Why credit score is so important

[Capt Caveman]

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?

Go belly up tomorrow? Sure, if you don't have a clue and invest in fairy dust. Again, if you have no aversion to risk, you're not going to make money on your money.

Is all of your retirement/savings sitting in a savings account or in a safe in your house?

 

[x26]

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.

I believe we Payed 3 or 3.5% upfront MIPS...or maybe less?? it was 2008.

Rossanna Danna Ranna--"It's always Something"...

 

[sportage]

Credit scores are only good as long as they are good. You can get a loan, a good loan, with scores in the mid 500's. It just takes more foot work and as Ricky Ricardo says "a lot of x-plain-n". Usually with bad items on a report, the bank just wants a reason down in writing for their files, then they are good with it. A lot of banks are still giving loans to people with really bad scores, because the bank then sells it off to another bank. Its weird... A bank can flat turn you down, but if another bank grants the loan, the first bank that flat turned you down will probably buy and own your loan from bank #2. So in the end, that #1 bank that said NO, ends up servicing your loan after all. Just think of it as your drunk uncle explaining the theory of evolution. Makes no sense so don't even try to figure the rules out.
I know people that got a 3.5%, 3% down, FHA home loan with a score just breaking 500. Even with scores as low as the 500's, its not that uncommon to get a loan. A good loan. And paying off charge-offs or collections, no matter how small or old, will raise your score. Then you just explain that you didn't know the collection was even there, or you argued with the collection to no avail. In many cases of bad entries on a report, the bank just wants some explanation down in writing for their files when they come subject to banking audits. Then they will grant the loan. The real key is still your employment history, salary, and believe it or not the health of your 401K plan. Games games and more games. You just got to be willing to play, jump the hoops, and keep fighting. If one bank says no, try others. Brokers are usually a total waste of time and that becomes a waste of your valuable time. Brokers can do little more than you can do on your own. Just think of brokers as a pay-day loan store. In it for the money (your money), but little else. If you must go thru a broker, and that broker can not get you a loan within 2 weeks, then forget them and move on. Brokers will string you out with promises for weeks and months, never finding you that loan in the end. And while most people naturally think the big name banks are the place to start, it ends up that small neighborhood bank that gets you financed. But that big name bank, in the end, will probably buy your small bank financed loan and service it. Its so weird...

 

[PlasmaBomb]

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

And I'm laughing all the way to the bank phokus and there isn't anything you can do about it.

Ah well...

 

[PrinceofWands]

Go belly up tomorrow? Sure, if you don't have a clue and invest in fairy dust. Again, if you have no aversion to risk, you're not going to make money on your money.

Is all of your retirement/savings sitting in a savings account or in a safe in your house?

I'm sure all the people that have lost everything (or a lot at least) in all the major crashes or such said and thought the same thing. I personally don't hold with making money on money in any case. Money should be exchanged for a good or service. To receive it for anything else destabilizes the system and, if excessive, is inherently immoral.

I don't invest and don't use banks, as discussed on here several times.

 

[cerebusPu]

i dont know if this is stating the obvious, but if you qualify for 4x your salary with your credit score and debt to income ratio, and the house you buy is within 4x of your salary, why don't you just put your name on the loan only?

 

[Capt Caveman]

I'm sure all the people that have lost everything (or a lot at least) in all the major crashes or such said and thought the same thing. I personally don't hold with making money on money in any case. Money should be exchanged for a good or service. To receive it for anything else destabilizes the system and, if excessive, is inherently immoral.

I don't invest and don't use banks, as discussed on here several times.

So, basically you live paycheck to paycheck and don't believe in saving/investing money. Or if you do, you're savings don't keep up with the rise in inflation, so your retirement is bleak b/c you aren't planning for it.

I guess you never heard of diversifying one's investment portfolio. The vast majority of people want to save/invest for future purchases/expenses - house, car, funding for school/career change, children, etc. Being knowledgeable can help immensely in maximizing their rate of return on their savings, be it as simply finding the best checking account to selecting funds for their 401k, IRA, etc.

 

[sonicdrummer20]

Here's hoping it does.

Above poster is a dickhead.

 

[Svnla]

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.

This is what I get from my FIA/Schwab Visa:

Annual fee = $0, nada, nothing.
Percentage rate = do not care because I ALWAYS pay IN FULL BEFORE due date.
Merchant charges = don't remember any discounts if I pay with cash from all the places that I shop.
Other stuffs = I can't help it with others with CCs are not be responsible for their own finance situations. Employees are free to work somewhere else if the pays are too low.

Like I said before in another thread, I spend about 10K per month for my personal and business expenses. I could pay by check or cash and get nothing or I could pay by my CC and get about $200 cold hard cash back into my pocket plus other freebie benefits (see link below).

Other benefits from my CC:

100% protection for shopping online. I will not shop online with debit card, ever.
2% cashback of EVERYTHING I purchase, no limit, no catch, nothing. Just cold hard cash every month, like clock work.

And much more = http://usa.visa.com/personal/visa-signature/benefits/index.jsp

My point(s)? CCs are great IF you are responsible.

 

[blackangst1]

Annual fees,

No AF on my card.

percentage rate,

n/a as I PIF every month.

merchant charges (which they pass to consumer via prices), etc.

Then youre paying the same fees in the price you pay with cash.

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.

So how am I paying for it exactly by being a responsible card user?

 

[blackangst1]

Credit scores are only good as long as they are good. You can get a loan, a good loan, with scores in the mid 500's. It just takes more foot work and as Ricky Ricardo says "a lot of x-plain-n". Usually with bad items on a report, the bank just wants a reason down in writing for their files, then they are good with it. A lot of banks are still giving loans to people with really bad scores, because the bank then sells it off to another bank. Its weird... A bank can flat turn you down, but if another bank grants the loan, the first bank that flat turned you down will probably buy and own your loan from bank #2. So in the end, that #1 bank that said NO, ends up servicing your loan after all. Just think of it as your drunk uncle explaining the theory of evolution. Makes no sense so don't even try to figure the rules out.
I know people that got a 3.5%, 3% down, FHA home loan with a score just breaking 500. Even with scores as low as the 500's, its not that uncommon to get a loan. A good loan. And paying off charge-offs or collections, no matter how small or old, will raise your score. Then you just explain that you didn't know the collection was even there, or you argued with the collection to no avail. In many cases of bad entries on a report, the bank just wants some explanation down in writing for their files when they come subject to banking audits. Then they will grant the loan. The real key is still your employment history, salary, and believe it or not the health of your 401K plan. Games games and more games. You just got to be willing to play, jump the hoops, and keep fighting. If one bank says no, try others. Brokers are usually a total waste of time and that becomes a waste of your valuable time. Brokers can do little more than you can do on your own. Just think of brokers as a pay-day loan store. In it for the money (your money), but little else. If you must go thru a broker, and that broker can not get you a loan within 2 weeks, then forget them and move on. Brokers will string you out with promises for weeks and months, never finding you that loan in the end. And while most people naturally think the big name banks are the place to start, it ends up that small neighborhood bank that gets you financed. But that big name bank, in the end, will probably buy your small bank financed loan and service it. Its so weird...

First, although FHA itself does not require a minimum FICO, you would be hard pressed to find a lender willing to go below 620 to underwrite an FHA loan. Do such lenders exist? Probably, but you certainly wont get anywhere near an attractive interest rate.

Second, you are incorrect about paying charge offs/collections will have ZERO impact on FICO. FICO scores them the same whether a balance is owed or not. It looks better upon manual review, but it will not raise your FICO.

 

[spidey07]

First, although FHA itself does not require a minimum FICO, you would be hard pressed to find a lender willing to go below 620 to underwrite an FHA loan. Do such lenders exist? Probably, but you certainly wont get anywhere near an attractive interest rate.

Second, you are incorrect about paying charge offs/collections will have ZERO impact on FICO. FICO scores them the same whether a balance is owed or not. It looks better upon manual review, but it will not raise your FICO.

Also I'll reiterate the broker didn't care about my assets, retirement accounts or any of that. You could have enough cash to buy the house outright, they didn't care. Only cared about two things and said these are all that matter these days:

1) Credit score
2) Gross income to debt ratio

That's it.

 

[SunnyD]

Also I'll reiterate the broker didn't care about my assets, retirement accounts or any of that. You could have enough cash to buy the house outright, they didn't care. Only cared about two things and said these are all that matter these days:

1) Credit score
2) Gross income to debt ratio

That's it.

Find a different broker. Problem solved.

 

[Golgatha]

ah Dave Ramsey is right. your credit score is how much you love debt.

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.

Can't wait to get my house paid off as well. It's my only debt at the moment.

 

[OCGuy]

Find a different broker. Problem solved.

No Spidey is right, assets only matter if you have a high DTI (above 45&#37 and you are looking for a 50% DTI exception. At this point 6 months full PITI reserves will allow the automated underwriting system to still approve it.

Credit and income are king at this point. I have had to decline more than a few loans where the person could outright buy the property cash if they wanted, but their reported taxable income did not allow it.

Everyone is playing pretty much by the same rules now.


Edit: I just remembered getting bitched at by a certain celebrity's wife because I had to explain to her that they did not qualify for a refinance on their expensive home. This guy had not gotten any work the previous year, so his tax returns looked like shit.

 

[TheSlamma]

c'mon Spidey this is your corporate masters system in place doin' what it does best, costing people like you who vote out of your own best interest a ton o' time and cash.

Anyway, I hope you can get that bad mark off without too much trouble, I spent a year getting something off my report that didn't even belong to me.