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Posted by Steve Horrillo on April 22, 2006, 11:09 am
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> Jeff Strickland wrote:
> > >> It is odd that you are so poor and have such a good FICO score.
> > >
> > > Income and assets are not used to calculate credit scores, timely
> > > payments and low balances do.
> > >
> >
> > I know that, but as a general rule, people with low incomes also have
> > low
> > FICO scores. Obviously, this rule of thumb is not set in stone. The idea
> > is
> > that life costs money, and if one hasn't got the cash, they use credit.
> > Excessive credit drives scores down. Certainly, one can go through life
> > without using credit, or using credit well, and this is reflected in
> > high
> > scores without regard to the income.
>
> IMHO, the whole credit monitoring industry is flawed for the same
> reasons I mentioned; FICOs have no attachment to income and assets.
> Case in point happened to me last week with a buyer that earned 600K a
> year, but he had maxed out his credit cards to the tune of 50K. His
> debt to income was in line, but he had a bad credit score because he
> had borrowed beyond the 70% of available credit on his CCs. Because
> income and assets have nothing to do with determining the score, the
> credit bureau's solution would be to pay off or bring the CC debt down
> to a 70% level. I had similar case earlier on in my career and I
> handled in a text book fashion (Mr. Customer we need to pay this and
> cancel that...) and lost my client because he was insulted that I would
> make these suggestions. What did I do with my 600K client last week?
> I told him the "credit system is flawed because income and assets"
> story, asked him not to shoot the messenger, got him to pay some of his
> debt off and closed the deal.
In my experience trying to get people approved for Solar Water Heating
systems, I've come across quite a few people with plenty of cash and assets
they don't care nearly as much about credit as the one who has to rely on
it. They take a "who needs them" attitude, yet they don't want to come up
with the cash. A classic example was with a well known pro football player,
Brian Bl.... I couldn't get him financed for a crummy $5000 yet there were
six crazy Mercedes' in the driveway. Yet his brother, also a pro football
player paid cash for his no problem. Go figure.
--
Warmest regards,
Steve Horrillo, Realtor / C.Ht.
MLS Training http://BrokerAgentTraining.com
Join EXIT Realty http://over100percent.com
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