Reply to Anyone else not have any credit cards & why does it hurt my FICO score?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Of course my DH has a slighter higher score than I do, since at one point he wracked up credit card debt (before he knew me!) and then paid it all off.  That sends your score soaring because you made them money, while also paying it all off.[/quote]

Yeah, that's not how it works.[/quote]

+1[/quote]

I most likely phrased it poorly, but after carrying CC debt, and then paying it all off, his credit score jumped an incredible amount.  It was good while he had the debt, and then it became stellar.  So, take from that what you will.  We had similar histories otherwise, and his was 20 points higher than mine.  The difference was he had carried way more debt, and paid it off, than I had.[/quote]

His credit score is higher than yours because he has a longer history of timely payments. The score jumped after pay-off because his debt to available credit ratio dramatically improved. Your original statement (and still kind of your clarification) implies that holding credit card debt that he paid interest on could have been good for his credit score. But that's not true. If he'd made small purchases on his credit card and paid in full each month (e.g. never holding any debt capable of accumulating interest) his credit score would be the same or even higher than it is today and the credit card company never would have made any money (from him, anyway). Meanwhile, the jump he saw was because his high debt to credit-limit was masking the gains in his credit score he'd made by having a long payment history.

I'm sorry if it sounds pedantic, but I think its important because a lot of people seem to think FICO scores irrationally reward people who carry credit card debt. And they don't. They reward people who have extensive histories of using lines of credit without forcing collection actions.[/quote]

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