Re: Re: Re: Re: Re: Perfect credit but still a good to see you here breeze. I haven't seen you on CN much lately, of course you've probably been on everyday and I've just missed your posts. Anyway, just thought I'd give you a howdy
Re: Re: Re: Re: Re: Perfect credit but still a Doc's Rant #4,528: Why You Don't Want a FICO Score of 850 1) First of all, a FICO 750 is a terrific score. It is very unlikely that you will be denied for any credit you want -- within reason, lol. You are likely to be offered the best mortgage rates, the best auto loan rates, and some hefty revolving credit lines. Bottom line: while the information you learn on this board will be of use to you for the rest of your life, you may not raise your score. 2) That said, take a close look at your overall "credit mix." If you have a few revolving credit cards (Equifax code "R"), an AmEx charge card (Equifax code "O"), an installment loan like a mortgage (Equifax code "I"), and you pay all of those on-time, then you're on the right track. Your score will raise as your accounts age. Also, take a look at your "utilization ratio" -- the amount you owe compared with your overall available summed lines of credit. If you carry balances, consider paying them down (if and when you can) for a predictable score increase. 3) I've never known anyone younger than age 55 who had a credit score above 825. I'm not sayiing it's not possible, and perhaps somebody here will volunteer themselves as a 30-year-old example of FICO 840 (it could happen), but I am saying that most of us have not seen that. 4) Perhaps the most important point, lol: Nobody should even want a FICO score of 850. Let me explain why: Your FICO score is not a measure of your goodness as a human being. In fact, it may not even qualify you -- in real world terms -- for better mortgage rates than someone with a 751 score. On the other hand, your FICO score does measure you against what money-lenders would consider their "ideal customer." My question for anyone is: Why would anybody want to become a money-lender's IDEAL customer? I'm reminded of a made-for-TV movie, and I'm showing my age now (40-something, cough), called "The Stepford Wives." I think it was on ABC, but I forget -- it was in the days before HBO anyway, I think. "The Stepford Wives" detailed a fictional town (Stepford, Mass., I think) where the husbands were sick of their nagging wives (oof, that show wouldn't play today, would it?) and so they developed a method for replacing them with robots which looked and felt EXACTLY like their real-life human wives except they never complained, never grew older, fixed perfect dinners, etc., etc. If there was a FICO score for sexist ideas of how women should serve male chauvinists from the late 1970s, then these robotic "Stepford Wives" would have definitely scored an 850. The banks would love for all of us to be "Stepford Borrowers," ahem. We would have combined revolving credit limits of $500,000 of which $100,000 would never be paid off. That 20% utilization ratio would indicate that we are responsible "Stepford Borrowers" who won't default. And we would make timely payments as we helped those bankers grow even more prosperous. Moreover, we would remain indebted to them for many decades at a stretch, albeit responsibly. 5) So, I ask, how does a FICO 850 score jibe with a life goal of becoming debt-free? Answer: it doesn't. No, you DON'T want to shoot for a FICO score of 850. I pulled my score again, and it's still 773 -- I'm great with that. I'm not trying to raise my score. (Mandatory off-topic digression: I can never say my score without thanking for the millionth time my "gang of five teachers" -- Lizardking, Marie, marci, breeze, and bbauer. That song's getting old, but having begun my own journey with FICO 564 almost two years ago, I remain grateful.) 6) Perspective: If your score was is in the 400s, you would be hurting and would need to take action. If your score was in the 500s, you would be turned down for just about everything (except maybe a basic Target.com store card -- they're pretty easy, believe it or not, lol), so you would need to get to work. If your score was between 625 and 675, you would qualify for some things and turned down for others, and you would still need to do some work to improve your scores, although you would qualify for reasonable mortgages -- just not the best rates. If you were between 675 and 700, you might work to get into the 700 club (and I'm not talking about Pat Robertson), and what you learn here will definitely help you to get there. Finally, if you're score is above 700, you're usually going to qualify for the best rates (again, usually), and if you're above 750 you're practically always going to get the best rates. I realize nobody crowned me Prince FICO, but that's the way I see it. In any case, I hope this perspective helps someone. Doc
Re: Re: Re: Re: Re: Perfect credit but still a easy tiger!?! i know you are talking to more than the original poster, but in defense i think the original poster thought her FICO scores was preventing her from getting loans easily. She misunderstood, that at this point in her investment career, it has nothing to do with FICO scores but with "selling" her next investment to a lender and giving them an excuse TO lend her money instead of an excuse NOT to. Big banks are notoriously conservative in this aspect and often time downright idiotic when understanding the needs of a RE investor. That why i recommend going to some local banks and developing personal relationships with one of the members of the loan committee. At these levels, it's about commercial lending, not personal lending. . . a whole different ballgame. The original poster is now a business person and has to act like one. (envision an 1980's business movie) She needs to have a loan package already made up detailing all the benefits AND pitfulls of her proposal BEFORE the lender can even ask about it. Also at this level, character and personal skills play a role equal to or, usually, greater than one's FICO score. That's what the original poster needs to focus on. btw- i understand your rant.
I was answering the "driving me nuts" aspects, humble. Mine was intended to be a reassuring post about her score. Tiger
Re: Re: Perfect credit but still a 750???? Doc, I can only figure the above post got yu goin'. Yes I would love to have a 850 score, I would love a Billion dollars, I would love to have 2 18 year old dizzy blonds to put me to sleep every night by scratching my head and rubbing my feet, I'd love to have your way with words, and dem Stepford gals seem kinna neat. I think I'm a little more realistic than that. A lot of things would be nice, but are not not my goals. In fact I don't even have a goal for a FICO score. A score is only a tool to accomplish my Credit Goals. Having a high enough score to get the best interest rates, and to add and increase my CL's are what I'm really after. If I could accomplish this with a score of 300.....no problem. The other time 850 was used was when I was playfully picking on Rodney aka George. It was just the Debbel in me. Doc, I do appreciate your concern that myself, and others might have the wrong outlook regarding scores, and setting us straight. And Doc, It sure is nice to have another Psycho to talk to. jay
Re: Re: Perfect credit but still a 750???? LOL, OnTheBayou, actually this was one of the dozens of essays I had written for a seminar I taught for The Motley Fool and thought it would be reassuring for the initial poster here. My message: A FICO 750 will likely net the best consumer rates, and nobody should aim for a FICO 850 anyway because that signifies the moneylender's "ideal" client (and who wants to be that?). Doc
Re: Re: Re: Perfect credit but still a 750???? YEOW! A bare girl named Tina. Now that brings back some super sweet memories. Thanks Bill.
Shoot, I'm still stumbling over the.....850 isn't a reflection on the awesomeness of my personal self or however doc put it. Yessssss it would be a huge ego thing to have 850 after the scores we've come from. When I hit the prime arena (bought a vehicle from GMAC not Crescent Bank or GE Capital!) I did the happy dance. When I got the 100k heloc *granted it's secured* I was perversely happy!! (Amsouth, God love em, prime, interest only!! Yes!)
Re: Re: Re: Perfect credit but still a 750???? PRobably not, they're out there I'm sure. But I bet they had to do some "special favors" for the FICO gods
Re: Re: Re: Perfect credit but still a 750???? (giggle) Rackt. Actually Doc is exactly right. We don't want perfect scores. Lenders are looking at these score with a suspicious eye, knowing that some people are talented FICO manipulators. You don't want to be a FICO manipulator.
Re: Re: Re: Perfect credit but still a 750???? Just got back from vacation and all I can say is WOW! What a response. Thanks to everyone for the insite. To answer a few of the questions and comments down the line.... One posted on satisfaction with WAMU. I've been very satisfied with WAMU. There rates have been the lowest I've found and loans have been streamlined, with nearly any docs required. I have to say though, I have developed a relationship with an officer that's helped tremendously. I knew of course risk factors were built in, but didn't really take into consideration that the risk brought the score down, without there being a negative to bring it down - Thanks for this insight. I do have a package ready to go. Showing before and after shots, as I do mainly forclosures;P and L's etc. With the rates as low as they have been I've been refinancing private mortgages into WAMU loans. Would posters here suggest that I seek private monies, before commercial monies (assume rates are within reason) to avoid the "additonal" risk. In addition to the lower rates, I prefer the institutions for bank auto pays, impounds etc. I've also been told to cancel any lines that are not being used. I keep 5 open lines with fairly hefty allowable lines to allow for real estate purchases instantly. Most of the time they're all at zero balances. Does anyone know how much of a ding this is? Should I close a couple? Thanks again, for the insightfulness of the board
Re: Re: Re: Perfect credit but still a 750???? No offense to this board, but i think your questions will be better addressed on. www.creonline.com or www.creditboards.com -mortgage forum. The first site is an absolute must for any investor the second site is one of the few online that incorportates mortgages, credit, and investor advice. The last question is the usual bad advice given out by lenders who don't know squat about investing or FICO. Leave them open.
Re: Re: Re: Re: Perfect credit but still a 750???? actually no. i have no more allegiance to that board as i do to this board.
Re: Re: Re: Re: Perfect credit but still a 750???? To throw my 2 cents in as a real estate investor (Rehabs). We have 6 houses in our names and are beginning the process of moving them into our company. We have applied for a D&B no and are just now getting the company's credit started. We have tradelines for siding and carpet. We have hit the debt to income wall as we used personal credit cards to get started and are maxed out, -- score hit, DTI hit. The earlier advice to move some of the properties into 1 or more LLCs, with the help of an accountant/lawyer is excellent for several reasons, score improvement, liability protection, etc. You may still be required to give a personal guarantee but could ensure that the lines are not reported on your personal credit report. We just moved a van into our company and they reported "account closed, paid in full" to our personal reports. Also, many hard money lenders will lend to an LLC and don't report to any of the bureaus. You could ask them to report to Dunn & Bradstreet the positive accounts and this will build your company's credit. Then you could refinance into the LLC at the end of the Hard Money year. You could probably then start getting your loc's in the company's name with a personal guarantee and no personal credit report reporting. Congrats on your excellent score, I can only dream... fletch.
Re: Re: Re: Re: Perfect credit but still a I remember seeing a CEO from, I think, Experian on MSNBC a couple of months ago trying to minimize hackers breaking into Experian/Ford's customer credit files. The CEO said that his score was in the 720's. Charlie
