Thanks, marci! Dani, don't pay any attention to lbrown59's posts. I don't, LOL -- in fact, I CAN'T pay any attention because he's on my "ignore" list. At first, I was hesitant to put anybody on that list because I thought that certain threads would be more difficult to follow if even one person was edited out. What I discovered, though, was that the opposite was true: threads made MORE sense, LOL! By the way, you can access your own "ignore" list by clicking this link. And life goes on. Doc
Lb, there are some misinformed people from all occupational fields. Plus, I am an internal accountant...cost management. I do handle corporate taxes, but other then for a few close family and friends, I don't deal with the outside market. I am only an accountant, not a CPA...accountants are limited in what we can do. I always recommend seeing a CPA or CFP for such things as starting a new business or for any business tax questions or planning. A degree does not make one an expert. I understand real estate is a taboo investment if you're looking at liquidity. That's why I also play with a few CDs and a couple mutual funds. At this moment with the market being so low I dont't want to take a chance with my money so I am not playing. Dani
With your signature I assume you know exactly how banks make money. They hold your funds and give you less than 2% for savings accounts and lend it to unfortunate souls at 19.9%. www.creditsense.com
Dani, Really enjoyed hearing about your background! Thanks for that post. Kudos for you to carving out such a varied business background so early in your career. Now you've got me wondering what drew you here... You write, "Why would someone choose to put their house up for a security to pay off unsecured debt? Because the interest rate is cheaper?" -YES. One poster in another thread noted 23% vs. 7%. On a significant balance, that's easily the differece between being able to get debt under control and falling behind--IF YOU'RE NOT ADDICTED to consumption. But also -Raises your credit score to move the debt (provided it's reported as secure, as it should be.) -Works as a good cash management tool. If one frequently uses 0% BT offers, or is trying to grow a young business, one can move those to and from a HELOC -tax deduction for $100K or less. No doubt there are others too, these leap to mind. "Is your home worth that kind of risk?" Depends on what "kind of risk." If I'm about to go BK, then no. Then again, if, God forbid, I ever get to the point where I can't pay my HELOC, that HELOC will be the least of my problems! "When a bad time (or a slow time) hits they increase their debt load to try to make ends meet. They are now working to pay off debt, not to raise a family and increase their wealth. Do you disagree?" No, but that's a reason to live below their means and save, not to forgo the advantages listed above...especially since many of those advantages will HELP THEM ESCAPE DEBT if used properly. "Why continue to drain ourselves in debt putting our home at risk and quite possibly are family at risk?" For the benefits. One could as easily say, why borrow to go college, or even borrow to buy a home when renting is less risky? Of course one needs to borrow responsibly. lbrown59, "2*Please tell me how this would work." Here's an example. 1. I take out a no-cost, no-fee HELOC WHILE I HAVE A JOB and all is well. I let my new $15,000 line sit unusued, as my "emergency fund." 2. I get laid off, and go 9 months looking for new work. 3. I realize that after 3 months, I have NO reserves left due to unexpected medical bills...nothing to pay the mortgage! So 4. I draw on the HELOC to pay the mortgage. 5. Once I get my job back, I save a little extra each month to pay off the HELOC, never missing a beat on mortgage payments. Had I not opened the HELOC, I'd have my home foreclosed on. Doc, Don't know if you missed my remark to you, or you just chose not to comment...?
LB, You actually made some very good points, as did Dave, Marie(!) and others. What I want to know is this: Isn't this entire discussion irrelevant to the real problem, namely inaccurate and unfair FICO scoring?
FICO is only a problem for people with no credit. Once you have some credit and exercise it, FICO is what becomes irrelevant. Just my opinion. I don't even know what my FICO is and I don't care. I have over 200k of accessible credit between my personal and business credit. Exercise your credit, deal from strength. www.creditsense.com
I don't keep track of FICO scores either. What I do is closely monitor the reasons given in decline letters. And if I get approved, I don't worry at all. But then SOMEONE uses those FICO scores, and I do get declined, so I might be better off if FICO scores were eliminated or governed by law. LB, based on his 4000+ posts, could very well agree.
*Is your home worth that kind of risk?" **If you have enough savings the home is not at risk. 1*You can pay the home loan anytime you wish. 2*Even if by some remote chance you did loose the home you could pay cash for another home. Your main goal should be to get into this position as soon as possible. *lbrown59, "2*Please tell me how this would work." 1*Thanks for the example
1*Where it's relevant is the better your financial position is the less impact scoring and reporting will have on you. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ You can either fight to get the inaccuracies corrected or work toward getting yourself into a position to where it doesn't effect you. You can also do both. LB 59
FICO is only a problem for people with no credit. Once you have some credit and exercise it, FICO is what becomes irrelevant. creditwork ======================== Agreed The idea is to accumulate enough in personal savings to where you don't have to rely on the CRAs and FICO in order to accomplish your goals.
Great stuff. We can be independent from FICO scores, perhaps even from debt itself. Thank you, gentlemen.
CW, I have to disagree with you, I do have credit, pretty good credit, and yet my FICO scores still are relevant to other things. I bought a Harley last year (for cash money-I was serious in my earlier posts about no debt) at the "stealership" they quoted me 3 insurance rates.I was quoted a rate by Progressive, that was 2 times higher than the Dairyland rate I choose, why? Progressive pulled EXP and Dairyland didn't. (My only negative was on EXP). I went to BB&T last month and opened a checking account with them, they pulled a FICO score, and offered me a 10K card and a 3K LOC as overdraft protection, all in 30 seconds from the time they finished entering my info into their computer. Why, Fico score! The guy said, did you know your score was 790? (I didn't let him know I was pissed to have lost my 800-club card!) I am getting a new mortgage and that is the reason I came here 3 or 4 months ago, to cleanup my files, make sure they are correct, and raise my scores as much as I can. The mortgage guy at BB&T said to me "wonderful things happen with a FICO above 720". Things like: a regular loan turns into a no-doc (without the interest rate increase), pre-approvals in minutes, best rates, etc. What about my new homeowners policy? Itâ??s FICO driven again! Sure CW, you could argue that it is not my FICO that did it but my good credit, but the yardstick is calibrated in FICO points , whether we like it or not. I canâ??t consider FICO scores as irrelevant anymore, the more I learn the MORE they become relevant to my daily life, my real life, which has little to do with my online presence here. JohnM â??The yardstick is calibrated in FICO pointsâ? - wow is that a sound bite or what? â??Itâ??s the economy stupidâ? - doesnâ??t even come close
To answer your question I found this board after Fleet skyrocketed my husband's interest rate back in 2000 for no apparent reason. I was looking to vent. Fortunately, I have never had to deal with any kind of credit problems or difficulties (knock on wood), but I believe learning is valuable. It is important for people to know their rights, plus it gives me a good outlook on where people have come from and where they are going. And I enjoy reading their stories of success. Although, most topics address some type of credit repair many also focus on prime credit cards offers, warnings, insurance, businesses, etc. which I have found very helpful. Plus I have learned a great deal about the CRAs, CAs, validation, and FICO which I had very little knowledge of before I found this board. Dani
Neither one, Dave, I just hadn't read this thread in a few days. Well, using a HELOC as an "emergency fund" doesn't seem wise to me at all. Rather than use borrowed money for that purpose, then "save a little extra each month" afterward to repay the debt, I would suggest, saving a little extra each month during those many months of peace and prosperity before the crisis in order to amass an emergency fund. First, while you still have other outstanding revolving obligations, you might consider establishing an emergency fund of 1 month's expenses. After you pay off debt (except the house), you should build that up to 3 to 6 months of expenses. As for being fiscally conservative, I absolutely am. We don't have a car payment at all -- both are paid off. We pay off our credit cards in full each month. We have an emergency fund. I believe this is something anyone can do if they are willing to plan and save and live below (rather than above) their means. Doc
