why is the credit system backwards, The bigger your debt the easier to get a loan?

I have a 50k paid for house a 25k semi truck and a 382 monthly car payment my score is under 600

only 1 credit card with a 500. limit and the usual bills

my brother is in hock over 200k on his house 40k for his hummer and about 25k for motor home his score is over 800 he cant pay his bills without using his credit cards and refinancing he is short about 1200. per month but he has been able to float but he is sinking bad.

I owe under 15000. for everything I own have a decent income but will not get buried in credit card debt.

the system is realy backwards. He just did a refi for 250k and took all equity out of his house again to pay off his credit card

he does not earn enough money to pay his bills

I have about 2500 a month extra my credit score has been in the 540 to 570 range for 5 years. when are the fico scores going to stop requiring so much debt to raise credit score....that is just backwards

8 Answers

  • 1 decade ago
    Favorite Answer

    The ultimate goal is to not have a score at all. Sure you MIGHT pay a little more for insurance, but you WILL save a lot more by not living over your means and paying interest. When your brother files for bankruptcy and loses everything, which is just a matter of time, he will realize that having a high credit score was only a trap. Don't go there. What is best, wealth or ego?

    FICO was designed to help the credit industry-though not very well-not the individual. It is an I love debt score, nothing more.

    Source(s): Dave Ramsey has the largest and best program I know of for helping in both of your situations.
    • Commenter avatarLogin to reply the answers
  • Anonymous
    4 years ago

    Wow, Zoe just doesn't seem to understand. This is the way most people live. Borrowing from Peter to pay Paul is the American way of life. There's nothing wrong with taking out a loan to pay off your credit card debt. But just make sure you don't run up the card again. Cut it up and get rid of it. It will actually look good on your credit once you do get the loan paid off. You will have all that extra unused credit and will probably increase your score. Good luck in school. Sounds like you've got your head on straight. Don't listen to these know it alls on here that think they're better than everyone!

    • Commenter avatarLogin to reply the answers
  • a_mom
    Lv 4
    1 decade ago

    Your credit score goes on your debt to income ratio, how long you have had each credit card, and whether or not your payments are late. It's possible that your brother's late payments haven't caught up to him yet. If you have a credit card start using it and pay off the entire amount each month. This will get your score up. Also when you pay off your car your score will go up. My credit score is high, but I don't have a lot of debt. When you get your credit score from all three major credit reporting companies they all give you the reasons both positive and negative for your score. Eliminate the negative factors affecting your credit score and it will go up. I have never seen not enough debt as a negative factor resulting in a low score. On the contrary generally too much debt gives you a lower score.

    • Commenter avatarLogin to reply the answers
  • 1 decade ago

    Are you smart enough to listen to some good advice from someone who’s been where you are? I’m betting you are because you’re seeking information on how to improve your credit score, which is a very smart thing to do. Maybe you’re hoping to buy a house one day and you know a higher<!--credit score will not only increase your chances of being financed, but will also influence the interest rate you’ll pay. You probably already know that generally speaking, the higher your credit score, the lower your interest rate.


    Maybe you just need to improve your credit score because your credit took a blow due to divorce, illness or loss of a job. Whatever your reasons for wanting to improve your credit score, you’re to be commended-->and I’m going to help point you in the right direction.One very important thing to keep in mind -- when you finish reading, don’t forget to click on the links I’ve provided at the end of the story.

    • Commenter avatarLogin to reply the answers
  • How do you think about the answers? You can sign in to vote the answer.
  • 1 decade ago

    There must be another issue with your scores.

    Are you looking at genuine FICO scores?

    http://www.myfico.com choose the link FICO STANDARD

    You might be pleasantly suprised.

    Also, do you have a long credit history with the house and credit cards? Short histories hurt.

    Here's a FICO credit score simulator. Play around with it and see how it works out for you. You can put different answers in each time and see what will help bring your score up.

    I am not in any kind of debt, except for 14.95 per month that I spend on trucredit monitoring system and my scores average 724.


    • Commenter avatarLogin to reply the answers
  • 1 decade ago

    The score isn't just based on debt. My score is over 800, and I have no debt. No house or car payment and no credit card debt. All bills and credit cards are paid in full every month.

    • Commenter avatarLogin to reply the answers
  • 1 decade ago

    It's not backwards. You have loans for a house that is very low. A loan for a semi, but that is income producing so it is less risky, and one car payment.

    Your brother has used too large a percentage of his monthly income for his loans. If he can't pay them then he shouldn't own a hummer. Tell him to go buy a used honda for 5k and sell the motor home. Surprise! He just lost 65k worth of debt. (probably less because he's probably flipped in his loans)

    He's able to put himself in that situation because he has good credit, the banks trust him.

    You are able to be in the situation you are in because you have poor credit. Most of your loan goes to an income-producing business which lowers the risk to compensate for your poor credit.

    The banks realize this when they issue the loans. It is all correct.

    • Commenter avatarLogin to reply the answers
  • Anonymous
    1 decade ago


    I used "Credit Solution" to settle my debt and improve my credit score.They managed to reduce my debt up to 58% .It's legitimate.I came across this company on NBC News Special Edition.Check it out here:


    • Commenter avatarLogin to reply the answers
Still have questions? Get your answers by asking now.