Turned Down Because My Credit Score Was Too High!

If you read my previous blog, The Perfect Credit Score, you may have noticed that I made a rather absurd sounding statement. The statement was, "You can actually be turned down for loans and, especially, for credit cards if your credit score is too high!" Now, before you shoot the messenger, call me names, and think that I've lost my mind take a moment to hear me out. I already mentioned last week that there is no real, tangible value to having a FICO credit score over 780. When you have a 780+ score you are absolutely going to qualify for the best interest rates and the best terms available on any type of loan (so long as your income and job history is there to back up your excellent credit score). At 780 you can even qualify for 0% interest on an auto loan. Any credit score above 780 is just gravy.

There are many people who like to try to take their credit scores up and beyond the 780 range, just for the purpose of bragging rights. However, it is important to be very careful if you are attempting to improve an already excellent credit score. A misstep could actually send your score backwards instead of forwards.

Another potential problem you could experience is being turned down for financing (i.e. a credit card) due to a credit score that is too high. You may wonder why in the world a company would ever turn an applicant down for having a credit score that is too high. To answer that question, let me first pose a question to you. Why are credit card companies in business? The answer is simple - to make money. How do credit card companies make money? They make money through the interest and fees charged to their customers.

In order to have a credit score in the Herculean range (810 or higher) then a borrower is pretty much required to carry a $0 balance on all credit cards. When a card company sees a credit score so high that it indicates that the applicant does not carry a balance on any credit cards the company may not wish to extend credit. The reason why is because statistics show that a consumer with a 810+ credit score is not likely to use the card and, if the consumer does use the card he/she will pay off the balance in full each month. When a customer pays off a credit card balance in full then the credit card company does not make any money. Therefore, some card companies do in fact decide that it is in the best interest of the company's bottom line to deny applications from consumers with credit scores that are too high as well as those applications from consumers with credit scores that are too low.

Now, am I suggesting that you run out and do something to drop your 815 FICO score down to 780? Absolutely not. However, if you already have a FICO score of 780 or higher now is the time to kick back, relax, and maintain that healthy credit you have worked so hard to build. There is no need to try to push your credit scores up any further. Congratulations on your effort. You have arrived! Enjoy the benefits that a life with pristine credit has to offer!

If you have not yet arrived, don't worry. You are not alone. Your current credit score does not have to be your fate. You can take steps toward improving your credit today and, as long as you stay the course, you can be enjoying the benefits of a pristine credit score in the future too! Don't know where to start? Give us a call at 704-499-9696 and one of our credit specialists will point you in the right direction.

The Perfect Credit Score

850 Credit Score

People often ask me "what is the highest credit score that it is possible to achieve?" Before I answer the question, allow me to clarify one point. First, there are consumer credit scores and FICO credit scores. FICO credit scores are used widely by lenders when deciding whether or not a consumer will qualify for a loan. In this article we will be discussing FICO credit scores only. The range of FICO credit scores is from 300 to 850. Therefore, 850 is technically the highest credit score that is possible to achieve. However, there is not a single person alive today with a credit score of 850. Achieving a credit score over 800 is a calculated effort which takes years and years of flawless credit management. Consumers with credit scores over 800 almost always study ways to achieve these astronomically high FICO scores. Scores in the 800s do not just happen on accident.

I will give you some tips below on how to achieve the ever so difficult 800+ score but, first, let me caution you. I am about to make a statement which I, myself, find to be absurd. Still, absurd as it may be, it is the truth. You can actually be turned down for loans and, especially, for credit cards if your credit score is too high! Again, I know this sounds crazy, but I have examples to back up the statement. Check back next week for all the gory details and learn why having a score of 780 may actually be better than a score of 800+. In the meantime, if your desire is still to achieve the highest scores possible here are some tips:

1.  Always pay your bills on time. One single 30 day late can derail your plans to obtain the ever so difficult to obtain 800+ score.

2. Keep your credit card balances between 0% and 1%. On a $10,000 card you would want to keep your balance between $0 and $100 to stay on track for an 800+ score.

3. Have the right mix of credit. Consumers with FICO scores above 800 have proven to the credit bureaus that they manage different types of credit accounts well. Having a mixture of credit cards, mortgages, auto loans, student loans, and other installment loans can help you to move closer to the astronomical 800+ score.

4. Length of credit. To reach an 800+ score you will need to show a long track record (10+ years) of maintaining an immaculate credit report. Beware - applying for new credit can lower the average age of your credit file.

Remember, these are tips on how to achieve a credit score over 800. However, if your current credit scores are currently anywhere from poor to average then your initial plan of attack may be slightly different from some of the tips above. For example, if you do not have enough credit established then it may be beneficial for you to open some new accounts as a way to help establish healthier credit scores even though opening the new accounts would lower the average age of your credit file. Remember, striving to achieve a high credit score is great - a wise investment in your financial future. However, don't drive yourself crazy trying to reach a hard to reach score of 800. Once you have a credit score of 780 everything else is just gravy!

Out of the Box Summer Savings Ideas

Check us Out in

Fort Mill Magazine!

We are featured in the Summer Issue of Fort Mill Magazine! Click here to see the digital copy and check out page 40 for some great summer savings ideas courtesy of our very own Michelle Black. Healthy credit begins with a healthy budget. If your budget is in need of an overhaul then these fabulous tips on saving money may be exactly what you need to give your finances a kick start.

Need tips on how to sell your home ? Don't miss page 34 for "10 Tips to Sell Your Home Fast." Keller Williams Realtor, Jen Mildenberger has some wonderful - not to be missed - advice for you if you plan to put your home on the market in the near future.

So take a minute, check out the issue, and be sure to drop us a line on Facebook or Twitter to let us know what you think.

A New Mortgage Friendly Credit Score?

By Sara Bovat of National Mortgage News. CoreLogic and FICO this week released the FICO Mortgage Score Powered by CoreLogic. This new offering evaluates the traditional credit data from the national credit data repositories and the supplemental consumer credit data in the CoreLogic CoreScore.

This is aimed at increasing the number of mortgage loans that lenders make by improving the quality of their credit decisions on loan applications.

In a question-and-answer session with Asset Securitization Report, Tim Grace, senior vice president of product management at CoreLogic, spoke about why the product can potentially drive the number of the country’s mortgage originations higher.

ASR: A recent FICO quarterly survey showed that bankers lack confidence in the housing finance market. What attributes of this new product can help bring this back?

GRACE: The CoreScore credit report incorporates credit history-related data about potential borrowers and existing customers that was extracted from CoreLogic proprietary databases. The databases represent the largest and most complete collection of real estate and public records in the nation, covering 99.9% of the U.S. population. Rental information and nontraditional lender data are also incorporated into the CoreScore supplemental credit report. Since it is updated continuously, the CoreScore credit report provides additional data to augment the information provided by the traditional credit report companies. The FICO Mortgage Score Powered by CoreLogic is a new score that combines the supplementary consumer credit history from the CoreScore credit report with the credit information that is typically provided by traditional credit repositories. We believe the lenders want to approve more borrowers and we think this score will help them do so in a safer manner.

ASR: What makes CoreLogic’s information analysis more accurate and safer for lenders than traditional credit data?

GRACE: The FICO Mortgage Score Powered by CoreLogic is specific to predicting mortgage defaults. The data that was used to develop the model is from recent consumer behavior. This is why the information better represents how today’s borrower behaviors affect credit risk. In our sample of 300,000 mortgage applicants, the score also would have enabled 3,100 more consumers to qualify to purchase a home at a credit score of 700 or above criteria.

ASR: What change did you make to the CoreLogic CoreScore credit report introduced in October 2011 to further improve accuracy?

GRACE: CoreLogic is focused on increasing the transparency into borrower credit behavior. In addition to the new FICO Mortgage Score Powered by CoreLogic, the CoreScore credit report now contains rental information and alternative credit data. All of the data is seamlessly integrated into a single, real-time credit report.

ASR: How does this product help the prequalification and origination phases of the process? Will borrowers be more likely to prequalify for loans?

GRACE: The new FICO Mortgage Score Powered by CoreLogic was designed for mortgage origination from prequalification to prefunding. Analysis of the new score shows that, for a great many consumers, the inclusion of additional credit data could help them. Over 70% of consumers in our sample scored higher with the FICO Mortgage Score Powered by CoreLogic than they did with scores in general use today, and 24% saw their scores increase by more than 50 points. For borrowers in the 580-619 range or those that are close to a lender’s typical credit score minimum, 45% of that population saw their scores improve enough to meet the credit score threshold.

ASR: How will the new scoring model developed by FICO help mortgage lenders more safely and profitably expand their origination volumes? Does it create more transparency or does it better borrower prequalifications?

GRACE: The new FICO Mortgage Score Powered by CoreLogic uses the same score range as traditional FICO scores, making it easy for lenders to operationalize, and for consumers to understand. The new FICO Mortgage Score Powered by CoreLogic is more predictive than generally available credit risk scores due to a number of factors: 1) FICO extracted predictive value from the incremental data contained in the CoreScore credit report; 2) The data that was used to develop the model is from recent consumer behavior, better representing how today’s borrower behaviors affect credit risk; 3) This model is specific to predicting the likelihood of mortgage default at the point of origination; 4) A single risk score is produced, reflecting borrower credit risk using both traditional and supplemental credit data.

ASR: How does CoreLogic’s data contribute to this partnership with FICO?

GRACE: The CoreScore credit report contains information from the CoreLogic proprietary databases of nearly 1 billion consumer credit transactions. By leveraging this data with the FICO’s expertise in analytics, a series of predictive models will be developed to increase visibility into borrower credit risk. The FICO Mortgage Score Powered by CoreLogic is the first model available in production, which leverages data only available on the CoreScore credit report.

Saving Money - Part 2

Saving Money - Part 2  By Michelle Black

Have you ever found yourself in a place where you have more bills than money? Money shortages lead to a poor credit rating, marital stress, and the inability to provide the things your family needs.  One of the first things you will want to do if you find yourself in a situation where your budget is unbalanced is look for a way to start saving money. We hope today's tip will be helpful.

Tip #2: Ask for your bills to be lowered. Similar to yesterday's tip regarding asking for your credit card interest rates to be lowered, you can also request for many of your monthly bills to be lowered as well.  Try calling your cable company, explain that you have seen some great offers for satellite TV and that you are considering switching services. However, before switching, you wanted to check with them to see if they could offer you a lower monthly rate. While you are at it, ask for your internet service bill to be lowered as well. I have personally saved money off both of these monthly services just by calling and kindly making the request.

Other monthly bills you may be able to get lowered with a request include your cell phone bill (even if you are currently under contract), your lawn care bill, your newspaper subscription, your insurance bill, etc. By calmly and politely making the request you can save yourself a lot of money. When making the request for your bill to be lowered please keep the following in mind:

1. Always be polite and calm. Getting angry will most likely insure that you do NOT get the bill reduction you need. 2. Explain why you need for the bill to be lowered. For example, "I have seen an offer for a better rate" or "I cannot afford to continue making such high payments and I'm trying to balance my budget." 3. Ask for a supervisor if necessary. The first customer service agent you speak with likely will not have the authority to lower your bill. 4. Don't take no for an answer. If the supervisor refuses your request politely explain your reason for needing the bill lowered again and ask "What can you do to help me please?"

Remember to check back with us again for part 3 of our money saving blog series. Saving money can help put you on the path towards a balanced budget and even a healthier credit report! If you need personalized credit or budgeting advice please feel free to give our friendly staff a call at 704-499-9696.

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