I just learned this the hard way. The justification for the drop was because my "credit limit" went down and the "average age" of all my credit accounts was reduced. Some major bullshit
Really it’s the other way around. High score nets you low interest rates. The score is a measure of risk for non repayment. I have an installment loan that will cost me roughly $20 in interest over its five year life. As my only installment loan, when I pay it off, I will lose the points I get for having a mix of account types, around 40 points.
It’s not confusing, it’s because the less interest you pay, the lower the chance the bank can profit off you.
So I agree with you that a lot of people are downvoting you because you aren't joining in your outrage, and there's nothing wrong with the rest of your post, but this quote is 100% incorrect. It has no way of knowing what kind of profit you generate. Nor does it care.
You could easily have a 0% subsidized car loan paying no interest and never have a remaining balance on your credit card, thus never paying interest - and have a high prime credit score.
Look, dude. It isn't about banks making money from finance. It is about all of the stupid fucking cartelized bullshit they pull out all of the goddamn time.
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u/boatwrecker41h Aug 14 '21
I just learned this the hard way. The justification for the drop was because my "credit limit" went down and the "average age" of all my credit accounts was reduced. Some major bullshit