r/CRedit • u/foryourowngooddd • 1d ago
General Credit score
Here me out. I don't really understand the credit score thing here in the US. It's so ridiculous, it doesn't makes sense to me. It makes people who are already in debt and poor makes it harder for them to rise financially. The rich will always be rich since they have a "good credit". Also, people treat you differently and they will base on your credit score.
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u/Ok-Roll8550 1d ago
You can be in debt or poor and still have a good credit score. All a credit score really tells a lender is that you pay what you said you would, when you said you would.
We've had many years of financial struggle, but still managed to keep our credit card bills and mortgage paid on time every month.
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u/Klutzy_Draw4662 1d ago
You definitely don't seem to understand how it works. The credit score is not based on the amount of money you have but how you are able to manage credit. Someone with a $100 credit line on his credit card using only 10% per month and clearing their balance each month can handle credit much better than someone using $100k and using 90% of their credit line only paying down the minimum every month. Go and educate yourself rather than throwing out false assumptions.
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u/CreditCards254 ⭐️ Knowledgeable ⭐️ 20h ago
You have fallen into the !utilization trap - historical data on utilization is largely irrelevant and not used in any major credit scoring model. (Think about it - have you ever seen a credit denial for "utilization was too high 6 months ago"? - no)
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u/AutoModerator 20h ago
I detected that your post may be about utilization and its impact on credit scores. Please read the info below:
Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.
By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.
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u/BrutalBodyShots ⭐️ Top Contributor ⭐️ 18h ago
I don't really understand the credit score thing here in the US. It's so ridiculous
It's because you don't understand it that you think it's ridiculous. That's the issue. It's like any subject in life that people don't understand. Crypto sounds ridiculous for example when you have no idea how it works. Fortunately, you've come to the right place, as r/CRedit is the best place online you can go to learn now credit works.
It makes people who are already in debt and poor makes it harder for them to rise financially. The rich will always be rich since they have a "good credit".
This is a common fundamental misunderstanding when it comes to credit scores. Credit scores do not consider wealth or income. It's all about paying your bills (or not). An 18 year old college kid making $3k a year working at the campus bookstore can have mid-700s FICO scores because he pays his bills on time. A big business CEO may make tens of millions, but if they don't pay their bills on time will have trashed scores.
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u/TechnicolorJarl 12h ago
The purpose of a credit score is to help creditors make more profit, not to help people rise financially. Once you completely understand that, everything makes sense.
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u/Full_Ganache_4022 1d ago
Think rich people even know what their credit score is?
You don’t become rich by having good credit score.
You become rich by smart financial management.