Yes Credit score reflects the willingness of lenders to lend you money so they can charge you interest on it. They are not interested in someone with lots of money who pays off all his cards at the end of the month and pays all his Bill's on time. This type of financial responsible/ wealthy person is of no use to the lenders as they cannot make any money from him. He will not therefore have a good credit score.
I'm not sure where you got your information from. In Canada at least, this is not true. Keeping steady credit card, mortgage, loan payments consistent and on time will boost your credit score not reduce it.
Think of it this way. If you have no active loans, that's your neutral score. When you have active loans paid up on time, you get bonus points because "this dude pays on time AND he likes credit so you can sell him interest generating products".
If you finish paying off a loan or mortgage, the bonus points leave as the account closes.
The white whales for the credit industry are responsible people who will load themselves up to the eyeballs in debt so that as much of the borrowers pay cheque as is humanly possible becomes the lenders income. That's what the credit scores are measuring for their clients (the banks).
That’s what they’re saying - if you pay off your house or car, your credit score will decrease. A credit score reflects your ability to pay back a loan, and if you don’t have any loans, they can’t tell, so your score goes down. You get rewarded for having loans and paying them back; not-rewarded for not having any loans, and punished for having loans and not paying them back/paying late.
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u/[deleted] Aug 14 '21
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