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re: As crazy as Dave Ramsey can be about credit cards and FICO scores ...
Posted on 6/9/18 at 5:12 pm to Jag_Warrior
Posted on 6/9/18 at 5:12 pm to Jag_Warrior
quote:We are about to close on our first home, so I've been researching this more closely. What I have trouble understanding is with increadd in the use of online payment systems for rent and utilities, which most closely resemble the transactions of home owner, why these aren't included in the model used for home loans if available?
I think the biggest failing of the FICO model is that it ignores certain key inputs, namely income and (liquid) assets.
I know there are applications that attempt to report this information, but it just seems so odd that if I'm going to be paying 1200 dollars a month on a mortgage, why my credit history, specifically something as small as a credit card with a $5,500 limit is a major component, whereas paying $1,000 to $1,600 dollars a month, every month for years, in rent on time is irrelevant.
And since my wife has limited credit history, all I had to do to bump her score like 30 points was add her as an authorized user on my account as if she had the card for 10+ years and was the one paying it on time and ensuring my credit utilization was low.
1
Posted on 6/9/18 at 8:44 pm to windshieldman
quote:
have around an 800 credit score, seriously. I also work 2 jobs and make on the high end about 65k a year while raising 4 kids and for the most part a stay at home wife, she just started working. I have no money, but a good credit score. Yes the credit score system is dumb. You damn sure don’t wanna be lending me much money unless it’s very small amounts.
Props to you raising 4 kids on 65K a year very impressive.
Posted on 6/9/18 at 8:46 pm to agdoctor
quote:
I haven’t had debt of any kind in 15 years other than 2 credit cards which I pay off monthly. My score has been over 800 until last fall when I upped my credit limit on the cards. Dropped to around 775 or something. Makes me no difference one way or the other.
Im pretty much in the same boat. No mortgage for the last 10 years ive had a company truck for 15 years so no car note and i dont have any credit cards only a debit card. Have no clue what my credit score and frankly dont care what it is.
Posted on 6/9/18 at 11:05 pm to Double Oh
I haven’t paid a penny of interest to anyone in over a decade. Pay off cards monthly for cashback. Score is healthy. Usually 800+., and we’re not rich. We just pay our bills on time.
When people obsess over credit scores, I often think of my dad when he was refusing to pay someone over a dispute. They told him they would report it and it would hurt his credit score. He said, “Hell, I’m old and my house is paid for. I don’t need any credit, so what the hell do I care about a credit score?”
That’s freedom!
When people obsess over credit scores, I often think of my dad when he was refusing to pay someone over a dispute. They told him they would report it and it would hurt his credit score. He said, “Hell, I’m old and my house is paid for. I don’t need any credit, so what the hell do I care about a credit score?”
That’s freedom!
Posted on 6/10/18 at 8:57 am to Twenty 49
My biggest question is to Will Cover...or really anyone with insight.
With the obvious assumptions re: financial discipline and financial wherewithal for folks with a tri-merge score that uses the middle of the three bureaus as the governing score, what is the real life, dollars and cents difference for a score at 775 versus 800?
It seems like more than anything it’s vanity or ego more than anything. The equivalent of guys in the gym boasting about how much they bench. At the level of household finance required to attain either of those scores, to me it seems like it’s not even a blip on the radar between the two scores.
There may be a difference on rate sheets here and there, but at most folks with those numbers level of financial health, that difference is so negligible it’s bordering on meaningless IMO.
With the obvious assumptions re: financial discipline and financial wherewithal for folks with a tri-merge score that uses the middle of the three bureaus as the governing score, what is the real life, dollars and cents difference for a score at 775 versus 800?
It seems like more than anything it’s vanity or ego more than anything. The equivalent of guys in the gym boasting about how much they bench. At the level of household finance required to attain either of those scores, to me it seems like it’s not even a blip on the radar between the two scores.
There may be a difference on rate sheets here and there, but at most folks with those numbers level of financial health, that difference is so negligible it’s bordering on meaningless IMO.
This post was edited on 6/10/18 at 9:00 am
Posted on 6/10/18 at 9:00 am to GFunk
quote:
the real life, dollars and cents difference for a score at 775 versus 800?
Posted on 6/10/18 at 10:12 am to Will Cover
Once you get past about 720 on a credit score, it doesn't matter how high your score gets.
That's the lowest score that banks will still typically give you the best rate.
That's the lowest score that banks will still typically give you the best rate.
Posted on 6/10/18 at 11:04 am to windshieldman
quote:
I have no money, but a good credit score.
Same.
811 credit score.
No debt or much cash.
Just started making over 50k 3 years removed from college this year.
This post was edited on 6/10/18 at 11:06 am
Posted on 6/10/18 at 11:12 am to East Coast Band
quote:
Once you get past about 720 on a credit score, it doesn't matter how high your score gets.
yeah my 835-850 FICO is just a stupid thing but i know i have leeway before a drop affects me
Posted on 6/10/18 at 12:07 pm to foshizzle
quote:
For example, someone else with a 25 year credit history might be more at risk of stroke or senility or something else that suddenly causes problems, even if you aren't.
I guess his point was all things like that being equal how would having a car payment make him less of a credit risk?
Posted on 6/10/18 at 1:04 pm to Will Cover
quote:
And because of that, my score drops. It's truly an "I love debt" score as he says -- and obviously being in debt can provide a higher credit score number. It does not indicate one's wealth or financial income. Seems rather backwards in terms of logical thinking, but it is what it is and my post won't change anything.
Well wait. Its easy to see a fallacy in the system is you think it is an indicator of that.
It is a risk assessment of your ability to handle access to credit. No ongoing and up to date data increases possible risk.
You can split hairs about the methodology but that still holds true.
And it becomes a revolving door. People follow this cash based approached, and their credit drops. They hate the system more so they go more cash based. Its not inherently wrong or a bad course, but if you can use it credit is a tool.
And if you don't have a debt mix on your record in the past 7 years with as low rates have been, you haven't been using that tool correctly (or at all based off of your post).
So I don't know why you would get bitter about your score, or even why you would check it. You chose not to use it. You do you. Just don't fool yourself into thinking that a lower credit score is validation for that choice.
Posted on 6/10/18 at 1:10 pm to StringedInstruments
quote:
Shouldn't history carry more weight then?
Don't you want to give people a fair chance to recover?
Similarly, you have to consider that a persons financial situation can vary widely in a short period of time, and a accurate system has to reflect that.
quote:
But paying off two cars, a student loan, and paying down a mortgage should be a way to prove long term credit safety. Especially since we're paying our bills on a credit card and can show that we have no issues with managing money.
And that is why the part that caused you to drop is a relatively one of the smallest factors in the calculation. But it is still there.
Or do you think that someone SHOULDN'T get rewarded for being able to manage and service a wide and diverse set of debt and sustain it without going under? That it should be invisible to the assessment?
Outside of possibly a house purchase (and maybe including that) worry less about micro changes in the score. After you hit general thresholds you will be fine and it will have essentially no impact to you.
Posted on 6/10/18 at 1:12 pm to Powerman
quote:
I guess his point was all things like that being equal how would having a car payment make him less of a credit risk?
More data is in front of them. Both the payment info and updated entry in the behind the scenes data in the report.
Posted on 6/10/18 at 7:13 pm to East Coast Band
quote:
Once you get past about 720 on a credit score, it doesn't matter how high your score gets.
That's the lowest score that banks will still typically give you the best rate.
yeah 720 is the minimum you have to have if you are buying more than 4 rental properties with conventional mortgages backed by fannie mae.
Posted on 6/10/18 at 7:24 pm to Jag_Warrior
quote:
Although I wouldn't have a HELOC if you offered one to me with a Playboy Bunny on top, I do believe in having access to lines of credit for business reasons - but even then, I don't rely on them.
i am pretty much with you on this. Let me currently tell you what i went through. I have a unsecured LOC at a local bank. I currently have over 6 figures temporarily in this bank until i invest and spread it out. But i normally do keep a big balance for RE reserves and taxes, etc. I asked for my LOC to be doubled. They said they could not double it but their linit would be just under the double amount. I said ok.
Once again i have all my tax info and filled out their assets and debts sheet just like the first time. A few days later they came back saying sorry FAT BASTARD but our underwriter doesn't like to go any higher than what you have now. I was like WTF? my credit is over 800, you see how much cash i currently have in your bank AND you are making money off me in the form of interest as I am using my LOC.
If you had no intention of upping my current LOC why waste my fricking time? Well, i found out why. They loved my assets versus debt sheet and offered a HELOC. I told them GFY. That is not what i applied for. My house is paid off and has been for years. They obviously wanted hard assets. This is a case of where having great credit and assets paid off was bad for me in the case of upping my LOC. I told them i will keep my account open but will go elsewhere.
SO, i went to a competitor locally, applied for the same amount with a UNSECURED LOC AND GOT IT without even filling out a asset/debt sheet.
Have to play banks against each other.
Posted on 6/10/18 at 8:08 pm to Fat Bastard
quote:
you see how much cash i currently have in your bank AND you are making money off me in the form of interest as I am using my LOC.
Most lenders don't really care about how much cash or other liquid investments you have, as I was told you could pull that out and blow it in Vegas the day after you get the loan. That what they want real estate as security, it is not going anywhere.
Posted on 6/10/18 at 9:17 pm to EA6B
quote:
Most lenders don't really care about how much cash or other liquid investments you have, as I was told you could pull that out and blow it in Vegas the day after you get the loan.
correct. i had to hear that line also. But frick em. i was not locking up that cash in CD's either for a secured LOC.
Posted on 6/11/18 at 8:20 am to StringedInstruments
quote:
Shouldn't history carry more weight then?
I got warned about my credit score dropping (it's a small drop but still going down) after selling my house. We haven't had a car payment in 2 years. My wife's student loan was paid off 3 years ago. We sold our rental home and now have 0 debt.
But paying off two cars, a student loan, and paying down a mortgage should be a way to prove long term credit safety. Especially since we're paying our bills on a credit card and can show that we have no issues with managing money.
You're winning at life.
Credit and money lending agencies hate you because you're to smart for their tricks and games to funnel off your wealth.
Posted on 6/11/18 at 1:33 pm to oklahogjr
quote:That, but it can also signal that we won't be making alot of money from interest with this person because they don't carry debt for too long.
it's a risk signal to a lender. those without any debt may not be very good at managing it. may not want to give then a lot of money
Posted on 6/11/18 at 1:47 pm to Fat Bastard
quote:
ou on this. Let me currently tell you what i went through. I have a unsecured LOC at a local bank. I currently have over 6 figures temporarily in this bank until i invest and spread it out. But i normally do keep a big balance for RE reserves and taxes, etc. I asked for my LOC to be doubled. They said they could not double it but their linit would be just under the double amount. I said ok.
Once again i have all my tax info and filled out their assets and debts sheet just like the first time. A few days later they came back saying sorry FAT BASTARD but our underwriter doesn't like to go any higher than what you have now. I was like WTF? my credit is over 800, you see how much cash i currently have in your bank AND you are making money off me in the form of interest as I am using my LOC.
If you had no intention of upping my current LOC why waste my fricking time? Well, i found out why. They loved my assets versus debt sheet and offered a HELOC. I told them GFY. That is not what i applied for. My house is paid off and has been for years. They obviously wanted hard assets. This is a case of where having great credit and assets paid off was bad for me in the case of upping my LOC. I told them i will keep my account open but will go elsewhere.
SO, i went to a competitor locally, applied for the same amount with a UNSECURED LOC AND GOT IT without even filling out a asset/debt sheet.
Have to play banks against each other.
Wonder why they didnt up your LOC when your house has been paid off for years? I mean your house isnt going anywhere is it?
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