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Comment by wink | Hacker News Reader

I think the thing that most of us can't wrap their head around is the "building a credit score" part, not the credit score itself.

As in, if I never take a credit and save all my money, I don't have a good credit score, but if I spend 95% of my net income on weird stuff, but do pay my credit card bills on time I suddenly have a good credit score? As exemplified by advice I often read to route as many recurring payments as possible (including rent) through a credit card (and paying on time, ofc).

I mean, that's how it was explained to me, but happy to be proven wrong.

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A large part of a credit score is determined by a track record of on time payments. You don't need to spend 95% of your net income on weird stuff to do that.

Are you sincerely confused that building a credit score requires you to actually use credit?

This is pretty inaccurate in my experience. I have always had a score above 800 and never took on heavy debt and paid of credit cards monthly.

I suspect most of the building credit Behavior comes into play when you are trying to dilute derogatory marks on your credit reputation. If you missed a $50 bill, it is better if it is one of hundreds of transactions then one of 10.

With that said, I can see the value of showing some experience of servicing debt. Imagine being a banker talking to someone asking for a large loan. Someone with a documented history of paying on time is naturally lower risk then someone with no history

You’re basically correct (although 95% of income is drastically overstated, it can be far less than that), but I don’t understand why you can’t wrap your head around that? If you’re never taking on any credit debt then of course you will have a non existent credit score. If I’m a lender, how would I possibly know you’re capable of paying back a loan without some audit trail of your past ability to do so? It seems an incredibly simple concept to understand.

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