@Patient957 wrote:
@Kforce wrote:The good side of this is that 40k @ 18% can be paid off in < year with your income
Which is why income doesn't factor in to credit score. If there's such a big income, you should be able to quickly pay off the debt. The fact that the big debt exists despite the high income suggests there might be an issue. It's a warning sign.
Stated another way, nobody carries $40K debt at 18% unless they have to.
^
This.
The OP makes $200k a year and has no mortgage. And they are going to take 10 months to pay off $41k? Something seems off here.
@Thomas_Thumb wrote:A score that measures debt management, not wealth is a valuable tool for lenders.
If more people understand this one statement it would eliminate a lot of frustration and help them make better decisions.
@FICOdawg wrote:@Varsity_Lu Sure, but my case is example of the MANY blind spots to FICO scoring. I could have easily taken a mortgage and paid the CC. That would have been a dumb move as I benefited by being a cash buyer when I bought my place which will be far more savings than the interest I'll pay while chopping the balances down.
The formula treats CC debt in the same manner. My initial $41k is peanuts in the grand scheme of things but for another person could be crushing debt. The formula doesn't know the difference. I have multiple ways to pay the remaining balance off today (would be bad financial move to do so). FICO has no way to know that.
Im on a FICO page so the biases are strong. I get it. FICO scoring has massive flaws in it.
I don't think there is bias. I just think you need to rethink what FICO really is and not get frustrated by what it isn't.
I have been a cash-only guy for many, many years. No loans at all. I make a good salary, have a good retirement savings, an emergency nest egg, and had $70k cash sitting in the bank to build and addition to my house. Lowe's denied me a card when I tried to buy $10k in lumber to get an 18 month same as cash deal they were offering. Seriously. I am the last person they should deny. But it's because FICO does not measure wealth. It measures how well you handle debt. In my case, not having debt for a long time raised a lot of questions as to whether I could manage debt. In your case, the banks only see $41k at 89%. I know you don't like it and think it's unfair, but it is what it is. If you accept that you can work with it with less frustration.
Like I said earlier, my score went from unscorable to 812 very quickly without any loans. It can be done. Of all the factors involved, utilization is the quickest and easiet to fix.
