By Billy Liggett | The Rant
So I paid off a loan on an HVAC unit in January, and one of the Big 3 companies that monitors my credit score congratulated me the following week with a cheery message stating “Positive Activity: Loan Paid.”
That same day — mere minutes later — the company dropped my credit score by 3 points.
The following month, we closed on our house, selling it after 13 years of never missing (or being late on) a mortgage payment. The same “congratulations” message followed. This time, my credit score fell a whopping 25 points.
As we enter March, my family is in the market to buy a house. As such, I’ve been checking my credit score like I was following the fourth quarter of a game on my phone while at my kid’s school recital. A lot.
I’ve lived 44-plus years on this Earth and, ashamedly, have paid little attention to my credit rating up until now. Even when I’m sure it hovered in the low 400s back in the days when I could barely make rent, car payments and student loan bills, I didn’t worry about it much. Maybe I should have, but we’re all invincible in our 20s, aren’t we?
Today, I’m stressing. A late credit card payment or the appearance of a medical bill from 2014 (this has also recently happened) can wreak havoc on a credit score.
Apparently, so can actually paying off your debts.
The three main companies that monitor and determine our credit ratings — Experian, TransUnion and Equifax — have far too much power over our lives.
Even a small drop in a credit score can affect your interest rate when buying a house, costing you thousands and thousands of dollars over the course of a 30-year mortgage. Or worse, these scores can altogether keep you from buying a house. Or a car. Or a new HVAC unit. Or even an iPhone.
Bad scores can even prevent you from getting a job. Roughly half of all employers factor in your credit score when doing background checks. And 20 percent of all credit scores in this country contain at least one error, according to several studies.
This is nothing new. Credit rating companies are among the most complained-about companies in the world.
But when suddenly your life depends on a very good or excellent credit rating, you wonder how you haven’t always been stressed about it.
I’m fortunate. I’ve spent the last 20 years — guided by my ever-so-wise wife — repairing any damage my broke ass caused in the late 90s.
That’s what makes these “congratulations … we’re docking your score” messages all the more infuriating. The reason for the latest drop (from what I understand) is that having fewer open installment accounts can have a negative impact on one’s score.
In other words, get more credit.
To “help” me, one of the Big 3 is sending me regular emails telling me that my current score qualifies me for “top tier credit cards.” So the company that can make or break me is waving low-APR lines of credit in my face, encouraging me to go more into debt and potentially harm my score.
There’s no winning this game.
Fortunately, I’ve not read where writing a newspaper column to air my grievances against these companies can negatively affect my score. I’ll continue to watch the ebbs and flows like my own personal stock market, and the day we finally land on a house, I’ll gladly delete the app until it’s time to replace the family van that’s a year or two away from hospice care.
My advice — if you don’t know your credit score, find out now. There are free ways to do it (the companies are required to provide it for free once a month), and having that piece of mind will save you from disaster if your score is low and you need to buy now.
And I’d also say don’t stress too much, but the system is broken, and we’re paying the price. Literally.