Why credit score is so important

[sunzt]

Some of you are pretty immature. Regardless of the person's (OP) viewpoints, this isn't P&N and he wasn't trying to turn it into a political rant. Even before his post, I'm sure the OP was fully aware of how this situation contrasts his political views.

Learn to separate political views from the person.

 

[BarkingGhostar]

Wife and I are getting ready to buy our dream home so we went to talk to a mortgage broker to see where we stood. Turns out she's got one and only one big huge ding on her credit score, some bill that she never received or authorized and it's 60/90 days late. This single item is dropping her score 100 points, otherwise she'd be at 740+ (broker ran what if analysis stuff).

Anything under 740 and it's a sliding scale of fees due based on how much you put down and what your score is. A percentage of the mortgage amount ranging from .25 to as high as 3%. Even doing a typical 20% down this single 40 dollar charge that was late is costing us 10,000 dollars in fees.

Yeah, I'll be disputing that shit with the credit agencies and the debtor. Big mixup on card changes, name changes, her moving, etc. What's even more interesting is the broker said assets don't matter, all the banks care about is credit score and debt to income ratio (and appraisal, comparable properties). If we ran it on my credit/income alone I was approved for 4x my gross salary which is ridiculous.

Here's hoping 40 dollars doesn't cost us 10 grand.

Why would you wait until the mortgage broker pulled your reports instead of you doing it beforehand? Even if you get it cleared up, the broker may use it covertly to not get you the best rate. You do realize they are in the business of making money off of you, right?

 

[Svnla]

Wife and I are looking at buying our first house in the near future and credit is going to hurt me methinks. I don't have bad credit, on the contrary, I have NO credit. I've lived my life debt free, never borrowing, I have one credit card for gas and that's it. Apparently that sort of living is "unsafe" and it's going to be tough to get a good rate.

Grrrrrrr...

As long as you are not going to buy a house next month, you CAN make your credit score better. Read the thread that I created and posted in this thread, and follow the steps and your score will go up. Not going to lie and say your score will be great within a short time frame but it is better than nothing.

Why would you wait until the mortgage broker pulled your reports instead of you doing it beforehand? Even if you get it cleared up, the broker may use it covertly to not get you the best rate. You do realize they are in the business of making money off of you, right?

See my post from yesterday, #9.

As highland said, USDA Rural Develeopment loan, PMI is prepaid and built into the loan, and comes to about a grand total of $1200 over the life of the loan. The way USDA loans do their "insurance" is epic. And no, I wouldn't have gotten any better rate if I had a better score. USDA loans are always at a fixed level for everybody that qualifies.

I am not familiar with the USDA Rural Development loan with cheap PMI built in. What are the catches, if any? Do you have to live in the rural area?

 

[SunnyD]

Some of you are pretty immature. Regardless of the person's (OP) viewpoints, this isn't P&N and he wasn't trying to turn it into a political rant. Even before his post, I'm sure the OP was fully aware of how this situation contrasts his political views.

Learn to separate political views from the person.

How dare you bring maturity and levelheadedness into this conversations! BAN!

 

[HumblePie]

I don't know who tells the bigger whoppers around here sometimes. Spidey or dmcowen. You know in 6 months I have a feeling I'm going to see a thread by Spidey saying how HE got carded for buying balsamic vinegar at Target, and then dmcowen stating how he is getting a ridiculous fee because his credit score is low.

Two big liars on opposite side of the same coin. Just depending upon which side of the coin has spun around to determines who throws out the next whopper.

 

[Thump553]

spidey may never believe this but it can be confirmed by anyone inside the mortgage industry: Ever since the Great Recession/Collapse began, mortgage lenders have: (a) been going over applications with a fine tooth comb and making sure all the i's are dotted and t's crossed-they are so enthusiastic about it now they are like a combination root canal and full IRS audit and (b) credit scores are absolute king now-there is now a de facto high cutoff limit for credit scores-anything below that and no soup for you, regardless of assets, income, etc.

Be prepared to buckle down and wade through a bunch of crap-if you are lucky. The closing you expect to occur in late June will be more like late August.

And you think you are frustrated, just think of the people trying to sell.

 

[AstroManLuca]

nm

 

[spidey07]

Why would you wait until the mortgage broker pulled your reports instead of you doing it beforehand? Even if you get it cleared up, the broker may use it covertly to not get you the best rate. You do realize they are in the business of making money off of you, right?

I know. We went to get an idea of what we could be approved for and run different scenarios because I'm keeping my house and then purchasing this new one. I didn't want to go out looking for our dream home, find it only to realize we couldn't get the loan. Getting the loan isn't a problem at all, it's this damn fee based purely on credit score.

 

[spidey07]

Wait, so you fail to pay a bill and now you're angry that there are consequences?

The bank is rich, they call the shots. Deal with it. Or pay your bills and maybe they'll choose to have mercy on you. Then again, maybe they won't.

Never received a bill and never authorized the charge. So I'll send it to fraud department with card company and dispute with credit agencies.

 

[Golgatha]

I got 851

http://www.daveramsey.com/article/the-truth-about-your-credit-score/lifeandmoney_creditcards/

Like it or not, your credit score is not an indicator of winning financially. All it tells you is whether you are good at borrowing money and paying it back. That’s it.

That said, I'm in the 800+ club, so this link isn't sour grapes, just a reality check for everyone reading this thread.

 

[spidey07]

spidey may never believe this but it can be confirmed by anyone inside the mortgage industry: Ever since the Great Recession/Collapse began, mortgage lenders have: (a) been going over applications with a fine tooth comb and making sure all the i's are dotted and t's crossed-they are so enthusiastic about it now they are like a combination root canal and full IRS audit and (b) credit scores are absolute king now-there is now a de facto high cutoff limit for credit scores-anything below that and no soup for you, regardless of assets, income, etc.

Be prepared to buckle down and wade through a bunch of crap-if you are lucky. The closing you expect to occur in late June will be more like late August.

And you think you are frustrated, just think of the people trying to sell.

I have been hearing exactly that. The high cutoff limit seems to be 740. Thankfully we just finished selling her house. I heard tale of a loan that didn't go through because the bank couldn't find comparable properties near it that sold to determine appraisal/value. Talk about a recursive loop.

 

[ShawnD1]

Lesson for everyone. When you are about to buy something expensive such as a car or house, check your credit reports at least 90 days before you are about to do it so you have the opportunity to fix the errror(s).

Good tip.

My credit score is probably fucked because the retard phone company never sent me a bill. They didn't mail it, they didn't email, they didn't try to call me (they're the fucking phone company, THEY KNOW MY NUMBER). They made absolutely no effort to tell me what my bill was. The thing ended up being paid a month late because of their retardedness.

 

[Macamus Prime]

Investment firms dump billions of your money into shitty investments that fail,... and they get bailed out. You are "late" on a $40 payment and you get hit with an additional $10K.

Sure sounds like class warfare to me.

 

[highland145]

Investment firms dump billions of your money into shitty investments that fail,... and they get bailed out. You are "late" on a $40 payment and you get hit with an additional $10K.

Sure sounds like class warfare to me.

Haven't most of the bailed out firms paid the $$ back? Well, except for GM.

 

[Aikouka]

You betcha! :thumbsup:

Best part is I'm still zoned for the much, much better city schools versus the county schools. My neighborhood will be suburbia in about 2 years, likely with tons of shopping and convenience within a couple blocks. As it stands, I'm 7 miles from downtown/work anyway.

Hmm Sunny, you might have to let me in on this secret .

 

[highland145]

Hmm Sunny, you might have to let me in on this secret .

If serious, UDSA rural development program. Low interest and down payment and your credit doesn't have to be perfect. Google it.

 

[Aikouka]

If serious, UDSA rural development program. Low interest and down payment and your credit doesn't have to be perfect. Google it.

I know that given the rest of the information above, but given we live in the same area, he may know more about where, etc.

 

[highland145]

I know that given the rest of the information above, but given we live in the same area, he may know more about where, etc.

Isn't all of AL rural?

kidding.

Hope you made it thought the storms o.k., too.

 

[OutHouse]

I love dave ramesey and have read his books and listen to him nearly everyday. here is his take on credit scores.


http://www.cbsnews.com/stories/2005/10/18/earlyshow/living/money/main951008.shtml

(CBS) Sometimes it seems as if your entire financial life depends on your credit score.

It has been said that a credit score is the key to everything from getting a mortgage to getting lower insurance rates. But author and radio talk show host Dave Ramsey tells The Early Show that credit scores are not nearly as important as you may believe.

He says Americans today are "worshipping at the altar of the FICO score," and that this attitude needs to change.

The FICO score is comprised of five elements:

35 percent of the score is based on your debt payment history
30 percent is how much debt you have
15 percent is the length of your credit history
10 percent is the type of credit/debt you have
10 percent is any new credit


Based on these five elements, Ramsey calls the FICO score an "I love debt score." In other words, he says you cannot have a high score unless you carry debt. And it's not worth enduring the burden of debt in order to have a high credit score

 

[SZLiao214]

Are there any benefits of going over 750? I've been at 780-790 for about a year now without it changing. My first credit card was about 7 years ago.

 

[SunnyD]

I know that given the rest of the information above, but given we live in the same area, he may know more about where, etc.

pm sent. Let me know if you have any other questions, and especially if you plan on going with the same builder. Referral bonus ftw!

 

[ponyo]

I love dave ramesey and have read his books and listen to him nearly everyday. here is his take on credit scores.


http://www.cbsnews.com/stories/2005/10/18/earlyshow/living/money/main951008.shtml

(CBS) Sometimes it seems as if your entire financial life depends on your credit score.

It has been said that a credit score is the key to everything from getting a mortgage to getting lower insurance rates. But author and radio talk show host Dave Ramsey tells The Early Show that credit scores are not nearly as important as you may believe.

He says Americans today are "worshipping at the altar of the FICO score," and that this attitude needs to change.

The FICO score is comprised of five elements:

35 percent of the score is based on your debt payment history
30 percent is how much debt you have
15 percent is the length of your credit history
10 percent is the type of credit/debt you have
10 percent is any new credit


Based on these five elements, Ramsey calls the FICO score an "I love debt score." In other words, he says you cannot have a high score unless you carry debt. And it's not worth enduring the burden of debt in order to have a high credit score

The less you're in debt, the less you care about credit score. Free people tend to freeze their credit since they have little or no need for such thing after a certain point.

 

[ShawnD1]

Based on these five elements, Ramsey calls the FICO score an "I love debt score." In other words, he says you cannot have a high score unless you carry debt. And it's not worth enduring the burden of debt in order to have a high credit score

Most successful people and things do have constant debt in some form. Putting everything on credit card and paying it on time still counts as debt that has been taken out and paid back.

Correlation does not mean causation, but correlation is still correlation. People who need to live on a "cash budget" because they can't trust themselves to use a credit card responsibly are exactly the type of people you don't want to lend money to.

 

[OutHouse]

Most successful people and things do have constant debt in some form. Putting everything on credit card and paying it on time still counts as debt that has been taken out and paid back.

Correlation does not mean causation, but correlation is still correlation. People who need to live on a "cash budget" because they can't trust themselves to use a credit card responsibly are exactly the type of people you don't want to lend money to.

maybe they are sick of owing banks money? or you can have a 500 credit score, have no debt and have 100K in the bank. i would call that a financial responsible person.

once my house is paid off, im going to make sure i am never in a position to where i need a loan to buy something.

 

[ShawnD1]

or you can have a 500 credit score, have no debt and have 100K in the bank. i would call that a financial responsible person.

once my house is paid off, im going to make sure i am never in a position to where i need a loan to buy something.

That's like saying you were an independent contractor in Nigeria. There's no way anyone can confirm your claim that you are responsible. It's possible you didn't actually know the money was there.
Having a bunch of credit cards that are paid every month shows a record that you are fully aware of how much you spend, and you pay it back on time. Not getting anywhere near the limit shows you have self control. If you're on a cash budget, there's no way you can show me if you have self control or not.