Interest Rate and Credit Score

[Colleen27]

I'd like to point out that not paying bills on time is not how you have a lower but still mortgage-worthy score. That's usually achieved by limited credit history - as in, being younger - or only having credit cards but not car or mortgage loans. So it isn't the "responsibility " vs. "irresponsiblity" question that it is being made out to be. There's significant age and wealth bias baked into credit scoring even among people who always pay their bills on time, so this is literally people with every advantage whining that they're not getting the best-of-the-best treatment they feel is their due.

 

[Traveling on cc points]

I'd like to point out that not paying bills on time is not how you have a lower but still mortgage-worthy score. That's usually achieved by limited credit history - as in, being younger - or only having credit cards but not car or mortgage loans. So it isn't the "responsibility " vs. "irresponsiblity" question that it is being made out to be. There's significant age and wealth bias baked into credit scoring even among people who always pay their bills on time, so this is literally people with every advantage whining that they're not getting the best-of-the-best treatment they feel is their due.

We aren’t talking about perfect or near perfect scores here. According to the articles I have read, this new rule applies to anyone who has a score of 680. 680 is not the number I think of when talking about a great credit score but that is the number they decided on.

According to Experian, the average credit score by age in 2022 was:

• Age 76+: 760
• Age 57-75: 742
• Age 41-56: 706
• Age 25-40: 687
• Age 18-24: 679

I don’t think people are “whining” that they aren’t getting the treatment they are due, they don’t think it is right to pay more fees on their mortgages simply to subsidize other peoples mortgages.

Hypothetical question- If it was an option on your next mortgage payment to add $40 to $60 each month to donate to a fund for people less fortunate to be able to get a mortgage, would you?

 

[Ms.Minnie]

I'd like to point out that not paying bills on time is not how you have a lower but still mortgage-worthy score. That's usually achieved by limited credit history - as in, being younger - or only having credit cards but not car or mortgage loans. So it isn't the "responsibility " vs. "irresponsiblity" question that it is being made out to be. There's significant age and wealth bias baked into credit scoring even among people who always pay their bills on time, so this is literally people with every advantage whining that they're not getting the best-of-the-best treatment they feel is their due.

I don't think your comment in bold is correct. Please see Credit.com, the number one thing that affects your credit score is your payment history per this website.

The 5 Main Factors That Impact Your Credit Score​

The main factors that go into how your credit score is calculated are:

1. Payment history
2. Amount of debt, also known as your credit utilization ratio
3. Age of credit accounts or history
4. Mix of credit accounts
5. New credit inquiries

We aren’t talking about perfect or near perfect scores here. According to the articles I have read, this new rule applies to anyone who has a score of 680. 680 is not the number I think of when talking about a great credit score but that is the number they decided on.

According to Experian, the average credit score by age in 2022 was:

• Age 76+: 760
• Age 57-75: 742
• Age 41-56: 706
• Age 25-40: 687
• Age 18-24: 679

I don’t think people are “whining” that they aren’t getting the treatment they are due, they don’t think it is right to pay more fees on their mortgages simply to subsidize other peoples mortgages.

Hypothetical question- If it was an option on your next mortgage payment to add $40 to $60 each month to donate to a fund for people less fortunate to be able to get a mortgage, would you?

Good question, not sure if I would. I'm thinking no, if I paid $60 a month for 30 years that would be $21,600. Thats a fairly substantial amount of money that I could have applied to paying off my own mortgage. Sorry if that sounds stingy or selfish but I don't think I would.

 

[Traveling on cc points]

I don't think your comment in bold is correct. Please see Credit.com, the number one thing that affects your credit score is your payment history per this website.

The 5 Main Factors That Impact Your Credit Score​

The main factors that go into how your credit score is calculated are:

1. Payment history
2. Amount of debt, also known as your credit utilization ratio
3. Age of credit accounts or history
4. Mix of credit accounts
5. New credit inquiries

Good question, not sure if I would. I'm thinking no, if I paid $60 a month for 30 years that would be $21,600. Thats a fairly substantial amount of money that I could have applied to paying off my own mortgage. Sorry if that sounds stingy or selfish but I don't think I would.

I don’t think you have anything to be sorry about. Most of us wouldn’t opt into that option either.
Like I said previously in the thread, I have no skin in this game. I have no intention of getting a new mortgage anytime soon or ever but I do feel bad for new home buyers that worked hard to get their scores up only to subsidize others who didn’t choose the same path.

 

[georgina]

I don’t think people are “whining” that they aren’t getting the treatment they are due, they don’t think it is right to pay more fees on their mortgages simply to subsidize other peoples mortgages.

Hypothetical question- If it was an option on your next mortgage payment to add $40 to $60 each month to donate to a fund for people less fortunate to be able to get a mortgage, would you?

Some of the same complaining people are happy paying a lower percentage of their income in federal taxes while many less fortunate than them are paying a higher overall percentage. MANY things in our economic systems aren't 'fair' to someone.

 

[Traveling on cc points]

Some of the same complaining people are happy paying a lower percentage of their income in federal taxes while many less fortunate than them are paying a higher overall percentage. MANY things in our economic systems aren't 'fair' to someone.

I will agree with you on that point.
Unfortunately, I don’t fall into that very small group.

 

[Ms.Minnie]

Some of the same complaining people are happy paying a lower percentage of their income in federal taxes while many less fortunate than them are paying a higher overall percentage. MANY things in our economic systems aren't 'fair' to someone.

This is a topic for a whole nother discussion. But since you brough it up and I don't disagree with you I think the solution to the tax issue is to have a flat tax. Period.

 

[longboard55]

I don't know if this was stated, but this whole story about raising rates for good borrowers is fake. Fnma made some adjustments to help first time buyers. No one raised rates on people with good credit.

 

[RamblingMad]

I don't know if this was stated, but this whole story about raising rates for good borrowers is fake. Fnma made some adjustments to help first time buyers. No one raised rates on people with good credit.

I posted the impacted schedules. This is over a lot of people’s heads. I catalog it under angry news.

 

[Southernmiss]

https://www.niemanlab.org/2023/03/n...-are-more-effective-than-angry-or-scary-ones/


Although positive words were slightly more prevalent than negative words, we found that negative words in news headlines increased consumption rates (and positive words decreased consumption rates). For a headline of average length, each additional negative word increased the click-through rate by 2.3%. Our results contribute to a better understanding of why users engage with online media.

So: Add a negative word to your headline — words like harm, heartbroken, ugly, troubling, angry — and get 2.3% more clicks, on average. And adding a positive word — like benefit, laughed, pretty, favorite, kind — does the opposite and keeps people from clicking.

 

[sheilafri]

I had to do a google search to find out what you were referring to.

Luckily we built our home last year and it is most likely our forever home so this won’t affect me but I think it is ridiculous to penalize people who have had discipline their whole life’s to maintain a great score.

I taught my daughter about the importance of her score at a very young age. I added her as an AU in several of my credit cards when she was 6 years old to start building her credit profile.(I think they closed this loophole) I told her that when she grows up and she only had enough money to buy food or pay a reportable bill to pay the bill and come to my house for dinner. She is now 22 with an 830 score with 2 credit cards of her own.

DS has been an AU on one of our cards for years. He recently purchased a condo. The mortgage broker asked permission to do a credit pull while we were on the phone. He laugh/gasped and said he’d never seen a credit score that high on someone so young. BTW, he ended up paying cash. He likes to live within his means.

 

[mom2rtk]

I don't know if this was stated, but this whole story about raising rates for good borrowers is fake. Fnma made some adjustments to help first time buyers. No one raised rates on people with good credit.

At the expense of people with higher scores. Many are saying it's not a lot, but is believed to be around $40/month on an average mortgage.

 

[princesscinderella]

This is a topic for a whole nother discussion. But since you brough it up and I don't disagree with you I think the solution to the tax issue is to have a flat tax. Period.

Yes would definitely be ideal, however if this was implemented an entire segment of the financial economy would be scaled back too much (accounts, auditors, irs employees). The complexity creates jobs. It will never happen.

 

[Traveling on cc points]

DS has been an AU on one of our cards for years. He recently purchased a condo. The mortgage broker asked permission to do a credit pull while we were on the phone. He laugh/gasped and said he’d never seen a credit score that high on someone so young. BTW, he ended up paying cash. He likes to live within his means.

That is great! Congrats to him!
I 100% think that there should be a required class in public high school that teach about credit scores and how much it really takes to live on your own. Some parents either can’t or don’t prepare their kids on this topic.

 

[RamblingMad]

At the expense of people with higher scores. Many are saying it's not a lot, but is believed to be around $40/month on an average mortgage.

You don’t have to believe anything. I posted the actual schedules. You can do the math. High scores are up .125% unless you have a LTV under 75%. Then there is zero impact.

 

[RamblingMad]

That is great! Congrats to him!
I 100% think that there should be a required class in public high school that teach about credit scores and how much it really takes to live on your own. Some parents either can’t or don’t prepare their kids on this topic.

There definitely should be a fundamental finance class both in grade school and high school. I say grade school because people do drop out of high school.

 

[GAN]

I don’t think you have anything to be sorry about. Most of us wouldn’t opt into that option either.
Like I said previously in the thread, I have no skin in this game. I have no intention of getting a new mortgage anytime soon or ever but I do feel bad for new home buyers that worked hard to get their scores up only to subsidize others who didn’t choose the same path.

This is exactly why the adjustment was necessary. First of all, the $40 quoted in the article is WORST case scenario and no one is sure how many it will actually impact in the end. Like you, millions of others, who bought or refinanced at the all-time low rates have no skin in the game ...you'd be foolish to assume a new mortgage under the current condition. It isn't good for the overall economy if the housing market slumps due to lack of activity ...in fact, it's especially not good for you if you're a homeowner as the likelihood of your investment going down increases. So.... in order to keep things moving they recognize it will take buyers that either don't have a perfect credit rate or young people coming up that don't have established credit history. To protect everyone, including all us other content homeowners, this is the way they've decided to go forward for now. There's more to it than meets the eye....

 

[Traveling on cc points]

This is exactly why the adjustment was necessary. First of all, the $40 quoted in the article is WORST case scenario and no one is sure how many it will actually impact in the end. Like you, millions of others, who bought or refinanced at the all-time low rates have no skin in the game ...you'd be foolish to assume a new mortgage under the current condition. It isn't good for the overall economy if the housing market slumps due to lack of activity ...in fact, it's especially not good for you if you're a homeowner as the likelihood of your investment going down increases. So.... in order to keep things moving they recognize it will take buyers that either don't have a perfect credit rate or young people coming up that don't have established credit history. To protect everyone, including all us other content homeowners, this is the way they've decided to go forward for now. There's more to it than meets the eye....

I don’t pretend to be an expert on the subject but I did read a few articles from a few different sources when the thread popped up and the quotes were $40 to $60 a month. The $40 was for a $400,000 house with 20%down with and a score above 680. Maybe in different parts of the county you can get a decent home for under $400,000 but where I live and many other places, you can’t. $40 is not worse case scenario.

Even at $40, that is $14,400 over the coarse of the loan.

 

[GAN]

I don’t pretend to be an expert on the subject but I did read a few articles from a few different sources when the thread popped up and the quotes were $40 to $60 a month. The $40 was for a $400,000 house with 20%down with and a score above 680. Maybe in different parts of the county you can get a decent home for under $400,000 but where I live and many other places, you can’t. $40 is not worse case scenario.

Even at $40, that is $14,400 over the coarse of the loan.

Worst case scenario for the US "average" home price ...which is declining. I think it was $390K in 2022. So sure ...makes sense. That is a good amount over the life of the loan, but the alternative for everyone could be significantly worse. I think it's fair for the times we're in -the market will adjust and people can refinance down the road.

 

[mom2rtk]

Yes would definitely be ideal, however if this was implemented an entire segment of the financial economy would be scaled back too much (accounts, auditors, irs employees). The complexity creates jobs. It will never happen.

Other giant industries have been uprooted with no concern for job loss. You know, all those buggy whip makers and such. I’ve also been told people can just learn to code. Or something.