sr Жыл бұрын
partially false. Your reliability of paying off your debts is the function
@neoanderson7492 Жыл бұрын
I wouldn't believe an 18 who says they have an 800 credit score without seeing it for my self. Even with help I don't think that is possible
@AlexMint Жыл бұрын
@@neoanderson7492 it's absolutely possible if a parent adds their kid on their credit card. People absolutely do start out ahead of others.
@neoanderson7492 Жыл бұрын
@@AlexMint like I said I don't believe it without proof. Did you ever get proof? I don't think it's possible
@AlexMint Жыл бұрын
@@neoanderson7492 there are tons of articles in financial circles advocating for starting your kid out with an advantage by adding them as an authorized user on credit cards, among other methods that get someone to start out as an adult with a high credit score rather than wait until they're 27 to have 800, but by all means pretend this isn't a thing.
@gamelist5198 Жыл бұрын
I'm DCAing in MYSTICFLIP as well. ETH heavier DCA and ALGO. I'm taking your advice and starting Google tomorrow with a 50 dollar purchase and continuing Microsoft and Apple. VTI and VOO on another app and longterm portfolio. Here we go family!
@matthewgunning9055 Жыл бұрын
Nice unbiased video! Platforming advocates for the credit system for the first 5 min of the vid!
@anthonyscott5134 Жыл бұрын
Gotta love the selective points and angle they used in this video. Basically approaching it from the standpoint of an all or nothing situation. Either we have credit reporting or no credit reporting. Also, the age old, “Our system is the gold standard for the world” misleading statement. They conveniently talk around the fact that you can pay off an account and your score goes down, even though you’ve made that payment religiously for years. The fact that your score can be radically different between the three bureaus is especially troubling. Something that you do financially can simultaneously raise your score 10 points on one agency, 4 points on another, and actually have you lose points on the other! Now that’s BS! The system loves to paint a roses picture of the system that’s missing a lot of the worts.
@minnietaylor3565 Жыл бұрын
👏👏👏👏👏on ALL your points. And you have to pay to even see your TransUnion score.
@janthony4224 Жыл бұрын
@@minnietaylor3565 Not on Credit Karma. I get both Trans Union & Equifax. Experians has their own app.
@frequentlycynical642 Жыл бұрын
@@minnietaylor3565 You are entitled to one free report once per year from each bureau. Federal law for many years.
@jamesodell3064 Жыл бұрын
@@frequentlycynical642 Unlimited free downloads should be required.
@mikemcdonald611 Жыл бұрын
What the second to last guest says seems so simple, and yet your income at the time may require use of a credit card, or deficient income may dictate a late payment. The overarching theme behind score discrimination is directed at lower income folks (from my experience).
@CallistaRhian Жыл бұрын
I don't see how it's discrimination. If you've been previously delinquent or earn a lower income and are thus more likely to be unable repay your loan, then you should be be charged a higher interest rate or declined loans. Banks are businesses, not charities.
@danishvirani8873 Жыл бұрын
Although this seems true at first and would be true for very low income individuals. The truth is there are many people at or below medium income who aren't overextending their lifestyles and the reverse is true. To illustrate 20% of people live paycheck (CBS). Although some of those people will have good credit all of them are easily highly susceptible to getting bad credit with one slight slipup. Credit scores do a good job of indicating ability/history of paying bills on time and nothing else. If you are lower income and don't pay too much stuff you should be okay. If you are high income and buy too much you'll end up..eventually..not fine.
@mikemcdonald611 Жыл бұрын
@@CallistaRhian There are systemic challenges making it more difficult for a person in poverty to escape from their debt, resulting in banks making money from those higher interest rates, compared to their customers who can more easily afford those higher percentages. Simply defining a business can still include predatory practices and even immoral philosophies.
@mikemcdonald611 Жыл бұрын
@@danishvirani8873 What happens when you work a job but for one reason or another, need to pay for things on credit and the debt continues to accumulate, resulting in monthly payments you are unaccustomed to, all the while still facing the bills now unaffordable, forcing you to now begin looking for a second job or a better paying first job, acknowledging the current reality that those bills still need to be paid in real time. The situation can be more complicated than not paying for too much stuff.
@danishvirani8873 Жыл бұрын
@@mikemcdonald611 translation If you use credit as a supplement to income to buy stuff you can’t afford you’ll drown in debt. That doesn’t make credit bad it makes lack of financial literacy bad.
@shannoncraig6943 Жыл бұрын
I have a friend that had the same first name as one of her classmates and a close Social Security number as her and they merged their credit history. They have fought with the credit reporting agencies for years. Even Lowe's will deliver to the wrong address sometimes thought they have never lived at the same place.
@millabasset1710 Жыл бұрын
Credit scores are designed for working class people only, it's a debt trap so lenders can maximize profits from not doing actual labor. Corporations can borrow at insanely low interest rates because they have tons of assets to use as collateral, plus they have scummy friends on Wall St that do them favors. Credit scores are easily meant to drop for a few mistakes, also meant to slowly increase when you follow the rules.
@janiceschroeder9908 Жыл бұрын
I think that's so businesses can have every opportunity to make money off of you. Those businesses pay for subscriptions.
@blogdesign7126 2 ай бұрын
agreed!
@burnttoastbrain Жыл бұрын
For those that wonder why you credit score falls when paying off a loan or mortgage, this is because credit bureaus like to see open lines of credit. It shows that you are actively saving your debt. Now when you close it, they have less information to judge you on and so the “algorithm” needs to readjust. Which is why it falls for a while and then comes back. I hate that the system does this but I hope that explanation clears that up as it’s never really talked about
@shanewillbur1325 Жыл бұрын
Yeah. In the modern day, expecting the credit bureaus to determine and know the difference between credit account closure due to a paid off balance vs any other reason should be standard. If we have to use the system to measure a persons credit worthiness, then this is a pretty large error on their part which should have been fixed long ago.
@acewings221 Жыл бұрын
It lowers the average age of your accounts…
@lisaburke7506 Жыл бұрын
In that case, the credit scoring system isn't concerned with whether or not you pay back your debts so much as whether you enable your creditors to maximize profit through accrued interest. As long as you have some kind of debt to enable some business to profit off of you, you are a favorable person. But as you pay off or close accounts, the lender does not believe they will be able to make as much money off of you and so penalize you with a higher interest rate in an effort to make as much money off of you in the perceived limited amount of time you will be a debtor.
@stainlesssteellemming3885 Жыл бұрын
So why not factor in assets as well as debt. A person with a zero credit score and $1M in cash in an account is a pretty safe bet for a $1000 loan.
@whodatboi351 Жыл бұрын
@@stainlesssteellemming3885 this. 100% this.
@johnkarlolacatango5123 Жыл бұрын
I totally agree with what you are saying ....
@Sim9 Жыл бұрын
I hate how these companies share your information with basically anyone, even when your profiles are 'frozen'. When are we going to get comprehensive privacy regulation that lets us control our personal info and decide WHO gets to see it?
@uncgaron Жыл бұрын
Did everyone notice how skeezy those representing the scoring and reporting agencies were? I took particular issue with John Ulzheimer’s last comment - “it’s impossible to have a low score if you never miss a payment and never max out your credit cards. IT’S EASY TO WRITE A CHECK AT THE END OF THE MONTH AND NEVER BE LATE PAYING YOUR BILLS.” Wow - what an incredibly blessed life he must live. What kind of inherited generational wealth and cultural capital must he have such that he never paid a bill late and was able to open his own consulting firm. Please John, enlighten us with more of your, “all you have to is…” wisdom.
@cheetobandido546 Жыл бұрын
Thank you for putting so eloquently into words what I was feeling. My far less articulate reaction was, "ugh".
@thecapone45 5 ай бұрын
Well. I was able to do that most of the time but that’s just cause I was employed and set reminders. 🤷♂️
@curtisharvey2405 Жыл бұрын
There should be a easier way to fix errors and get negative reports removed
@ahotdj07 Жыл бұрын
I agree. There should be something under the Fair Credit Reporting Act that holds these three agencies accountable. If an error is reported and there is solid proof provided to the bureaus, then they have, oh I don't know, 90 days to correct? If not then they will pay a penalty.
@seanfraser8456 Жыл бұрын
@@ahotdj07 there actually is. It's in the FCRA. They have 30 days or so to respond to your dispute. If they don't get back to you in time, the item has to be removed by law.
@ahotdj07 Жыл бұрын
@@seanfraser8456 That is good to know.
@tjr4459 Жыл бұрын
When I paid off my student loans my credit score dropped 😂. It has recovered somewhat since but still not at the point when I still had the loans and making on time payments. It’s like the system purposefully wants you to be in debt to be paying for something.
@nathanr5825 Жыл бұрын
Welcome to the benefit of "closing and account".... a decent part of your score is based on credit mix. Well you just removed the biggest chunk of debt in that equation and now you are left with credit cards and auto loans most likely. FICO doesn't like that.
@cesarm3218 Жыл бұрын
Basically you're required to "find" something to pay off, which in these days is not fiscally possible for most middle class income folk. So the system is built for people who have big time money and can "diversify" their debts because they have the income to allow for that. It's a whole load of BS for credit institutions to say they don't discriminate. They can shove it up their booty
@dark12ain Жыл бұрын
it does. it's a reason America isnt worried about the debt clock. debt is money, they use it as leverage
@mcdowellsfamilyadventures5318 Жыл бұрын
System is designed to keep us all in debt. Cash is no longer king. You can have $100k cash to buy a $250k home and if your credit is non existent or less than 600 you are not getting a home. Sad reality.
@tjr4459 Жыл бұрын
@@nathanr5825 nope, I have no credit card debt and I don’t own a car. Thankfully I work at home and live somewhere I don’t need a car.
@gilbertnunez3970 Жыл бұрын
I dont know about all this, I started rebuilding my credit with a ton of debt with a 502 Credit score took 2 years to get it up to 731
@Tuli0. Жыл бұрын
Since the start of 2022, we have been in a recession, but major media outlets and governments around the world refused to acknowledge it. We must exercise wisdom and intelligence. Since knowledge is power, I want the entire family to be strong! I recently bought some MYSTICFLIP . We appreciate you keeping us informed during these uncertain times.
@GovernmentAcid Жыл бұрын
The industry guy (second to last guy) is totally wrong about credit scoring. I went from having zero credit 3 months ago, to now having a score in the high 700s, because I've purchased and sent myself electronic gift cards for trivially small, and joke amounts, like $0.69. According to TransUnion, which posts my highest FICO score in the 760s, not only was this responsible financially, this was SOMEHOW one of the most responsible decisions that I could've POSSIBLY made. And if that's somehow true in their view, not only is their scoring model completely non-functional, but it's literally INSCRUTABLE to human motive or human desire
@Psi-Storm Жыл бұрын
You have low credit utilization, which is seen as responsible. It doesn't really differentiate between people that spend $10 with a $500 limit or $1000 with a 50k limit.
@Mechaneer Жыл бұрын
That doesnt make any sense at all. You didn't provide your SSN to get yourself an electronic gift card, because who would? It's a gift card, not a credit card. Therefore, how could it possibly be tied to you and impact your credit? Something else affected your scores, and you might want to pull your reports to find out what it is so you can better understand your situation.
@GovernmentAcid Жыл бұрын
@@Mechaneer no, sorry, what I meant is that I used a credit card w/ a $200 limit to buy and send electronic gift cards to myself, so it shows up on the credit report because it was my credit card that I used to buy it.
@Mechaneer Жыл бұрын
@@GovernmentAcid oh, OK. It makes perfect sense what you are saying then, thanks for the clarity. And I agree, it doesn't make much sense to give someone an extremely favorable score for this kind of activity, but kudos to you for finding a loophole that is beneficial to you anyway.
@4-kathryn Жыл бұрын
That's how my parents started me off with credit when I was 14 or so. They told me on a biweekly basis I should buy a candy bar or something super cheap and purchase it through my credit card to earn credit. Pay it off. I still think it's an odd system... moreover because I don't like this notion of buying stuff all the time. Now that I'm in my 30s I try to use credit on big, important purchases like a washing machine but I hope the system will change. It's not environmentally friendly to consume things and resources all of the time.
@lucasstuart-chilcote7069 Жыл бұрын
I absolutely do not trust the credit system. It feels so made up. There’s no rule or manual how to do it. I paid off my one credit card 5 year only card and my score dipped 15 points. I tried to apply for another card and get a credit report and they warned me that my score will decrease doing those things. I’m a really good person but I feel like I can never win with the credit system. It’s so stupid and annoying!
@dmnddog7417 Жыл бұрын
Same thing happened to me. I paid off my education loans and suddenly my score plummeted, so I couldn't apply for a CC. My bank offered a "credit-builder" loan that helped bring it back up. It's basically a loan to yourself, but it looks like a regular bank loan to the bureaus. I suggest to ask your bank if they offer something like that.
@deem10 Жыл бұрын
Open one credit card, buy one snack every 3 months and keep it at your house (not in your wallet/purse). Your scor will rise in about 6 months
@Travisharger Жыл бұрын
I just want to know why after paying off a car loan, house loan, personal loan, or even a credit card that those years of timely payments bare no weight on a person’s credit score. It makes no sense. If a company is trying to determine whether someone is the type of person who will pay back a loan, it seems that their history of loan repayments would be highly relevant. For example, it makes no sense that a person’s credit score should drop dramatically when they close a 15-year old credit card or pay off a loan that they have always paid on time.
@avreypietila6960 Жыл бұрын
Why would u want to loan money to someone u can’t make money off. If u don’t use it they can’t make money off of u.
@ajr993 Жыл бұрын
It is highly relevant. If you miss one payment it will hurt your score tremendously
@iluvcakes19 Жыл бұрын
@@ajr993 which is trash 🗑️ if you have a history of being on time for the past 15 years.
@MrAnonymousRandom Жыл бұрын
As with anything, credit scores can be gamed. The people who are whining are those who don't game the system. The ins and outs of gaming the system are public knowledge.
@Psi-Storm Жыл бұрын
15% of the credit score is average credit history. If you close down your oldest credit card, the average age goes down significantly. You could drop 100 points if all you are left with is a 1 year old new credit card. That's why nobody recommends to close them out. Just swap the product to a card without annual fees and use them once a month for the Netflix subscription or something.
@bennieronaldo2558 Жыл бұрын
Omfg! MYSTICFLIP turned out to be a bloody smart move. I love love love this. I’m the wrong side of 40 so I’m taking this all on board IMMEDIATELY- thank you! Even if I run out of time my kids will benefit from this incredible education. Thankyou thankyou thankyou!!
@lynnjudd9036 Жыл бұрын
I think the biggest problem with credit is how you can get "penalized" for old problems. Eg. If you fell behind on student loan payments but have now caught up the "old problem" shows up for a long time to come. Mine didn't disappear until I refinanced my house and paid it off three years later.
@jinWhuang Жыл бұрын
That’s why the new score system is planing to scale down the medical and education debt. It’s now starting FICO 10, each time the scoring system has some improvement. The scoring system is continually evolving. I agree there are lots of flaw, but it still gives us the chance to access credit at lower cost.
@robreich6881 10 ай бұрын
Lmao, that’s the whole point. Having “problems” indicates that you will have “problems” in the future.
@TenzinJordyn Жыл бұрын
They should really find a solution to parents not messing up their kids credit. Unfortunately, I was one of those people that by the time I realized what a credit score was I already had several open credit cards, loans, etc., that I never okayed but since parents have my info it’s like w/e. I’ll give this 18 year old a credit card w/ a $10k limit… sure. Now I’m suffering the consequences of their actions. SMDH, fix the system please & thax.
@JasonB808 Жыл бұрын
Start off with a low end Store Credit Card from your favorite place to shop to build credit. Use credit cards every chance you get, pay them off on time. Have two credit cards, and manage them well for several years. Credit score will be high 700s to near 800. Ideally, after credit score is high enough, replace old low end cards with rewards cards, get a cash back credit cards instead of points or miles, as they have arbitrary value. 1.5% cash back to 2% cash back are the best rewards cards around. Using Debit cards doesn’t do anything to build credit. Stop paying with Debit cards.
@dmnddog7417 Жыл бұрын
I have a mileage card because I like to travel, and it has no foreign currency transaction fees. But yes, having a cash back card from your own bank is a good idea. Most importantly, pay them off on time, this can't be overstated. I use autopay set for ten days before due date.
@carpelunam Жыл бұрын
I had to scroll through so much stupidity too find some common sense. I know the system isnt't perfect, but having a decent score is not hard if your life is functional and your able bodied.
@JaySmith-pv2mw Жыл бұрын
No late payments, no credit card debt and I'm about to pay off a five year car loan in two years and ten months. My Transunion score went down a few points last month and up 37 points this month! 🤷♂️. Exact same financial situation and payment history for both months.
@BewareTheLilyOfTheValley Жыл бұрын
"Never, ever, miss a payment!" Ah yes, why didn't I think of that? Few people set out with a devil-may-care attitude regarding payments, life happens and you fall behind. Losing a job, getting sick, not having a functioning vehicle in a country that almost mandates having one except in the most urban of areas, these things make someone fall behind on payments. The guy next goes into not wheeling and dealing with a credit card. That's great, except these cards pounce on young, ignorant people who don't fully understand them. It's simple to say to not spend much on your card, but I'd propose we need more legislation around these predatory tactics. Just because someone is 18, shouldn't give a company carte blanche to market however they want to. These people are younger and don't have a lot of credit history, if any, so their APR is much higher, already starting them off in a much more vulnerable position to fail. And lastly, I really hope rent is added by default to our credit history. I shouldn't have to pay to have it added, which is what was just notified to me this week from my apartment complex. If you stop paying the monthly fee, your credit will just drop, all because you can't or won't pay the $10 a month, or whatever it is. Pretty messed up. If it took my credit to get the apartment, or just anything at all, that deserves to be reported to the bureaus. Otherwise, it needs to stop being a factor in getting an apartment.
@HowToCleanLikeAPro Жыл бұрын
"Past performance is no guarantee of future results" unless you want money from us and then it's the gold standard
@WaleAnimashaun Жыл бұрын
The real issue with credit reports isn't back luck or unexpected circumstances. If a member has access to ryine your credit, then they that family member has the ability to prevent you from paying your debt on time which is the entire purpose of a credit score/report. The real issue which credit reporting is that they're not comprehensive or accuracy and the difficulties involved in correcting those errors.
@honjokun0615 Жыл бұрын
When I moved to the States, I never applied for a credit card so I never had a credit score. I once needed to move to a new place to get out of an abusive relationship, but the rental company were hesitant to rent to me urgently because I had no credit score. They asked whether I would be willing to pay a deposit of two months' rent. I had more than enough in my checking account so I paid without second thought. The real estate agent looked at me like I grew a second head. The system is messed up.
@encoremultimedia3511 Жыл бұрын
Good report CNBC. Credit companies love to tell you they fix problems... kinda. Several years ago, out of the blue, something showed up on our credit report that we had defaulted on a large loan. We have NEVER defaulted on any loan and we had NEVER done business with the company claiming the default. We contacted the credit score folks. They said they'd look into it. Months went by and no word even when I attempted to contact them. Then, one day, it disappeared from our report. Almost a year had gone by. We never got an explanation from the credit scoring companies. Here's another weird thing. We had a loan with one of our local banks. It was for a fixed amount, to be paid off in a fixed amount of time. We paid off the loan when it was expected and our credit score went DOWN. Why? We had LESS debt. I couldn't get any explanation on that either from the credit reporting services. However, a friend of mine in the financial industry told me the people who run all this stuff like it when you are in debt. It shows you're likely to stay in debt and they make money off the interest. That's profit for the credit card companies, etc. So, if you pay down your dent or worse, pay off debt, they don't make as much money. If they ding your score, you get charged higher interest so they can make up the difference.
@feliciaware7609 Жыл бұрын
I stumbled across your video and instantly knew this was made for me. I'm going through the same thing with my business but just knowing that I'm not the only one who's experienced this just pushes me to go harder. Continue to put out informational content and sharing your story, THAT is what separates you from the rest. Much gratitude Marvin and *Top Phase Restoration* was so helpful during the process of boosting my credit
@Mumble8988 Жыл бұрын
Somethings in life seem so contradictory I honestly can’t tell if it’s on purpose or not. Like, let’s say you need a job, but you live nowhere near any businesses. Okay, so you need a car to drive. But, you don’t own a car. Can’t get a car without a job, can’t get a job without a car. Can’t get a car without credit, can’t get credit without a job. It’s like an endless loop.
@InfoDisco Жыл бұрын
Most of these "Catch 22's" are illusions crafted from false-necessity. One of my first jobs out of HS was at a local gym, and I worked with this dude named Brett who had just gotten out of prison. All summer long, he biked several miles to work- and then when the weather got bad in autumn he started ubering. Now mind you, we were making like $10/hr back then, so this guy was literally spending $22-25 each day in ubers to come work an 8-hour shift where he'd earn $80 before tax. Of course that sucks, but if he wanted his license back he had another $1500 or so in fines that he needed to pay, so that's the sacrifice he made. It is INCREIDLBLY rare that someone lives in such desolate isolation that they truly need a car to be able to find employment.
@Mankorra_Gomorrah Жыл бұрын
Really cool that they dance around the fact that credit scores are functionally financial yelp reviews with companies/people only ever reporting payments you missed and conveniently forget to report payments that you made on time. The fact that paying regularly and on time actually decreases your score by a few points which is really awesome.
@ewicky 11 ай бұрын
that is not fact
@robertlee8805 Жыл бұрын
Another Educational financial video produced by my FAVORITE network. Where were in the early 80s? I really could've used this educational tool back then. Thanks again. Where would we get all these educational videos any where else?
@MrShakespeere Жыл бұрын
My credit score is 810, one month i bought a hot tub on my credit card to get points. 15000 dollar balance, 85% utilization of total credit. I paid the whole thing in cash 8 days later. For one month my score dropped to 675. Next month, up to 815. System broken.
@MrShakespeere Жыл бұрын
And the payment was on time i should have said. But the credit card company reported the balance before the payment date for some reason.
@destroyeredit8872 Жыл бұрын
Hey great story, please keep us informed of your journey. Just a thought, I noticed the book that got you started was written by Jared Martinez. Jared is known as The FX Chief, he owns a company, Master Traders Institute ( MYSTICFLIP )in Florida. I am sure he would appreciate your story.
@timothyj.armstrong451 Жыл бұрын
I missed one payment on a credit card I didn’t even know I had, and never even physically received, and it stopped me from buying a home. I have zero student debt. I already own an income property out right. I’ve had the same job for two years. And I was putting over 50% down. All of those things should make me a prime candidate. But one missed payment on a card that didn’t exist ruined so much. You can’t argue that system makes sense..
@YESITSWILL Жыл бұрын
I used to be engaged to a woman who was the daughter of an immigrant whose mother did exactly what was mentioned in the video. The mother had 6 childern. She opened credit cards in the names of all the children, maxed them all out and never paid a dime on any of them. It took the woman I was engaged to more than 10 years to rebuild her credit up to 700 because of this. Not FICOs fault, but it is one of those things that happens.
@dramatyst5661 Жыл бұрын
Well she's dumb my father used my info when I was a child and I got it all cleared at 18 . Perfect credit ever since recently bought a type r to replace my supercharged 14 si 😂
@cheetobandido546 Жыл бұрын
Because the system is flawed. You just described one of the flaws. Hello?
@thecapone45 5 ай бұрын
@@dramatyst5661lucky you. Someone else I know had the same thing happen to them but their parent did a horrible job with the cars. Point if, children shouldn’t have to suffer the consequences of their parents mistakes.
@royaldiadem_ Жыл бұрын
Yeah the discriminatory questions are not included in the credit report but they are definitely on the application.
@Martin-Cats Жыл бұрын
I normally have had a perfect 850 most of my life, but paid off my mortgage by the time I was 52. Plus always pay off my credit cards every month. For this, I saw my credit score go down about 50 points after the mortgage history was wiped off.
@fogrunr5075 Жыл бұрын
Credit accounts and loans are supposed to remain on your record for 10 years. There should be a rule about that... If it's still on your record, they can't drop your score just because you paid it off. Obviously it's designed to keep people seeking death and lenders paying FICO. Glaringly obvious.
@TheZombaslaya Жыл бұрын
So paying off debt hurts you now? Insane
@newlife7876 11 ай бұрын
@@TheZombaslayaScore went down 25 points because I refinanced my car to get a better rate.
@tarihbozbas4075 11 ай бұрын
This has easily become one of my favourite & the realest credit repair source major level of mature grown conversations amongst legends intellectual mindsets.Different level of transparency.It's authentic.Dope to see! Salute to Mendos Anonymous Hack
@GovmntLacky Жыл бұрын
The problem with credit scores is that you are heavily penalized and lightly rewarded. Charge a little more this month on a credit card than usual and your score can go down 30-40 points (even if paid at the end of the month). Use your cards and accounts well the next month and pay it all off and your score goes up 4 points. THAT is the problem. It’s like the price of gasoline. Goes up 30 cents overnight. Goes down 3 cents every other day.
@MminaMaclang Жыл бұрын
As a professional who worked in credit scoring, my eyebrow is raised this whole video haha
@walterfoster1167 7 ай бұрын
The scores stay around too long and make it largely unusable. If your circumstances has changed drastically, the score won’t update thus hindering you. It’s best to just pay cash for everything and you can live more comfortably than relying on credit approvals.
@anaroman1499 Жыл бұрын
When I rented for 5 years, there is an option to include rent payments in your credit scoring system.
@VivaLegolastef90 Жыл бұрын
In Europe they measure your actual creditworthiness, that is income & collateral.
@gimcrack555 Жыл бұрын
My credit score is listed as N/A. Been debt free since I was 36, I'm now 59 and not having accessible credit score never hurted me. But of course I didn't want a credit card or loans. That's what being debt free means. Pay cash for everything, like my used cars. Plus my first house every at the age of 56. I payed that in cash as well.
@virkill3408 Жыл бұрын
I immigrated to the US about 5 years ago & having a blank slate is NOT a bad place in credit scoring as I’m well above 790 with more than 50 grand available credit for me to use 🤷♂️
@good-tn9sr Жыл бұрын
yea americans like flexing poor financial investments
@danishvirani8873 Жыл бұрын
As someone who worked in the credit sphere for a long time. I can say underwriters generally think of it as a bad thing. But the stats people will see it as more of a good thing. Ultimately "high credit" only works when most people are "high credit". The interest rates for high credit are incredibly low and this low profit margin can only be maintainable by large volume. In other words every single bank has every incentive to get peoples credit scores up.
@MrAnonymousRandom Жыл бұрын
US banks have a reputation for being loose with credit when compared to the rest of the world. By default, they want to extend you as much credit as possible. It's people who don't educate themselves on how the system works that end up shooting themselves in the foot.
@dannyslaughter3055 Жыл бұрын
A peer moved here on a cross country job transfer. It made it very difficult to purchase a home because she had no US credit. But to your point it also gives you a chance to spend 1-2 years to build near perfect credit as an adult when you’ve got some of the dumb out of your system. So short term bad but can be a blessing in disguise
@technicolortabby4239 Жыл бұрын
Very unfair. Benefit those who already have money or are willing to live dangerously on the edge or above means. Doesn't even take into account that you pay rent or bills on time but still can keep you from an apartment. The way it functions now often keeps people poor or from getting ahead.
@3namechangezalowdevry90day7 Жыл бұрын
Be frugal, save, pay cash and don't use credit in the first place. Get training in an in demand job. Nobody ever refuses cash because you have insufficient credit.
@ahotdj07 Жыл бұрын
What I want to know is why does the score vary from agency to agency? E.g., (not actual numbers)...Trans will say my score is 750; Equifax will say 800; and Experian will say 725. Why such a huge difference in numbers. Also, even the score that comes free with bank accounts (including credit cards) are always way off by a lot. Why such a large variable? Plus Credit Karma is the worse.
@user-ex2yt1pl6u 9 ай бұрын
Focus on building wealth instead of building the means to borrow it. Net Worth > Credit Score.
@Eusantdac Жыл бұрын
I am blessed to have cash and a house paid off so I could care less about credit score. It's stupid too cause banks keep sending me lines of credit and credit cards (which I do not use except one) and I basically only work once in a while, part-time. I mostly work as a volunteer because I find it more rewarding and that gives no pay.
@technicolordiode9891 Жыл бұрын
This is confusing lol
@Eusantdac Жыл бұрын
@@technicolordiode9891 It means You can live without caring about credit score if the house is paid-off and You buy everything with cash.
@technicolordiode9891 Жыл бұрын
@@Eusantdac The fact that you said you work “once in a while, part time” makes this sounds a lil confusing
@Eusantdac Жыл бұрын
@@technicolordiode9891 Yes and actually this I give as an example for those who say that a Universal Basic Income would make people not work/be lazy. Even though I am not in need of money, I have to do something with my time/life. So, I volunteer where/when I can and sometimes I pick-up a part-time job too, for half a year, or a year, here and there. Can't just sit idle doing nothing, my brain would go numb. People in general I think need to do things, to be engaged in one way or another. Best of luck to everyone!
@ahotdj07 Жыл бұрын
Good on you.
@whimsicalhamster88 Жыл бұрын
It doesn't include rent but it does include mortgage payments. If someone, anyone, adds you as an Authorized User, you can get a huge jump in your score. Guess how rich kids are able to start with 700 scores while poor kids start with 500 scores because they have tons of student loan and other debt just to get an education.
@Lazirus951 Жыл бұрын
The problem with credit scores is it creates a death spiral for the working class. Your car insurance gets doubled, you need a bigger deposit for everything, you get denied applying for apartments, electricity, internet. One black eye on your credit can make everything dramatically more expensive so you are doomed to spiral downward.
@haruhisuzumiya6650 Жыл бұрын
That's by design
@lawrence1960 Жыл бұрын
FICO hinge on us all staying in debt.
@residentevil4life Жыл бұрын
during lockdown my score randomly dropped by like 50 points and till this day not only has not gone back up but I still have ZERO clue why since my report literally did not specify anything
@thanosianthemadtitanic Жыл бұрын
The real problem is the credit system is not designed for determing risk but rather maximizing lender profit and furthermore control
@BRYCONIC Жыл бұрын
I made a few hundred dollar payment once in a debt and my score went down like 50 points. Did research and the credit companies viewed my actions as desperate, NOT responsible. That changed my entire view of credit and life in America. One day i needed help with paying my car insurance which wasn't much and my parents basically said figure it out, this is how life is. Sooooo I started getting payday loans (cuz that's what they did) and got credit cards cuz i didn't know better. SUCKS having parents like that. :)
@thesavoyard Жыл бұрын
Credit scores are to manipulate behaviour, not promote good behaviour.
@poione42 Жыл бұрын
My credit score is horrible, but I’ve never bought anything on credit either. On the plus side I don’t owe any debt
@zaalnibu Жыл бұрын
When I bought my second car my interest was 10% more than what it should be, not even because I had a bad credit score, because I had a 730, but I didn’t have enough credit history, and open lines of credit. Why do I need 6 credit cards I don’t use just tell that I’m not a high risk.It’s dumb, punishing people for being financially smart and not borrowing money they don’t need. I’m literally paying my bills on credit, just because I want to keep building my score, because I literally don’t need any of the cards. Then the dumb thing is there is a error on one of my credit reports that I’ve reported like five times but the bureau won’t fix so one of my scores is fifty points lower than the others
@3namechangezalowdevry90day7 Жыл бұрын
Just save up and buy a cash car. Buying new/leasing is a guaranteed ripoff. Check what models Consumer Reports says are good. Do as many of the repairs on it yourself as possible.
@billdexhart5179 Жыл бұрын
Having to create more debt to specifically to prove that you can handle more debt is stupid. While generally over here, it's more financially responsible to have as little debt as possible. As a continental European, this is crazy. No such thing as credit scores where I now live. Thank God.
@ArisB21 Жыл бұрын
People need to get educated on finances, don’t borrow more than what you can afford. Live within your means
@lawrence1960 Жыл бұрын
It took me years to convince them that my name was Lawrence….not Lawarence.
@mercedeswilkins9085 5 ай бұрын
Remember that your income, debt, and payment history, weights more than your actual credit score number
@GENIUSA1A Жыл бұрын
It sucks being young and being automatically started at a poor credit score just because you are new and not at fault of your own.
@The1stClassVillain Жыл бұрын
The FICO system need to be overhauled. It’s setup for failure and it’s not fair. You can’t tell me I can move my credit score up by getting a credit card but when the bank run my credit, my score go down. Soft and hard inquiries. Also, I heard Car dealerships and mortgage companies use a different type of scoring other then transunion, Equifax and Experian.
@nataliefontane Жыл бұрын
I don't know about auto dealers, but mortgage lenders absolutely will only use TransUnion, Equifax, and Experian FICO scores when approving borrowers.
@The1stClassVillain Жыл бұрын
@@nataliefontane There is a Canadian documentary right here on KZfaq that better illustrates what I’m talking about. They had three people who had their credit reports and scores in their hands before each separately, went in to a bank to get a home loan. Each of them came out with scores different then the three scores from transunion, Equifax and experian. They explained that the reason for this is, banks, car dealerships etc use a different scoring system all together then the three we typically use. I think that’s sneaky. One guys score from the bank was 40 points off from the score he got from transunion himself.
@nathanr5825 Жыл бұрын
You are close. There are lots of different "FICO" scores that exist. You only get to see one of them, and it's almost never actually used by a lender when you buy a car, or a house or to get a credit card. Lenders have access to scores that are specific to what you are trying to finance. So auto lenders have FICO Auto and all of its versions. Mortgage lenders have FICO 2, FICO 4 and FICO 5. Credit card companies will use the FICO Bankcard score (of which there are like 4 different versions). You will never see these scores or be told how to improve them. Also to note, not all lenders will report payments or accounts to all 3 of the reporting agencies (TU, EqFx and Exp) so all the different scores listed above will all be different of the 3 reports. There are actually hundreds of credit reporting agencies in the country. There are actually 6 nationwide agencies and not just the 3 that most everyone knows. There are also specialized reporting agencies. These other agencies are in areas like, employment screening, gambling, tenant screening, medical, checking and bank accounts, insurance, and low income sub-prime. Basically the entire system is designed for average consumers to have absolutely no idea what happens and how to use it effectively. Anyone that tells you credit cores are fair and equitable either works in the industry or doesn't know what they are talking about.
@jamesbrown1645 Жыл бұрын
@@nathanr5825 MyFICO will show you all 28 credit scores but it will cost you $30 a month.
@nathanr5825 Жыл бұрын
@@jamesbrown1645 not much of a help if it costs more money.
@MrHammer2088 Жыл бұрын
My address (is on my credit report) tells the socioeconomic makeup of my neighborhood... That's how they were able to create red lining in real estate
@quiet451 Жыл бұрын
Being "unscored" should not be viewed negatively. It may very well reflect that you have been financially responsible enough in your life to live within your means.
@trance9158 Жыл бұрын
Or broke and or homeless
@BrendanGeormer Жыл бұрын
It isn't about being financially responsible so much as it is scoring your engagement with the financial system...
@Hans-gb4mv Жыл бұрын
And this is what is wrong with the system. If you ever do need a loan, for example a mortgage for a house, you're in trouble because you never had debt in your life. The fact that you have a good income, pay your bills and taxes on time doesn't matter for them. They want you to take out debt, to take out loans so you can earn a score because that is what earns them money. And in such a system, you can only conclude that the system is broken. And reducing the risk for lower interest rates? Why are interest rates in countries without a credit scoring system so much lower if risk is the biggest factor and having debt mitigates that risk?
@nataliefontane Жыл бұрын
I was a property manager for a long time, and the only unscored people I came across were new immigrants. Six months of credit activity will generate a score, so it doesn't take long to establish credit.
@adultshit Жыл бұрын
A score on how good you handle your money.. hm.
@ThatOneChannelinAZ Жыл бұрын
*WHAT THEY* Need to to do is get rid of credit companies like Portfolio. Ive had them contacting me for a said unpaid credit from 2008 which is false. That debt was paid off in 2008 and still 14 years later they're still harassing me for it almost daily. There needs to be a way to get rid of these people.
@wescoleman6390 Жыл бұрын
Look up the Fair Debt Collection Practices Act. There are penalties for harassment over debts, unpaid or otherwise.
@ThatOneChannelinAZ Жыл бұрын
@@wescoleman6390 will do man
@JF238xCreatingABetterFuture 11 ай бұрын
NEVER MISS A PAYMENT FOR ANYTHING….DO YOUR BEST TO MAKE YOUR PAYMENT ON TIME 💯💯💯
@matthewcoreyhall Жыл бұрын
From my personal experience, after finally paying off my student loans, my credit card debt and car loan... my score went WAY up. It took maintaining low credit usage for about a year to really see those score gains. I did close a couple of un-used accounts that hit my score but compared to the gains of keeping my debt very low consistently, it really doesn't compare.
@Psi-Storm Жыл бұрын
Student and car loan debt shouldn't influence your score negatively when you pay the rates on time. Credit card debt on the other hand can tank you score, because your credit utilization goes up. It's smart to regularly ask for limit increases on your credit cards even if you don't plan to use them, because then the percentile utilization goes down.
@thedude5040 Жыл бұрын
I regularly use 40-90% of my credit card every month. Ive never seen any negative impact from it. I even spent an additional $20k between going through the mortgage process and closing on toys and vacations for my first home purchase. Bank literally didnt care.
@Psi-Storm Жыл бұрын
@@thedude5040 It doesn't affect running loans. Try to get a car loan when you are at 90% utilization. The offered interest won't be pretty, they might even flat out reject you.
@thedude5040 Жыл бұрын
@@Psi-Storm i did actually. Last month on a new rav4. Started a new 4 year car note @1.9%.
@thedude5040 Жыл бұрын
@@Psi-Storm im waiting for a response
@M_DanielNY Жыл бұрын
Proud to be in the elite population! My parents and brothers messed up their credit scores many years ago when they were younger. However they made sure I didn’t end up like them. Definitely thankful for that.
@user-ei7ed6zy9k Жыл бұрын
i'm black and from inner london. 1) My family swear against credit cards but have decent credit scores. 2)I have credit cards and have an excellent score.\ 3) I know plenty of people who grew up just like me who also have credit cards but have terrible scores. This isnt about credit scores, banks or demographics, its about financial literacy. Banks are well within their rights to not lend to people with bad financial literacy
@1237tnb 11 ай бұрын
I find credit scores to be very annoying. They are very easy to hurt and very hard to improve. An example, if you close a credit card. Your credit score might drop 20 points because of a decrease in available credit. If you then open another credit card (with the same if not more available credit) your credit will probably not improve and it might even decrease, because now your average credit history has decreased. Another example, if you're credit usage goes from 29% to 30% your credit score might drop by 65 points. If you then decrease your credit usage back down to 25%, there night be no positive increase in your credit. Even making all of your payments on time doesn't help. Missing one payment by a little over 30 days can drop your score by 60 points. Now, at best, you can only have paid 99% of your payments on time. So, there's no amount of payments you can pay to improve your credit. And if your credit payment history is perfect, then you cannot use the continuing perfection of your payment history to increase your credit score because it's a weighted average with several other categories.
@fturla___156 Жыл бұрын
I often have perfect credit that exceeds 800, but that means nothing, because all it takes to drop my score over 200 points is if someone gets paid by me that doesn't provide the product or service then there is a dispute which was never my fault. Credit scoring is a scam.
@Dr.HouseMD Жыл бұрын
“Your level of education isn’t on your credit report” Awesome. Hey not for nothing-ITS AMONG THE FIRST QUESTIONS ON EVERY CREDIT APPLICATION
@adrienzhang3235 8 ай бұрын
There is no perfect system as long as this system works. Errors can be happened everywhere
@chadpreece970 Жыл бұрын
Absolutely, having a couple late payments takes years to overcome, your interest rates go up etc, had 10years of on time payments to 3different banks missed a couple payments and they wouldn't do anything to help get me set back up. Came and replied everything for less than 2k in late payments on over 150k in loans and only had about a year to go, on them . Since then I'm cash only,
@USA50_ Жыл бұрын
For most of my life I didn't want or couldn't get a loan from a bank/credit union. I focused mostly of savings. After years I had to balance out things by saving, starting a prepaid credit card and networking on a daily basis. Networking is what will help American citizens more than anything else because sometimes money won't solve all our national or individual problems/issues. We can make our society better - I believe in America ❤️🇺🇲🕊️ Let's have faith in the USA!
@duckducktv7960 11 ай бұрын
Your out-of-the-box thinking and unique perspective turned an otherwise mediocre presentation into a fantastic one Mendos Anonymous . You did a good job of catching the mistakes and keeping us from wasting time and by taking the wrong path. Your attention to detail really sets you apart from the crowd. Great work! Dave, Your great work has resulted in tangible, beneficial results to me. You’re a force to be reckoned for doing all these beautiful things to my credit Mendos anonymous Hack
@baileyhamiltonmorton1768 Жыл бұрын
My credit score dropped by 40 points because my student loan carrier (I never missed a payment) changed and the new carrier divided it from one loan into two loans..
@jinWhuang Жыл бұрын
Credit score is as flaw as SAT/ACT score, or GPA. That’s why banks doesn’t rely solely on credit score. But it provides a good reference to affectively access to credits. Without it, we can still access to credit, but at what cost? For large company or rich people, banks don’t lend you money based on personal credit score, they will have a team to do a full assessment. For the average joe, you want the bank to do a full assessment too? It’s possible, but the cost will passed down, like maybe having to pay for an assessment fee even before they give you a quote, and no one will shop for credits since the upfront cost for each quote is expensive, then less competition, and then making the mortgage/loan even more expensive. Credit score is not the problem, education is.
@InternetUser._ Жыл бұрын
Credit scores make it virtually impossible for the average person to live without debt. What a shocker that banks and lenders benefit while the people do not.
@EarthWasHere Жыл бұрын
Thats how they make money, they have to rig the system in order to make bank. Without that there is no need for them.
@andybaldman Жыл бұрын
Glad I’m not the only one who understands this. It’s amazing how heavily the concept of a credit score manipulates people and benefits corporations.
@zjones9876 Ай бұрын
I've literally never given a second thought to my credit score. I don't track it or know what it is. I've never been denied for a loan or failed to get the best rate possible. It's not something anybody should be obsessed over.
@jabbaweezy Жыл бұрын
11:32 "If you pay your mortgage on time every month your credit score is going to increase, but you pay your rent on time every month nothing happens because that information isn't reported" Wow I didn't know that.
The Fine Print with George Kamel
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