It has been on my mind for some time but hopfully someone on this forum can explain it to me. Since scores are so important for almost EVERYTHING, whyis it your able to get a home mortgage with a mid score of 620 but with that same 620, you will most likely be denied for most decent credit cards? As I continue to correct the mistakes that one decision caused my scores to plummet over the last 2 years I strive to reach at least 600 across all three reports, but even when I reach that goal, I will still be in no position to look favorably to CCC and/or LO's.
Any comments are appreciated.
Starting Score: EX:603
@aquatic1 wrote:It has been on my mind for some time but hopfully someone on this forum can explain it to me. Since scores are so important for almost EVERYTHING, whyis it your able to get a home mortgage with a mid score of 620 but with that same 620, you will most likely be denied for most decent credit cards? As I continue to correct the mistakes that one decision caused my scores to plummet over the last 2 years I strive to reach at least 600 across all three reports, but even when I reach that goal, I will still be in no position to look favorably to CCC and/or LO's.
Any comments are appreciated.
There are a few reasons:
1. The US government guarantees, subsidizes and encourages it.
2. The loan is secured by an asset.
3. The asset traditionally appreciates.
4. You will most likely pay the mortgage even if you don't pay the credit card, because you have to have a place to live, you don't have to be able to "charge it."
5. A home purchase is considered a necessary and responsible use of credit, generally.
There are many other reasons, but these sort of make it obvious on the "why" part. Credit cards represent a purely "elective" and unnecessary credit extension. They also represent increased risk with unsecured credit.
@Anonymous wrote:
@aquatic1 wrote:It has been on my mind for some time but hopfully someone on this forum can explain it to me. Since scores are so important for almost EVERYTHING, whyis it your able to get a home mortgage with a mid score of 620 but with that same 620, you will most likely be denied for most decent credit cards? As I continue to correct the mistakes that one decision caused my scores to plummet over the last 2 years I strive to reach at least 600 across all three reports, but even when I reach that goal, I will still be in no position to look favorably to CCC and/or LO's.
Any comments are appreciated.
There are a few reasons:
1. The US government guarantees, subsidizes and encourages it.
2. The loan is secured by an asset.
3. The asset traditionally appreciates.
4. You will most likely pay the mortgage even if you don't pay the credit card, because you have to have a place to live, you don't have to be able to "charge it."
5. A home purchase is considered a necessary and responsible use of credit, generally.
There are many other reasons, but these sort of make it obvious on the "why" part. Credit cards represent a purely "elective" and unnecessary credit extension. They also represent increased risk with unsecured credit.
Once again, you have answered a question in a way that makes sense. I never thought about the fact that the home is an asset that can be taken away if you fail to pay unlike a cc where if you fail to pay the company can just continue to charge fees and then sell it off to a JDB. Having a place to live is more important. That is exactly why I am in the position I am in. I went from no rent to paying almost $1000 monthly just for rent. Once that happened, the CC's went to the bottom of the list. 2007 was not a good year for me!
Thank you again for the breakdown!!!!!