Zero Fico Score

[Anonymous]

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bluechase wrote:

He has an answer for a person  who pays their credit card off every month then looses their job.

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Credit card companies are in it for what benfits them. How do they gain by  giving you free miles, insurance, and getting nothing in return.  Again, I am new.

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Welcome, bluechase.

What is the answer for the person who PIF and loses their job? How is it different for the person who uses a debit card and loses their job?  The PIF person has the money in the bank to pay the bill. The debit card user has the money in the bank to pay the bill.

CCCs win because it is a minority of people who PIF, use their miles, make insurance claims, etc. The CCCs make billions just in late fees and over limit fees, to say nothing of finance charges.

[DallasLoanGuy]

Another poster here is technically correct. There is no Zero score. It is actually a 'No Score' due to insufficient data. And it just means that the borrower has no credit to score, or that data is too little and/or too old to be a predictor.

But it is called a 'Zero Score' by a lot of people who don't fully understand what it is....

[Anonymous]

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@bluechase wrote:
What you are saying only works if you are already responsible and everything goes according to your plan - no illnesses, car repairs, emergencies etc. I understand the part about leaving your money in the bank to collect interest and all that but the vast majority of people live paycheck to paycheck and there aint a whole lot to leave in the bank. What goes in the bank goes straight out of the bank. Did you forget that the #1 reason people go into debt is because they dont have the money its not becasue they have the money and rather use the plastic? Dont people just want to postpone the transaction? It seems like if the majority of people were really as responsible as you all say we wouldnt have a mortgage issue( however small) and there wouldnt be so many credit card companies out there.

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Except there is one big issue in what you just said. Those people who live paycheck to paycheck, because they have no credit since they only paid cash, now are evicted or have to resort to pawn shops and payday loans because they got sick because THEY HAVE NO CREDIT!

For example, I saved one person $100 a month in payday loan interest by showing him how to get credit. Yes, they were high interest credit cards with an annual fee, but 23% APR interest and a $100 annual fee is cheaper than 400% APR of a payday loan! He was paying $100 a month in interest on back to back payday loans because his car broke down and he had to get to work and he had no credit!

If you are living paycheck to paycheck, YOU NEED CREDIT MORE THAN ANYONE ELSE! But the mistake that most people make is they use it for little things they don't need instead of saving it for an emergency.

People who live paycheck to paycheck need credit MORE than the rest of us. They just need to use it prudently, for emergencies.

[Anonymous]

I am new, but one thing I want to add...if you are taking advantage of 0% interest on auto loans than you are just paying interest up front.  What I mean is without taking the 0% and paying cash you can get thousands off of the automobile thus by paying full price one would have to consider that interest.  Just a thought.

[haulingthescoreup]

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@Anonymous wrote:

I am new, but one thing I want to add...if you are taking advantage of 0% interest on auto loans than you are just paying interest up front. What I mean is without taking the 0% and paying cash you can get thousands off of the automobile thus by paying full price one would have to consider that interest. Just a thought.

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Good point. That's why 0% financing from a dealer isn't necessarily a great deal. Now if you go in with outside financing, negotiate the best price you can get, and THEN ask if you're eligible for a dealer 0% and get it, you're sitting pretty. Doesn't mean the dealer will necessarily go for it, but if they're desperate to cut inventory, they might.

The debate on this thread swings back and forth between the general and the specific. Just because in general, consumers might not handle credit well (and that is by no means established), that doesn't mean that I can't. So I will happily take advantage of no-fee credit cards with good rewards programs because (1) I'm using them for things that I would normally buy anyway, and (2) I'm going to pay them off before I owe a finance charge. (In fact, I pay them off before the statement even cuts, but that's a different topic.)

So I'm sorry that X number of people have gotten burned by credit, but there is no reason on earth that I should reduce my own financial flexibility and opportunities because someone 3 blocks or 3 towns or 3 states away is a shop-a-holic. And I'm by no means hard-hearted --I'm not. I just remember that the $3.39/gallon that I just bought is really costing me $3.22, and I'm pretty happy about that. Although I'd be a lot happier if it were back down around 70 cents!

It all comes down to be honest with yourself: if you can educate yourself, and set goals, and use self-discipline, then credit is a great tool. If you can't or won't do these things, then you're a klutz with a chain-saw. Bad times lie ahead.

[Anonymous]

how do you reply where it show the quotes you are directly repling to?

PS  My dad has been on a 0% cc rampage over the last 3 years.  We were unaware of the negatives on his credit report until he tried to buy a house and his score was 670...just a little explanation he used 0% to buy everything including cars on cc's and placed the cash in cd's and high interest mm accounts.  His util% was something in the 70% range with a couple hundred thousand owed(although it was all in the bank)  He made approx $6000 last year alone by doing this.  I can't see anything wrong with that if you have his self discipline.  He paid off all his cc's 2 weeks ago when we found out the damage so his score should be shooting rapidly towards the high 700's

[haulingthescoreup]

To quote a reply, click "reply" on the top left of the actual post you're replying to, just above that member's name, not the "reply" up at the very beginning of the thread. Then, if you're in Firefox, when the text box opens, click "quote post", which is just above the box on the top right. If you're in Internet Explorer using the graphical editor, click what looks like a squared-off cartoon quote balloon in the graphics menu bar (a square with a little triangle coming off at the bottom.)

Two good lessons from your dad's experience: high util will kill scores, and if you have the cash to pay it off, it's easily correctable. The only delay in score increase is waiting on your creditors to report, and then waiting on the credit bureaus to update.

In a mortgage situation, if your back is against the wall, you can pay for Rapid Rescore to force updates through. Better to clean things up three months ahead of time, though.


edited to clarify which "reply" button is which, and because I keep forgetting about the differences between Firefox and IE...

Message Edited by haulingthescoreup on 04-24-2008 03:56 PM

[Anonymous]

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haulingthescoreup wrote:
To quote a reply, click "reply" on the top left of the actual post you're replying to, just above that member's name, not the "reply" up at the very beginning of the thread. Then, if you're in Firefox, when the text box opens, click "quote post", which is just above the box on the top right. If you're in Internet Explorer using the graphical editor, click what looks like a squared-off cartoon quote balloon in the graphics menu bar (a square with a little triangle coming off at the bottom.)

Two good lessons from your dad's experience: high util will kill scores, and if you have the cash to pay it off, it's easily correctable. The only delay in score increase is waiting on your creditors to report, and then waiting on the credit bureaus to update.

In a mortgage situation, if your back is against the wall, you can pay for Rapid Rescore to force updates through. Better to clean things up three months ahead of time, though.


edited to clarify which "reply" button is which, and because I keep forgetting about the differences between Firefox and IE...

Message Edited by haulingthescoreup on 04-24-2008 03:56 PM

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Thanks...loks like it going to work

[Anonymous]

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DallasLoanGuy wrote:

Another poster here is technically correct. There is no Zero score. It is actually a 'No Score' due to insufficient data. And it just means that the borrower has no credit to score, or that data is too little and/or too old to be a predictor.

But it is called a 'Zero Score' by a lot of people who don't fully understand what it is....

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Correct.  And Dave Ramsey can't accurately claim to have a zero score or no score.  He had credit at some point in the past (and filed BK, I believe) so he was on the FICO radar screen.  FICO has a long memory (at least 25 years ... ) so some data on him would probably still show up now to generate a score.

[RobertEG]

I am not so sure of that.  In the recent FICO webinar, they stated that total inactivity in all TLs for more than six months can result in their drop in any FICO scoring, thus resulting in a "no score." 

I rely on input from the gurus on here, but that is what FairIsaac stated.