Jonathan is correct: your net worth does not directly affect your FICO score. It is not a factor in the algorithms used to derive scores. Only debt data: the amount and type of debt that you have, as well as payment history, and the number and frequency of inquiries into your credit report, are used in scoring. Skipped or late child support payments will also be reported on a credit report, and that activity will affect a score. Medical collections are also reported, but those are a complicated topic in regards to how they affect scoring.
I echo Jonathan's comments below. The movement in your score is a reflection of the fluctuating balances in your revolving debt. Honestly, I wouldn't sweat this too much....if your score is bumping between 780-830, that's high enough that you're going to get the best rates on almost any debt (auto loan, mortgage, etc.) you'd shop for, but remember....if you don't need to shop for debt, your credit score isn't very important.
You've made an important point. Consumers have short memories and often big appetites when it comes to housing choices. Most don't remember a time when rates were higher than 5ish%, and many houses sold today are luxury homes as compared to their more modest homes of the 70s and 80s. And yes, even as a professional in the industry, I worry that we are setting ourselves up for another housing crisis....many factors play into my opinion on that topic. It may not be a dramatic crash, but a slow stumble. But honestly, that's a topic for another article.
As a mortgage broker, I'd encourage sellers in this market to offer an interesting option if your house is not moving. Offer: 1. a reduction in price or 2. the same reduction in price as dollars that a buyer can use toward buying down their rate or closing costs. Example: House is listed at 400,000 but isn't moving. You can lower the list price to 390,000 in hopes that that encourages a buyer, or you can offer 10,000 in closing cost assistance that a buyer can use to buy down his/her interest rate. From what I'm seeing, most people would rather buy the house at $400k and use $10k seller concessions to get a lower mortgage rate than just buy the house for $390k. For the Seller, either option is indifferent, but for most buyers, that lower rate is more valuable than a reduction in price.
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Jonathan is correct: your net worth does not directly affect your FICO score. It is not a factor in the algorithms used to derive scores. Only debt data: the amount and type of debt that you have, as well as payment history, and the number and frequency of inquiries into your credit report, are used in scoring. Skipped or late child support payments will also be reported on a credit report, and that activity will affect a score. Medical collections are also reported, but those are a complicated topic in regards to how they affect scoring.
Post: Know the Score
Link to comment from September 28, 2023
And by the way, the FICO model 10T that's coming will assist borrowers like you. It's going to give lenders a "video" of how consumers use credit.
Post: Know the Score
Link to comment from September 28, 2023
I echo Jonathan's comments below. The movement in your score is a reflection of the fluctuating balances in your revolving debt. Honestly, I wouldn't sweat this too much....if your score is bumping between 780-830, that's high enough that you're going to get the best rates on almost any debt (auto loan, mortgage, etc.) you'd shop for, but remember....if you don't need to shop for debt, your credit score isn't very important.
Post: Know the Score
Link to comment from September 28, 2023
You've made an important point. Consumers have short memories and often big appetites when it comes to housing choices. Most don't remember a time when rates were higher than 5ish%, and many houses sold today are luxury homes as compared to their more modest homes of the 70s and 80s. And yes, even as a professional in the industry, I worry that we are setting ourselves up for another housing crisis....many factors play into my opinion on that topic. It may not be a dramatic crash, but a slow stumble. But honestly, that's a topic for another article.
Post: Know the Score
Link to comment from September 28, 2023
As a mortgage broker, I'd encourage sellers in this market to offer an interesting option if your house is not moving. Offer: 1. a reduction in price or 2. the same reduction in price as dollars that a buyer can use toward buying down their rate or closing costs. Example: House is listed at 400,000 but isn't moving. You can lower the list price to 390,000 in hopes that that encourages a buyer, or you can offer 10,000 in closing cost assistance that a buyer can use to buy down his/her interest rate. From what I'm seeing, most people would rather buy the house at $400k and use $10k seller concessions to get a lower mortgage rate than just buy the house for $390k. For the Seller, either option is indifferent, but for most buyers, that lower rate is more valuable than a reduction in price.
Post: What’s the best strategy for selling a house?
Link to comment from September 17, 2023
Thank you for sharing your story. Many lessons here for all.
Post: Guns to Stethoscopes
Link to comment from September 16, 2023