LET’S TALK FICO

 

FICO is an acronym for Fair Isaac Corporation, and as you well know, it is a ranking system using the numbers from 400 to 800. Your score can actually get to the mid four hundreds and rise up to somewhere over eight hundred. I have never seen a number below 450 and higher than 830, but they do exist, or so I am told.

 

 

Your score is created using a complex mathematics algorithm, whose secrets are closely guarded.  620 are considered marginal, 580 poor, and 720, good to excellent. All lenders, including banks, mortgage lenders; auto dealerships, credit card companies, and many many more rely upon your credit score. It’s just not those though, and in a minute I will bring up two more that may completely surprise you.

 

 

Sometimes other factors have an effect on how your credit is viewed, including current trend in interest rates, higher than average demand for loans and other credit, and the state of the economy in general.

 

 

In the not so distant past I worked for one of the largest subprime lenders, and a large percentage of my loans were stated loans. Of those loans a small percentage actually had the income that we claimed on the loan application. When someone is not able to show their income, or has little to no income, they would be offered a stated income loan. All you have to do will be furnishing a mortgage statement and proof of insurance and that was it. The loan officer calculated what income would need to be shown to make the Debt to Income ratio work and then the loan was submitted. No one even d thought about the consequences of giving a loan to someone who could not afford the monthly payments.

 

 

As long as the borrowers mid score was 520 and above the company would make the loan. It makes one wonder what was used to qualify the borrower, it anything at all. Given that, no one should have even been remotely surprised when the industry imploded.

 

 

So we all know that, credit card companies, mortgage lenders, auto companies, further companies, but it is the apartment owner of the unit you are wanting to rent. Not only do you have to be concerned about what you last land lord has too   say about you, you’ve got to worry about what your credit report says about you. Now that is no big surprise here, but the next group of people jumping in the credit report band wagon are your future employers.

 

 

I have to admit, the first time a prospective employer wanted to check my credit I was a little put off. My credit report, good or bad has never gotten in the way of job performance. My credit is pretty good, but I can pretty much guarantee that if I get it bumped up another forty points my job performance isn’t going to be effected.

 

 

Now armed with that latest bit of information I had to go back and do a mental check and try to figure if my report was responsible for not getting that last great job I was drooling over. I have no idea what future employers are looking for, and what the raised flags are but I can guess. I think we can assume they are looking for signs of irresponsibility that may transfer over to work performance.

 

 

So, if you are job hunting you may want to think about your credit report and see if there is anything you can do to improve it. Since we are on the subject of jobs, you should be aware that employers are also looking at your last ten years of address changes. If you have moved too many times in the last ten years (I have no idea what too many is) then you may have an issue there. Their argument is that it shows too much instability if you have moved too much.

 

 

It's a rapidly changing world we live in and it pays to be on top of things. I think there is one thing we can count on not changing, and that is the scoring system that is used today. I think that is pretty much engraved in stone.

 

 

Good luck and happy reading.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            &nbs