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Credit score dropped for seemingly no reason (self.personalfinance)

submitted 11 months ago by Pat12 to c/[email protected]

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I moved countries a few years ago and am building up my credit score from scratch. I'm cognizant of good practices to build up my credit score like paying my credit card on time. My credit score dropped 10 points in the last month but I don't know why. I've increased my spending on my card because of Christmas and travelling but make the payments right away (typically same day) so that there is not a large balance on my card at the end of the month. The total spending for the month is less than 30% of my credit card limit.

I don't have any other form of credit like loans. Any suggestions why there was a drop?

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[–] Crackhappy 7 points 11 months ago* (last edited 11 months ago) (1 children)

You are doing what I refused to do, which is to game the credit system. You're right, if I didn't incur any debt I wouldn't have a bad credit score. When I was young with four kids and a dead wife I incurred a massive medical debt by having cancer. Outside of that I didn't do anything.

I applaud you, and congratulate you. I wish I could have done what you have.

You're right, I have bad advice. Who can just not carry a debt in this economic climate?

Edit: This is far snarkier and negative than I intended. My apologies.

[–] thrawn 3 points 11 months ago (1 children)

It’s wildly bullshit that medical debt affects credit score, yeah. My condolences by the way, though I know it means little from internet strangers. I think medical debt gets removed after seven years though so the score could rise. Not sure if you have to dispute it manually, but it shouldn’t affect you for too long (in the span of your life).

If you’re not planning to also game the system the score obv doesn’t matter either way though. I don’t actually know my score, which is probably weird in a thread specifically about credit scores. It’s its own bullshit system, largely in part because stuff like medical debt counts there. And really the concept of three companies keeping track of everyone’s financial data, mismanaging the information, and profiting from it is just kind of garbage.

That said, if you do ever actually want to start, having a low score isn’t a huge hurdle. There are plenty of cards for low scores like Discover which is 1% back. By keeping the same life habits but using a credit card instead, you do come out on top very easily. If you set an autopay you never carry debt, and you also save just the teensiest amount through delayed paying and can generate interest on the money you use to pay it. Of course there’s no need to ever start, especially if you don’t have use for the extra money.

No worries about any snark! I try to read things in the most positive way these days. Hope you’re doing well out there!

[–] [email protected] 1 points 11 months ago (1 children)

AFAIK, medical debt has changed quite a bit recently, and my read of this is that paid medical collections will drop from your report. So unlike non-medical debt, you should consider letting large medical debts go to collections and settle for a fraction of the price. This doesn't work as well for non-medical debt because collections otherwise stay on your report for 7 years.

I'm far from an expert and haven't dealt with this at all, so definitely double and triple check this if you're in a situation where defaulting and settling may be preferable.

[–] thrawn 1 points 11 months ago (1 children)

I think settling for a fraction of the price is rarer than it seems, and even a tiny fraction of cancer bills would be extremely difficult for most. This is good advice if you need your credit though. I hear it’s easiest to negotiate with the hospital itself but with American healthcare you might well get one that simply does not care.

Your suggestion also works for people who already have the medical debt though. At that point it doesn’t hurt to try to negotiate. They should avoid making any payments until completely ready to pay it off though (and having made a deal), wouldn’t wanna restart the clock and whatnot.

In the other commenter’s case I would probably just ignore it until it went away. I never need credit though so it’s not realistic for everyone. Medical debt is such a fucking terrible thing honestly. Hopefully they succeed in removing it from credit entirely

[–] [email protected] 2 points 11 months ago (1 children)

Yup, try your luck with the provider, and consider the collection company as a backup plan. Usually you can get a pretty good deal from one of them, but you need to be ready to pay in cash.

But yeah, if you can handle waiting 7 years, letting it fall off is the cheapest, but you'll have crappy credit and are open to lawsuits until that time.

[–] thrawn 1 points 11 months ago

Man medical debt lawsuits are among the worst things in this country. Pure maliciousness. I imagine it’ll be one of the most reviled “past things” in the future.