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Posted by Daniel T. on May 17, 2008, 4:28 pm
> Daniel T. wrote:
>
> > 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.
>
> OP is buying a home in 4 years. Getting the score then will be too
> late.
It seems to me that getting his score now is pointless. How would the
information benefit him?
> > 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.
>
> No FICO? You are sure of this how? My credit report shows accounts
> closed up to ten years ago, so it depends what kind of loan that
> was, paid off may not mean the account was closed, too.
Anicdotal evedence. I dealt with a few customers who had no FICOs when I
was selling cars. They had no recent loan history, no data to work with,
so when the report was run, the FICO was literally blank (not 0, but
blank.)
By the time the OP is ready to buy the house, he will have gone 17 years
without a loan payment. No late payments, but none on time either. The
FICO is supposed to be a measure of how likely you will make your
payments on time, so how can that be determined in his case?
> > 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.
>
> $5-$10K?? Minimum payments? I maintain the $8 may be money well
> wasted, but paying that kind interest is over the top. Only OP
> knows what his report shows. If he has no active accounts, so a
> pretty empty credit file, and if that reflects in a poor FICO, he
> can open one card, maybe through his regular bank, and make
> purchases each month, paying in full every month.
Not a poor FICO. As I understand it, a person gets a poor FICO by not
paying his debts on time, therefore someone who hasn't had debts can't
have a poor FICO.
None of us know for sure of course, because the formulas for calculating
FICO are secret, however it is in many people's opinion that having some
debt (an installment loan for exampe) for some time will help raise your
FICO (assuming you make your payments on time... not early, but on
time.) From www.myfico.com for example: "In general, having credit cards
and installment loans (and paying timely payments) will raise your
credit score." Note, they do not say paying off loans early helps raise
your FICO, they say making timely payments does it.
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