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Posted by John A. Weeks III on May 17, 2008, 3:05 am
> John A. Weeks III wrote:
> > Don't worry about FICO. All that tells a lender is how profitable
> > you will be, so they know how badly they can take advantage of you.
> > You have been living just fine for years without knowing your FICO
> > score, so don't waste the $8 to find out. It doesn't matter. When
> > you go for a loan, you may find lenders that worship at the god of
> > FICO. And then there are better lenders that do manual underwriting.
> > Those are the ones that you want to deal with. They will evaluate
> > your history and give you a rate based on how well you have behaved.
>
> Can you actually ask a bank if they are FICO-driven or if they'll look
> strictly at your record (credit report, income, etc.) only?
> I find this response curious, similar to the reply to the refinancing OP
> who someone told not to bother calling the bank holding the current
> mortgage. $8 seems a small sum to waste, the resulting knowledge may be
> pretty valuable.
> Joe
That is just it...wasting money, no matter how much, is not a wealth
building strategy.
And how would the FICO score matter at this time. Will the OP say,
"hey, my score is really good, so I'll make 2 late payments?" If
the OP has been behaving, the score will be good enough. If they
haven't been behaving, then they may not get the loan. In any
case, with a loan pending in the near future, the OP is going to
want to behave well and not make any late payments. Knowing the
exact score shouldn't change their behavior, and if their behavior
doesn't change, then they don't really have a need for the score.
Save the money, even if it is only $8.
-john-
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John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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Posted by Elizabeth Richardson on May 17, 2008, 11:15 am
> And how would the FICO score matter at this time. Will the OP say,
> "hey, my score is really good, so I'll make 2 late payments?" If
> the OP has been behaving, the score will be good enough. If they
> haven't been behaving, then they may not get the loan. In any
> case, with a loan pending in the near future, the OP is going to
> want to behave well and not make any late payments. Knowing the
> exact score shouldn't change their behavior, and if their behavior
> doesn't change, then they don't really have a need for the score.
> Save the money, even if it is only $8.
Did you read the OPs post? He won't be making any late payments because he
has no debt. His real question is not whether or not he should spend $8 on
getting his FICO score, but whether having no debt for 13 years lowers his
score, thereby making a future loan more expensive. Would it be prudent if
he had a small loan oustanding on which he is making regular payments? Of
course, if this is the answer to the question, $8 seems trivial.
Elizabeth Richardson
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Posted by John A. Weeks III on May 17, 2008, 11:14 pm
In article
>
> > And how would the FICO score matter at this time. Will the OP say,
> > "hey, my score is really good, so I'll make 2 late payments?" If
> > the OP has been behaving, the score will be good enough. If they
> > haven't been behaving, then they may not get the loan. In any
> > case, with a loan pending in the near future, the OP is going to
> > want to behave well and not make any late payments. Knowing the
> > exact score shouldn't change their behavior, and if their behavior
> > doesn't change, then they don't really have a need for the score.
> > Save the money, even if it is only $8.
>
> Did you read the OPs post? He won't be making any late payments because he
> has no debt.
I was assuming that they had electric and gas bills that need to be
paid on a regular basis.
-john-
--
======================================================================
John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
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to keep the conversations on-topic for financial planning. Other posting
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Posted by Elle on May 16, 2008, 7:46 pm
> I just took advantage of a Massachusetts law that allows a
> free credit report once a year.
Federal law now requires that each legal U.S. resident be
allowed "one free copy of his or her credit report from each
credit reporting agency once every twelve months. This
information is available at the only government-sanctioned
credit reporting agency-operated website,
annualcreditreport.com, by calling 1-877-322-8228, or by
mailing the Annual Credit Report Request Form." (From
Wikipedia)
> Our report is clean and accurate but they do not include
> the credit score, FICO. The FICO is $7.95 from Equifax.
> My only concern is that we haven't had a loan since 1995
> which I paid off in a few months. We are planning on
> buying a winter home when my wife retires in four years.
> With a clean history is the FICO useful now? Ever?
I am going to assume that you plan on putting at least 20%
down on this second home. I just wouldn't feel good making
suggestions to a stranger, whose financial situation is
almost unknown, here unless you plan on this.
I think knowing your FICO or its approximate value would be
useful to you right now, if only to help educate you and
yours on the loan process today. Googling for {"automated
underwriting" "percent of lenders"} turns up reports that
somewhere around 90% of lenders today use automated
underwriting which very likely means FICO is a large part of
the input to the decision-making process. Myfico.com itself
states that 90% of the "largest U.S. banks" use FICO. The
automated-FICO approach is said to be less expensive to
lenders, and it cannot discriminate by race or gender. I
have yet to find reports that lenders that use manual
underwriting are somehow superior, except maybe in very
unusual cases. I doubt that banks that use manual
underwriting always offer lower mortgage interest rates. I
think it may be just the opposite, based on reading about
manual underwriting today. I would welcome citations from
others, either way.
I would do three things now:
1.
Try the estimator at
http://www.myfico.com/FICOCreditScoreEstimator/Default.aspx
2.
Read further about what determines the FICO score at
http://en.wikipedia.org/wiki/FICO_score#Makeup_of_the_credit_score .
Also read more at myfico.com and at sites found by googling
about what sort of credit score range is necessary for the
best interest rates. Off the top of my head, I believe
anything higher than 750 or so will get you the best rate.
3.
Make sure you can afford this house. Not to be presumptuous,
but a flag went up when you indicated that one of you was
retiring and yet planned to seek a mortgage for another
house.
It sounds like you'll be fine, but why not get more definite
peace of mind using the tools above?
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Posted by Daniel T. on May 17, 2008, 11:36 am
> I just took advantage of a Massachusetts law that allows a free
> credit report once a year. Our report is clean and accurate but
> they do not include the credit score, FICO. The FICO is $7.95
> from Equifax. My only concern is that we haven't had a loan since
> 1995 which I paid off in a few months. We are planning on buying
> a winter home when my wife retires in four years. With a clean
> history is the FICO useful now? Ever?
Don't bother buying your credit score. When it comes time to make a
loan, just about any lender you can name will tell you what your score
is when they check it. They will all probably say something like "I'm
not supposed to show you this, but..." and then show you your credit
report (along with the score) and start asking you questions about any
minor discrepancy on it in order to scare you into thinking your score
is very low. :-)
Without a loan since 1995, you are what the car industry (and possibly
others) calls a "ghost". You have no FICO because there isn't enough
data to determine it. What this means is that you will have to present
documentation proving that you will be able to pay off the loan, no
signature loans for you. :-)
So, when you ask how much a (good) FICO is worth, the cost you should be
referring to is the cost of maintaining some debt so that there will be
data for the FICO system to work with. If you want an easy time of it
when you are ready to buy that house in four years, you should borrow
some money now (a credit card maybe?), and make minimum payments, but
always on time, for the next four years, then pay the loan off before
buying the house. So a good FICO will cost you five to ten thousand
dollars over the course of then next four years, and all it will get you
is less hassle when it comes time to buy that house.
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
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