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Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
0

Subprime and Prime identifing.

[ Edited ]
Lenders base rates on FICO scores. Why not also base FICO scores on rates!

If it ever becomes possible to change the grouping to ignore banks and types of accounts (ie subprime) and instead identify the interest rates for those accounts. Because someone receiving a 0% apr from a subprime loan should be rewarded (they would have to have good credit) vs a person that pays 25% on a loan (they would have to have bad credit or be desperate). I doubt you are able to do this now, but maybe a possible change for the future. Because I always take any opportunity to borrow money rather than use my own for smart business reasons if interest rate is low.

So maybe in the future
Prime loans 6% and lower.
Medium loans 6-8%
Low loans 8-10%
Subprime loans 10-18%
Sub Subprime loans 18-32%

This way, everyone gets treated equally and the type or bank, or title would have nothing to do with the scoring. Only the interest rate. That in my opinion would be extremely accurate. If interest rates ever find their way on a credit report to be possible. :-) Thank you for listening.

Message Edited by ilovepizza on 06-17-2007 12:10 AM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
0

Re: Subprime and Prime identifing.

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007
0

Re: Subprime and Prime identifing.



Noah_Bodie wrote:

I daresay the lenders with products labeled as subprime would file suit against FI and win.



Yep
Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
0

Re: Subprime and Prime identifing.



ilovepizza wrote:
Lenders base rates on FICO scores. Why not also base FICO scores on rates!

If it ever becomes possible to change the grouping to ignore banks and types of accounts (ie subprime) and instead identify the interest rates for those accounts. Because someone receiving a 0% apr from a subprime loan should be rewarded (they would have to have good credit) vs a person that pays 25% on a loan (they would have to have bad credit or be desperate). I doubt you are able to do this now, but maybe a possible change for the future. Because I always take any opportunity to borrow money rather than use my own for smart business reasons if interest rate is low.

So maybe in the future
Prime loans 6% and lower.
Medium loans 6-8%
Low loans 8-10%
Subprime loans 10-18%
Sub Subprime loans 18-32%

This way, everyone gets treated equally and the type or bank, or title would have nothing to do with the scoring. Only the interest rate. That in my opinion would be extremely accurate. If interest rates ever find their way on a credit report to be possible. :-) Thank you for listening.

Message Edited by ilovepizza on 06-17-2007 12:10 AM

The jury has not reached a verdict on this.  It is believed FICO will begin to do this with their new scoring model but it has not been confirmed yet.
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

Established Contributor
dog
Posts: 560
Registered: ‎05-03-2007
0

Re: Subprime and Prime identifing.

[ Edited ]
that is such a circular mess of horsecrap, if they were to do so.  i have bad credit, so i have to get a subprime account, which will make my credit even worse.  just doesnt seem right.
 
just like the whole idea that i have bad credit, so i will pay 18% on a car loan, so that i am less likely to make the higher monthly payment.
 
that'll teach us subprime borrowers a lesson!


Message Edited by dog on 06-27-2007 07:14 PM
Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
0

Re: Subprime and Prime identifing.



fused111 wrote:
 
The jury has not reached a verdict on this.  It is believed FICO will begin to do this with their new scoring model but it has not been confirmed yet.

Yeah, right, sure.
 
OK, I'll bite. What exactly will be the criteria for determining whether a given CC or loan is prime, medium, low, subprime, or sub subprime? Remember that BTs, cash advances, and purchases are sometimes under different APRs and may be in different Primegories. If I have $3,214.69 from 0% APR BT, $783.34 from 12.5% cash advances, and $948.13 from 7.8% purchases, what's my CC Primegory this month?
 
I daresay the lenders would decide up yours FI, and refuse to report any APR info--along with the class action suit that would bury tiny FI with $1.3 billion in assets.
 
Ever read the TOS? All the recent credit repair is forbidden talk jibberjabber? It was came about because of a lawsuit brought by The Three Stooges (EQ, EX and TU). Experian has but $2 billion in assets.
 
Now consider that the 10th largest U.S. bank, State Street Corp, has $88 billion in assets. Citigroup has $2 trillion in assets. The lenders could dig a hole, stick FI in it, wave bye-bye, and they'd move on their merry way using Vantage or a myriad of other scoring schemes. Done. Over. Next.
 
The CRAs are street punks. The banks are the mafia. Not the real life often goofball mafia, but the Hollywood big screen, all knowing, all powerful, kill your horse and stick it's head in bed with you while you sleep between snores mafia. They got guys who make Luca Brasi look like a punk and who don't even fear Vito Corleone himself. I am speaking figuratively.
 
FICO score is all about risk, not how much you like the particular loan program or how appealing the terms of the loan may or may not be. Term of the loan, interest, payments, downpayment, rewards, cash back, etc. are all what might well be deemed priviledged information. None of FI's FICOin' business.
 
Debtor #1 drives a financed $110K Mercedes, lives in an $950K home, and earns $300K a year. But he's late on his mortgage, car loan, or CCs at least 4 times a year. CCs balances have been steady climbing, he's maxed out 4, paying the minimums, just got a 5th CC 2 months ago and he's starting to run that one up.
 
Debtor #2 drives a 4 year old Chevy (paid off 1 year ago), lives in a $110K home, and earns $45K a year. He's never been late, has 2 CCs, util is about 7%.
 
I don't give a rat's butt about the CC APR. I know who's a bigger risk.
 
OCs would fight it tooth and nail because they know they are in a competitive business. Posting the loan APR info in CRs would cause soft pulls on your CRs to skyrocket as the CCCs got into a dirty, scappy, knock down, drag out fight.
 
"Heh there Mr. Jones, this is Tom from Citibank Credit Card Services. We noticed that you have a balance of $2,100 at 18.9% on your Chase MC. Sir, we can beat that, and then some. How's about we BT that balance over to your Citibank VISA at say 14.9% for 6 months?"
 
The OCs know it would happen because someone would start and it would snowball from there. They make big bucks off high APRs and anything that knocks it down is bad for business.
 
You might have FICOs in the 800s but still have a couple of $500 CL, 19.2% CCs in your wallet. Why? I don't know. You're a bad negotiator. That's what high APR CCs mean. Has zero to do with risk.
 
OK, enough of my ranting and enough with the nonsense. Show me one single, solitary, even remotely credible article speculating about this anywhere in any remotely credible news source. Bathroom walls don't cut it.
 
Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
0

Re: Subprime and Prime identifing.

[ Edited ]
Noah:
 
 I can't say I disagree with you.  My post was in response to the OP.  FICO might or might not do this.  Whatever FICO does, it doesn't matter if I like it or not.  The thread below clearly suggests a possible change.
 


Message Edited by fused111 on 06-28-2007 06:09 AM
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

Senior Contributor
Noah_Bodie
Posts: 4,635
Registered: ‎03-11-2007
0

Re: Subprime and Prime identifing.



fused111 wrote:
The thread below clearly suggests a possible change.


Not sure about a thread. More like a presentation. And I still didn't see even a hint about the CC itself serving as an indicator of risk.
Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
0

Re: Subprime and Prime identifing.



Noah_Bodie wrote:


fused111 wrote:
The thread below clearly suggests a possible change.


Not sure about a thread. More like a presentation. And I still didn't see even a hint about the CC itself serving as an indicator of risk.


Around three minutes into the presentation, percentages (perhaps score values) are shown for CCs, mortgages and auto loans, and each of these has two categories prime and subprime.  Didn't you see this?  Am I the only who thinks somethings might change after watching this?
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

Super Contributor
MidnightVoice
Posts: 8,161
Registered: ‎03-25-2007
0

Re: Subprime and Prime identifing.



fused111 wrote:
 
Around three minutes into the presentation, percentages (perhaps score values) are shown for CCs, mortgages and auto loans, and each of these has two categories prime and subprime.  Didn't you see this?  Am I the only who thinks somethings might change after watching this?


No, and I am the one who noticed they had slipped that in  :smileyhappy:
 
I am SURE they are gonna do it one way or another
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid

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