I'm mad. Checking my FICO score from one of the 3 major credit bureaus, I see a score much lower than I expected. Upon review of the factors that impacted my score most, are 2 new factors I have never seen before. Both center around the idea that my home loan has too little credit available on the loan. Each just says it differently.
My home loan is a refinance. The financed amount does NOT reflect the value of my home. Therefore the "available" credit is technically much higher as you calculate my equity into the picture. In addition, as a refinance, there wasn't a down payment. I did that on my initial loan many years back. Since they know many homeowners recently refinanced, it's like they want to help credit lenders charge consumers more to borrow credit. They stack the chips against us. The fact I pay my bills on time and have for many years now and that I have zero negative marks apparently has less weight than my "newly refinanced mortgage". It's absurd and unfair.
2007-10-23 17:40:58 · 5 answers · asked by stoptheinsanity_73 3 in Business & Finance ➔ Credit
Credit Bureaus, mandatory auto-insurance, the IRS, multiple overlapping taxes... these represent organizations & legal requirements that are proving time and time again that there are not enough protections in places for the average citizen. Remove the "power" given to them or put in place better consumer protections.
2007-10-23 17:57:55 · update #1
The age of the loan is about 2 years now. Since that time my score has gone up and now back down. I have no recent credit requests, no bad debt, and all payments are ontime. The only thing new is their 2 impact factors that didn;t appear previously 2 years ago when my home loan WAS new.
The different scoring methods sound far more complicated than it seems they should be, How would any consumer ever understand the impact on their credit when the playing field seems to change under their feet. Keep it simple: I pay my bills ontime. I have no bad debt. I agree, base it on available credit, but don't add new reasons to lower my score conveniently around the time of the mass refinances in the past few years. Something is fishy.
2007-10-23 18:22:49 · update #2
They work for the banks. Who else profits from there services?
2007-10-23 17:44:45 · answer #1 · answered by Anonymous · 1⤊ 2⤋
The credit bureaus are no more than repositories of financial data supplied from a wide variety of sources, from lenders to collectors to courts to tax agencies. Any entity needing the information pays for a report. They have no prejudices. They are not malicious.
The score is computed by a third party, Fair Isaac (FICO), Beacon, etc., not by the reporting bureau. There are a lot of models used to determine scores. I arrange loans every day and look at a lot of reports, and the scores vary wildly depending on the source and the chosen model. Experian, for example, has over two dozen models to choose from.
A real estate 'tri-merge" combines the three prominent sources (trans Union, Experian, Equifax), so that a lender has the greatest opportunity to see all the factors. A tri-merge can show scores ranging by as much as 100 points or more!
Not to mention, there are auto scores, mortgage scores, unsecured loan scores, etc.
If you refinanced your home, that is, started an all new loan, then your score would have dropped. Any time you borrow money, your score drops. Whenever a credit card balance goes up, your score drops. Paying down balances increases your score. The best scores indicate that the borrower chooses to borrow, but really does not need to. Increasing balances indicate a need to borrow.
IF you did not actually refinance, but merely got a line of credit against your home, your score really took it on the chin. Lines of credit look like credit cards. Large credit card balances drag down scores. A real estate line of credit that opens at the limit increases what the score sees as an rise in the percentage of revolving credit, that is, the ratio of balances to limits. It makes it look like you maxed out a really big credit card.
The value of your home is invisible to the scoring system. It is not part of the available credit equation. Think of it like this: if you have three credit cards at their limits, it wouldn't matter if you have enough in your savings account to pay them off. The scoring system doesn't know about your savings account. All it would see is that your credit cards are at their limits. This looks like you are paying bills with credit cards, or you are irresponsible.
Don't worry. As time goes by, your new loan will "season", assuming you pay on time, and your score will go back up.
2007-10-23 18:12:21 · answer #2 · answered by zealot144 5 · 1⤊ 0⤋
Each credit bureau is a private company. They don't "work for" anyone. They do have to abide by the rules in the Fair Credit Reporting Act. http://www.credit.com/credit_information/credit_law/The-Fair-Credit-Reporting-Act.jsp
Are you looking at a real FICO score or is it a Fako. Equifax is the only one that uses FICO. The other two have there own system and a different scale. If you just want to check your score, MyFICO.com is the best place -- straight from the source.
2007-10-23 17:58:00 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋
Well from personal experience i know what you r talking about. I think credit bureaus work for bill collectors and collection agencies.businesses- anywhere you spend money or finance something even credit card companies. We are trying to purchase a big rig and they turned my husband down because he has no credit built up. They are adding me on tomorrow, to try again but i have a bankruptcy on my credit from b4 him . they also told us his credit wasnt comparable with any loans meaning he has no loans out equivelent to the amount of the truck and thats the other reason he was denied
2007-10-23 17:55:37 · answer #4 · answered by child4jc74 3 · 0⤊ 0⤋
>Their own interests, same as any other monopoly.<
2007-10-23 17:44:28 · answer #5 · answered by Druid 6 · 1⤊ 1⤋