Credit score...

[K Frame]

Because of Dad's recent death, Mom needed to refinance the house and a couple of loans that they had.

In order to qualify, though, I had to cosign the loan. Not what I expected to be doing at this point, but that's fine.

As part of the application process, they pulled credit reports from two of the major three reporting agencies.

I've not looked at my credit score lately, but was very pleased to see that one company had me listed at 783, and the other at 767.

Can't beat that!

I'm especially proud of it in light of the fact that my divorce 10 years ago really screwed my ratings for a long time.

[Northwoods]

Eh.  I look forward to the day my credit score is 0.  Because that'll mean I'll be financially indepandant to the point that I haven't had any debt of any form for 7 years or whatever that time frame is. 

[Mannlicher]

The key seems to be using credit, but using it wisely.  When I bought my wife a new car last year, the average score from the 'big three' was 825.   
On the car, I put 30% down, and I pay an extra hundred each month.  It will be paid off in no time, my credit score stays good, and I have no debt that I could not pay off by writing a check tommorrow.  Using their money is a good thing.

[grislyatoms]

Mine's right around 630. Not too bad but not that great, either. A divorce and stupid credit choices buggered it.

On the bright side, it has been steadily climbing now for 3-4 years.

[Brad Johnson]

I've not looked at my credit score lately, but was very pleased to see that one company had me listed at 783, and the other at 767.

Outstanding!

You realize that puts you in about the top 5% of consumers?  It's a direct reflection of someone who has their head screwed on straight, financially speaking.

When I bought my wife a new car last year, the average score from the 'big three' was 825.

LORDAMIGHTY!! 

Mine's right around 630. Not too bad but not that great, either. A divorce and stupid credit choices buggered it.

Not to fret, Gris.  You are right at "average".  Presuming you don't have any outstanding unpaid debts being reported, you should be fine if you ever need to finance something.

Brad

[Sindawe]

The key seems to be using credit, but using it wisely.

Exactly.  Not using credit over a period of time will lower the score.  So I keep ONE card and hold a small balance on it (less than $1,000) while every other bill gets paid in full with two days of receipt.  The last time I checked (just before I bought my Sentra in late 2005) my scores were 810 & 824.  Made for great gloating material with Toyota when they wanted to charge me 5.85% interest on a Scion and that only reluctantly, while Nissan were nearly groveling on the showroom floor for the honor of charging me 1% for the Sentra.

Which reminds me, its time to run the reports again.

[K Frame]

"You realize that puts you in about the top 5% of consumers?  It's a direct reflection of someone who has their head screwed on straight, financially speaking."

Why thank you.

Here, have $25... 

[Declaration Day]

Mine's at 729 right now.  It would be closer to 800 if my wife hadn't paid a few bills late (that are in my name).    I keep a very close eye on them now.  She's a sweetheart, but not very good with money.

Grislyatoms, 630 is not that bad.  When I bought my house, my score was 602 and I qualified easily, with a good interest rate too.

[Matthew Carberry]

1) Pay bills on time, only >30 day lates count for credit scoring, so if it's 20 days late, pay it now, don't wait.

2) Contact your lender prior to the due date (or as soon as possible after) if you foresee a problem making a payment.  They can work with you if you ask, but once it's late they have to report it.

3) Prioritize the secured loans (mortgage, car etc), lates are taken more seriously on those than on revolving credit.

4) Have about 3 open (even if 0-balance) tradelines.  No open credit = BAD credit.

5) Do not carry a regular balance higher than about 20-30% of the limit on any credit card.

6) Old credit is generally better than new credit.  If you are going to close accounts, if it makes financial sense keep the older ones open.

7) Minimize your applications for new credit.  Rolling maxed balances from 0-interest to 0-interest cards is bad for your score. (new credit/high balance issues)

Pay collections and past dues promptly.  If you can't fight it, pay it.  Don't be passive aggressive.

9) Get documentation of all payoffs of debt balances and collections.  If there's an error in updating the report we can still remove the debt from your ratios.

10) You can get a free report (not score, that's how the bureaus make their money and thus charge you for it) once a year from each of the Bureaus (Equifax, Experian, Transunion) at www.annualcreditreport.com.  That's the official .gov mandated "free credit" website.  You don't have to get all at once, I get them staggered at 4 month intervals so I can see if anything has changed or popped up.

[Matthew Carberry]

Mortgage info (AK specific anyway)...

Fannie and Freddie (and Ginnie and the rest) do not "give better rates for better scores".  That only applies to privately funded loans, like most sub-Prime and Alt-A products.

With Fannie's new "Expanded Approval" levels bad scores can increase your interest rate, due to the increased risk, but a Prime Rate approval is just that, an approval for the best rate available that day.

Better scores primarily allow you to offset other risk factors in your loan application.  For example, to exceed suggested loan program ratios or lower the required documentation or cash reserves.

Good scores also allow access to higher risk loan types, such as Stated Income, No Income and high LTV loans.  If you are self-employed or commission and use a lot of tax write-offs against that income, those loans can be godsends.

On "high LTV" loans, good credit can also help you qualify for lower Private Mortgage Insurance.

As was said, if you are overall a good risk (meet DTI ratios, have good reserves and no mortgage lates) and your score is above 600 and some mortgage guy tells you that he can't get you the "Prime Rate", shop around, he could be trying to feather his nest with a slightly higher rate that has an overage.

All of this info should be available to the lender the minute he has your income, debt and credit info.  Once he plugs that into his AUS (automated underwriting system) along with the loan amount and property type you are looking for he should be able to give you a signed Good Faith Estimate accurate within a couple percent of the actual loan costs.  He should also be willing to let you know what the prime rate that day is and why you don't qualify for it (if you don't).

Now, until you actually have a property you can't lock-in that rate with the investor (thus guaranteeing it 15,30 or 45 days out) but it shouldn't change much without a good explanation.

Right now rates are at historic lows and have been stable for over a month.

[mtnbkr]

Dunno what mine is now, but it was in the mid 700s when I was applying for a mortgage loan.  At the time, I had 4k in credit card debt, 4k in cash, a small 401k account, student loans, and a used car (that was paid for).  When I went to buy a car last spring, I pretty much dictated the interest I was willing to pay.

Chris

[grislyatoms]

10) You can get a free report (not score, that's how the bureaus make their money and thus charge you for it) once a year from each of the Bureaus (Equifax, Experian, Transunion) at www.annualcreditreport.com.  That's the official .gov mandated "free credit" website.  You don't have to get all at once, I get them staggered at 4 month intervals so I can see if anything has changed or popped up.

Thanks for the heads up, Carebear. I just pulled up my Experian report. I am disputing 6 items. Never heard of them, don't know where the hell they came from.

One is like for 4K+ (from a very large well respected national bank. I've never had any account of any type with them), the rest of the stuff is nickel and dime crap.

I knew my FICO score because one of my credit card issuers tracks it for me for free. Lulled me into a false sense of "everything's ok".

I'm a little ticked off.

[Matthew Carberry]

Thanks for the heads up, Carebear. I just pulled up my Experian report. I am disputing 6 items. Never heard of them, don't know where the hell they came from.

One is like for 4K+ (from a very large well respected national bank. I've never had any account of any type with them), the rest of the stuff is nickel and dime crap.

I knew my FICO score because one of my credit card issuers tracks it for me for free. Lulled me into a false sense of "everything's ok".

I'm a little ticked off.

That's the importance of checking all 3 Bureaus.  Often the errors occur because one of them just doesn't get the message of a payoff or something.  Also, some creditors, especially collection agencies, only give information to one of the three.

One other thing to look for is duplication.  If one bureau gets the account number or creditor name reported differently you can get the same debt shown twice.  If it's good credit, that may actually help your score, but in general you don't want to have your debt-to-income ratios or available balances-to-limits appearing larger than reality. 

[K Frame]

It took me awhile to figure out the one duplication I had. I lost my stinking card and had to request a new one.

Everything on my one report is mine.

I had two 30-day lates, and that was when I was switching to a new bill payment service. I missed getting them transferred over.

[Monkeyleg]

Congratulations on a great score, Mike. That doesn't come easy.

I had a rating near 800 until my multiple surgeries/tests/scans back in 2005. I got into a dispute with a hospital over a lousy $250 bill.

They claimed that I owed them, when in fact they owed me for overcharges. My insurance company did an audit and confirmed my position in writing to the hospital.

But, by that point, the hospital had already sent that whopping $250 charge to a collections agency. And I had a big black mark on my credit record.

When I found that blemish on my record, I called the accounting department at the hospital. When none of the flunkies answering the phones could give me satisfaction, I asked to speak to the supervisor.

I faxed her copies of my insurance company's audit, copies of the letters my insurance company had sent to me (and to her department), and copies of all of the hospital invoices and insurance payment statements.

When she finally had all of this paperwork in her hands, I called to ask her to call off her collection agency dogs.

She said, "no."

Why?

Because I never asked her nicely.

It reminded me of that scene from "A Few Good Men," where Jack Nicholson's "Colonel Jessup" tells "Danny" that he needs to ask him nice.

Everybody has a time in their lives where things go bad...traffic accidents, armed robberies, slipping on the ice, etc. I just hope I'm there when that b*tch has her moment, and I can tell her that I'll help her, but she just has to ask me nice.

[grislyatoms]

Well, the plot has just thickened a bit. (sorry to veer the thread a bit)

Last night in the mail I received a collection notice(!) from an agency representing the "big bank". It was adressed to my address.

The kicker is, the addressee's name is similar to mine but not exact. Last names match but the first name and middle initial do not.

Uh, I just realized something else. The account #'s in the collection letter and the credit report don't match. The dollar amounts don't match either. This is getting bizarre. I hope this isn't an identity theft/fraud type of thing. I had a checkbook stolen @4 years ago; that took about 18 months to resolve.

I am going to look at the others (credit bureaus) today.

[mfree]

Just checked mine again.... 790. Not bad for a 28 year old single guy who's coming out from under huge debts

[RadioFreeSeaLab]

719, last time I checked in October.

[Manedwolf]

Credit scores.

People bragging about their shackles, given in the form of a number arbitrarily assigned to them by a faceless group of corporations for being a Good Consumer. If there is an error, you may beg your masters to correct it, and their favor might smile on you. Or not.

How staggeringly ironic. The measure of the worth of an American citizen's good character is now a quantifiable three-digit number...based mostly on how much made-in-China plastic crap and disposable electronics they buy and pay off in time.

[K Frame]

Credit scores.

People bragging about their shackles, given in the form of a number arbitrarily assigned to them by a faceless group of corporations for being a Good Consumer.

How staggeringly ironic. The measure of the worth of an American citizen's good character is now a number from 400 to 800...based mostly on how much made-in-China plastic crap and disposable electronics they buy and pay off in time.

 

Yeah, being able to dictate the terms of the credit you're willing to pay for purchases where paying in cash isn't an option is a... shackle.

Being able to keep my Mom in her and Dad's house, a house that's been in the family for over 70 years is a... shackle.

Moron.

[Manedwolf]

Credit scores.

People bragging about their shackles, given in the form of a number arbitrarily assigned to them by a faceless group of corporations for being a Good Consumer.

How staggeringly ironic. The measure of the worth of an American citizen's good character is now a number from 400 to 800...based mostly on how much made-in-China plastic crap and disposable electronics they buy and pay off in time.

 

Well? Have you ever stood back and stopped to think about what it really is? What it means?

What people in the age when Americans were far more independent would think of it?

Woo-hoo! The corporate masters are pleased with me!

I mean....seriously?

[K Frame]

Well? Have you ever stood back and stopped to think about what it really is? What it means?

What people in the age when Americans were far more independent would think of it?

Woo-hoo! The corporate masters are pleased with me!

I mean....seriously?

No! Not at all! Why should I? After all, I'm flush with credit greed!

The age when Americans were far more independent?

Oh, you mean the kind of independence that, prior to the growth of the mortgage lending industry, kept roughly 80% of all Americans as RENTERS, or worse, TENANTS of the corporations for which they worked?

Yeah, that's certainly more wholesome and more noble.



Can you truly, and I mean TRULY, comprehend what a credit score really means?

It's a DIRECT reflection on you -- on the level of your personal responsibility, commitment, and honesty.

[Matthew Carberry]

Well, the plot has just thickened a bit. (sorry to veer the thread a bit)

Last night in the mail I received a collection notice(!) from an agency representing the "big bank". It was adressed to my address.

The kicker is, the addressee's name is similar to mine but not exact. Last names match but the first name and middle initial do not.

Uh, I just realized something else. The account #'s in the collection letter and the credit report don't match. The dollar amounts don't match either. This is getting bizarre. I hope this isn't an identity theft/fraud type of thing. I had a checkbook stolen @4 years ago; that took about 18 months to resolve.

I am going to look at the others (credit bureaus) today.

Contact the collection company and initial lender (by mail, receipt requested) and demand they provide you the documentation on the account.  basically a copy of your application for that account.  if they can't provide it, they have to remove it.  If it is fraudulent and you can demonstrate that, they have to remove it.

I have a firm I refer people to who have lots of credit correction necessary.

http://www.lexingtonlaw.com/about-lexington-law/advantage.html

Basically you pay them to do the legwork to get every negative item on your report removed.  The credit correction laws state that if you request the documentation that a credit account or any late payment or other derogatory item is actually yours it has to be provided to you or the derog taken off in a certain amount of time.

These guys barrage the collection agencies and creditors with information requests.  If they fail to respond, the firm follows up with a cease and desist letter and the item has to be removed or a fine has to be paid.

One of my coworkers is using them for he and his wife and even legitimate lates and derogs have been removed.  Their scores have gone up over a hundred points in just a couple months.

If you have a rat's nest of credit problems and would rather just pay someone else to fix them, it's an option.  This is not a "credit correction firm" that tanks your credit by negotiating payoffs and such, they only target the negative or incorrect info.

[Matthew Carberry]

Maned,

Do some research on the development of the secondary mortgage market industry, which is what made home ownership possible in areas without sufficient local capital to make enough loans for all area residents.  Credit scoring developed to give out-of-area investors a uniform way to judge your ability to handle a large loan.

Credit scoring provides a way to track how well you handle money, that's all.  Without a credit score you can still get a loan, but I have to research your payment history, by hand, by seeing years of utility bills, rents etc.  Even with those on time payments of necessities I still have no evidence how you will handle borrowing or repaying large loans so I will be tightly constrained by the absolute letter of the loan terms.

Housing-to-income ratio too high even though debt-to-income ratio is okay?  Decline.

Not enough month's reserves on hand even though you pay your bills on time?  Decline.

Never been a landlord but want to buy a multi-family?  Whoa, that's risky.  Decline.

Credit scores are a convenience to allow lenders and investors to look at your ability and willingness to repay debts over time and use that info to potentially compensate for other potential risks in a loan.  Without credit scoring, we're back where Mike Irwin described.

[K Frame]

"Without credit scoring, we're back where Mike Irwin described."

That's OK, CB.

Those were the GOOD old days.

You know, when the average life span was about 45, IF you weren't maimed or killed on the job, chances were good you rented your residence for your entire life, a "savings account" was a few pennies under your mattress, you were so far in debt to the company store that you didn't have any hope of ever leaving your job as a monkey puncher at the Pullman factory, making 17 cents an hour, your health care plan was (wait, WHAT health care plan?), and if George Pullman decided that he wanted to lay a bunch of people off, and you were one of them, company goons stopped by BEFORE you left the plant for the even and tossed everything you and your family owned out of the company house and into the street.

Oh, and to satisfy your debt to the company store, they kept most of what you had.

But that's all OK.

The corporate masters were SO much more benevolent back then...

And, you weren't reduced to a number.

Oh, wait...

Many of the large American companies back then assigned employee numbers to their employees. And that is how you identified yourself, NOT by your sur and Christian names.