Money Matters
Dear Community,

Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.

If you have questions about this, please email help@theknot.com.

Thank you.

Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.

Changes to credit score calculations

http://pge.libercus.net/.pf/emailed/84357/3/201704200075

This article describes some changes to how credit scores are calculated.  Things like taking medical debt out of the equation should help some people improve scores.  They will also look at trend data and try to predict risk.

Re: Changes to credit score calculations

  • Two things that would bother me.....

    1) I'm one of those high credit score people with a few cards open that I don't use.  Granted, I could close it, but that brings me to the next point...

    2) The last paragraph says mortgages will be staying with the traditional FICO score.  The problem with this I see is that the Vantage score and the FICO score seem to be opposites of each other and having a good score in both seems harder if not impossible.
    Daisypath Anniversary tickers
  • jtmh2012 said:
    Two things that would bother me.....

    1) I'm one of those high credit score people with a few cards open that I don't use.  Granted, I could close it, but that brings me to the next point...

    2) The last paragraph says mortgages will be staying with the traditional FICO score.  The problem with this I see is that the Vantage score and the FICO score seem to be opposites of each other and having a good score in both seems harder if not impossible.

    That's kind of what I was thinking.  Which doesn't make much sense to change it then.

    I also don't understand why they would no longer include medical debt or tax leins in the calculation.  Yes, it would be beneficial if insurance hasn't paid out on your claim to the hospital yet and it hits your credit.  But medical debt is a huge thing in America and many people have it.  If those weren't calculated into your credit score then someone could be given a CC with a large balance when they have 10's of thousands in medical debt that isn't factored in.  Makes it riskier for the creditor because they don't have the full picture.

    TTC since 1/13  DX:PCOS 5/13 (long, anovulatory cycles)
    Clomid 50mg 9/13 = BFP! EDD 6/7/14 M/C 5w6d Found 11/4/13
    1/14 PCOS / Gluten Free Diet to hopefully regulate my system. 
    Chemical Pregnancy 03/14
    Surprise BFP 6/14, Beta #1: 126 Beta #2: 340  Stick baby, stick! EDD 2/17/15
    Riley Elaine born 2/16/15

    TTC 2.0   6/15 
    Chemical Pregnancy 9/15 
    Chemical Pregnancy 6/16
    BFP 9/16  EDD 6/3/17
    Beta #1: 145 Beta #2: 376 Beta #3: 2,225 Beta #4: 4,548
    www.5yearstonever.blogspot.com 
                        Image and video hosting by TinyPic

  • Welp I'll be in trouble because I have a TON of available credit because I keep my old accounts open forever. My utilization rate is always super low even though I charge everything I buy and pay it off each month. I actually like keeping a large line open in case of emergency - I stash our emergency fund in an online bank that doesn't have a debit card and takes a couple days to clear. The last time we had an emergency (to the tune of $17k...) we were able to throw it on a card and just pay it off once the funds cleared back into our checking account. 

    I'm torn on the medical debts issue. On the one hand the fact that someone can be in tens of thousands of debt for getting sick in the US is disgusting and ridiculous. On the other it is something a creditor would want to know about since they do owe that money. 

  • I'm torn on the medical debts issue. On the one hand the fact that someone can be in tens of thousands of debt for getting sick in the US is disgusting and ridiculous. On the other it is something a creditor would want to know about since they do owe that money. 
    And this is why they're looking to exclude the medical debt.  Health care in this country seriously needs to be fixed.  Even if you have insurance, it's far too easy to go into a doctor for something and walk out with a bill that short of being ultra rich you can't pay.  Even with an appropriate emergency fund, there are some bills that are just too big.

    But yet that person pays their credit cards in full, pays the mortgage on time, does all the other things you should do and has their credit trashed because they had some health issue and owe the hospital?
    Daisypath Anniversary tickers
  • I see this as a way to side step lending laws and make it possible to give loans to people who shouldn't get them. Sorry, but not everyone should get a loan. I understand medical debt just happens and isn't a result necessarily of poor choices with money. However, banks' primary goal should be only lending to people who can repay. I'm very leery of this being a good idea. Seems like another great way to get a bail-out going again in 15-20 years...
  • smerkasmerka
    Ancient Membership 250 Love Its 500 Comments Name Dropper
    member
    I see this as a way to side step lending laws and make it possible to give loans to people who shouldn't get them. Sorry, but not everyone should get a loan. I understand medical debt just happens and isn't a result necessarily of poor choices with money. However, banks' primary goal should be only lending to people who can repay. I'm very leery of this being a good idea. Seems like another great way to get a bail-out going again in 15-20 years...
    The bailout won't be needed in 15-20 years. It will be sooner. People and banks are doing deals like they were in 2006. Housing markets are on fire and interest rates are crazy low. 

    I just had our credit pulled for a mortgage refi. We are at 800+. But they still gave us reasons why points were knocked off - too many accounts and not long enough time the accounts have been open which is total bs since I've had the same credit card since 1997. 
  • I take these changes with a grain of salt. Yes, I have a couple of cards open I don't ever use. However, our scores are already in the high 700s and our debt to income ratios are quite good, so I doubt any of these changes will drastically impact our scores. Once our credit reached the very good range I no longer saw the point in scrambling for points here and there. We'll just try to keep making responsible choices. 
    short+sassy
  • So much of credit scores are complete B.S.  I don't really care whatever crap they want to do.  I can only do my best for me.  And, quite frankly, they've been talking about dropping medical collections from credit scores for years, but it hasn't happened yet.  I think a better option is to, not take them out completely, but give a substantially longer period of time before they become a "ding".  Because it's RIDICULOUS how long insurance and billing can take sometimes.  And some providers have a policy of just sending bills straight to collections.  I had an out-patient procedure at a hospital years ago.  I got the first bill for it FOUR years later.  That is not a typo.

    Overall, if a person pays their bills on time and keeps a low credit card utilization, they should have a fairly good score regardless of whatever model the "flavor of the year" is.  Generally speaking, you'll get the best rates when your credit score is 720+.  Anything higher than 720 is good gravy, but doesn't make much difference. 

    My real estate investing puts my credit score at a disadvantage for two reasons.  Both of which have nothing to do with my worthiness of a debtor.  My credit "age" is too low, because they look at the average age of your current accounts.  Never mind that I've had some type of credit for 20+ years and have never had an account go into default.  I also apply for loans and credit lines SUBSTANTIALLY more than the average person because of the type of business I have.  Not much I can do about that either, other than to retard my growth.  Which is not happening.

    Plus I have an LLC, for which I also apply for things.  And, although that LLC has its own tax id number, my own credit is dinged with an inquiry every time I apply for something under that entity because I have to give a personal guarantee.

    Fortunately, both "Age of Accounts" and "Credit Inquiries" are low factors for credit scoring.  But perpetually have those as "bad marks" doesn't help and its really irritating.

Sign In or Register to comment.
Choose Another Board
Search Boards