Comments on: Your Credit Score is About to Become More Valuable

By: Sportskater

Sportskater — Tue, 01 Dec 2009 04:19:59 +0000

I have a question. I have a good credit score (730). I also have a lot of credit and a substantial amount of debt. I am using 57% of my available credit. I have just been turned down for a car loan. I'm confused. I have never made a late payment on my mortgage, installment loans or revolving credit cards and over the last year have made some significant reduction in my debt. Should I try again through a bank that I have used for car loans years ago? What can I do to keep from getting turned down again? The lease runs out on my car soon and I have got to be prepared to buy or lease again.

By: Ryan

Ryan — Tue, 01 Dec 2009 04:13:44 +0000

Sportskater, You are able to get a free copy of your credit report any time you are turned down for a loan, so now may be a good time to get that so you can find out why you were declined. You can also contact the lender and ask them. It may be that your credit utilization is too high for them, or there may be other factors. You will definitely want to know more information before going in for your next loan application.

By: Ryan

Ryan — Wed, 01 Oct 2008 14:01:47 +0000

Daphne: Being proactive with your finances is the best thing one can do in times of economic uncertainty. One can’t rely on government bailouts or other events to take care of them!

Kristen: Thanks for sharing. I didn’t realize that!

By: Kristen

Kristen — Wed, 01 Oct 2008 12:07:15 +0000

Another comment about credit scores, and in particular the mention of a score of 660. If someone is applying for a government-insured mortgage (such as a VA loan or an FHA loan), and their credit score is below 660, that person/couple is required to get housing counseling from a HUD approved agency before they can take out the mortgage. 660 is the line where the government starts to go, “Hmmm …”

By: Daphne Lim

Daphne Lim — Wed, 01 Oct 2008 11:21:34 +0000

Great site Ryan, and it’s a good article. I’m not living in the US so the details don’t apply to me, but I like your pro-active stance in showing people that we do have control over our financial status and should in fact learn the rules of the money game. Keep up the good work!

By: Zhu

Zhu — Wed, 01 Oct 2008 03:47:56 +0000

I was reading your other article as well on how canceling credit card can affect a report and I must say that I find it extremely stupid (the fact it can affect your credit score, not your article! )

People can think the less credit cards they have, the more they can manage them efficiently, the less they would get in debt etc. But on the other side, credit card companies push and increase limits! My $500 limit credit card I got when I first came to Canada has been increase to $7500 in 3 years. I do NOT need that money. But hey, as my bank told me, I’m lucky to have an high limit… Weird society that pushes people to consume always more.

Sorry for the side rant!

I agree that credit history is more important nowadays, lenders will be very careful.

By: Ryan

Ryan — Tue, 30 Sep 2008 19:14:52 +0000

Leah S: A good credit score is generally considered anything around 660 or higher. How high your score needs to be depends on many factors, such as how much you are trying to borrow, etc.

I think lenders have a sliding scale of who they will lend money to and at which interest rates. Generally the higher your credit score, the better your rates. Some companies have a lower limit for credit scores at which they will not make loans. I think that depends on the lender, but usually in the lower 500s is very bad and you may have a hard time finding anyone willing to lend money to you.

By: Ryan

Ryan — Tue, 30 Sep 2008 19:08:12 +0000

Mr. Tough Money Love: I don’t mean to imply that anyone can borrow their way out of trouble – uncontrolled borrowing is what got out country’s economy in this mess int he first place.

My point is simply that with fewer banks willing to make loans, a high credit score is more valuable because it will help those who can responsibly use the loan obtain the money they need.

I agree with your assessment to increase your networth, so long as it is not simply paper net worth, which is how many of these financial institutions became so “valuable.”

To me the current economy says take care of your personal finances in every way possible: fortify your savings and emergency fund, improve your credit score, pay down debt more quickly etc. Now is probably not the time to make large financial gambles.