700Man wrote:
Sidewinder, income most absolutely SHOULD be included in a credit score. How can you say that income doesn't relate to willingness/ability to pay? That's absurd.
Income has NOTHING to do with willingness to pay. Yes it has to do with the ability to pay, but the lender judges that. Your credit history and/or score has nothing to do and is not there to reflect your ability to pay, it is there to reflect your willingness to pay. Credit reports and scoring is all about how you MANAGE your money not how MUCH money you have.
Yes, a guy making $500,000 can decide to stiff all his/her credit card companies on a lark. And someone making $35,000 can keep making minimum payments that consume 30% of his/her after-tax paycheck. BUT HOW LIKELY IS EACH ONE ?
How likely each is to happen would require a great deal of research. More research than I have time for. However, income has nothing to do with how likely each of those are to happen. A persons circumstances and morals have to do with that.
As I said above, this is about PROBABILITIES and forecasting LIKELIHOODS. Income most certainly should be a factor in FICO scoring since, in fact, the best scores are positively correlated with income (and also assets, home location, etc).
What do you have to back this theory? I know people who make WAY more than I do and have as bad or worse scores than myself. In fact one of them owns a substantial amount of land and other assets.I also know people who make less than I do and have way better scores than myself.
Do those GUARANTEE you'll be a good credit risk? Of course not. But they increase the odds tremendously.
If you don't think so, ask yourself this: if you were a lender, and were told to make a home mortage loan 100% TOTALLY BLIND, and the only thing you knew was that one applicant lived and wanted a mortgage for his/her house in the South Bronx, and the other wanted his/her mortgage for Great Neck, Long Island (a very posh place), which would YOU lend to ????
Unrealistic. Now you are basically saying where one lives has something to do with their credit risk/willingness to pay?
Message Edited by 700Man on 04-25-2008 09:01 PM
Why not include education level, parent's education level, your quality of life growing up, how many kids you have, your marital status, etc in with scoring?
By your reasoning, all of these factors would affect your credit risk.
Someone making $100,000 with 5 kids should be the same risk as someone making $25,000 with no children, right? It does cost a lot to raise children.
If you went to college or even graduate high school that means you are more financially responsible than someone who didn't, since you are more educated, correct?
Need to consider parent's education level as well, that way you can judge whether the parents were educated enough to teach their children financial responsibility.
Let's not forget your childhood quality of life. Everyone knows if you grew up with little valuables and didn't have many luxuries that you are gonna strive to have those things as adults and for your own children, therefore you will be more likely to run up giant amounts of debt buying those things and then spend your income on more things instead of bills.
Message Edited by sidewinder on
04-25-2008 09:45 PM
