Bad news: The new FICO score changes could impact the credit cards you qualify for

[Nature Boy 2.0 8,335]

https://www.cnbc.com/select/credit-score-changes-fico-10/

[Steeleballz 7,550]

 

   I don't really see this as bad news. It's actually seems like good news. Credit scores need to actually reflect people's financial situation. The whole credit rating system is a little weird if you ask me. When somebody who is carrying a lot of debt can get a better score by opening more credit accounts, it doesn't sound like the score is designed for assessing people's ability to pay back debt so much as it is assessing peoples ability to stay in debt.

[Burnt Reynolds 5,058]

48 minutes ago, Steeleballz said:

 

   I don't really see this as bad news. It's actually seems like good news. Credit scores need to actually reflect people's financial situation. The whole credit rating system is a little weird if you ask me. When somebody who is carrying a lot of debt can get a better score by opening more credit accounts, it doesn't sound like the score is designed for assessing people's ability to pay back debt so much as it is assessing peoples ability to stay in debt.

Who actually uses these scores, or at least, gives them any real weight for lending?

 

Credit card companies? Cell phone providers? Renters? For meaningful issuance of credit, it's a minor snapshot, and numerous other financial ratios and instrument possessions wind up far more meaningful.

[Nature Boy 2.0 8,335]

5 minutes ago, Burnt Reynolds said:

Who actually uses these scores, or at least, gives them any real weight for lending?

 

Credit card companies? Cell phone providers? Renters? For meaningful issuance of credit, it's a minor snapshot, and numerous other financial ratios and instrument possessions wind up far more meaningful.

Credit score is hugely big in the car business. 

[Voice of Reason 10,298]

11 minutes ago, Burnt Reynolds said:

Who actually uses these scores, or at least, gives them any real weight for lending?

 

Credit card companies? Cell phone providers? Renters? For meaningful issuance of credit, it's a minor snapshot, and numerous other financial ratios and instrument possessions wind up far more meaningful.

How about every single lending process in America?  Mortgage companies, banks, utility companies, landlords, boat clubs, in addition to the ones you named.

[yuna628 9,547]

42 minutes ago, ALFKAD said:

How about every single lending process in America?  Mortgage companies, banks, utility companies, landlords, boat clubs, in addition to the ones you named.

Yep. Tons of institutions do. If the USCIS proposals go through after the lawsuits, even they will be looking at it. Husband is obsessed with our score now... lol and we started from nothing. 

[Nature Boy 2.0 8,335]

1 hour ago, ALFKAD said:

How about every single lending process in America?  Mortgage companies, banks, utility companies, landlords, boat clubs, in addition to the ones you named.

Everything we do is based on credit score. If you are 730+ little  else matters 

[90DayFinancier 910]

1 hour ago, Nature Boy 2.0 said:

Credit score is hugely big in the car business. 

+ Insurance, employers, banks with existing lines of credit....

 

 

1 hour ago, ALFKAD said:

How about every single lending process in America?  Mortgage companies, banks, utility companies, landlords, boat clubs, in addition to the ones you named.

Boat clubs? 

[Steeleballz 7,550]

1 hour ago, Nature Boy 2.0 said:

Everything we do is based on credit score. If you are 730+ little  else matters 

 

  I think the issue is that the average score in the US falls in the 700 range nowadays. At one time it was difficult to get to that point. Now, a lot of people carrying a lot of debt still have scores of 700+, but carrying debt in and of itself is a risk factor for your ability to pay anything back. If you have a credit score of 730, but you are one broken furnace away from going over the edge, there is something wrong with the system.  

 

  Personally I closed 2 of my 3 credit cards last year because I never use them and then paid off the only loan I had completely. That caused my credit score to go down because I don't have enough debt and my active accounts don't have a long enough record. Silly system. 

Edited January 24, 2020 by Steeleballz

[Voice of Reason 10,298]

11 minutes ago, Steeleballz said:

 

  I think the issue is that the average score in the US falls in the 700 range nowadays. At one time it was difficult to get to that point. Now, a lot of people carrying a lot of debt still have scores of 700+, but carrying debt in and of itself is a risk factor for your ability to pay anything back. If you have a credit score of 730, but you are one broken furnace away from going over the edge, there is something wrong with the system.  

 

  Personally I closed 2 of my 3 credit cards last year because I never use them and then paid off the only loan I had completely. That caused my credit score to go down because I don't have enough debt and my active accounts don't have a long enough record. Silly system. 

Yeah, one of the WORST things you can do to your credit rating is closing an old card.  I once did that with a card I had forgotten about from about 20 years previous.  Saw it on my credit report, and called to cancel it.  A week later, my score plummeted about 75 points.

 

I like the idea that the new scoring looks back two years.  Another frustration I find is that if my CC balance is particularly high one month due to purchases, my score also goes down, even though I pay it off every month.  That's also silly.

[Burnt Reynolds 5,058]

I think there's a lesson to be learned about contextualizing a question after asking it.. no one bothers reading it. 😂

 

2 hours ago, yuna628 said:

Yep. Tons of institutions do. If the USCIS proposals go through after the lawsuits, even they will be looking at it. Husband is obsessed with our score now... lol and we started from nothing. 

And this is for spousal classes as well? 😳

 

Is this a hard check? Or do you submit your history on your own?

 

It's a weird thing to look at because for those who are just re-entering the US (or USC's who've lived in the US and just moved) who either haven't established credit or who dumped their credit lines when leaving, its doubtful the credit score will reveal anything useful.

Edited January 24, 2020 by Burnt Reynolds

[Steeleballz 7,550]

13 minutes ago, ALFKAD said:

Yeah, one of the WORST things you can do to your credit rating is closing an old card.  I once did that with a card I had forgotten about from about 20 years previous.  Saw it on my credit report, and called to cancel it.  A week later, my score plummeted about 75 points.

 

I like the idea that the new scoring looks back two years.  Another frustration I find is that if my CC balance is particularly high one month due to purchases, my score also goes down, even though I pay it off every month.  That's also silly.

 

   I see that too. I like using a credit card for purchases just in case I have to return something. I pay mine off automatically same date every month. I use Credit Karma to follow it and sometimes it will be reported as 0, other times a couple of thousand. I guess the good part is if you don't use credit, it doesn't really matter what your score is. If I was going to refinance a mortgage or something, I'd make sure the balance was low for a few months and just pay cash for purchases. 

[Voice of Reason 10,298]

10 minutes ago, Steeleballz said:

 

   I see that too. I like using a credit card for purchases just in case I have to return something. I pay mine off automatically same date every month. I use Credit Karma to follow it and sometimes it will be reported as 0, other times a couple of thousand. I guess the good part is if you don't use credit, it doesn't really matter what your score is. If I was going to refinance a mortgage or something, I'd make sure the balance was low for a few months and just pay cash for purchases. 

I use my CC because it pays higher interest than any savings account.  Since it is money I am having to spend anyway, and cannot save, might as well make some interest on it.  Lots of protection via using a CC vs a debit card.  I'm hoping this 24-month look-back will keep my score higher when they see the payoff history.  🤞

Edited January 24, 2020 by ALFKAD

[yuna628 9,547]

18 minutes ago, Burnt Reynolds said:

I think there's a lesson to be learned about contextualizing a question after asking it.. no one bothers reading it. 😂

 

And this is for spousal classes as well? 😳

 

Is this a hard check? Or do you submit your history on your own?

 

It's a weird thing to look at because for those who are just re-entering the US (or USC's who've lived in the US and just moved) who either haven't established credit or who dumped their credit lines when leaving, its doubtful the credit score will reveal anything useful.

It is as far as I am aware, I believe it would look at both the sponsor and beneficiary score (though I think in some cases that would be difficult) as well as any loans. The specifics of the rules were not extremely clear when I reviewed the draft documentation and then the full rules before the lawsuits came out. It was for a whole host of visas, would not seem to affect K1s but would affect those adjusting. I would agree that it would be a form of government prying that wouldn't reveal anything too useful, but the better the score would be accepted with a ''positive weight'' whatever that means. But these changes were just one of many in-depth facts the USCIS wanted to know on the new self sufficiency and sponsorship forms. No one really knows what they intend as it's blocked for now.

 

33 minutes ago, ALFKAD said:

Yeah, one of the WORST things you can do to your credit rating is closing an old card.  I once did that with a card I had forgotten about from about 20 years previous.  Saw it on my credit report, and called to cancel it.  A week later, my score plummeted about 75 points.

 

I like the idea that the new scoring looks back two years.  Another frustration I find is that if my CC balance is particularly high one month due to purchases, my score also goes down, even though I pay it off every month.  That's also silly.

Yep, hear him grumping about this all the time. Some months for whatever reason you have a big bill. Why is it such a big deal, especially when you pay it right off?

[Steeleballz 7,550]

2 minutes ago, ALFKAD said:

I use my CC because it pays higher interest than any savings account.  Since it is money I am having to spend anyway, and cannot save, might as well make some interest on it.  Lots of protection via using a CC vs a debit card.  I'm hoping this 24-month look-back will keep my score higher when they see the payoff history.  🤞

 

  You mean the rewards/cash back thingies? I was thinking about getting one that had a good return for groceries.