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Back when interest rates were low, Rocket Mortgage incorrectly tanked my credit score. They refused to fix it, which means they were liable for whatever econom

by hedora 3y ago

Back when interest rates were low, Rocket Mortgage incorrectly tanked my credit score. They refused to fix it, which means they were liable for whatever economic damage that causes. When I refinanced, I explained the situation to the other bank's loan agent. They emailed their underwriting division, and the underwriters simply issued an override. Not sure if that works these days or not, but my point is that credit scores are complete bullshit. Hopefully most people will push the button, inadvertently opting out of credit reporting, and that corner of the industry will simply stop existing. Lenders already do more due diligence than the credit agencies do. If you default on a loan, there could be a central record (say, at the court house) of this, and lenders could consult that. That would fill in the remaining missing functionality of the score (and do so in a way that is transparently free of institutional racism, etc).

adrr 3y ago
Besides defaults how would you get precision in a model without any other data? Payment history and total outstanding credit wouldn’t be there. You would have to trust the customer to provide you with all these details. Without precision in the risk model, cost to the consumer will go up to mitigate risk. Someone who has paid all their credit lines for 10 years but and has never defaulted has the same risk profile as a person who has frequently missed payments.
JumpCrisscross 3y ago
> credit scores are complete bullshit You can also juice it up or down by over a hundred points by accumulating and then rapidly paying down balances.
- galoisscobi 3y ago
  > juice it up or down So what here determines if the score goes up instead of down? I’m planning on getting a mortgage soon but wife’s credit score is in high 600s. If we can make it past, 720, we are told we’ll get a better rate. So I’m curious as to how to bump up the score.
  - toast0 3y ago
    There's lots of articles everywhere, but the basics are: make sure everything is paid on time; if you have any earned negative items, see if you can get them removed by asking nicely etc. Then there's things like age of oldest account, average age of accounts, etc. You may be able to add her to your accounts to improve this factor, if your accounts are older than hers. Then balances. You get dinged for having a balance on too many accounts. I think you also get dinged for having zero balance everywhere. I think 'ideal' is 3ish cards with balances (you can (and should) pay the whole balance every statement, reporting is usually done just after the statements). Highest ever balance should be less than credit available or you get dinged; ask for credit increases on cards where you ever went over the limit. Total balance shouldn't be more than some % of total credit, I think 35%? You also get dinged for high % current balance on any one card. Again, you can add her on high limit, low usage cards to help her score. She'll get more score points as a joint account holder than an authorizer card holder. You get dinged for recent (6 month?) credit inquiries, but inquiries are grouped, so if you apply for new credit, try to get it all done in a few days; mortgage inquiries have longer to be grouped. If you know when your creditors do reporting, you can adjust your payment dates to tweak things. You might make a payment to your credit card before the statement closes even in order to show a lower utilization % and that could move your score a lot depending on details.
  - PascLeRasc 3y ago
    There are communities where you can rent someone else's credit score as an authorized user.
  - JumpCrisscross 3y ago
    > I’m curious as to how to bump up the score Find a way to pay down revolving balances to zero. If you have cash sitting around, great. Otherwise borrow from a 401(k), friends or family, send non-reporting payments in late et cetera. Running balances rapidly to zero tends to cause a 50 to 100 point bump. After you’ve got approval, rebuild the balance and use that credit to repay the loan. In summary: transfer the debt from reporting to non-reporting sources. If you’re thinking longer term, find bullshit collateralised reporting loans and take them out. Securities-based loans, HELOCs. Low rate. Manufactured borrowing. But it’s a credit line paid back on time. The algorithm likes those.

by hedora 3y ago

adrr 3y ago

Besides defaults how would you get precision in a model without any other data? Payment history and total outstanding credit wouldn’t be there. You would have to trust the customer to provide you with all these details. Without precision in the risk model, cost to the consumer will go up to mitigate risk. Someone who has paid all their credit lines for 10 years but and has never defaulted has the same risk profile as a person who has frequently missed payments.

JumpCrisscross 3y ago

> credit scores are complete bullshit You can also juice it up or down by over a hundred points by accumulating and then rapidly paying down balances.

galoisscobi 3y ago
> juice it up or down So what here determines if the score goes up instead of down? I’m planning on getting a mortgage soon but wife’s credit score is in high 600s. If we can make it past, 720, we are told we’ll get a better rate. So I’m curious as to how to bump up the score.
- toast0 3y ago
  There's lots of articles everywhere, but the basics are: make sure everything is paid on time; if you have any earned negative items, see if you can get them removed by asking nicely etc. Then there's things like age of oldest account, average age of accounts, etc. You may be able to add her to your accounts to improve this factor, if your accounts are older than hers. Then balances. You get dinged for having a balance on too many accounts. I think you also get dinged for having zero balance everywhere. I think 'ideal' is 3ish cards with balances (you can (and should) pay the whole balance every statement, reporting is usually done just after the statements). Highest ever balance should be less than credit available or you get dinged; ask for credit increases on cards where you ever went over the limit. Total balance shouldn't be more than some % of total credit, I think 35%? You also get dinged for high % current balance on any one card. Again, you can add her on high limit, low usage cards to help her score. She'll get more score points as a joint account holder than an authorizer card holder. You get dinged for recent (6 month?) credit inquiries, but inquiries are grouped, so if you apply for new credit, try to get it all done in a few days; mortgage inquiries have longer to be grouped. If you know when your creditors do reporting, you can adjust your payment dates to tweak things. You might make a payment to your credit card before the statement closes even in order to show a lower utilization % and that could move your score a lot depending on details.
- PascLeRasc 3y ago
  There are communities where you can rent someone else's credit score as an authorized user.
- JumpCrisscross 3y ago
  > I’m curious as to how to bump up the score Find a way to pay down revolving balances to zero. If you have cash sitting around, great. Otherwise borrow from a 401(k), friends or family, send non-reporting payments in late et cetera. Running balances rapidly to zero tends to cause a 50 to 100 point bump. After you’ve got approval, rebuild the balance and use that credit to repay the loan. In summary: transfer the debt from reporting to non-reporting sources. If you’re thinking longer term, find bullshit collateralised reporting loans and take them out. Securities-based loans, HELOCs. Low rate. Manufactured borrowing. But it’s a credit line paid back on time. The algorithm likes those.