FICO 2008 factors in your income?

[Anonymous]

I was reading an article on the BOA website in the first-time-homebuyer section (linked below) about changes to the credit scoring systems or the new "FICO 2008," as I plan to apply for a loan in the near future.  I was concerned about the comment "High Debt-to-Income ratio." Specifically, I don't have any Income items listed in my credit files (I always though it was listed), so I would presume that no income would be factored into my score...Any thoughts?

http://homeloans.bankofamerica.com/en/our-commitment.html?cm_sp=CRE-Mortgage-_-FirstTimeHomeBuyer-_-MO16LT001P_Sp%20Link_Learn%20what%20you%20can%20afford#popup-/en/learning-center.html%23lc-/en/learning-center/buying-your-first-home/preparing-for-your-home-loan/fico-2008-score.html

[MarineVietVet]

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@Anonymous wrote:

I was reading an article on the BOA website in the first-time-homebuyer section (linked below) about changes to the credit scoring systems or the new "FICO 2008," as I plan to apply for a loan in the near future.  I was concerned about the comment "High Debt-to-Income ratio." Specifically, I don't have any Income items listed in my credit files (I always though it was listed), so I would presume that no income would be factored into my score...Any thoughts?

http://homeloans.bankofamerica.com/en/our-commitment.html?cm_sp=CRE-Mortgage-_-FirstTimeHomeBuyer-_-MO16LT001P_Sp%20Link_Learn%20what%20you%20can%20afford#popup-/en/learning-center.html%23lc-/en/learning-center/buying-your-first-home/preparing-for-your-home-loan/fico-2008-score.html

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Welcome to the forums.

FICO scores consider a wide range of information on your credit report. However, they do not consider:

• Your race, color, religion, national origin, sex and marital status.
  US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
• Your age.
  Other types of scores may consider your age, but FICO scores don't.
• Your salary, occupation, title, employer, date employed or employment history.
  Lenders may consider this information, however, as may other types of scores.
• Where you live.
• Any interest rate being charged on a particular credit card or other account.
• Any items reported as child/family support obligations or rental agreements.
• Certain types of inquiries (requests for your credit report).
  The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.
• Any information not found in your credit report.
• Any information that is not proven to be predictive of future credit performance.
• Whether or not you are participating in a credit counseling of any kind.

I found all that here:   http://www.myfico.com/CreditEducation/WhatsNotInYourScore.aspx

Message Edited by marinevietvet on 12-31-2009 09:25 PM

[Anonymous]

I think what BofA means is when you apply you obviously have to disclose your income. They pull your credit reports. The bank can then see your monthly obligations as listed on your CR and compare that to your provided income and there they have your DTI. It is a combination of all the steps in the app process.

[Lel]

As mentioned, the FICO score - regardless of whether it is the 08 version or an earlier version - does not factor in a "debt to income" ratio, because income information is not stored at the credit bureaus and thus cannot be incorporated into the formula.

There's another problem with the B of A link - it contains woefully outdated information regarding the way that authorized user accounts are treated (the piggybacking to which they refer).  Originally, FICO 08 was going to eliminate AU accounts from scoring, but in response to protests from the FTC (as I understand it), this was changed and AU accounts will still be used in the calculation a FICO 08 score.  This was announced about 1.5 years ago.