Credit and Credit reporting...

[Left Seater]

Credit, credit reporting and FICO scores are just getting stupid. An example or a rant, your call.

So my in laws are aging and need more health care than their little town can provide. As such they spend a crap ton of time driving to bigger towns for Dr appointments. So recently my wife and I have discussed having them sell their casa and move to San Antonio. Whatever cash they get from their home sale we will use as a down payment for a place here. Then my wife and I will get a mortgage for the balance in our name. Number of reasons to do it this way that don’t really matter to the story.

So this morning I roll over to the local bank branch that currently holds our mortgage. I sit down with the 20 something and we do a bit of talking and we start talking rates. We want a pre-approval for x amount so the in laws can start looking. Bank dude says he will need to pull my credit to get accurate rates. I agree and in 5 minutes or so he says we can do Y percentage rate. I point to a sign and say I want that rate on the sign. He says I don’t qualify for the sign rate. I know my credit is very good and ask him why I don’t qualify. He explains that my recent credit usage is too low and that I am paying back my current mortgage ahead of pace. I scrunch up my face and ask him to explain why that doesn’t make me eligible for the lowest rate. He says that I need to borrow more like on cars or a boat or something. Further that the bank isn’t making as much money on me as they expected on my current mortgage since I am paying it off early. He asks when I last purchased a car. I told him 2 years ago. He said well there is no finance record of it. I explain saving money and then paying cash for something. He scrunches up his face and says I thought only my parents did that.

At that point I stood up thanked him for his time and headed out. He followed me outside like a used car salesman trying to salvage a sale at month end. I gave him my card and told him to call me only when he could offer me the sign rate.

Screw banks and FICO for screwing with credit scores to give the best rating to those who use the most. Also screw that kid for implying I was old.

Made an appt with USAA for tomorrow and I doubt they say the same thing.

[Rooster]

USAA rocks. Been with them from the day I started driving as a 15 year old in Japan. Parents had it first and then I got it, now my kids use it too.

[Mikey]

I'll be interested to hear what USAA says. We use them for all of our insurance. IMO, nobody else comes close to their rates and service (for insurance at least). I wouldn't be surprised if their mortgage services are of similar quality.

Our first mortgage and a HELOC are through with Quicken Loans. We've had very good service with them as well. They're affiliated with Schwab and we probably get good attention there because of our fairly substantial Schwab accounts. Nice thing about Quicken is you can do pretty much everything online and over the phone.

Credit rating scores are a mystery me. I have about half a dozen services (banks, credit cards, etc) that offer free monitoring of my score. It can be different by 40 or 50 points depending on which service they use (Equifax, Experian, whatever). And the ones you see aren't necessarily the same ones that finance companies get from them. Ponderous.

BTW, I put a freeze my credit when the Equifax fuck up happened. Any time I want to apply for new credit I have to go online and temporarily remove the freeze. Kind of a pain in the ass but worth it for the security.

[Left Seater]

I will let y’all know what happens at USAA.

I am just shocked that a bank wouldn’t consider me for their best rate. The only debt my wife and I have is our mortgage. We are on track to pay off that 30 year note in 16 years, which is 9 years from now. We probably have 7-8 credit card and use 2 or 3 a month and never carry over a balance. We pay damn near everything on a card, as cash gets us zero airline miles.

But somehow the guy down the street with two car payments, a mortgage, student loans and $20K in credit card debt is a better bet for the bank. Never mind if he misses work for two weeks will be filing bankruptcy. But whatever.

[Mikey]

Surprised to hear of your bad experience with Quicken. But not that surprised. Our refinance was done probably 8 or 9 years ago. We shopped around and got a very good deal on interest and basically no closing cost. Everything went smoothly and quickly. I’m thinking the game has probably changed a bit since then, though.

[Mikey]

Funny - for some reason I thought it was a good thing to get your limits increased. I bumped a couple of cards up to $10k and $7.5k a couple of years ago partly for that reason.

[Mikey]

Got it question for you ‘Spray. How does a HELOC affect your credit? We took one out about 15 years ago and, while gradually paying it down, have bumped it back up several times for home improvement projects. It’s never been anywhere near to our (theoretical) equity though. It’s about 80% maxed out now. Thinking about paying it off now because the tax advantage has gone away (thanks GOP).

I checked out one of those credit score calculators the other day and there was no option for paying off a HELOC.

[Derron]

I don't even know what our credit score is. We have one credit card for air miles only. Pay it off every month. No debt except for mortgage and that will be gone maybe September and no later than March of 2019. Paying cash for the next house.

I had some debt 10 years ago on construction equipment, thorough a private lease lender. He ran one credit check in 5 years. Paid that all off 2 years early. Still had to pay the full value but cleared the debt. Just makes life a lot easier not worrying about a fucking credit score.

[atmdad]

LS, it sounds like shutyomouth knows what he is talking about, you got fucked for being too good.

Use that to your advantage. See what the offer from USAA is and take it back to the 20 something snotrag and ask him to beat it, ask for his/her 30/40 something manager. Insinuate that USAA could take on your primary mortgage at a better deal as well. You just don't want to deal with the pita paperwork but if need be, you will walk.

[Screw_Michigan]

It is amazing that Equifax is not only allowed to stay in business but continues to receive government money. Only in Trump's America.

[Left Seater]

Screwy is kinda correct. For as much control as the credit reporting companies have over people’s lives they should have their shit straight. As many errors as they have plus their lax security means they should be replaced. But they won’t be. Politics has zero to do with it though.

I do have quite a few credit cards and some with high limits. If a credit card company wants to give me 100,000 for spending $5K on their card over 3 months I will certainly take those miles off their hands. My wife and I also put every thing we spend on mileage earning cards and then pay them in full each month.

Same for my business. Most of my accounts payable go on a mileage earning credit card. Then the business pays those in full each month. And despite them being business cards since I am listed as the principal they also show on my credit report. Due to the business cards mostly I prolly have access to a half million in credit via credit cards, but never carry a balance from month to month. I guess based on what Papa is saying this is hurting me.

I won’t intermingle business spending with personal spending when it comes to credit cards so I don’t see closing cards as an option.

[Goober McTuber]

Here's the thing, though. Up until EFX got hacked, Trans Union and Experian's files were even more fucked up. All three bureaus have a ton of mistakes. The biggest culprit OF the mistakes, however, are the companies reporting the information. If they report something wrong, nobody knows or can know until it shows up when the consumer is trying to get a loan.

The real problem is trying to get those mistakes corrected.

[Mikey]

I had a medical bill once for a couple hundred $$ that, as happens a lot with medical bills, didn't get sent out until months after the service was used. By the time they sent it I had moved out of state and somehow it never got forwarded to me.

I never even knew that this charge existed until a few years later when I applied for a loan. It had gone to collection and showed up on my credit report. I spent many hours trying to run this thing down and pay it off. When I did pay it off I still couldn't get it taken off my report. I tried the reporting agency, the collection agency and the original creditor to no avail. That thing followed me around for seven years.

Fuckers.

[Left Seater]

So off to USAA I went this morning (their HQ is here in town.) First thing out of the young ladies mouth is that you for your continued business Mr Seater. I smile and we sit down. I explain exactly what I want to accomplish today and why the reason for the mortgage pre-approval. She takes a few notes and then says no problem. I ask about rates and she says that rates are variable. She explains they will need a bit of info and asks if she can access my bank accounts (most of which are held with USAA.) I fill out a bit of paperwork and then she says that we would qualify for their best rate, which is about a .25% below the sign rate at the bank I visited yesterday. Within about an hour I have a pre-approval letter for the amount we were looking for.

I ask her about the likelihood of USAA selling this mortgage if we were to go all the way thru the process. She says that it will be very likely for this mortgage. I ask her why and she explains that USAA has what amounts to two books of business. There is one book of business for officers and 1st generation dependents with above average credit. There is a second one for enlisted and 1st generation dependents with average or below credit. This allows them to offer better rates to officers and those with better credit. She explain that our mortgage would be in this group and since this group has very few late payments, write-offs, or foreclosures that it makes these mortgages very desirable to other banks and a money maker for USAA from these banks. Apparently, USAA makes some pretty serious coin selling the servicing of mortgages to banks that need to balance their riskier portfolios.

Makes sense I guess, I don't really care who I have charge my card for the monthly payments.

Screw the bank around the corner.

[Derron]

But somehow the guy down the street with two car payments, a mortgage, student loans and $20K in credit card debt is a better bet for the bank. Never mind if he misses work for two weeks will be filing bankruptcy. But whatever.

This would be most every millennial around. They must have two nice cars / SUV's and toy haulers, boats and their "dream home" at 32. They will miss that two weeks when they take the time off to go on their winter Mexico trip because all their "friends, OMG" are.

I know some of them make some pretty good money and they spend it as fast as they make it. One of my sons friends are living with her father so they can "save money" for their dream home while they make 2 car payments on 50K SUV's, a " premium" boat and the Cabo trip last month. They have by their own admission a 2 paycheck life style.

Crazy shit.

[Left Seater]

If taking a trip to Cabo is about to break someone they have a bunch of issues.

My wife and I are on a two paycheck kinda life as well. We basically spend one and save/invest the other. One thing I will never understand is the new car every 24 months and or leasing a car. Cars are certainly designed to last more than three years so why throw them out in that time frame?

[Goober McTuber]

One thing I will never understand is the new car every 24 months and or leasing a car. Cars are certainly designed to last more than three years so why throw them out in that time frame?

The problem is not that the car will last more than 2 or 3 years. The problem is the initial depreciation is so much larger than the depreciation in years 4, 5 and 6. Hell, it's much larger that the depreciation in years 2 and 3. And when you lease, you are financing the depreciation.

[Goober McTuber]

One thing I will never understand is the new car every 24 months and or leasing a car. Cars are certainly designed to last more than three years so why throw them out in that time frame?

The problem is not that the car will last more than 2 or 3 years. The problem is the initial depreciation is so much larger than the depreciation in years 4, 5 and 6. Hell, it's much larger that the depreciation in years 2 and 3. And when you lease, you are financing the depreciation.

But you also have to worry about miles all the time. I leased once and just didn't like that feeling, though I'm sure they've got lease deals that are more generous with the mileage now. Besides - I'd rather take that money and spend it on things like fried chicken.

You've always been able to change the lease miles. 12,000/yr, 15,000/yr, 18,000/yr. I used to be in the car business.

[Left Seater]

At least you’re wearing clothes in this pic.

[Goober McTuber]

That guy is wearing clothes. And he should be.

[Mikey]

That guy is wearing clothes. And he should be.

So you're the shaggy one without clothes?

[Goober McTuber]

That guy is wearing clothes. And he should be.

So you're the shaggy one without clothes?

That's your mom. I'm the shaggy one in the beach picture.

[Mikey]

My sainted mother, God rest her soul, passed away 20 years ago.

Goobs will never, no matter how hard he tries, be able to take her place.

[Screw_Michigan]

This would be most every millennial around. They must have two nice cars / SUV's and toy haulers, boats and their "dream home" at 32. They will miss that two weeks when they take the time off to go on their winter Mexico trip because all their "friends, OMG" are.

Complete bullshit

[Dinsdale]

Complete bullshit

Many of them even own a washer/dryer set.

[Derron]

Complete bullshit

Many of them even own a washer/dryer set.

And are making a payment on it from Aarons too.

[Derron]

If taking a trip to Cabo is about to break someone they have a bunch of issues.

My wife and I are on a two paycheck kinda life as well. We basically spend one and save/invest the other. One thing I will never understand is the new car every 24 months and or leasing a car. Cars are certainly designed to last more than three years so why throw them out in that time frame?

I used to do that, but haven't had a car payment now in about 18 years.

I had some equipment and vehicles financed about 10 years ago. All in the business, and one personal vehicle was paid for and have been for 20 years. I started working with a guy who had access to private money and had set up a leasing company. I did a couple of 350K golf course equipment deals with him years ago and used him for our business. He called them leases, they met GAAP standards for leases, but they were basically conditional sales contracts. $ 1 residuals. Awesome. My accountant loved them.

I have not made any kind of vehicle payment in 10 years. I drive older well maintained vehicles. The car industry and society in general has successfully trained the American public that you will always have a car payment, and that you have to have a near new vehicle at all times, and the dealers and finance companies are great financing negative equity into your next car loan. I have no idea what a car payment is these days, but the simple thought blows me away. As the obscene price of new vehicles continues to rise so will the financing of them.

[Derron]

I wouldn't be shocked at all if the auto industry pops it's bubble like the housing industry did a few years back. The majority of the public doesn't give one fuck about the actual price of the vehicle - only the monthly payment. That's just sad...

It has put the newer used car / vehicle market in a much better position though. The same comparable vehicle as far as miles and condition is about double the value it was 6 years ago. As soon as a vehicle cannot be financed by REASONABLE sources, it's values plumments and you can score it for cheap. I have a 02 Explorer with 173K miles on it. My cost of operation on that is about $ 239 a month right now all in not counting insurance. New transmission 30K ago, all new wheel bearings, new tires, getting new trans fluid in it today. Easily another 50K miles out of it. Paid 7K for it in 2012 with 104K miles. Comparable 10 year old vehicle now with same miles is easily 12K. 50% run up in value in 10 years. If I replaced my current 02 Explorer with a comparably priced vehicle, my per month cost goes up $ 200.

With new vehicles well over 40K to 70K, Ford is now writing 10 year paper on some of their rigs. So people will finance a depreciating asset for 10 years and will likely get fucked in the ass ( trade it in) on a newer one in 7 years and add the negative equity to the next set of payments. The car and finance companies make more margin on the paper than they do on the vehicle. The finance side of things knows what the average buyer can stomach or take for a payment and the whole marketing thing is driven by that. Just like the Chevy commercials where they get a bunch of plaid wearing bearded men hipster millennials and women with nice asses on a commercial and go on about how many " awards " their cars have won and how "safe" they are. They all ooooo and ahhhh about that. Everybody gets a trophy.

[Derron]

Jesus. I'd heard that a lot of places were going 7 years now, but 10? Holy fuck. That's dumb beyond words...

When the buyers have to stay in certain payment parameters, the way to keep the payment down in the affordable range is to run the term out. I don't know that much about how the balances of the debt affect credit ratings, cash flow is one thing and what your personal balance sheet looks like is another.

[Left Seater]

Hell it isn’t even 10 years. I see car ads all the time that talk about rolling your current note into a new car payment.

The auto industry is doing well. Gone are the days of 0% interest and a free Aveo with the purchase of a Suburban.