Re: How Much Is A Credit Score (FICO) Worth?

"John A. Weeks III" <john@[EMAIL PROTECTED]
> wrote
Elle wrote
>> But of course, one generally cannot get a mortgage loan
>> without a satisfactory income. I think what is missing 
>> from
>> the thread is that, per many sources, the three Cs of
>> mortgage underwriting are credit, capacity, and 
>> collateral.
>> The FICO score takes into account only the credit part.
>> Capacity takes into account income (not just amount but 
>> type
>> of income and so apparent stability).
>
> I guess I even dispute that statement.  FICO does not look 
> at
> assets or savings, only debts.  I think credit part has to
> include assets to be fair.  After all, is someone like 
> Bill
> Gates a bad credit risk if he has no loans outstanding, 
> and
> thus a zero FICO?

Serious question: Why do so many people think that a person 
with no loans outstanding has no FICO score? I am assuming 
loans here do not include that provided for 30 days or so by 
credit card companies to customers who pay the balance in 
full every month. A person who pays their CC balance every 
month and their utilities on time and has done so for a 
certain number of years should have a FICO score.

Not sure about the rest of your points. Kinda sounds like 
semantics. Creditworthiness means... ? Perhaps different 
things to you, the banks, me. Either way, assets are taken 
into account under the three Cs guideline.

snip because I think the three Cs responds. Plus again, this 
is not an exact science. Also, those with no credit score 
can do as you mentioned: Seek a manual underwriter. Though I 
am not sure this gives better rates today. Automated 
underwriting has become so common that its expense is low 
and, from my reading, it would seem its pretty reliable. If 
reliability can be measured.

> I still only see FICO as a measure of how badly a bank can
> rip you off, not what a great deal they can give you.

FWIW, somehow it seems to me as well that there is some kind 
of commercialized push to get people to take on debt (with 
crappy interest rates) to boost their score. Nonsense. Given 
only the two viewpoints, I favor yours (and Skip's and 
several others' here). Namely, keep one's nose clean (debt 
wise), pay one's bills in a timely fa****on, have I guess 
maybe at most two credit cards (paying off balances in full 
each month)*, give it all a few years, and one should have a 
fine credit score. Live within one's means.


*Too lazy to see whether at least credit cards (but no other 
"loans") are still necessary to have a FICO score. 

--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators
strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond.  For all of the other tips and suggestions, see "FROM
THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on
the
Newsgroup.