Comment by apeace | Hacker News Reader

Comment by apeace | Hacker News Reader

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I assume that it is just a money-making scheme and serves no actual, logical purpose.

I had bad credit a couple years ago because I'd never had a credit card or a loan. I decided to fix it by getting a card much like this Amazon one. I attached it to my Netflix account, turned on autopay, and forgot all about it.

A few months later my credit score had skyrocketed from the mid 500's to the mid 700's.

Nothing about my income or my job stability changed in those few months. Nothing about my spending habits changed. The only thing that changed was instead of paying $9 to Netflix via my debit card, I paid via my credit card.

But this is an advantageous situation for them because they have multiple avenues to extract money. Miss a payment? Late fee. Don't pay the whole thing? Interest. Don't read every document you get in the mail? Here's a new annual fee.

I'm in a funny situation now because my score is looking pretty good, but all of the score tracking companies tell me the best way to continue improving is by getting more credit cards. How convenient.

Edit: Spelling

You didn't have "bad credit" you just had a thin file. Your score went up quickly because it was all positive indicators. I was in the same boat, never bothered with a credit card or took a car loan (bought used in cash), and my score was 500's. Couple years later and I'm just shy of 800 with 1 card (no annual fee) I barely use and have set for automatic payments through checking account.

It is both a money making scheme and it does serve a logical purpose.

You might have phone service for 20 years, pay each month by check, and never miss a payment. That will never show up on your Credit Report. But if you miss one payment, the phone company will gladly report you, regardless of the reason, to credit reporting agencies.

Financial Institutions however do report to credit reporting agencies regularly regardless of whether it's a loan or a credit card.

Having nothing on your credit report isn't necessarily a bad thing, but having a record of making monthly payments is even better. A loan costs money, in the form of interest, but a credit card doesn't necessarily cost you anything. So the theory is that you can acquire a credit card with little or no credit history, and demonstrate your ability to pay off a monthly balance and the credit card company will report that activity.

That's not true. Post-paid subscription accounts are generally reported as open credit accounts, since they are.

Are they not required to show that information on Credit Reports? I'm only asking because I don't see any of my post-paid subscriptions like my telephone bill or Netflix account which have both been open for 10+ years on any of my 4 credit reports. I can however see that 2 week period in 2006 when a loan I had was sold three times over and each company that touched it said I was a good paying customer despite never having sent me a bill.

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