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Daily Chat >> General Posts >> Credit Scores Can Drop http://www.clusterheadaches.com/cgi-bin/yabb2/YaBB.pl?num=1269081745 Message started by KingOfPain on Mar 20th, 2010 at 6:42am |
Title: Re: Credit Scores Can Drop Post by Grinner62 on Mar 20th, 2010 at 8:37am KingOfPain wrote on Mar 20th, 2010 at 6:42am:
I can't HOPE to pay you unless I can get the gub'ment to force you to CHANGE our contract. How dare you impose the TRUTH of consequences. |
Title: Re: Credit Scores Can Drop Post by monty on Mar 20th, 2010 at 8:51am
If people are paying their bills on time, but are 'on the verge of default' ... maybe their credit score should be lowered??
The credit score is not all about personal responsibility (although personal responsibility is one factor that will affect it). The credit score also measures certain things about your economic position. Millions of people had their credit limits reduced due to external factors (the 'credit crunch'), and this reduced their credit scores significantly even if they kept paying every single bill on time. The person didn't change - the bank's ability to make loans did! But no man is an island, and no credit score is based purely on the responsibility of the individual. The credit score penalizes people who are responsible enough to pay off their debts entirely and close down their revolving charge accounts. Suddenly, they have less available credit (Ding!), and part of their credit history has been shortened. (Ding!) Should employers use credit scores to help make decisions related to hiring, firing, or promotions? Should your auto insurance rates be dependent on your credit score as well as your accident history? Those are separate questions, but they are worth asking. |
Title: Re: Credit Scores Can Drop Post by Brew on Mar 20th, 2010 at 8:56am
The Man will keep tabs on the plebs any way that is advantageous for the Man.
Once us plebs accept this, life becomes much less complicated. |
Title: Re: Credit Scores Can Drop Post by Sandy_C on Mar 20th, 2010 at 4:52pm
My husband and I have four credit cards, all of which are paid in full each and every month. One for my business, one for his business and two with low credit limits for general household/gas/etc stuff.
We have no car payments, no store credit cards, no debts other than the mortgage on our personal home and on a rental property we own - both of which are paid every month (actually we're two months ahead in payments). Our mortgage lender on the rental offered a refinance on the mortgage. I said, OK, make me an offer. They ran my credit report, and my FICO was very high thankfully. But.... because the credit limits on those four cards was pretty high ($50,000, $30,000, $5,000, $5,000), even though I pay off all charges immediately, the reporting agencies lowered my score because of what I "could" charge. So, in my personal opinion, it doesn't make a hills beans of difference whether you pay all bills in full every month or you make the minimum payments every month. What you "could" charge makes all the difference in your score. Sandy |
Title: Re: Credit Scores Can Drop Post by Bob P on Mar 21st, 2010 at 7:22am Quote:
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Title: Re: Credit Scores Can Drop Post by Grinner62 on Mar 21st, 2010 at 7:43am Bob P wrote on Mar 21st, 2010 at 7:22am:
;D :D ;D :D ;D :D ;D :D |
Title: Re: Credit Scores Can Drop Post by Marc on Mar 21st, 2010 at 3:02pm
I'm becoming a fan of Dave Ramsey's approach to working toward achieving a "zero" credit score.
One of my daughters and her soon to be husband had heavy debts in student loans, credit cards and car loans. When they saw what they were paying in monthly interest, they took one of Ramsey's seminars. Three years later, they are debt free, have no credit cards, no car payment and buy everything cash. They both have decent, but not high dollar jobs so it was quite a painful process - but now they live almost worry free with cash in the bank. They discovered that getting a mortgage actually wasn't hard at all with a zero credit score as long as they had a solid down payment and no debts. I realize that it sounds totally counter intuitive because we've all been taught to pray at the alter of credit. I'm watching it work fantastically for them. With the sole exception of a small home mortgage, they have one basic rule: If we don't have the money, we don't buy it. They save up until they can actually afford it. Marc |
Title: Re: Credit Scores Can Drop Post by Cathi_Pierce on Mar 21st, 2010 at 3:33pm
This loan modification stuff is the meat of my business of late.. I should charge a commish on modification assistance. At least here in Oregon, prices are still depressed, and, frankly, people are scared of purchasing, since jobs are scarce, and businesses are still folding.
To that end, I am pretty knowledgeable, and, as Batch said above, things are being 'made up as they go along" here. IF you qualify for a loan mod....after 6+ months of providing duplicate and triplicate proof of employment, impassioned letter of explanation as to HOW you no longer qualify for the loan you received. after you've been turned down for a traditional refinance(generally because your appraised value is 20% lower than it was 2 yrs ago.....after jumping thru HOOP after HOOP.....you finally get a letter that states,,,,,to the effect: Congrats, your financial life sucks enough that Uncle Barack is gonna help you out.....send EXACTLY X number of dollars, in certified funds, on EXACTLY the first of the month, for 3 months, and, after that trial period, we will make this agreement permanent and will supercede the terms of your original mortgage..........at that point, your loan servicer-who might have been the facilitator for your loan mod as well-has the OPTION of reporting your reduced payments as 1-pays on time, no change 2- late for 1-2,3 payments, putting you at the HOT stage of default, as some have been known to do, (one hand not aware of what the other hand is doing) reject the trial payments, since they do not cover the p&i, throwing you immediately into a deficit situation, and BANG, foreclosure........ Obviously, the first option is the best, but depends on how your servicer handles it. Approx 1/3 of the lenders I have worked with understand the ramifications and are willing to waive reports for this 3 month trial, AS LONG AS no payments are late currently.....in other words, you must continue to make the full monthly payment while the lender is building your file, developing a plan and losing your paperwork..in order to keep your credit scores intact. It's not an easy road, and each file is handled differently....and the short reply, Steve is YES, scores can go down..... but not nearly as much as a short sale or foreclosure would ding you. Personally, I think, for people who genuinely need it, the loan mod program is an excellent one. IF your scores are good, and you RIGHTEOUSY have fallen victim to this new "weaconomy", you can see your payments dropping considerably-to as low as 2.3% interest.......keeping you IN your home, giving you time to recoup, and, perhaps, regain some equity position, so you can get out, in time. Rules change by state, vand as noted above, by lenders as well.....this is not an easy project for laypeople to undertake. ASK FOR PROFESSIONAL HELP...and, if a Realtor is here to help you, know they will make not a single penny on the deeal........BUT Loan Mod CAN work. Hoping NOONE here needs that kind of help! Cathi |
Title: Re: Credit Scores Can Drop Post by Cathi_Pierce on Mar 21st, 2010 at 3:40pm
Marc's right....when I was first married, credit card interest was tax-deductible....... people carried HEAVY debt because of that. NowADAYS IT JUST DOESN'T PAY TO USE CREDIT.
The days of bigger, better, faster are gone, being replaced by, security, cushion and spartan living....its FAR better to choose this rather than be forced into it. WATCH your spending, KNOW where you money is going and keep an eagle eye on your scores....live WITHIN your means. If you want to read a great book, read The Millionaire Next Door... nuff said, sorry bout the preaching........ Cathi :D |
Title: Re: Credit Scores Can Drop Post by Charlie on Mar 21st, 2010 at 4:04pm
Don't worry though. Consumerism never stays down for the count.
Things will be back to "normal" soon enough. How lucky can we be? Charlie |
Title: Re: Credit Scores Can Drop Post by Marc on Mar 21st, 2010 at 4:53pm Charlie wrote on Mar 21st, 2010 at 4:04pm:
I hope you are wrong Charlie. Not saying you are, just hoping. I'm seeing evidence of a shift in core thinking on this subject and I can only hope that it continues in a healthier direction. When you read what Cathi wrote above and spend a moment to think about the the whom/how/why and the ramifications of it....it's really quite scary. Marc |
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