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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (37615)8/2/2005 8:26:47 PM
From: Ramsey Su  Respond to of 110194
 
It should still be accurate. The creditworthy borrowers should be able to maintain the score at the same level as before. The aggressive borrowers of today could see their FICO score tumble.



To: ild who wrote (37615)8/2/2005 8:31:59 PM
From: russwinter  Respond to of 110194
 
The problem with FICO is that in part it's a rob Peter to pay Paul formula. 35% of it is bill paying history. Also if you can extract equity as part of your "mortgage", to service old credit, you can score high. Mortgage and car loans are "good", credit card debt is "bad"
credit-report-scores.us

If they see a big mortgage, they have no real way of knowing if you have the wages or income to support it. Wouldn't know if you had some teaser rate, or an ARM or IO about to be reset, or worse regular amortized. Too many other toxic variables out there right now. Further, I have to ask, how could the avg FICO score stay at 725, given a 0% savings rate, and total dependency on housing prices.



To: ild who wrote (37615)8/2/2005 9:35:04 PM
From: ild  Read Replies (1) | Respond to of 110194
 
GLD added 47,623,636 oz
streettracksgoldshares.com



To: ild who wrote (37615)8/3/2005 7:35:28 AM
From: Oblomov  Read Replies (1) | Respond to of 110194
 
FICO isn't a "formula", per se. There are many different credit scoring models, many of which are developed by FIC, but usually the banking institutions themselves have their own models, too.

Sure, all of the models could have a systemic bias in them that causes a huge underprediction of default rates. I think this is exceedingly unlikely since most banking institutions closely monitor their loan books and consider many worst-case scenarios.


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