I have to admit that I had to check the publication date on Newsweek's story about high credit scores. Given what's included in the story, I figured it was written about two or three years ago. Nope. It was written just yesterday. When you read the story, you'll see why I was wondering about the date. The first two paragraphs read like a throwback to yesteryear.
From Newsweek:San Diego banker Henry Li, 27, is paying for his 3 Series BMW on a credit card that has been charging him less than 2 percent interest—for more than three years. He puts his monthly expenses on another card and gets 5 percent cash back on his gas and groceries and 1.5 percent back on everything else. He's always sorting through offers for great discounts on cable service, cell phones, mortgages and credit cards. Sometimes he calls his card issuers and raises his credit limits just for sport.
Why? Li lives the freewheeling life of a person with a high credit score. Break through 750 (on the typical range of 300 to 850; Li says his score is roughly 750), and it's as if you've gotten the keys to the kingdom. Especially now, with wary lenders tightening credit for most would-be borrowers, life is good for the credit-score elites. They still face a broad array of zero percent credit-card deals, mortgages at rock-bottom rates and other gimmes that B and C borrowers can only lust after.
Read the entire story here.
Friday, May 1, 2009
The New ‘700 Club’
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36 comments:
Wow... I'm above 750 and have no keys to the kingdom. They must have been lost in the mail.
arrogance ? ignorance ? Either these people have more money than they know what to do with, or they are headed for trouble like the rest who worship at the alter of the great FICO.
Yes. Where are the keys to the kingdom??
Hey, CM, thanks for posting this. I suspected this when i was going through several other publications and websites and some other blogs you posted. Basically, the rumor is that people with a score over 720 can get stuff. I really don't know what to say about this, but I think that people are depending on scores too much. We are humans, not numbers. Credit scores are even spreading to insurance and cell phones. Can you imagine that? People have to pay higher insurance and may even have difficulty getting cell phones just because their credit score sucks. I think honestly this is just bullshit. Lucky, in California, there is strict legislation that bars insurance and other companies from using credit scores to determine eligibility. Neverthless, I dont think judging people by their credit score is being fair to everyone. Many who pay on time and have never defaulted or never missed a payment are getting their credit limits cut off, accounts closed, just because they were a few points less than the "so called glorious 720". In the future, Credit scores may determine if you can or can't buy anything or do anything. The FICO score company, Fair Isaacs, is now, i think, trying to lobby to get legislation to have the score formula they use to spread to other industrial sectors. Makes sense, if more people depend on the scores, they make more money. Isnt that scary for you guys? MOst of us dont have 720, much less 750.
Boy you hit on a subject that will surely generate lots of comments, Marcus. Good going.
~Don
During the past three years, I've worked on my credit scores. I'm well aware that many of us micromanage our scores. And, frankly, I wish it wasn't so. But because these lenders -- at least in the recent past -- assigned so much weight to scores, I figured it was worth maximizing my scores.
When I finally get the memo that scores are no longer as important, then I won't worry about them so much. Or, when I have so much money that credit is totally useless to me, I'll stop worrying about them.
Until then, I'll keep paying attention.
Finally, forgot to mention in the story: I get a small commission if anyone uses one of the FICO ads around my site. Full disclosure!
That one guy a couple of weeks ago really spooked you...tee hee...have you heard from him recently? I haven't seen anything in reading the comments that would indicate he is still on your case. You handled him very professionally.
Kudos.
~Don
My FICO has been ranging from 789 to 798 and Direct Merchants has just cut my credit limit from 10k to 5k.
Direct Merchants ruined by HSBA after buy-out.
~Don
It was a good point, though. Full disclosure when I do have a financial interest from FICO is a good thing. Better to disclose than not.
I have absolutely no idea what my FICO score is, I've never checked it, I'll never pay to check it. I have more credit than I'll ever use, and even though we charge everything, we don't have to, we do it for the points & rebates and simplified accounting. We never finance a car, we buy - for cash - used. If we don't have enough money, we don't buy. The only exception is our home. Our home is the only debt we have and even that we bought "way under our league" according to the broker and mortgage company. Using revolving credit is, in my view, the exception to the rule, something you resort to after all other possibilities have been exhausted, or if you have a clear and simple leverage position in which you'll use credit to obtain goods or services that will you can use generate at least 10X the cost of your credit.
I'd rather drive a 10 year old car that smells like a dog than to be a slave to FICO obsession.
agree with you anon. Have a current 830 FICO, use credit only occasionally, currently building house out of pocket, and my truck is 10 years old as well. Credit is necessary evil, but sounds like you have if figured out.
Here's what I am thinking.
Use credit sparingly, don't carry balances, and don't miss payments. And do this for a good period of time. My guess is that scores are generally high for those who do this. Not a whole lot of need to check FICO scores.
I drive a lowly CPR (Certified Previously Rental) from 2003, and my last FICO score was 792 as of Jan. 2009.
Not only would I expect you to get a commission if I used one of the MyFico links. I'd specifically use the link so you DO get the commission.
Does anyone know what Suze Orman is talking about here? This is a post from her Twitter account:
"YES YES YES always pay your most recent debt first -- if you want your FICO score to go up - I know does not make sense - but true"
http://twitter.com/SuzeOrmanShow/status/1664966864
No, but I know what part of her body she's talking from.
If I'm not wrong, Suze has a theory that what she calls "stale debt" destroys your FICO score.
Interesting. Never heard of that theory. Do any of my readers know how this works?
How would the PIFullers tell which debt is stale?
I imagine her theory has to do with balances that are carried for a period of time, V. I doubt her theory has anything to do with those who pay in full.
Well, any debt with the PIFullers is stale, so they pay it off right away anyway.
PIFullers = a new term?
;-)
I wonder if Suze meant to PAY OFF the most recent debt first. In other words, ZERO it out.
And let the stale (old) debt show a little history of paying, as long as it is done on time.
Could it be that?
That could be it, V. Not sure, though. Just grasping for straws myself.
Anon @ May 1, 2009 9:28:00 PM EDT states that Suze's theory of stale debt destroys FICO scores. Well, I don't know. "Destroy" is a strong word in this case. Maybe it PREVENTS better FICO scores?
Not sure. I really started paying attention to Orman just recently. Don't know about much about her theories -- which is why you'll often see me asking my readers about her.
I don't know much about Suze either. I wish I had time to watch her show, but I have other distractions to keep me busy.
Not to push you to the other thread (Ok, I am), but if we want to keep chatting about Suze, we should do it here.
http://www.creditmattersblog.com/2009/05/suze-orman-says-that-emergency-planning.html
I am about at 715-720 and just received rate hikes on all my cards as well as credit line cuts on the two cards I carry balances on...based on my recent conversations with Bank of America it really makes no difference whatsoever my credit score is/was/will be. I have been completely disabused of the importance of FICO credit scores when it comes to c-cards.
"Especially now, with wary lenders tightening credit for most would-be borrowers, life is good for the credit-score elites"
I remember reading somewhere that what is changing is the cutoff fico scores for opening accounts. If a 670 fico was good 2 years ago, then a 710 fico is needed today. Which is in line with what the article said.
Stable banks want to keep good customers. Unstable banks will do across the board CLD's, APR hikes, ect, without good reason. The most important thing we can do is reward good banks with our business, and avoid the unstable banks.
You are your credit score
http://tinyurl.com/dhfaam
Perhaps credit scoring is the mark of the BEAST!! 666, anyone?
Anon, nice.
Yeah, if you have a 666 credit score, as far as lenders are concerned, you do have the mark of the beast. :)
I agree with Tech. Need to get that score up or down -- but get rid of that 666. ;)
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