Does FICO know interest rates?

[Anonymous]

Does FICO know or care what your interest rates are or does it just see that  you do/don't pay your bills on time?

EXAMPLE: Will someone with a $15K auto loan at 16% APR & current on all payments be rated the same as someone with the same loan & payment status but a 5% APR?

[Anonymous]

fico doesn't care about rates or how much your payments are, just wheter or not you make them on time. realistically how would fico or an undwer writer now a rate for sure? ya a sig or auto loan may be guessed, but there are too many variables to guesstimate a mort rate. are taxes and ins escrowed? if they are then it would appear the rate would be higher than it actually is.

[Anonymous]

Great, that's what I thought. A "sea lawyer" told me something to the contrary & I thought I'd ask the wise guys on here.

[RobertEG]

No FICO concern at all when the loan is first secured, because, as has been stated, FICO dont know, dont ask, and dont care about  your interest rate or loan terms.... only the initial loan amt, remaining balance, and payment history.  When you first secure the loan, regardless of loan terms, you are at 100% util of that single loan.  Your interest rate, however, does indirectly enter into the FICO equation as time goes by, for the higher your interest rate, the less of your monthly payment is going towards payment of principal balance owed.  Thus, the higher you interest rate, assuming regular monthly payments, the higher your reported outstanding principal balance will be, and thus the higher your calculated %util of that loan will be.  But, cheez, maybe $10 a month bal diff?  An insignificant pimple in FICO. And remember that install %util overall is less than 10% of total FICO score.  Interest rate differences become almost insignificant. Put your heartburn elsewhere!

and also remember, FICO is not a one-category game.  Your new install loan may also benefit your credt mix.

My brother is a CPA, and not a "sea lawyer."  Still, I would listen to advice I get on this forum before relying on him for FICO advice!

Message Edited by RobertEG on 03-22-2008 11:29 PM

Message Edited by RobertEG on 03-22-2008 11:33 PM
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Message Edited by RobertEG on 03-22-2008 11:49 PM