Why so many people, specially those troubled with mortgage; are so concerned with their FICO score? Spending is spending, if you have a nice score, you'll end up spending more, even with lower rates. Unless you borrow to invest in your business, getting more and more debt is completely foolish. Investing really means making more money. A bigger house, car, toys, are not investments, as advertisers want us to believe. So why worry about FICO scores?
They are pulled for jobs, for insurance coverage and rates, for mortgage rates, for trying to get an apartment. If you live off the land in a cabin you own, they are not a problem. You wonât die if they are low but you may have fewer opportunities and pay more for things you donât even finance, such as insurance.
Banks will make refinancing easier. What else can they do with subprimes? Foreclosures? Lengthy bankruptcy litigations? Refinancing is their ONLY way out.
For the most part the banks were not the lenders to the subprime borrowers, so they have no obligation or reason to write loans to them if they aren't going to make money by doing so. Availability of credit has tightened a lot in the last year. The banks are now afraid to lend to the subprime folks. The other lenders that were lending to them are pretty much out of business now. Its almost hopeless going for a loan or refi if you are subprime, now. The rates they need to charge are astronomical, like 9 to 12% for a home loan, because they can't borrow the money to lend for subprime loans anymore.
Note: these are all quotes from FICO credit reports, not interpretations and rephrasings. I added comments in parentheses on a few, noting what triggered the comment. I've tried to group them by topic, because it's pretty overwhelming! Characteristics of FICO® High Achievers (FICO scores of 760 and above) Account age: oldest account: FICO High Achievers opened their oldest account 19 years ago, on average. average account age: Most FICO High Achievers have an average age of accounts between 6 and 12 years. oldest revolving account: FICO High Achievers opened their first revolving account 19 years ago, on average. average revolving age: age of newest account: FICO High Achievers opened their most recent account 27 months ago, on average (from MidnightVoice's post) Number of accounts reporting: number of accounts currently being paid as agreed: FICO High Achievers have an average of 6 accounts currently paid as agreed. (number of open accounts that are currently not late, etc --incl mortgage, etc. Got + for having 8.) number of accounts carrying a balance: FICO High Achievers have an average of 3 credit accounts carrying a balance. (Note: this is on all types of credit, not just CC's. Got - with 5 accounts: 2 CC's, mortgage, HELOC, student loan; got + with 4 accounts: 1 CC, mort, HELOC, SL--these out of a total of 8 accounts) Utilization: Revolving util: For FICO High Achievers, this ratio is 7%, on average. Installment util: Most FICO High Score Achievers have paid down on average 35% of the original amount of the loan, in addition to the fact that on average they usually owe less than $1200 on their non-mortgage accounts (found on a search) Inquiries: Inquiries: About 72% of FICO High Achievers did not apply for credit in the past year. Of those that did, about 20% applied for credit just once. (got with 2 inqs--EQ, didn't get with only 1 on other reports) Mix of accounts:Your FICO score evaluates your mix of credit cards, installment loans, and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders. (found on a search) Revolving: Number of credit cards: FICO High Achievers have an average of 4 to 5 credit cards (including open and closed cards, bank cards and department store cards). (found on a search) Recent CC use: Your FICO score evaluates your mix of credit cards, installment loans and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders. You helped your FICO score by showing recent use of a credit card. (comment only, no percentage given) Installment: Consumer finance account: Only 12% of FICO High Achievers have a consumer finance account. (found on a search) Remaining balance: Most FICO High Achievers carry a total balance of less than $1200 on non-mortgage accounts. (found on a search) Alternate average balance:Your FICO® score considers how much you owe on your credit accounts, such as revolving credit accounts and non-mortgage installment loans. Generally, the more you owe on these accounts, the greater risk you pose to lenders. FICO® High Achievers have an average total balance of $5000 on non-mortgage accounts. (contributed by JayToo 01/05/2008) Late payments: any lates: About 93% of FICO High Achievers have no missed payments at all. But of those who do have a missed payment, it happened nearly 4 years ago, on average. 60-day or longer: Very few FICO High Achievers, about 1%, have a 60 days late payment or worse listed on their credit report. "bad payment history" --multiple accounts with lates: About 93% of FICO High Achievers have no missed payments at all. But of those who do have a missed payment, it happened nearly 4 years ago, on average. (Got this with lates on 3 three different revolving accounts) Other derogatories: Virtually no FICO High Achievers have a public record or a collection listed on their credit report.
I had a brokerage account at TD Greenline from years back, and it had a few junior miners in it. Recently one of them got acquired by another company and I had to reactivate the account in order to sell the shares. The brokerage did an Equifax on me even though the transaction I was requesting had nothing to do with them extending me credit. It seems it was just a sort of personal reference.