FICO score and loan rates

[Methuss]

A nearly perfect credit score will get you the best loan rate or so the old way of thinking goes.

Before the credit bust, if you could fog a mirror, you could get a mortgage or a car loan. We all know what happened next. But bankers still need to make a buck, so it sounds logical that if you can show a strong credit score, you'll win the best of deals on any kind of loan.

Not so.

Traditional mortgage lenders prefer large down payments to offset their risk. If you default, the 10-20% you put down decreases their losses on foreclosure. Credit card issuers are just as apt to reduce your credit line or raise your interest rate regardless of your score. And those 0% car loans? Often they last for only three years, which puts the payments so high you'll need to come up with more upfront cash anyway. My neighbor, a classic car salesperson, told me of an incident where a guy with an 820 BEACON score and more than enough income was turned down on a loan becuase he had an adjustable rate mortgage...and that was the only reason. So lenders are fickle and irrational about lending right now.

The truth is credit is going to be tough to get for a while no matter what. So don't obsess over every few points of your FICO score. It really won't make much difference until the economy and the lending industry shakes out.

[jq26]

Credit has tightened significantly. Try getting a jumbo mortgage w/ less than 20% down. Hint: they don't exist anymore. And mortgage insurance rates are through the roof. With 10% down on a prime conforming home loan, I was quoted $325/month in PMI. It was essentially a dealbreaker because of the expense.

It IS all about down payment as it used to be until the mid '90s. Then we started to get goofy and granted credit to anyone with a pulse based on improbable calculations that had assets increasing in value in perpetuity. That theory worked out really well.

This is a great thing for long term health and stability. The last few years have shown the toxicity of leverage. Finally a little common sense is injected into a lending system run amock.

[jhnsmith978]

I don't agree with you. The website MyFico.com, which is maintained by the company that created the "FICO" credit score, provides a lot of information about how you can raise and how your score is calculated. The factors that lead to a good credit score are the same ones that make good financial sense like paying bills on time and all..What you say??
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[maggie22]

I would interested as well...I was paying off all my creditors and had never missed a payment...Every time i send them 10K or more, they respond by cutting my credit lines close to the remaining balances...My bank guy said this messed up my score becuase it looked like I'd maxed out my cards?

[creditrepairman]

Credit has gotten so much more strict. Just because you have an excellent credit score now doens't mean you'll be getting that loan. It's so annoying!

[faye00]

i agree. the score that the bureaus gave you depends on the report given to them. that is why you have to read and check your report thoroughly because any inaccurate date noted in it could affect your score.

[crap1novice]

Anyone know how car loans have been affected? I am on the verge of needing a new car, but still need to do some work on my score, I think I am now low 600s.

[Jenny_12]

I am not very knowledgeable with car loans, but I have heard and read a couple of resources telling that it does. Your credit score level is really of great help though. A hundred score below excellent score might not make a huge difference.

[charles71]

Certainly, yes. The credit industry has gotten all mixed up these days. Sometimes, your effort in maximizing your credit score would seem useless in the long run. However, this isn't accounted or attributed to one factor alone. Perhaps, there are necessary things that we forgot to include. That's why our credit ability does not improve at all.

[bloomingdale]

Originally Posted by Methuss

A nearly perfect credit score will get you the best loan rate or so the old way of thinking goes.

Before the credit bust, if you could fog a mirror, you could get a mortgage or a car loan. We all know what happened next. But bankers still need to make a buck, so it sounds logical that if you can show a strong credit score, you'll win the best of deals on any kind of loan.

Not so.

Traditional mortgage lenders prefer large down payments to offset their risk. If you default, the 10-20% you put down decreases their losses on foreclosure. Credit card issuers are just as apt to reduce your credit line or raise your interest rate regardless of your score. And those 0% car loans? Often they last for only three years, which puts the payments so high you'll need to come up with more upfront cash anyway. My neighbor, a classic car salesperson, told me of an incident where a guy with an 820 BEACON score and more than enough income was turned down on a loan becuase he had an adjustable rate mortgage...and that was the only reason. So lenders are fickle and irrational about lending right now.

The truth is credit is going to be tough to get for a while no matter what. So don't obsess over every few points of your FICO score. It really won't make much difference until the economy and the lending industry shakes out.

This is the situation when it concerns lenders and creditors. Oftentimes, credit companies go free willing in rising interest rates when payment became overdue. The sad thing is that, the creditors continue doing the rising even with the presence of law regulating such practice.

[bookreader]

is it true that having multiple credit cards (even if I pay them on time) is bad for credit FICO score?

[GautamLawyer]

Originally Posted by Methuss

A nearly perfect credit score will get you the best loan rate or so the old way of thinking goes.

Before the credit bust, if you could fog a mirror, you could get a mortgage or a car loan. We all know what happened next. But bankers still need to make a buck, so it sounds logical that if you can show a strong credit score, you'll win the best of deals on any kind of loan.

Not so.

Traditional mortgage lenders prefer large down payments to offset their risk. If you default, the 10-20% you put down decreases their losses on foreclosure. Credit card issuers are just as apt to reduce your credit line or raise your interest rate regardless of your score. And those 0% car loans? Often they last for only three years, which puts the payments so high you'll need to come up with more upfront cash anyway. My neighbor, a classic car salesperson, told me of an incident where a guy with an 820 BEACON score and more than enough income was turned down on a loan becuase he had an adjustable rate mortgage...and that was the only reason. So lenders are fickle and irrational about lending right now.

The truth is credit is going to be tough to get for a while no matter what. So don't obsess over every few points of your FICO score. It really won't make much difference until the economy and the lending industry shakes out.

Thanks dear for share the post. i like it.....

[karan75]

The website is MyFico.com is created by "FICO",it provides a lot of information about how we calculate the score.

[willingtocope]

Originally Posted by karan75

The website is MyFico.com is created by "FICO",it provides a lot of information about how we calculate the score.

It provides info on how you calculate the FICO Consumer score (the one we're allowed to see)...which is close to the FICO Bank Card score (The "sucker" score that predicts who CCs will make money off of).

It does NOT provide info on the FICO Mortgage Score, New Car Score, Insurance Score, Medical Risk Score...or the other 8 or 10 scoring algorithms.