Posted by Serina/VT on 10/15/07 10:24am
Msg #216507

Paying off your debt questions

There have been a few threads on this forum lately about work, debts and paying them off. I had a conversation with a loan officer about paying of debts, and having none. She told me that was the worst thing you could do as it would destroy your credit rating. So she explained that lenders look to see how much available credit you have, ie credit card with 5k limit with only 1500 on it. How many loans you have etc. She said that if you have no loans or credit cards you use your credit score will drop.

Anyone have any helpful thoughts on this subject?

Reply by Charm_AL on 10/15/07 10:30am
Msg #216509

true, they want to see you paying off debt at the time it is due. If you have no credit you are not showing that you can repay a debt. Don't fall behind tho, they could hold that against you to. Also, if you have many hits on your credit profile, that can be ugly too. To many people hitting your score signifies that you are desperate. I bought a new car last year and my report was hit several times by the finance manager, putting out the number for the best term.. You can get away with a number of hits if it's all done at one time, such as borrowing or ref'ing.

Reply by SharonMN on 10/15/07 10:36am
Msg #216513

Have no credit history is bad. Having no debt is good. I've personally never had a debt other than my mortgage. I have credit cards that I use regularly and pay off in full each month, though, and my credit score is around 800.

Reply by PA_Notary_II on 10/15/07 10:39am
Msg #216515

I have no debt and still have a high credit score. I maintain a Master Card and have some of my utilitiy bills, insurance premiums, etc put on the card every month. But I pay it in full every month. Therefore, I write less checks and maintain an excellent credit score without any interest expense. I have several lines of credit...all with a zero balance. Bet it would work for you too.

Reply by ToniK on 10/15/07 10:35am
Msg #216512

I thought the same thing BUT my husband paid off all his debts, closed all his credit cards and his credit score soared. It bypassed mine and still high. I have about 4 credits cards and my credit score moves up slowly. I'm thinking of paying off all the debts and either closing all the cards or get one card that equals the total amount of credit I have. But I want his score....

Reply by SReis on 10/15/07 11:24am
Msg #216531

ToniK do NOT close the cc's

That is the biggest misconception. Pay off the cards but leave them open, esp. if you have had then a long time & had a good history of paying, that actually helps your credit score. I swear by Suze Orman. She has some great books out there!!

Reply by SReis on 10/15/07 11:28am
Msg #216533

ToniK - that is just my opinion NOT legal/finanical advice. n/m

Reply by ToniK on 10/15/07 1:07pm
Msg #216549

lol@SREIS. I couldnt if I wanted to...

I need to keep them open so I can use them for when I open my Boutique next year. But I was thinking of closing 2-3 of them and asking my Plat card to up my limit.

Reply by PJM/MI on 10/15/07 11:09am
Msg #216525

Re: Dave Ramsey could help!

He has stated that a LOAN OFFICER will tell you that your credit score will be crappy if you don't have any loans.
Like you, I have heard the same thing..from a loan officer.
Mr. Ramsey's bottom line is that if you don't have any debt, don't plan on taking on any debt, you don't need to worry about your credit score.

Reply by SReis on 10/15/07 11:27am
Msg #216532

Re: Dave Ramsey could help!

This line of thinking seems a little unrealistic. CC's are one thing but how many of us can say that we were able to not take out a loan for our home, education expenses or even a reliable car. I would love to not have debt but I don't think its very realistic.

Reply by Charm_AL on 10/15/07 11:36am
Msg #216534

Re: Dave Ramsey could help!

I agree SReis....it's a little far fetched for me to think NO credit is good credit. I saw it all day long as a mortgage broker, have debt, pay it and you are qualifying for a loan.

Reply by John_NorCal on 10/15/07 4:24pm
Msg #216578

I agree Charm and SReis, the key

is to be responsible. I've spoken with people at credit bureaus and their systems are set to show active accounts. Advice from them is to have a card, use it every six months for a small purchase that you can pay off in that billing period and it will show active and paid as agreed.