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Comment by throwawaycert | Hacker News Reader

Credit scores change constantly. What your 80 point drop told creditors is "This person might not have enough money to pay their bills, or is careless or forgetful.". You are perceived as higher risk because, statistically, you are a higher risk. Those of us who maintain excellent credit do it in part by making sure our money gets where it's supposed to. I check online to make sure payments post, or hand in payments in person, or call in the rare case these days when there's no other way to check.

Fortunately, credit scores usually recover rather quickly from one-off delinquencies if you stay current afterward. And I bet you'll be paying more attention to your bills now, won't you?

The credit score is doing exactly what it's supposed to.

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I was surprised how much they change constantly, for silly things like how much balance you have on your credit cards.

My wife & I both have excellent credit scores, and we pay all of our bills in full every month. Nevertheless, I've noticed a ~50 point swing in credit scores from month-to-month, all dependent on whether airline tickets, furniture, or charitable contributions happened to make it onto this month's bill. Our debt-to-liquid-assets ratio is something like 0.1%, so there's never any real risk of not having money to pay it off, but of course the credit bureaus don't have information about our assets, so they evaluate us against what other people our age have, which (being Millenials) is not very much.

Knowing how the system works, we can take steps to game it, like not putting any major purchases on credit card in the 3-6 months before getting a mortgage. But still, it's slightly ridiculous that something that's supposed to measure your creditworthiness can swing so much over short time periods.

It's not that weird. If your score is, say, 750, 50 points is about a 7 percent change. My finances very easily vary 7% from month to month!

50 points also isn't likely to make much difference, especially if your score is already good. Loans basically go off tables. Essentially if you're between A and B, you get this rate for this losan, C and D gets this rate, etc.

Once you're past 700, you're already getting good interest rates and banks will fall over themselves to loan you money if your income supports the loan size. When I was at 780, the loan officer couldn't give me a lower rate on a mortgage - I was already getting a fraction of a percent over prime.

You can eliminate credit score swings by never generating a credit card statement with a balance. You can do this by paying your card off prior to the statement date.

I spend between $1000-$2000 on credit cards a month and collectively I generate statements with less than $10 spread across 4 cards. My credit score is rock solid from month to month.

If you have six figures of liquid assets (what 0.1% debt vs liquid assets implies) this should be no problem at all.

We usually just set all our cards on autopay-in-full and forget about it. Is there a way to have them autopay before the statement date, or do you need to proactively check every month and make a payment right before the statement date?

Being proactive is the only way, unfortunately.

You also believe the stock market is nonsense, because valuations fluctuate?

It's worth remembering that an important aspect of your score is your value as a customer. Risk is one element. Carrying a balance gives you more value than if you never carry a balance.

It's the other way around - your credit score is higher if you have a lower balance on your cards.

That is not correct. A small balance raises your score more than a zero balance. But you want to keep it under a third.

This is an oft passed around urban legend, but it's not true. You can try for yourself by opening up a free CreditKarma account and seeing what happens if you zero out all your balances.

I'd take that with an entire shaker of salt; you are assuming CreditKarma knows the FICO formulas. Even the prediction engines used by the actual credit bureaus are notoriously unreliable at telling you what will happen given a particular change in inputs. Probably not accidental, they don't want to expose the algorithm.

> we can take steps to game it, like not putting any major purchases on credit card in the 3-6 months before getting a mortgage

I wonder how much your ability to game it indicates whether you are likely to be a good or bad debtor?

Foisting responsibility onto customers with more important things to worry about, rather than into organizations whose only purpose is to keep track of these things?

It is not my job to go out and manage my customer's finances and take their credit cards or write myself checks from their accounts, and I'd be quite rightly arrested for theft if I tried.

It is, or should be, your responsibility to notify them when payment it due.

Ah, but there is no indication they didn't. What happened is that the check was sent, but did not arrive. In other words, the customer and his agent (the postal service, probably) in the exchange did not fulfill their job of getting the money to the business. That is not something the business can control, and if you try to make it their responsibility, they will simply start refusing payment by mail, since it would be a constant and high level source of fraud.

But making it the customer’s responsibility is cool?

In any case, I read this as the notice that payment was required is what got lost, not the payment itself.

Ah, you may be right, but even that still makes the report valid.

Let me tell you what I hear as a business person if you tell me my letter to you was misdelivered: "My mail delivery is unreliable so it's your problem."

Well, no, you didn't tell me it was unreliable, so I couldn't adjust my risk perception or take special precautions. And if you ever want to do business with me again, you're going to come in and execute the transaction on site and not leave with the goods until the bank confirms it's cleared.

On top of which, most billing contracts specify that payment is due whether or not you were notified. You are supposed to keep track, too.

And yes, this is okay, because until we have a proper socialist system, it is, in fact, our responsibility to pay our debts. Don't like it? Don't incur debts.

As a business person, you’d put a customer through the wringer for one missed payment due to communication problems? I hope you have a monopoly in whatever market you serve, because otherwise that’s a great way to lose all of your customers.

Anyway, we’re back to making it the responsibility of the customer with a thousand more important things to think about, rather than of the business that’s dedicated to the stuff.

And if you think it should be that way, great. But it’s obvious to me that it is that way because of the power imbalance, not because it’s right.

If the customer is using it as an excuse, yes I would. They’re trying to weasel out of their responsibilities, responsibilities they almost certainly incurred voluntarily.

If you don’t make payments as agreed, your credit score goes down. If you do, it goes up, and will soon recover from the perfectly reasonable dip it took from your mistake. It’s pretty simple.

So if the customer's cheque doesn't get to you, that's the customer's fault, but if your letter doesn't get to the customer, that's also the customer's fault?

> The credit score is doing exactly what it's supposed to.

policing people and make the poor to pay more.

If you don't pay your bills, I think it's entirely reasonable for businesses to tell each other about that so you don't defraud them out of a lot of money.

>the entire banking system promotes systematic moral hazards and has lowered the purchasing power of stagnating wages for most people

"Why are people defaulting on their bills!?"

The whole notion of transfer of majority responsibility to an individual is one of the slimiest things in this society. We get monitored by an array of hidden surveillance measures and algorithimic judgement we have no way to properly counter or defend ourselves against. Meanwhile central credit gets to borrow money and get bailed out.

Give me a fudging break.

This isn't complicated. You incur a debt, you pay it. If you can't, people aren't going to want to do business with you, and will quite reasonably refuse.

You are trying to make everyone else responsible for my finances and I'd damn well thank you to stop, since they're mine.

I understand that clearly. But clearly there are classes of institutions and people who...

1. Make a mockery of prudent allocation of money and get bailed out when their games get messed up

2. Mess up the purchasing power of any money you possess far more than any individual defaults or even class of individual defaults

3. Impose grave and hidden responsibilities on individual borrowers and mass surveillance...

They are messing up your finances far more than the most reckless individual borrowers ever could. *

PS - How is finance going to deal with the multitrillion dollar pension bomb? With prudence or with a combination of a game of musical chairs and chickens until stuff gets serious? How is your financial discipline, as an individual, going to protect you from manmade tsnumais?

What are these "grave and hidden responsibilities" you're talking about? Paying your bills is hardly an obscure pastime.

As for your PS, I don't respond to conspiracy theories.

https://worldview.stratfor.com/life-expectancy-pension-retir...

Is the World Economic Forum a purveyor of conspiracy theories? Is our reduced purchasing power at the level of food and rent a conspiracy theory?

Edit: My apologies, here's the actual WEF press release https://www.weforum.org/press/2017/05/global-pension-timebom...

Pffft. The WEF is a celebrity getaway in the Swiss alps for the same people who caused the 2008 crisis and got away with it. If they’re making that prediction in good faith, it’d be a preemptive confession of guilt. If not, it’s just a distraction from their routine crimes.

> statistically, you

Is an oxymoron. Statistics exist when "you" is unknown.

"You" have statistics attached to you. Default rates, lifespan, cancer risk. Given people A and B in similar life and financial situations, A or B might defy the statistics that say they'll both pay or default, but they probably won't. The only way a bank or anyone can predict this is statistically.

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