To me credit report just means you're good at managing debt, not necessarily income.
This is close but not quite right. "Credit score" is a measure of how profitable you are to a bank or loan institution. Basically how much money can they make off of you. If you are bad at paying back loans and CC, you default on the loan, the bank looses money, or better said, they didn't make as much as they could.
They rely on interest from a loan to make money. At least in part. It's the only reason they give loans. If they didn't make money on the loan there would be no reason to give one.
Paying off a loan really fast (or as you put it, manage your debt) also doesn't make them much money. You made less payments and so the bank made less on interest.
Too high of a percent balance on a CC signifies to the bank that you are having a hard time paying it off. It might mean you can possibly default on it. Or if you do they will loose more. Too low of a balance and they don't make much interest. So you are also not a good investment for a bank.
Keeping say a 30-50% balance on a credit card or paying off a loan in the loan term time frame and not faster means the loan office makes maximum profit. So you are a good investment for the bank/loan institution.
In the end, the credit number is really just a number the banks and other loan institutions assign to you as a score card for how much money you can make them. Don't think of it as your number. It's not yours, you don't own it like say a social security number or birthday date. It's just a number that another institution has as part of their accounting.
It's maybe better to think of the raw number as a price tag on an item in a grocery store. The bag of chips has no say or right to the price tag. It has no right to demand a different price or an explanation as to how the store came up with the value. It's just a number to assign to the bag of chips how much someone else values the bag of chips.
It's bizarre to me that people are hung up on this and think they own this number and have some right to know how it's derived or why it went up or down or whatever. I guess a number of years ago enough people made a big enough stink about the numbers and convinced Congress who likely also didn't understand it or didn't care as it pleased their constituents, passed some laws to make it seem like that number means more then it does and give the consumer more power over the insight to the derivation of the number. Made enough people feel good. I guess enough people who where bad at paying off their debt in an orderly fashion and weren't a good investment to the banks though they needed a better explanation as to why they where denied their next loan.
Keeping accounts open but zero balance does nothing for the loan provider. Makes them zero or little money. And therefore does little for credit scores. Closing them does however make it look like you perhaps are having a hard time balancing income and debt and could potentially mean a higher risk. Opening new accounts also means taking on new expenses. Also a higher risk. Until the banks or loan institution sees that the payments or loans are holding steady or you aren't going bankrupt, the credit score will usually bounce back. Or with a new loan, can possibly creep up a bit as it's getting paid off
Sorry if I kinda went of a rant.... I do that sometimes ?
