Credit Scores

A credit score is a mostly arbitrary thing that both has big impact and almost no impact on your day to day life.

What the score attempts to track is your trust-worthiness to take out new credit based on old credit.

There's a half dozen different types of credit scores tracked by a bunch of companies and they're frustratingly all different: different scoring metrics, different number ranges, different inclusions of debt like mortages, etc. ...then it's all wrapped up in obscurity and hidden in a box somewhere. The whole thing is a pretty rotten scam, but here we are.

The game as she is played

On the whole, things that are financial attribute to your credit score: paying your credit cards, paying your phone bill, car loans, sometimes mortgages, etc.

Then it's also based on history: how long those credit cards have been open, how often are you opening new ones, etc. It's also based on something called unallocated credit which seems to be an easy powerhouse for generating score passively.

Unallocated Credit is the ratio between how much credit you're offered, and how much you're currently using. So for example, if you have one credit card open and it has a max limit of $10k, and you have $5k in debt, you're using half of all your available credit. That's... not great. A credit score might see you as risky for additional credit since you're using so much of your existing. For me, I have something like $60k available between cards and line of credit and whatever, and I use a few hundred a month and always pay it off - I get a ton of credit (heh) for being "so good" at that ratio. Obviously I'll never use even a fraction of it and have all the self control in the world to know that it'd be a dumb idea to take that much credit out on cards.

• So the scheme is, if you have the self control for this, always accept / ask for your credit card limits to be raised, even if you'll never need or use them to raise this ceiling.

• Keep old cards open if they don't have annual fees, they can literally sit in your closet and a) add overall time to your "average credit length" which is good AND b) add overall ceiling to your un-allocation which is good.

• Same with line(s) of credit if you're not using them and they're otherwise not costing you anything, just leave 'em open and empty sitting there.

And then just wait long enough for that ratio to help you.

Tracking your score

I use Borrowell, it's free and they make money by offering you credit cards and things which presumably would be sponsored links that give them cash. This doesn't seem egregious to me. They'll email you every quarter or whatever with the recent check. I remain unconvinced that paying a monthly fee for Equifax is worth it - it's shockingly expensive and doesn't seem to provide much. Also, knowing your credit score doesn't really matter short of curiosity and knowing generally where you stand. For practical purposes, most lending decisions are basically just sorting you into "excellent, fine, terrible" categories, the specific number doesn't matter except to push you over the arbitrary threshold.

If you're doing things well, it'll just passively go up in the background of your life and years later you'll be happy to get some preferential rates on a car loan or mortgage or whatever. Yay.

Like I said at the top, it's both very important and very useless. But it's pretty easy to slowly gain, why not.