Why credit score is so important

[highland145]

The funny thing is, if the general public was more educated on how to manipulate the FICO system, it would be less effective as a tool to measure ability/willingness to pay.

True for those that look at the score alone. I don't care about bankruptcy's, medical, foreclosures, cell phones. I'm sure there are more. I look at how they do business in my industry. So I might make a guy with a 500 fico and not one with a 650.

 

[Deeko]

Here's hoping it does.

Wow, what an incredibly douchey thing to say.

 

[x26]

For this fee 740 was the cut off. Meaning the top line was >740. And then it tiered down, 721-739, 701-720, etc. But I think the graduations were at a 10 point resolution and not 20.

Have you even looked into FHA???

FHA is NOT score based. If you qualify: You Qualify!! FHA FTW!! Stop Crying the Blues and go FHA!! call BoA they do FHA!!

 

[BoberFett]

That 10k will be profit in a banker's pocket instead on being blown on some unnecessary, unproductive petit bourgeois crap. You should be celebrating the free enterprise system.

You think our banking industry is free enterprise?

 

[TheNinja]

ive got over 9000.

I'm a division manager! People are scared of me! I can do 100 push-ups in 20 minutes

 

[MegaVovaN]

I'm a division manager! People are scared of me! I can do 100 push-ups in 20 minutes

That's not impressive. Do 100 proper push-ups in 1 minute and we can talk.

 

[boomhower]

Have you even looked into FHA???

FHA is NOT score based. If you qualify: You Qualify!! FHA FTW!! Stop Crying the Blues and go FHA!! call BoA they do FHA!!

That's not entirely true. Every bank I have every looked at that does them has a score minimum. They vary from bank to bank but the vast majority will have a minimum. That said, a 670 should be good for an FHA anywhere.

 

[zinfamous]

Hey, spidey. Were you laundering money from your wife to pay off your debt to Perknose?

:hmm:

 

[TheNinja]

That's not impressive. Do 100 proper push-ups in 1 minute and we can talk.

I drive a DODGE STRATUS!!

 

[HendrixFan]

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

A full third of your score is "how much debt you have". This usually amounts to around 100 points total (give or take) so that the larger debt load you have, the lower your score. If you are near 100% utilization you will lose all 100 points, if you are between 1-10% you will lose no points. Not having debt is as big of a factor as actually having a history of paying your debts.

Get some credit, never carry a balance and after your credit ages you will have a very high score.

As was already mentioned, you can manipulate your score if you understand how it works. The flip side of that is if you are taking the time and effort to structure your credit to maximize your score, you probably aren't likely to default on your debts, which is what the credit score is supposed to predict.

 

[zinfamous]

I drive a DODGE STRATUS!!

classic

 

[arcenite]

I still don't understand why people put so much weight into FICO anyway... Most companies use their own equation for determining scores anyway.

 

[PrinceofWands]

For most people it's going to have some impact, since they'll have to at least buy/build a home at some point. However, for many it's an utterly useless number which doesn't impact our lives at all. I can't imagine a reason anyone would ever be looking at my credit scores again. Regardless of if its ever used for the particular individual, overall it's a horrible system.

 

[spidey07]

I still don't understand why people put so much weight into FICO anyway... Most companies use their own equation for determining scores anyway.

This 10k fee was directly tied to score from the three agencies and nothing else. Things have changed drastically. Assets didn't matter, debt to income didn't matter. Credit score from the agencies is all that mattered to cost us an extra 10k and nothing else.

 

[PrinceofWands]

but its all a non issue for me. if i cant pay cash for it im not buying it. once my house is paid off i will owe NOBODY not a dime. Right now i have NO credit card bills, No car loans, no student loans. man i cant wait for that day when i will be totally free and clear of any and all debt.

Word. There is NOTHING better. Nothing.

 

[arcenite]

This 10k fee was directly tied to score from the three agencies and nothing else. Things have changed drastically. Assets didn't matter, debt to income didn't matter. Credit score from the agencies is all that mattered to cost us an extra 10k and nothing else.

:thumbsdown:

 

[OCGuy]

Have you even looked into FHA???

FHA is NOT score based. If you qualify: You Qualify!! FHA FTW!! Stop Crying the Blues and go FHA!! call BoA they do FHA!!

FHA now has score hits.

And it also has a 1% up front MI premium, as well as a monthly MI premium of 1.1%.

FHA is a terrible loan for someone with more than 20% down.

 

[LegendKiller]

I still don't understand why people put so much weight into FICO anyway... Most companies use their own equation for determining scores anyway.

Some companies do, some companies don't. FICO is still the bedrock of much of the risk underwriting.

 

[blackangst1]

Originally Posted by OutHouse

but its all a non issue for me. if i cant pay cash for it im not buying it. once my house is paid off i will owe NOBODY not a dime. Right now i have NO credit card bills, No car loans, no student loans. man i cant wait for that day when i will be totally free and clear of any and all debt.

Word. There is NOTHING better. Nothing.

Well, I'll disagree. Nothing is better than paying all your bills on time, and getting rewards/cash back for doing so. Hell, I run the majority of my spending through 2 credit cards, and it nets me usually free airfare somewhere, discounted airfare for overseas, or flat cash back. Nothing is better than free money. I mean, its money youre going to spend anyway.

Some people view it it as second currency:

http://www.startribune.com/business/120477579.html

 

[PrinceofWands]

[/I]


Well, I'll disagree. Nothing is better than paying all your bills on time, and getting rewards/cash back for doing so. Hell, I run the majority of my spending through 2 credit cards, and it nets me usually free airfare somewhere, discounted airfare for overseas, or flat cash back. Nothing is better than free money. I mean, its money youre going to spend anyway.

Some people view it it as second currency:

http://www.startribune.com/business/120477579.html

No matter what you feel it gets you, debt exists as a weight upon you - or at least upon many people. If you are somehow immune to it, more power to you. For me, and those like me, the total freedom from debt remains the supreme liberty.

No money is free. Whatever you think you're having gifted, I assure you it comes directly from your pocket, or the pockets of those who can least afford to give it. They only give it by charging fees, higher rates, or generally inflating costs to increase profits to the top, and so on. You're not being rewarded for responsibility or success, you're being conditioned by your masters to increase their power.

 

[Capt Caveman]

Word. There is NOTHING better. Nothing.

Sure. If you're risk averse and not willing to maximize your money. I've already mentioned this example. I need to buy a new vehicle. Do I cash out an investment that has provided a APR of 10%+ since I've owned it(10+ years) or do I take out a loan of 2.49% for the car?

Similar situation with my mortgage and home except the return has been greater.

 

[blackangst1]

No matter what you feel it gets you, debt exists as a weight upon you - or at least upon many people. If you are somehow immune to it, more power to you. For me, and those like me, the total freedom from debt remains the supreme liberty.

No money is free. Whatever you think you're having gifted, I assure you it comes directly from your pocket, or the pockets of those who can least afford to give it. They only give it by charging fees, higher rates, or generally inflating costs to increase profits to the top, and so on. You're not being rewarded for responsibility or success, you're being conditioned by your masters to increase their power.

You go to XYZ store and buy a widget for $1000.00 cash and take it home. I go to same store, and buy the same widget for the same price but get 1% cash back at the end of the month.

How exactly am I "paying" for it?

 

[chusteczka]

How exactly am I "paying" for it?

Telling you would ruin the surprise.

 

[PrinceofWands]

Sure. If you're risk averse and not willing to maximize your money. I've already mentioned this example. I need to buy a new vehicle. Do I cash out an investment that has provided a APR of 10%+ since I've owned it(10+ years) or do I take out a loan of 2.49% for the car?

Similar situation with my mortgage and home except the return has been greater.

Only valid if the money is sitting in investments, which may bring that return or may go belly up tomorrow and cost you everything. If it's cash on hand, there's no question now is there?

 

[PrinceofWands]

You go to XYZ store and buy a widget for $1000.00 cash and take it home. I go to same store, and buy the same widget for the same price but get 1% cash back at the end of the month.

How exactly am I "paying" for it?

Annual fees, percentage rate, merchant charges (which they pass to consumer via prices), etc. If not to you, then to others with the same card but perhaps less resource, who now have less purchase power or suffer greater debt, potentially leading to default which thereby increases costs to all. Or indirectly through the lowered wages of the card company employees, who must take the hit to provide the return, thus weakening the overall economy. Or, or, or...I could go on all day.

The POINT is that they're not just giving you money, and it ISN'T coming from their profits. They just take it from others to pass to you, while keeping the lion's share. Nothing but peanut butter for your tongue instincts.