02-27-2008 08:01 PM
"How can I be low-maintenance?" he asked ironically. I mean, what was the point you were making?
02-28-2008 01:19 AM - edited 02-28-2008 01:38 AM
I guess I am in the minority on this issue, but here are my views, for what they are worth.
It always takes extreme scenarios to make a point, so I will proffer one. An installment lendor for a mortgage, auto, secured, or unsecured install loan looks at your 760 FICO score, and green dollar signs immediately fill his eyes. So he immediately looks for his rubber green ink “approved stamp,” and then moves on to the next loan applic in his vertical file. Deal done and approved for lendor A.
But suppose the applic fell on the desk of lendor B, who takes a look at the same applic, and then glaces beyond the three digit 760 number that was gospel to lendor A. He sees that three months ago, you owed $20,000 in revolv credit that is now miraculousy gone in your current scoring, but still shows up to him because he has monthly balance history before him in your CR Hmmm, he rightfully ponders. Applicant only has a net income of $40,000. How then did applicant pay off $20,000 in recent debt that does not show on his credit report in the form of any new CL that even approximates that sum? He is kinda suspicious that money to pay off that high recent debt that equals 50% of your anuual net may have come from a source of further debt on your part that is not yet, or ever will, reported to the CRAs as debt. Sure, it could have been paid from the applicant’s savings, but it could also have come from unreported debt (Aint Martha? or loan shark on the corner? A new account not yet reported to the CRAs?). So you can bet that lendor B will pick up the phone, and give you a grueling ringy-dingy!
These lendors don’t make money because they are stupid and lazy. Sure, if we are talking only about a diminimus app for a minor $300CL Orchard credit card, then the time is not worth the risk. But with the info available on your full CR that posts past monthly balances, no loan officer with any brains will issue a $20,000-$200,000+ new line of credit without further prodding into your finances.... income? undisclosed debt? etc....
What may be dismissed casually by some may mean all to another.
I do not bite on the hook that reporting of historical balances, even though not used in the FICO score, are not of concern to we consumers when it is evident that they are reported in your credit report, and thus potentially of concern in the real world eval of a credit app.
It changes FICO strategy for any consumer who cannot read the minds of the creditor. I would not simply dismiss lendors as stupid and lazy, and thus just put this puppy to rest, and rely only on the three digit 760.
02-28-2008 01:29 AM
02-28-2008 03:13 AM