this post was submitted on 23 Oct 2023
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Unpopular opinion, not really opinion but...
Credit score system is designed for the people with money to allow you to borrow that money. It's based on a curve system so... If your at the bottom of the list is because 99% of the population is better than you at learning how to play the score system. Tldr: the score system was not designed with me in mind.
I don't know if it works differently in the US but the best way to build your credit score is to not take on debt.
Keeping your credit utilization low and not missing any payments is the key. It's an indication of how likely you are to meet the payments.
If you max your credit cards out and just pay the minimum amount, carrying thousands of dollars of debt and as a result can't get a mortgage or a car loan because your credit score is shit then the system is working as expected.
Yeah I want to emphasize this too. It doesn't "require you to take debt", it checks to see if you pay your debts on time. If you carry a $5 credit card bill and pay it next month that has a positive effect. If you don't pay that it doesn't matter how much it is, you missed a payment, that's a negative. You don't have to have a bunch of loans to have a good credit score, you have to pay your bills.
Thats why having a credit card can be good for your credit score because you are effectively borrowing money until the end of the month, then paying it back. That signals on your credit score "hey this person borrows $1000 a month, and pays it back every time. They're a reliable borrower"
The best way to build a score is to take out small amounts of debt and repay them in a timely fashion. But you're still better off with a car note than without. You're still better off with a credit card than without. You want an optimal number of data points for the system to track. And you want a history clear of missed payments.
Without that data history, it becomes very difficult to secure apartment space or access anything other than student credit. And, because you absolutely need a car and an apartment if you want to exist in America in anything close to comfort, that means you functionally need a credit score.
Unpopular but very truthful.