@Anonymous wrote:
My income for 25 years comes on a K-1 form. Almost zero is W-2. I never had a mortgage in my life but my mortgage buddy says my income and down payment would buy me whatever mortgage I want even when my FICOs were 520. Hard money lender versus standard loans.
In 2009 after the bubble popped I saw hard money offers around 2.6% -- lower than any standard mortgage although with hefty down payment and only 3-7 year loans.
Bad FICO hurts unsecured credit. But secured loans like mortgages or cars? FICO doesn't matter much if you have income and a down payment.
I'm skeptical of that too, as S10 says I've never seen a hard money loan less than conventional even at stupidly high downpayments though that's a big factor in what rate you pay on a mortgage. I also have worked for a lender that had aggressive asset only mortgages and it was always at a higher rate than other loan products.
Also cars, you can get approved by putting 30+% down with absolutely terrible credit (because what's the worst case you flake and they resell the car for a profit anyway) so actually anyone really can get approved for an auto loan assuming they don't see something on your credit which can snatch the asset which I'm not certain applies to auto lending unlike the mortgage space.
My own EX FICO 8 AU 551 when I first started this and with a bunch of crap on my report, when I talked to the LO from WFDS, it came down to "I guess I have 13 thousand reasons to approve you" and that was that. It was also at a 19.35% APR, though I refinanced that down to 6% in just over 7 months as I pulled a 630 on EQ FICO 5 with DCU, but I wouldn't have been approved on that if I hadn't paid off some of my dirt (they wanted proof that my state tax lien was paid in order to get that).
While cash / income can fix a ton of credit issues, they won't fix the rate offered imo, even on secured debt where it's basically zero risk to lend to someone putting down 30% or higher on any secured loan I can think of that's relevant. Same applies to houses to what I stated above and the odds of someone defaulting after 2 years of ontime payment probably is statistically no different than average so the bank wins no matter what in that situation.
In answer to the original question, if you can pay cash for everything than credit is irrelevant. I was in that situation until age 35 or so wearing numbers off my debit card and writing checks for cars... didn't matter till I realized I couldn't pay cash for any house I wanted to live in around Los Angeles. Then I needed credit, and I wasn't in position to buy a place until 3.5 years after I started my journey.
From that standpoint I'd suggest it's important to everyone: if you don't need it no problem, but statistically I think it's virtually certain to come in handy for the 99%, in which case it's way better to build credit before you need it and not take a multi year delay... which incidentally given housing prices in 2012 vs. when I bought in 2015, probably cost me on the order of 80K just on the same condo.
