topic Re: Lack of credit scoring knowledge in General Credit Topics

Lack of credit scoring knowledge

FICOdawg — Fri, 30 May 2025 15:46:19 GMT

As part of the FICO journey to 800, I find it interesting how much John Q Public is clueless about their credit scores. I'll admit until I found out my score was in the low 700s since I always paid on time and had numerous loans/mortgage/credit cards and never rejected for a loan that I had a truly good score.

FICO generates BILLIONS of scores per year and yet this forum is fairly slow given the impact FICO has on people's wallets.

I read a recent Reddit where someone wrote that "after you hit 700 is doesn't really matter". Oh how clueless that statement is given the extra interest you pay. I hate to think how a couple simple moves would have saved me money over the years because I didn't want to add credit accounts or increase credit limits because I did not "need" it. Seems real opportunity to better educate consumers on FICO scores.

Re: Lack of credit scoring knowledge

Vinjints — Fri, 30 May 2025 16:15:12 GMT

Same boat on not going after additional credit cards or limits. Thought I was in good shape managing my own money and not overspending. Wish I had started sooner, but now I'm trying to slowly build up my limits for points, while teaching my kids that are at/becoming of credit carrying age.

Re: Lack of credit scoring knowledge

FICOdawg — Fri, 30 May 2025 16:30:06 GMT

It's painful as I want to buy my boat now but the difference between 752 and 800 is 1.99% on a decent size loan. I just refuse to pay more if I can wait six months to get my score over the magical 800. I had chase giving me credit limit and card offers constantly and I declined them and it's bit me in the butt on my score.

Simple education about # of credit card accounts would go a long way. If you did a survey people would assume less credit card accounts means a higher score. People are aware credit scores exist but the even just a few fine details would make huge difference for a large swath of people. My guess is this is why credit score average is somewhat consisten as once people have a car loan, mortgage and couple credit cards they assume that's enough. On things like boat/rv/pool or other unsecured loans the difference in rates between 710 and 800+ can be 5 points or more...... Some banks won't approve the loan if you are below 740.

Re: Lack of credit scoring knowledge

pizzadude — Fri, 30 May 2025 20:30:26 GMT

Yeah unfortunately there's a huge gap in education around most financial matters, not just credit and credit scores.

Thankfully there are still places like this where we can all learn and share information, hopefully that will continue to be the case.

Also I'm sure there are credit knowledgeable AI systems being built, so who knows what the future holds

Re: Lack of credit scoring knowledge

FICOdawg — Fri, 30 May 2025 21:00:11 GMT

Yes now they seem to be adding derivative models as a way to stave off competitors so makes it even harder to know the correct levers.

im sure banks love the FICO illiteracy as they get higher interest out of the deal.

Re: Lack of credit scoring knowledge

FlaDude — Sat, 31 May 2025 21:30:11 GMT

I've seen posts here that anything above 760 won't get better rates or more likely to be approved, but I have no idea how true that is.

Re: Lack of credit scoring knowledge

pizzadude — Sat, 31 May 2025 22:44:16 GMT

@FlaDude wrote:
I've seen posts here that anything above 760 won't get better rates or more likely to be approved, but I have no idea how true that is.

Yeah that is a general rule but there have been exceptions reported, like 780ish or higher with some lenders to qualify for their best rates

Re: Lack of credit scoring knowledge

Thomas_Thumb — Sat, 31 May 2025 22:45:09 GMT

I've read 780 is the new 760 from some loan seeking posters in the mortgage and auto forums.

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 00:47:40 GMT

The lender I'm looking at gives you unsecured loans for whatever you buy. Car/boat/RV/pool, etc. You take title in your name the day you take ownership even with the loan. However, they ONLY take good/excellent credit and the best rates are only for those with 800+ credit.

I think that's where many folks don't realize that without gaming the scores above 800 you often aren't getting the best rates. A fair number of people are lazy and aren't willing to shop for the best rate which I find crazy but some folks are just happy to get approved.

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 00:50:09 GMT

Another area I often wonder as far as "hidden" credit score impacts is how much more/less you pay for car or home insurance based on your credit score. I'll definitely shop rates for my car and home at renewal time as my score will be much higher I was around 705 at the last renewal.

Re: Lack of credit scoring knowledge

Thomas_Thumb — Mon, 02 Jun 2025 01:53:39 GMT

@FICOdawg wrote:
Another area I often wonder as far as "hidden" credit score impacts is how much more/less you pay for car or home insurance based on your credit score. I'll definitely shop rates for my car and home at renewal time as my score will be much higher I was around 705 at the last renewal.

Fico credit scores are not used by the insurance industry when determining premiums. The insurance industry uses a credit based insurance score (CBIS). These algorithms are designed to reflect risk of filing a claim. That is quite different from risk of a 90 day late. The industry leader for these scores is LexisNexis (LN).

It is possible to have an 850 Fico score but only a fair CBIS. If you do a search, there are multiple threads discussing CBIS, various scoring metrics, score ranges and rating.

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 05:33:53 GMT

lol I'm sure my score sucks. ExW totalled her car and daughter totalled her car on my policy. 2019 and 2021 so going be a while to clear them off.. Kinda sucks as they aren't on my policy anymore so I'm expecting I'm paying a premium on my policy for those cars that got paid out.

Re: Lack of credit scoring knowledge

Thomas_Thumb — Mon, 02 Jun 2025 15:30:16 GMT

Obviously driving record plays heavily into auto insurance premiums. However it is not a part of Home or Auto CBIS. Also, it is only based on you, as an individual. It looks like you should educate yourself on the scoring criteria.

P.S. if your driving record is clean and the policy in your name only, switch insurance carriers to eliminate the historical baggage. Your premium could drop quite a bit.

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 14:09:33 GMT

Well I had two variables change at once (the Big D and moved) and so I did change carriers. But since I moved to FL which is infamous for high auto rates, my rate went up. I'll shop around once the next renewal comes up.

I'll have to research it for sure.

Re: Lack of credit scoring knowledge

pizzadude — Mon, 02 Jun 2025 15:14:38 GMT

@FICOdawg wrote:
The lender I'm looking at gives you unsecured loans for whatever you buy. Car/boat/RV/pool, etc. You take title in your name the day you take ownership even with the loan. However, they ONLY take good/excellent credit and the best rates are only for those with 800+ credit.

Which lender is this ? I guess this would qualify as "super-prime" credit status or something similar.

You're right tho, a lot of people don't understand the credit scoring game and implications on how it affects the rates you pay.

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 15:50:17 GMT

Lightstream

Re: Lack of credit scoring knowledge

pizzadude — Mon, 02 Jun 2025 16:46:47 GMT

Interesting, I don't see any specific score tiers in their FAQ but they do state this in multiple places: LightStream only approves good-to-excellent credit profiles

From FAQ under "Excellent Credit":

LightStream loans are approved for inviduals with good-to-excellent credit profiles.

Our process looks beyond an individual’s FICO® score to closely examine their entire credit profile. We require a good-to-excellent FICO score as a qualifier to be reviewed. However, a high FICO score does not necessarily mean applicants will be approved.

Given the unique nature of each individual's credit profile, we believe there is no single definition for “excellent credit”.

We find that individuals with excellent credit usually share the following characteristics:

Credit History: Five or more years of significant credit history with a variety of account types (major credit cards, installment loans, vehicle loans and mortgage debt if applicable.)
Assets: A proven ability to save, evidenced by: retirement/investment accounts and liquid assets––including checking and savings accounts, etc.
Income vs Debt: Stable, sufficient income and assets with the ability to easily repay current debt obligations (including little, if any, revolving credit card debt) in addition to any new LightStream loan.
Payment History: An excellent payment history with no delinquencies or other problems repaying debt obligations.

Finally, it should be noted again that each individual profile is different and that we make our credit decision based on the specific reporting of the individual’s current profile.

Ultimately, our determination of excellent credit is based on whether we conclude that there is a very high likelihood our loan will be repaid in a complete, timely manner.

Note for co-applicants: We equally review each party on the application as each individual is equally responsible for the loan

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 17:35:38 GMT

Lightstream is popular in the boating community. To get the best rate you need over 800. Getting the loan is one thing, getting lowest advertised rate is another.

Having a boat title makes life so much simpler if you decide/need to sell it prior to payoff. It also simplifies the buying process with survey etc. They also finance older boats whereas some lenders only finance stuff 10 years or newer.

Re: Lack of credit scoring knowledge

pizzadude — Mon, 02 Jun 2025 19:58:00 GMT

That's good to know, and I see this for their auto loans, could be helpful also for older / specialty

Do you have any vehicle restrictions?

Whether you are purchasing or refinancing, we do not place any restrictions on the vehicle's:

year
make
model
mileage

Re: Lack of credit scoring knowledge

FICOdawg — Mon, 02 Jun 2025 18:24:39 GMT

The "downside" to Lightstream is you have to formally apply with a hard pull before they confirm rate. So, some guy with a 770 sees the lowest rate, applies and has boat/rv/muscle car fever and accepts the higher rate. Anecedotal evidence in boating community is you need 800 to get that lowest rate.

They are very fast with getting funds and will loan for all kinds of things like classic cars, etc.