How Much Is A Credit Score (FICO) Worth?

Credit report is good, but does not tell the whole story. One can have no late payments, but have so little in the way of accounts that their score isn't as high as they'd think. I recently wrote that WAMU offers free access to one's FICO score on an ongoing basis for any of their card holders. And the card has no fee. If getting a new card is not attractive to you, just pay the $8, and get a peek at your score. If it's not all it should be, you have 4 years to work on it.

Joe

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Pay the $7.95.You will know for sure all your financial decisions were right for all the years.Your FICO score is what creditors really look at.If your FICO is good,I doubt they even bother going through your credit report.Do it for "peace of mind"! It is a no brainer.

~Marty~

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On May 16, 12:22 pm, "abby" wrote: The FICO is $7.95

If you NEVER use credit then you can igore your FICO. FICO is a pretty good guess of how likely you are to pay back a loan. If the lender is confident you will pay back the loan then he only needs to charge you for the time value of money and a modest profit. If there is significant question that you will pay back the loan then he needs to charge for loss of principle even if it is only partial and spread over many loans. This is going to cost you more money. If it is likely you will not pay back, he has to charge you a lot. Knowledge is power. If you don't know your FICO and the loan officer does, he can bluff you into accepting terms higher than you need to. Car dealers do this (packing) all the time. Practically the first question a lender will have will be about your FICO. It only makes sense that you know what it is. Sounds like you have lived a decent life. Why not get the benefit?

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Don't worry about FICO. All that tells a lender is how profitable you will be, so they know how badly they can take advantage of you. You have been living just fine for years without knowing your FICO score, so don't waste the $8 to find out. It doesn't matter. When you go for a loan, you may find lenders that worship at the god of FICO. And then there are better lenders that do manual underwriting. Those are the ones that you want to deal with. They will evaluate your history and give you a rate based on how well you have behaved.

-john-

Can you actually ask a bank if they are FICO-driven or if they'll look strictly at your record (credit report, income, etc.) only? I find this response curious, similar to the reply to the refinancing OP who someone told not to bother calling the bank holding the current mortgage. $8 seems a small sum to waste, the resulting knowledge may be pretty valuable. Joe

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"abby" wrote

Federal law now requires that each legal U.S. resident be allowed "one free copy of his or her credit report from each credit reporting agency once every twelve months. This information is available at the only government-sanctioned credit reporting agency-operated website, annualcreditreport.com, by calling 1-877-322-8228, or by mailing the Annual Credit Report Request Form." (From Wikipedia)

I am going to assume that you plan on putting at least 20% down on this second home. I just wouldn't feel good making suggestions to a stranger, whose financial situation is almost unknown, here unless you plan on this.

I think knowing your FICO or its approximate value would be useful to you right now, if only to help educate you and yours on the loan process today. Googling for {"automated underwriting" "percent of lenders"} turns up reports that somewhere around 90% of lenders today use automated underwriting which very likely means FICO is a large part of the input to the decision-making process. Myfico.com itself states that 90% of the "largest U.S. banks" use FICO. The automated-FICO approach is said to be less expensive to lenders, and it cannot discriminate by race or gender. I have yet to find reports that lenders that use manual underwriting are somehow superior, except maybe in very unusual cases. I doubt that banks that use manual underwriting always offer lower mortgage interest rates. I think it may be just the opposite, based on reading about manual underwriting today. I would welcome citations from others, either way.

I would do three things now:

1. Try the estimator at
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2. Read further about what determines the FICO score at
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   . Also read more at myfico.com and at sites found by googling about what sort of credit score range is necessary for the best interest rates. Off the top of my head, I believe anything higher than 750 or so will get you the best rate.
3. Make sure you can afford this house. Not to be presumptuous, but a flag went up when you indicated that one of you was retiring and yet planned to seek a mortgage for another house.

It sounds like you'll be fine, but why not get more definite peace of mind using the tools above?

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That is just it...wasting money, no matter how much, is not a wealth building strategy.

And how would the FICO score matter at this time. Will the OP say, "hey, my score is really good, so I'll make 2 late payments?" If the OP has been behaving, the score will be good enough. If they haven't been behaving, then they may not get the loan. In any case, with a loan pending in the near future, the OP is going to want to behave well and not make any late payments. Knowing the exact score shouldn't change their behavior, and if their behavior doesn't change, then they don't really have a need for the score. Save the money, even if it is only $8.

-john-

What do you mean by "card"? Credit card? ATM? or just any checking/ savings account?

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Sorry I wasn't clear. A credit card. Don't know the APR (as I never carry a balance) but there is no annual fee.

Joe

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Did you read the OPs post? He won't be making any late payments because he has no debt. His real question is not whether or not he should spend $8 on getting his FICO score, but whether having no debt for 13 years lowers his score, thereby making a future loan more expensive. Would it be prudent if he had a small loan oustanding on which he is making regular payments? Of course, if this is the answer to the question, $8 seems trivial.

Elizabeth Richardson

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Don't bother buying your credit score. When it comes time to make a loan, just about any lender you can name will tell you what your score is when they check it. They will all probably say something like "I'm not supposed to show you this, but..." and then show you your credit report (along with the score) and start asking you questions about any minor discrepancy on it in order to scare you into thinking your score is very low. :-)

Without a loan since 1995, you are what the car industry (and possibly others) calls a "ghost". You have no FICO because there isn't enough data to determine it. What this means is that you will have to present documentation proving that you will be able to pay off the loan, no signature loans for you. :-)

So, when you ask how much a (good) FICO is worth, the cost you should be referring to is the cost of maintaining some debt so that there will be data for the FICO system to work with. If you want an easy time of it when you are ready to buy that house in four years, you should borrow some money now (a credit card maybe?), and make minimum payments, but always on time, for the next four years, then pay the loan off before buying the house. So a good FICO will cost you five to ten thousand dollars over the course of then next four years, and all it will get you is less hassle when it comes time to buy that house.

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"Daniel T." wrote

Are you sure about this? Because I can find nothing to support it. From my reading, just having credit cards and utility bills for a long enough time will yield a FICO score. Plus now Fair Isaac offers lenders a second automated way for determining an applicant's desirability, when said applicant hasn't a long enough history, such as (per one web site) immigrants, young people, and the recently divorced.

Small aside: I would not trust car dealerships to apply any sort of fairness to applicants when it comes to loans. Car dealerships are notorious for financing schemes based only in how big a sucker the customer is.

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OP is buying a home in 4 years. Getting the score then will be too late.

No FICO? You are sure of this how? My credit report shows accounts closed up to ten years ago, so it depends what kind of loan that was, paid off may not mean the account was closed, too.

$5-$10K?? Minimum payments? I maintain the $8 may be money well wasted, but paying that kind interest is over the top. Only OP knows what his report shows. If he has no active accounts, so a pretty empty credit file, and if that reflects in a poor FICO, he can open one card, maybe through his regular bank, and make purchases each month, paying in full every month. No need whatsoever to pay the interest. In fact, when you see my credit report, for a certain card it shows balance $5K, past due $0, terms $84/mo. The balance is a monthly snapshot, not an indication that credit is carried month to month.

Joe

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It seems to me that getting his score now is pointless. How would the information benefit him?

Anicdotal evedence. I dealt with a few customers who had no FICOs when I was selling cars. They had no recent loan history, no data to work with, so when the report was run, the FICO was literally blank (not 0, but blank.)

By the time the OP is ready to buy the house, he will have gone 17 years without a loan payment. No late payments, but none on time either. The FICO is supposed to be a measure of how likely you will make your payments on time, so how can that be determined in his case?

Not a poor FICO. As I understand it, a person gets a poor FICO by not paying his debts on time, therefore someone who hasn't had debts can't have a poor FICO.

None of us know for sure of course, because the formulas for calculating FICO are secret, however it is in many people's opinion that having some debt (an installment loan for exampe) for some time will help raise your FICO (assuming you make your payments on time... not early, but on time.) From

for example: "In general, having credit cards and installment loans (and paying timely payments) will raise your credit score." Note, they do not say paying off loans early helps raise your FICO, they say making timely payments does it.

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I had a Providian Visa card, and they were later purchased by WaMu. So I can access the free FICO score (TransUnion) from the web site. As with credit reports, you have three FICO scores.

Brian

You don't have to have a loan to have a FICO. I didn't have anything but credit cards up until I bought a house, and I certainly had a FICO. They base it on any credit situation, including credit cards and revolving charge at stores (pretty rare these days).

Brian

For one, it would confirm your suspicion that he "has no FICO". If that's the case, he can work on a plan to get it going. If he has one, he'll know the number. Knowledge is power. Whatever he discovers, it's a data point. Kind of like having your cholesterol tested even though you are 160LB, don't smoke and appear fit as a fiddle.

fair enough, but this is the first I've heard such a thing. I have no evidence to the contrary.

Well, the myfico site's wording is vague enough. I think paying one's credit cards in full helps to raise FICO scores and costs nothing.

Joe

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In what way is a having and using a credit card not a loan?

Elizabeth Richardson

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Are you saying that if he has no/low FICO he should behave differently over the next four years than if he has a high FICO? If so, what would those differences be?

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