What's your FICO score?

[Henry Schmidt]

I think mine is 8 not 800, 8 and I couldn't care less.
Fico is a game played by dishonest lenders to stab lower income people.

[Rick Lee]

Originally Posted by Henry Schmidt

Fico is a game played by dishonest lenders to stab lower income people.

Not really. If it were, we'd have not had the whole subprime fiasco, as millions of folks with sub-580 FICO's were getting 100% LTV loans with no mortgage insurance. And why shouldn't lenders charge more for bad credit?

[legion]

Last time I checked mine was when I bought my house 7 years ago. I was 24 and surprised to find my FICO was 750. Since then, I've paid off student loans, car loans, and credit cards.

I'd like to think my score is over 800 now.

[Porsche-O-Phile]

Oddly it might not be. As perverse as it sounds, having a certain amount of credit/debt is helpful towards boosting FICO.

As I've stated before, nobody outside of a few FairIsaac executives know the exact formula, so it's been "reverse-engineered" by identifying trends to the extent possible, which is about the best people can do - this is just one such trend that's been observed. To a point, more credit/debt helps. Past a point (believed to be a percentage of total income by most armchair analysts) it becomes a hinderance.

To the above - yes, lenders should charge more for higher-risk people, but even this common-sense notion is being challenged by today's entitlement-mentality society. Sadly there are actually people out there who think the same rate (or no rate/usury) should be charged to irresponsible idiots who mismanage their credit and/or take on lots of risk as those who are very responsible and conservative.

The recent housing market is an excellent example of what happens when credit is extended to those in the former group. On a larger scale, so are the recent bailouts of Goldman-Sachs, Citigroup, etc. It leads to bad, bad places.

[Rick Lee]

Originally Posted by Porsche-O-Phile

Sadly there are actually people out there who think the same rate (or no rate/usury) should be charged to irresponsible idiots who mismanage their credit and/or take on lots of risk as those who are very responsible and conservative.

I feel like giving you a coronary today.

Have you read about these Islamic lenders in the US that build the interest rate into the loan amount because interest is conidered usury in Islam? There was an article on it the Wash. Post a while back. In my personal experience, having called on countless ethnic mortgage brokerages in the DC area, such shops tend to screw their own people far more than I could ever manage to get away with, if I had tried. So these Islamic lenders figured out a way to just build all the interest into the final loan amount, divide that by the number of months in the loan term and make that the payment. I really wonder how Muslims take advantage of the home mortgage interest tax deduction when doing this, but I'm positive the IRS or HUD have offices dedicated to helping them do it. Maybe we should just borrow all our money from Saudi Arabia or Iran, since they'd never want to charge us interest, right?

[pwd72s]

Originally Posted by on2wheels52

Same here. Much better being the lender than the lendee.
Jim

You got it Jim...financial happiness is paying no interest while others pay interest to you.

[Porsche-O-Phile]

Originally Posted by Rick Lee

I feel like giving you a coronary today.

Have you read about these Islamic lenders in the US that build the interest rate into the loan amount because interest is conidered usury in Islam? There was an article on it the Wash. Post a while back. In my personal experience, having called on countless ethnic mortgage brokerages in the DC area, such shops tend to screw their own people far more than I could ever manage to get away with, if I had tried. So these Islamic lenders figured out a way to just build all the interest into the final loan amount, divide that by the number of months in the loan term and make that the payment. I really wonder how Muslims take advantage of the home mortgage interest tax deduction when doing this, but I'm positive the IRS or HUD have offices dedicated to helping them do it. Maybe we should just borrow all our money from Saudi Arabia or Iran, since they'd never want to charge us interest, right?

I've heard that - I've got a friend over in Qatar right now who has given me all kinds of insights into the quirky nature of banking in Islamic countries. There was also an interesting discussion on NPR about Islamic banking.

Up to them I guess, but the way I figure it - if you believe in a God who says "no usury" and you come up with a way to meet the letter but not the spirit/intent of that rule, you'll probably have some 'splainin to do when you finally meet Allah.

The nature of higher rates for higher risk is not punitive, it's simply a necessity for lenders to cover the cost of defaults (which by percentage are higher statistically for higher risk categories). I can't believe people don't get this - it's frikkin' finance 101. Actually it's not even finance - it's common sense 101.

[legion]

Originally Posted by Porsche-O-Phile

Oddly it might not be. As perverse as it sounds, having a certain amount of credit/debt is helpful towards boosting FICO.

Oh, I know all about that.

My total credit is much higher than it was 7 years ago, but I use much less of it than I did then. I do charge more on my credit card now than 7 years ago, but I pay it off every month.

Did you know that simply using more than 50% of your credit limit on any one card will lower your credit score?

There's a lot of funny stuff that goes into the Fair Isaacs formula, and it changes frequently.

Most people don't understand what the number actually measures. It measures likelihood of repayment of debt. When you look at it that way, some of the "quirks" make a lot of sense.

For example, if someone has had no debt for decades and suddenly takes on debt, they are not as likely to repay as someone who has successfully managed a small amount of debt. Their FICO scores will reflect that.

The other thing about FICO scores is that they don't assign blame. They are derrived from studying large numbers of people and drawing conclusions about what factors indicate a likeliness to repay. It's just a big regression analysis, and the important factors are always changing.

[gr8fl4porsche]

Last year I made the mistake of closing a bunch of unused credit cards. I canceled Discover Card,which I had for over 20 years. I probably had it in my wallet for the last 5 years and never used it once. Only used it at Sam's until they started accepting MC and Visa.

Lowered my credit score almost 100 points.

Carrying no debt and using cash will lower your score, the opposite of what you would think.

[Joeaksa]

Last time I checked it was 780 or so.... this economy is not helping it any...

[on2wheels52]

"financial happiness is paying no interest while others pay interest to you"



Jim

[A930Rocket]

That's what I did years ago thinking it would raise my score. I'm down to one CC. Found out later it didn't, but didn't bother to reopen or start new ones.

One day maybe I'll open some.

Last year I made the mistake of closing a bunch of unused credit cards. I canceled Discover Card,which I had for over 20 years. I probably had it in my wallet for the last 5 years and never used it once. Only used it at Sam's until they started accepting MC and Visa.



Lowered my credit score almost 100 points.



Carrying no debt and using cash will lower your score, the opposite of what you would think.

[FLYGEEZER]

I really don't give a crap what my score is. Don't plan on borrowing money for anything ...ever!
If I don't have the cash for something I want.....I'll wait till I do. Debt fee is the only answer.

[wdfifteen]

Originally Posted by Porsche-O-Phile

The principle of having to pay for "my" score doesn't sit well with me. That's my hangup with it. It ain't the seven bucks, it's the fact that someone can make up a number (using a proprietary formula you don't get to know) which can have a big impact on you and your life, and then have the audacity to try and nickel-dime me to know it? Yeah, that bugs me.
.

I feel the same. It seems like they've created a product that we don't need and tried to sell it to us. I've never bought it and probably never will. If someone wants to lend me money they'll figure out what my credit "score" is and let me know.

[Henry Schmidt]

Originally Posted by Rick Lee

Not really. If it were, we'd have not had the whole subprime fiasco, as millions of folks with sub-580 FICO's were getting 100% LTV loans with no mortgage insurance. And why shouldn't lenders charge more for bad credit?

My point exactly, Fico doesn't mean crap if anyone can get a loan. When banks are lending FICO is meaningless. When banks aren't lending FICO is meaningless.
I have a crappy FICO and just negotiated a 3% loan on my jumbo loan. What's your rate with your great FICO?

More like 29% for no foreseeable reason? I hear stories all the time about max interest rate changes with no reason given.
If the fico score isn't a scam, why aren't the scores from all three agencies the same?
If fico measures something "real" they should all be the same.

[Rick Lee]

I don't pay attention to CC interest rates. It could be 100% and I wouldn't care because I don't carry balances. Mortgage interest rates are a different story. Sure, you could get a subprime loan with a bad FICO, but you could get an A paper loan with a good FICO and the difference in rate would save probably hundreds of thousands of dollars over 30 yrs.

[legion]

Hey Jeff, just think of how many people DON'T look at your score because it isn't free.

Think of how many companies would do mass credit score checks for marketing purposes if it didn't cost them anything.

[Henry Schmidt]

Originally Posted by Rick Lee

I don't pay attention to CC interest rates. It could be 100% and I wouldn't care because I don't carry balances. Mortgage interest rates are a different story. Sure, you could get a subprime loan with a bad FICO, but you could get an A paper loan with a good FICO and the difference in rate would save probably hundreds of thousands of dollars over 30 yrs.

I just told you I have a bad FICO and just negotiated a 3% loan. What's your home loan interest with your great FICO. Less than 3%

[Rick Lee]

My house in VA is at 3.5% and the one I'm buying tomorrow is 4.875%, but neither have anything to do with my FICO and everything with my down payment amount and the day I locked in.

[Henry Schmidt]

Originally Posted by Rick Lee

My house in VA is at 3.5% and the one I'm buying tomorrow is 4.875%, but neither have anything to do with my FICO and everything with my down payment amount and the day I locked in.

I guess that's my point. "Your" FICO is not as important as net worth and negotiating prowess.

I also got my state property tax reduced retroactively by demanding a review. My assessment is now 50% of last year. They sent me a check and credited 50% of this years tax.