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As "Housing Recovery" Fizzles A New Scheme Emerges: Boost FICO Scores By Changing The Definition

Tyler Durden's picture




 

Now that the the fourth dead cat bounce in US housing since the Lehman crisis is rapidly fading, and laundered Chinese "hot money" transfers into US luxury real estate no longer provides a firm base to the ultra-luxury segment, the US government is scrambling to find ways to boost that all important - and missing - aspect of any US recovery: the housing market. This is further amplified by the recent admission by the Fed that it is in fact encouraging asset bubbles, not only in stocks but certainly in all assets, such as houses. Well, the government may have just stumbled on the solution to kick the can yet again and force yet another credit-driven housing bubble, a solution so simple we are shocked some bureaucrat didn't think of it earlier: changing the definition of the all important FICO score, the most important number at the base of every mortgage application.


First, a tangent.

Recall that as we reported last week, a shocking 77 million Americans currently face debt collectors, a number that previously had received no prominence because credit card companies report delinquency numbers, not the number that is "what happens next" after a delinquency is charged off and goes to the repo man. Sure enough, as delinquencies have been declining over the past several years - a widely trumpeted phenomenon to boost confidence in the recoveryless recovery - collection numbers were never mentioned as the realization that 77 million Americans effectively have zero access to credit because of (partial) defaults, they are no longer seen as eligible debtors.

Well, not any more. According to the WSJ, in what is a desperate attempt to boost the pool of eligible, credit-worthy mortgage recipients, Fair Isaac, the company behind the crucial FICO score that determines every consumer's credit rating, "will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency."

In doing so, it will "make it easier for tens of millions of Americans to get loans."

How many millions?

As of July, about 64.3 million consumers in the U.S. had a medical collection on their credit report, according to data from credit bureau Experian. And of the 106.5 million consumers with a collection on their report, 9.4 million had no balance—and won't be penalized under the new credit-score system.

Because nothing says a stable recovery like picking at lowest hanging fruit - changing the definition of an eligible creditor - to prove the point. 

The impact won't be long in coming: "The changes are expected to boost consumer lending, especially among borrowers shut out of the market or charged high interest rates because of their low scores. "It expands banks' ability to make loans for people who might not have qualified and to offer a lower price [for others]," said Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association, a trade group."

Perhaps the thinking goes that if you have defaulted once, you have learned your lesson and will never do it again. Then again, that thinking is patently wrong but who cares: there is a housing bubble to reflate at all costs, even if it means giving out Jumbo non-conforming loans to deadbeat recidivists.

Some critics said that loosening standards could bring losses for borrowers and lenders. "A lot of people really just can't handle credit—you're not really helping them by allowing them to dig themselves into debt," said Howard Strong, a lawyer in Tarzana, Calif., who specializes in consumer-protection class-action lawsuits. "It's like a sharp knife—if you don't know how to use it, you can cut yourself."

Perhaps someone should tell that to the US Treasury?

Some experts said the new model for FICO scores walks a fine line: It loosens standards without overstating the creditworthiness of borrowers. Fair Isaac said it ran studies to determine how likely borrowers are to repay their debts if they had a stellar credit record with the exception of such collections.

Did they hire Moody's as a consultant for these studies perhaps?

Finally, and tying it all together, is the source of America's chronic debt collection problems:

More than half of all debt-collection activity on consumers' credit reports comes from medical bills, according to the Federal Reserve. Such activity results in lower credit scores for consumers, meaning that lenders are more likely to be cautious in extending credit.

 

The number of U.S. consumers struggling with medical debt has been surging. As of 2012, 41% of U.S. adults, or 75 million people, had trouble paying medical bills, up from 58 million in 2005, according to a report released last year by the Commonwealth Fund.

 

The CFPB, in a May report, criticized credit-scoring models used by the financial industry, saying they put too much emphasis on unpaid medical debt and lead to an overly negative view of consumers. CFPB officials say that medical debt is inherently different from other forms of debt because consumers are often unaware of what they owe to hospitals and doctors.

Oh wait, maybe this explains why Obama is so desperate to socialize medicine: because nobody is actually paying. Suddenly it all falls into place.

Finally, as to the practical implication of this change...

The impact of the changes on borrowers is likely to be significant. Accounts that are sent to collections, including credit-card debts and utility bills, can stay on borrowers' credit reports for as long as seven years, even when their balance drops to zero, and can lower their scores by up to 100 points, said Mr. Ulzheimer.

 

The lower weight given to unpaid medical debt could increase some affected borrowers' FICO scores by 25 points, said Mr. Sprauve.

Because the only thing better than GAAP FICO scores is non-GAAP FICO. And now, cue the increasingly sad, laughable and pathetic all-in "recovery" one last time.

 

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Fri, 08/08/2014 - 11:22 | 5065379 IANAE
IANAE's picture

... pulling out all the stops to stimulate moar consumer debt ... GREAT for business - until it isn't.

Fri, 08/08/2014 - 11:25 | 5065400 Captain Benny
Captain Benny's picture

Fair Isaacs has learned Newspeak!!!

Fri, 08/08/2014 - 11:31 | 5065427 NoDebt
NoDebt's picture

Somehow, "this will not end well" just doesn't seem to cover it.

I am seriously considering changing my name to LoadOfDebt and running every possible credit line I have access to straight to the moon.  This shit's all gonna get written off either directly by the government or through hyperinflation someday.

And besides, I could do with a new Maserati and some plastic surgery.  Maybe a new wife, or at least a couple girl friends.

Fri, 08/08/2014 - 11:44 | 5065493 Postal
Postal's picture

Stick with girlfriends--and make it clear they're not exclusive.

Wives are too damn demanding. That, and the whole jealous thing.

Fri, 08/08/2014 - 11:46 | 5065507 Harbanger
Harbanger's picture

Not to mention you'd have to be broke or crazy to marry without a solid prenup.

Fri, 08/08/2014 - 11:54 | 5065539 mvsjcl
mvsjcl's picture

"Perhaps the thinking goes that if you have defaulted once, you have learned your lesson and will never do it again."

 

That's like the bank saying, we've paid our fine (for illegal behavior) once, so we won't do it again.

Fri, 08/08/2014 - 12:10 | 5065609 cocoablini
cocoablini's picture

Just remember- the financial system is based on an accounting scheme. So when economics works against you,change the scheme. Economics is fantastic because it has no basis in real math. Math is used to define a world view...as opposed to being implemented to understand the world. Sad

Mon, 08/11/2014 - 07:41 | 5075494 Thomas
Thomas's picture

Be careful in interpreting this data folks. My family (a) always pays its bills (like Lanisters), (b) has excellent (by comparisons) health insurance, (c) processes a shitload of medical bills (where is the lemon law for marriage?), and (d) is fairly frequently getting calls from debt collectors because of poor coordination among billers and payers. By the time insurance pays the bill, we are in collection. We learned to just wait for the dust to settle, the insurance company to pick up its tab, and then pay the part we owe. 

Fri, 08/08/2014 - 12:54 | 5065887 misterb4096
misterb4096's picture

Who needs a prenup? Bitch can't get my phizz at the bottom of the lake nor my BTC...

Fri, 08/08/2014 - 16:53 | 5067447 PlausibleDenial
PlausibleDenial's picture

Prenups are only fodder for the lawyers to receive more of your dollars in the process of identifying, defining, and enforcing said prenups.  "Own nothing, control everything" Rockefellar...

Re:  The subject at discussion.  FICO scores could not have been relevant after the mass financial scam that has occurred over the last number of years.  But, what do I "no",  I am sure there are some statistic heads on here that must know about data skews, etc.

 

FMR

 

 

Fri, 08/08/2014 - 21:17 | 5068505 TheRedScourge
TheRedScourge's picture

In many places, there is no such thing.

Fri, 08/08/2014 - 12:50 | 5065852 RafterManFMJ
RafterManFMJ's picture

No Debt, if you bought yourself a nice set of tits you'd never have to leave home!

MASSIVE ROI!

Fri, 08/08/2014 - 14:07 | 5066432 NoDebt
NoDebt's picture

"Not that there's anything wrong with that."

I'll take it under advisement.

Fri, 08/08/2014 - 14:10 | 5066469 RafterManFMJ
RafterManFMJ's picture

An entire post comprised of Pop Culture references? *hat, doffed*

Fri, 08/08/2014 - 21:42 | 5068584 TheReplacement
TheReplacement's picture

Invest:  Lever yourself some gold and silver.

Trade:  BTFD on days when the market goes down because of good news (as opposed to end of the world news). 

I was taught to bet in pool (8 or 9 ball) by taking the entire amount you are willing to gamble and dividing it by the number of games you would like to play.  $100 dollars/10 games=$10s a game.  Each $10 is a barrel.  Play the market with the barrel approach.  Never exceed your commitment so you only lose what you can afford.  Take cash out when you win and tuck that into real assets. 

The market is very predictable now.  Long the most shorted is a good bet.  Short gold on up ticks.  Just risk a barrel at a time and turn wins into real things.

Fri, 08/08/2014 - 11:30 | 5065428 Pladizow
Pladizow's picture

Well Yeah, the hedge funds need to unload overpriced inventory to someone before the collapse!

Sat, 08/09/2014 - 07:53 | 5069348 Mr. Ed
Mr. Ed's picture

Yeah.  You got the idea!

Fri, 08/08/2014 - 12:09 | 5065604 midtowng
midtowng's picture

This is great news! You can't burst a credit bubble until you've sucked in all the junk-level consumers

Fri, 08/08/2014 - 11:37 | 5065467 Harbanger
Harbanger's picture

I've been saying this for at least 3 years.  They will reinflate the housing bubble again with subprime mortages.

Fri, 08/08/2014 - 11:48 | 5065515 NotApplicable
NotApplicable's picture

Until they unwind the "Anti-Money-Laundering Act" it won't mean shit, as they demand a paper trail (via bank statement) for everything.
Because as we all know, only ebil terrerests pay with cash.

Fri, 08/08/2014 - 11:51 | 5065530 Harbanger
Harbanger's picture

Two different markets.  What they are reinflating is the low end market by qualifying new suckers.  Not where people buy with cash.

Fri, 08/08/2014 - 12:54 | 5065878 NotApplicable
NotApplicable's picture

Sorry, I worded the ending poorly, as that's not what I'm talking about. Lenders are scared to death of running afoul of that law, and will NOT lend to anyone who cannot document all transactions like rent, utility bills, etc.

All cash sales, if you recall are EXEMPT from this law, thanks to NAR.

Fri, 08/08/2014 - 11:38 | 5065468 williambanzai7
williambanzai7's picture

Fri, 08/08/2014 - 12:45 | 5065816 Rusty Nayle
Rusty Nayle's picture

+1

Fri, 08/08/2014 - 11:39 | 5065478 yrad
yrad's picture

I think this is a good idea. Reporting a paid debt for 7 years after it has been settled is pointless. Did I mention I'm a Loan Officer for a major bank? :)

Fri, 08/08/2014 - 11:43 | 5065494 Atomizer
Atomizer's picture

You might want to look at the 7 year Treasury. It is barometer of the housing market. 

Fri, 08/08/2014 - 11:46 | 5065512 yrad
yrad's picture

The 10 year is a better barometer for the short-term thinking person, which I am. Make it, stack it, hide it.

Fri, 08/08/2014 - 13:02 | 5065935 Jumbotron
Jumbotron's picture

FICO-HEDONICS !

Great....just fucking great.

Fri, 08/08/2014 - 11:22 | 5065385 Stanley Kubrick
Stanley Kubrick's picture

Truth stretched to new limits....to fit MOAR lending agenda.

Moral of the story, kids:  only a SUCKA play by the rules....

Fri, 08/08/2014 - 11:26 | 5065410 Winston Churchill
Winston Churchill's picture

What are these 'rules' you mention ?

Is it similar to laws.

Only the " law of the jungle " has been enforced since 2008.

We are way beyond rules.

Fri, 08/08/2014 - 11:27 | 5065411 IANAE
IANAE's picture

... there's always the (ever narrowing) BK debt put for those who just can't help themselves... but that's not so good for lenders who haven't ratcheted up their ALLL to reflect the new normal lending rules... wait, this is all bullish, right?

Fri, 08/08/2014 - 11:24 | 5065395 carbonmutant
carbonmutant's picture

It's important to provide those searching for El Norte with the opportunity to invest...

Fri, 08/08/2014 - 11:26 | 5065403 the grateful un...
the grateful unemployed's picture

in the spirit of fairness why shouldn't average americans have the same access to easy credit that wall street has? if you can't drop money out of a helicopter you can sure drop credit vouchers.  and are you any worse off at the end of the day, you lost the house you couldn't afford. the stock market goes back to where it was before the rally, everyone had a good time.

Fri, 08/08/2014 - 11:33 | 5065443 NoDebt
NoDebt's picture

That's a great idea.  You should run for office.  Or at least drop your resume off at the Marriner-Eccles building.

Fri, 08/08/2014 - 11:50 | 5065527 r00t61
r00t61's picture

I'm almost inclined to agree.  When civilization has become this backwards-bizarro, perhaps the only solution is to proceed on the assumption that infinite wrongs = new utopia.

Fri, 08/08/2014 - 13:59 | 5066369 Postal
Postal's picture

infinite wrongs = new utopia

I agree. Doing an infinite amout of wrong things with ropes and whips is utopia indeed. ;)

Fri, 08/08/2014 - 20:54 | 5068424 oooBooo
oooBooo's picture

I want my own fractional reserve bank, with one customer, me. I will then put my savings in my bank and then loan myself money at my terms. If the multipler there isn't enough I get access to borrow from the fed at zero percent if I need to.

 

 

Fri, 08/08/2014 - 21:55 | 5068625 Semi-employed W...
Semi-employed White Guy's picture

I want one of those too!  But I guess you have be named Israel Goldstein or Saul Ratzenberg or something to get that kind of deal.

Fri, 08/08/2014 - 11:26 | 5065405 ebworthen
ebworthen's picture

What we are facing is not an economic crisis but a psychological crisis of societal/civilization proportions.

Fri, 08/08/2014 - 11:27 | 5065406 Smegley Wanxalot
Smegley Wanxalot's picture

So does this mean I qualify to get that used 1970s Winnebago I always dreamed of living in from Wormwood Motors And Fine Homes now?

Fri, 08/08/2014 - 11:27 | 5065409 pods
pods's picture

Fuck em, avoid debt.  Cocksuckers give you the rope and directions and you fashion your own noose so they can hang you.

"Protect your credit score."  Fucking garbage. 

Blow the system up because that "credit rating" is not used for even employment.  

Another "just the tip" scams.

pods

Fri, 08/08/2014 - 11:36 | 5065460 greatbeard
greatbeard's picture

>> "Protect your credit score."  Fucking garbage.

When I bailed I had a near perfect credit score.  Not so much because I cared, it was just a result of how I lived my life anyway.  Borrow little, own a lot, pay bills when they arrive in the mail, lot's of cash in the bank.  I could borrow more than I could ever want by just asking.

Now I have a credit score of, errrr, zero.  I no longer have findable records.  I even have to provide a deposit to my power co-op, something reserved, usually, for know scofflaws.  My big offense? No debts, no credit, pay cash for everything, including my real estate.  I pay no taxes.

I'd never go back to an 825+ credit score.  Fuck 'em.

 

 

Fri, 08/08/2014 - 11:40 | 5065483 NoDebt
NoDebt's picture

" I no longer have findable records."

You and I need to sit down over a few drinks someday.  I need to know how you did that little piece of magic.

Fri, 08/08/2014 - 12:19 | 5065646 Hippocratic Oaf
Hippocratic Oaf's picture

Try doing that shit up here in N. Jersey.

Even IF you paid off your mtg., you're still paying taxes out the ass.

And if you drive ANYWHERE, ezpass stores your info.

You can't hide up in here.

Fri, 08/08/2014 - 12:35 | 5065705 toady
toady's picture

Yeah, I'm leaning towards you can't do that shit anywhere. Not that I'm calling bullshit, just that I'm sure some entity has some shit on EVERYONE.

Fri, 08/08/2014 - 12:43 | 5065796 greatbeard
greatbeard's picture

>>  you can't do that shit anywhere.

Findable records afa credit score, credit ratings go.  Sorry it it was taken for more than I meant.  Of course I exist in the system, I just no longer a have any credit rating and I don't give a fuck if I ever do again.

Fri, 08/08/2014 - 13:32 | 5066143 Intoxicologist
Intoxicologist's picture

Like you, I too removed myself from the credit system. Canceled all credit cards, no car payment, no nothing. I've got a medical judgment against me as well. I still have a mortgage, however. I figured my credit score was in the crapper, so imagine my surprise a few weeks ago when I learned it was in the high 700's. That just doesn't make any sense to me.

Fri, 08/08/2014 - 11:29 | 5065417 Dr. Engali
Dr. Engali's picture

More than half of a consumer's debt collection comes from medical bills? WTF? I thought Zerocare fixed that problem. Go figure..

Fri, 08/08/2014 - 11:43 | 5065497 NoDebt
NoDebt's picture

The problem is the evil insurance companies he was forced to work with.  They're the ones making the system unworkable.  Obamacare would work perfectly if it wasn't for private-sector companies being involved.  Damned private sector.

Fri, 08/08/2014 - 13:38 | 5066180 toady
toady's picture

Agreed.

Health insurance companies are nothing but scams. Middleman playing both sides against each other.

The problem is their scam is highly lucrative, up around 20% of GDP, so taking them out becomes another TBTF situation.

Fri, 08/08/2014 - 12:49 | 5065856 bmoreland
bmoreland's picture

I'm no fan of this move, but I do believe a lot of what shows up as "medical collections" is not real. In my extended family I have had 3 separate situations where doctors just keep billing and billing and billing for things they never did. Insurance won't pay it and so the "customer" is stuck with a fake debt.

Fri, 08/08/2014 - 11:29 | 5065419 Spastica Rex
Spastica Rex's picture

War is Peace

Freedom is Slavery

Ignorance is Strength

Democracy is Tyranny

640 is Good

Fri, 08/08/2014 - 12:11 | 5065610 Gromit
Gromit's picture

"Who controls the present controls the past.

Who controls the past controls the future."

Fri, 08/08/2014 - 12:48 | 5065838 A Nanny Moose
A Nanny Moose's picture

To be fair. Demockracy is actually tyranny.

Fri, 08/08/2014 - 11:32 | 5065430 Seasmoke
Seasmoke's picture

Funny story #1. As someone who was proud to have a sub 600 Fico score, I was shocked to hear that it's now at 620 

Funny story #2. I had a Dow solar salesman talking me into putting Dow solar on my roof. At the end of his pitch (which was interesting) he said I just need a 680 Fico to move forward. Said sorry , just found out its 620. He said I will call you back in a few weeks. I said don't bother. He said we will be able to get this for you soon. Someone knows something !!!!!

Fri, 08/08/2014 - 14:57 | 5066775 QQQBall
QQQBall's picture

they will jack you rate, bundle loans and get  a premium when they sell the port off to yield hungry investors who will borrow at ZERO b/c the port will magically be rated "AAA". 

Fri, 08/08/2014 - 11:32 | 5065431 BullyBearish
BullyBearish's picture

When the carcasses have been picked so clean, down to the bones by the vultures it's time for the vultures to regurgitate a little "nutrition" to maintain the illusion that the dead carcass is indeed alive.  Since wealth transfers from the banksters to the vultures via the FSA are dimishing, the next best thing is to make debt much easier to get...fogged a mirror lately?

Fri, 08/08/2014 - 11:32 | 5065436 JustObserving
JustObserving's picture
Boost FICO Scores By Changing The Definition

Why the fuck not?  We have been boosting the GDP for decades by changing the definition of inflation

Fri, 08/08/2014 - 11:48 | 5065518 Amish Hacker
Amish Hacker's picture

And in a related story, TEPCO reports that radionuclide levels at Fukushima are now "safe." Problem solved.

Fri, 08/08/2014 - 12:12 | 5065617 Gromit
Gromit's picture

Better than house prices falling.....

Fri, 08/08/2014 - 11:33 | 5065440 fzrkid
fzrkid's picture

Does this mean my 825 credit score will now be 1825 and banks will pay me to borrow money

Fri, 08/08/2014 - 11:32 | 5065441 DullKnife
DullKnife's picture

Hey!  I know!

Obomba issues an Executive Order that says all illegals have a credit score of 1,000.000!

After all, all these millions of low education, low income illegals deserve homes too.

And not just dinky, cramped apartments, but nice residential houses with room for their

soon-to-be-flown-in parents, grandparents, brothers, sisters, uncles, aunts, nieces and lesser relatives.

And Big O could issue free money to all the illegals to get the mortgage and guarantee the loans on the full faith and backing of His taking money from U.S. taxpayers/citizens to pay for any missed mortgage payments.

And Housing will go to the moon!

(along with house prices and rents)

DK

Fri, 08/08/2014 - 11:34 | 5065444 corporatewhore
corporatewhore's picture

I assume paid judgements and discharged bankruptcy can also be eliminated from the score?  Why not just give an 800 to everyone!

Fri, 08/08/2014 - 11:52 | 5065533 813kml
813kml's picture

No FICO Left Behind

Fri, 08/08/2014 - 11:33 | 5065445 Stoploss
Stoploss's picture

If we do not have fiscal responsibility to begin with, then why do we even have FICO scores???

FICO score is a measure of fiscal responsibility no?

They teach the opposite of fiscal responsibility in the schools, so that nullifies FICO right there.

Bring on the 4 digit FICO!!!

Fri, 08/08/2014 - 11:34 | 5065450 QQQBall
QQQBall's picture

Every conumer will now have the number of pounds of body weight over 200 added to their credit score.

Fri, 08/08/2014 - 11:55 | 5065540 813kml
813kml's picture

Just in time to finance a new half-ton scooter.

Fri, 08/08/2014 - 12:16 | 5065639 BurningFuld
BurningFuld's picture

Don't forget those extra ply tires.

Fri, 08/08/2014 - 11:34 | 5065451 kchrisc
kchrisc's picture

Most don't know that they can raise their Fair, Isaac, and Company (FICO) score by chanting, "I must go deeper into debt to the fraudulent-reserve banksters and Rothschilds."

Fri, 08/08/2014 - 11:36 | 5065463 tradewithdave
tradewithdave's picture

Goal posts?.... call them "Idea Posts"... then they can be moved as needed.  There, fixed it. 

Fri, 08/08/2014 - 11:41 | 5065475 Atomizer
Atomizer's picture

I'm Broke, can you finance to qualify me for a NINJA loan?

/ Bwahahahaha, just fell from my chair laughing 

Fri, 08/08/2014 - 11:40 | 5065481 Seasmoke
Seasmoke's picture

Don't you get 200 just for writing your name. (Or is that just SAT folklore)

Fri, 08/08/2014 - 11:39 | 5065482 roadhazard
roadhazard's picture

If everybody gets a bump then I've got to be 950 or better. I might be able to borrow enough to get this country running again by myself. Especially if I get one of those no payments for ten years deals.

Fri, 08/08/2014 - 11:43 | 5065490 Gringo Viejo
Gringo Viejo's picture

Just stopped to think I've been plugged into ZH for about 3 and a half years now. And I've never encountered a website or blog that was more informative, or "rip the rag off the bush" truthful than ZH. Tyler, TYVM.

Fri, 08/08/2014 - 11:43 | 5065500 Latitude25
Latitude25's picture

Well I'm still waiting for the FED to distribute free money to the public.  Then I'll buy a house.

Fri, 08/08/2014 - 11:45 | 5065505 sessinpo
sessinpo's picture

FICO - Fucked In Cracked Opening

Fri, 08/08/2014 - 11:48 | 5065520 edifice
edifice's picture

Contrary to popular belief, Millennials are buying houses and townhomes. The problem is, they can't really afford it, so they sublet to 1 or more roommates. People like me, who can afford to wire a year's worth of rent into their account. I have a credit score in the 770s; yet I have no mortgage, auto loan, and only 1 credit card on which I keep a small rolling balance (less than $300).

Fri, 08/08/2014 - 11:49 | 5065524 besnook
besnook's picture

why use a fico score at all? its all fiat and the fed will make sure the value goes up so why not let anyone buy and just charge interest. at these rates even a walmart couple can buy a 300000 dollar house. it worked before. they must have figured out how to make it work without crashing. maybe a federal anticrash tax would work so the banks can claim they bailed themselves out this time.

Fri, 08/08/2014 - 11:54 | 5065541 besnook
besnook's picture

because raising wages is too much work

Fri, 08/08/2014 - 11:58 | 5065556 madcows
madcows's picture

America's credit score is MINUS 17 trillion

Fri, 08/08/2014 - 13:57 | 5065571 vulcanraven
vulcanraven's picture

I was insolvent on around 17k of debt two years ago, which sent my credit score into oblivion. After paying back a small amount to a debt consolidation service, and having CHASE absolve 5k worth of debt and then report it to the IRS, I have already started recieving credit card offers again. Mind you, my credit score is probably around 590 at the moment. I took one of the offers from Capitol One so I could exploit the points system on their card, and guess what happened next?

After having the card for about 3 months, they started bombing me with pre-approved auto loans for $30k at 15.5% APR.

LOL! What a fucking clown show

Fri, 08/08/2014 - 12:02 | 5065572 FreeNewEnergy
FreeNewEnergy's picture

Cash solves most problems.

Notice the similarities

FUCK FICO

LOAN LOSE

BANKER GANGSTER

CASH GOLD GOOD

GUN GOD

I could go on, but, what's the point? Sun's shining, tomatoes are ripening, and I'm out of beer. Gotta go fix that pronto.

Fri, 08/08/2014 - 12:07 | 5065587 SheepDog-One
SheepDog-One's picture

Don't worry, they swore they learned their lesson last time when the shockingly irresponsible bets and NINJA cringeworthy lending practices collapsed the financial system....they learned, really they did!

Fri, 08/08/2014 - 12:08 | 5065598 wcvarones
wcvarones's picture

Screw FICO.  Loans should be priced on LTV.  You put 30% down, you're not going to walk away.  You put 5% down with an 800 FICO, you're still a big risk.

Fri, 08/08/2014 - 12:11 | 5065612 CoastalCowboy
CoastalCowboy's picture

It'll end differently this time 'cause Obama he make me believe.

Rainbows and Unicorns 4-ever!

Fri, 08/08/2014 - 12:14 | 5065630 ThroxxOfVron
ThroxxOfVron's picture

FICO is bullshit.  Especially using it as an excuse not to hire people with great work histories pre the 2007/8/9.

Even if the CountryWide frauds and Goldman shit-securitizations are ignored in the banking melt-down saga borrowers didn't blow up GM or AIG and weren't what fucked up the interbank and money market scenes...

The banks got zirp and the credit card rates for tens of millions of people jumped from good/4.99% to awful/24.99% in one step redlining them in an instant even as the market bottomed in 666 hell.  Socializing losses amongst those that could manage to pay up and funnelling billions in tax write offs to the banks and credit card companies.

Why the fuck should the citizenry be forced to pay 500% more on outstanding loans when the bank is being bailed out and provided with massive tax breaks and virtually free credit itself?

Fuck the FICO nuts and these interest rate hijackings.  The score is a goddamned scam.  

...& it certainly has nothing to do with whether or not someone does or does not have skills and/or a good work ethic/history.

I'm tired of hearing this shit.  Cease the .GOV interventions and let the lenders go bust if they make stupid loans to unworthy borrowers. Force them to earn their keep as facilitators and do the dillignce and provide the customer service and make good loans at good rates to prudent people -and we won't have all these fucking problems.

 

Fri, 08/08/2014 - 13:28 | 5066107 slightlyskeptical
slightlyskeptical's picture

Treasury should have bought all consumer loans and refinanced them at break even over 30 years. Banks would have been off the hook, real changes to banking could have been established, and the American consumer would have rebuilt the economy.

But no, due to moral hazard. It's not like this country has any morals left at all.

Fri, 08/08/2014 - 12:19 | 5065649 Muppet
Muppet's picture

I have no idea of my credit score.   I guess I'd care if... well actually.... no I don't care.

Fri, 08/08/2014 - 13:03 | 5065956 Cobra
Cobra's picture

You'd care if someone stole your (un monitored) identity and you got to hold the bag.

Fri, 08/08/2014 - 12:22 | 5065663 Downtoolong
Downtoolong's picture

In other news, Facebook, Google, and Twitter announced a collaborative effort to develop a PICO score for users, based on analysis of their activity on the three social media systems. The score will provide countless businesses, agencies, and government institutions with assistance in rating peoples worthiness and suitability for products, services, job opportunities, etc.    

“Think of it like a FICO score for your personality and behavior”, said Jon Monson, Chief Psychologist at Google.

“The key attraction is simplicity”, added Wilma Wei Chung, V.P. of Product Development at Facebook. “By distilling a person’s entire being into a single index, that makes it easy for our corporate and government clients to use.”    

The effort has already drawn attention from Wall Street too. “We can hardly wait”, said Tom Essex of the COMEX, “We’re already working on a futures market based on a national average PICO index.”  

Fri, 08/08/2014 - 12:26 | 5065677 buzzsaw99
buzzsaw99's picture

now nobody will pay their medical bills

Fri, 08/08/2014 - 12:32 | 5065707 marketheretic
marketheretic's picture

Go 5 - 7 years without access to credit and a few people will figure out that they can live a very nice life without having to have a bank in the middle of every transaction.

If MORE than a few people figure this out then we have ourselves a movement. This is what scares the "system"

Fri, 08/08/2014 - 12:48 | 5065847 DOGGONE
DOGGONE's picture

IMO, real asset price histories
http://www.showrealhist.com/RHandRD.html
scare the 'system' SEVERELY.

Maybe you might test my IMO by putting them all over the place!

Fri, 08/08/2014 - 12:33 | 5065712 SilverRoofer
SilverRoofer's picture

DEBT is the Money of SLAVES!

Let our people go

Fri, 08/08/2014 - 12:41 | 5065789 yogibear
yogibear's picture

End of the banking and ponzi scheme when they resort to this.

Take out all the money you can and buy PMs, then default and leave.

The banksters will be stuck will loads of bad loans again.

Fri, 08/08/2014 - 12:46 | 5065828 Loucleve
Loucleve's picture

Italy and the UK added Hookers and Drug sales to GDP a few months back.

I saw an article where we will be adding the value of US company products manufactured in CHINA (Apple) to GDP, but cannot find the article?

Anyone know where that is?  I know ZH printed it.

Fri, 08/08/2014 - 12:43 | 5065798 DOGGONE
DOGGONE's picture

real home price history here
http://www.showrealhist.com/RHandRD.html

Fri, 08/08/2014 - 13:09 | 5066001 mastersnark
mastersnark's picture

More debt makes a better life.

You are what is in your wallet.

Consume on credit to prove you are successful.

A mortgage is a valuable accomplishment.

Fri, 08/08/2014 - 13:17 | 5066045 ponyboy96
ponyboy96's picture

Only way for them to get the growth that they seek is by wage inflation.  As it stands housing and other commodity items have gotten far too out of reach for the average American.   They need serious wage growth to keep these next bubbles going.

Fri, 08/08/2014 - 13:27 | 5066094 Clesthenes
Clesthenes's picture

While we’re at it, why not fix the MBS problem?

To design a correction, we must start with three major facts 1) money was borrowed, 2) money is owed and 3) banks will not, or cannot, demonstrate rightful authority to collect such money.

And, we should aim at three principle goals 1) do not impose penalties on innocent bystanders (taxpayers, neither living nor following generations, nor bank shareowners or depositors); 2) hold those accountable who perpetrated the crisis, and 3) restore those who suffered by such crisis….

My suggested solution includes a very common practice: a second mortgage “on top” of the first.  It would be executed in favor of “we the people” thru the mechanism of a First-Amendment assembly (more on this).

Major steps of this procedure would have the assembly,

One, Negotiate a market-related debt for the property in question;

Two, properly execute a promissory note and deed of trust;

Three, begin collecting payments from the homeowner;

Four, distribute payments in two directions 1) to those who provided the original money (bank depositors or shareowners) and 2) to individuals or groups who are investigating the mortgage crisis and a few other grievances;

Five, when sufficient evidence is collected pertaining to identification of perpetrators, begin a prosecution of them;

Six, upon conviction, collect damages from estates of those convicted;

Seven, use this money to pay all costs of prosecution and to restore all injured parties to their original and rightful conditions.

There are many important observations to notice about the above procedures: we don’t need anyone’s permission to perform any one of them, except parties involved; and we certainly can’t employ existing forums of redress, which are dominated by those guilty; this is why we need to use First-Amendment assemblies.

In particular, people commonly execute second mortgages.  Sometimes they pay one and not the other.  In general, American Founders did not ask king George if they could take matters into their own hands: they stood in the law of nature.  Thus, we do not need to ask anyone whether or not we can help finance various investigations of grievances.

Here is an opportunity for people involved in truth movements to gain substantial support for their work.  Name your grievance: events of 9/11, attack on USS Liberty; missing trillions from DoD, HUD, SSA; illegal wars; suppression of natural health remedies; the transfer of secret military technology, and the Panama Canal, to Red China, South American drug cartels and Chinese Triads – (see the Congressional report, “The Financial and Commercial Impact of the Panama Canal Treaty”).

And, let’s not forget Nicholas and Alexandria.  At the time of their murder by Judeo-Bolsheviks, he was considered the wealthiest man on the planet.  Prior to his murder, he was held captive for nine months.  Why the delay?  I suggest that he was kept alive while Judeo-Bolshevik bankers located and transferred his property into their hands; then he and his entire family were murdered; thus, leaving no descendants who could claim interests in his property.

These are potential sources of trillions of dollars for restitution to injured parties and for compensation for the work of successful prosecution.

All these and many other grievances have easy, but time-consuming, solutions; and they are all impossible as long as aggrieved parties remain ignorant of their power thru the right of assembly.

From Unprecedented Crisis to Unprecedented Opportunity” provides a more complete explanation.

Fri, 08/08/2014 - 13:25 | 5066096 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Cash will always be King, and credit will always be Serf. Usury will always work the Serf to an early grave through stress that Banksters bank on. Starve the beast just as they had intended to starve 77 million Americans. What is good for the goose is good for the gander!

MUPPETS UNITE to overthrow the evil 1% ruling classes [read 85 billionaires]

OCCUPY FAIR ISAACS - OCCUPY FICO SCORES - OCCUPY EVERYTHING

Fri, 08/08/2014 - 13:33 | 5066146 blown income
blown income's picture

Well since being laid off 2 months ago from a 100k year job and all I have found is a job paing 60% less does this make it easier to walk away

Bought a home FHA last year 3.5 down on 150k

Figured I was safe so decided to fix up the house Home Depot was kind enough to give me 32k and a FHA home loan of 25k

Another 20 k on low interest cards or 0 for a year figuring I could refi once it was all done

Well not done got the $$$ and kitchen etc.

Thinking of walking away wonder if this will help if I move and try to buy in a few years

Yes I signed on the lines and feel like shit and I shod own up to my obligations feel less of a man but fuck the company pulled the rug from under me

Fri, 08/08/2014 - 18:11 | 5067747 MrButtoMcFarty
MrButtoMcFarty's picture

The American Dream...LOL

Fri, 08/08/2014 - 13:50 | 5066293 Billy Shears
Billy Shears's picture

Because "confiscating" your savings/property via inflation just wont work fast enough.

Fri, 08/08/2014 - 13:57 | 5066349 AurorusBorealus
AurorusBorealus's picture

"And that no man might buy or sell, save that he had the mark, or the name of the beast, or the number of his name.  Here is wisdom.  Let him that hath understanding count the number of the beast: for it is the number of a man: and his number is Six hundred threescore and six."

An ode to Fair Isaac.  Yes, let´s mark ´em as having good credit and give ´em all a number... each man a number for his name, with which to buy and sell.  Those with good FICO, let them buy, buy, buy.  Those with bad FICO... let them starve.

Fri, 08/08/2014 - 13:57 | 5066361 22winmag
22winmag's picture

It depends on what the definition of definition is... just as with GDP.

Fri, 08/08/2014 - 14:06 | 5066430 Mox E
Mox E's picture

 

"can stay on borrowers' credit reports for as long as seven years"

Yeah right. I had a bad credit thing stay on my report for 12 years and couldn't get rid of it no matter what I tried. Now I have mysterious debts being collected that are so old that they're past the statute of limitations. This in particular is from a card that I closed, but apparently had a small balance. The creditor (Capital One) never bothered to tell me that it had a balance and never once tried to collect. Now with interest it's grown to over $1K and some secondary market collector has been trying for several years to get me to pay it. Credit industry is a fucking joke.

 

Fri, 08/08/2014 - 23:18 | 5068826 daveO
daveO's picture

Cap. One are thieves. They once issued a card to me for which I never applied. Then, mailed it to my old address(same house, but had a new 911 address). Two years later, I found out about it thanks to a free credit report. They had charged an annual fee and late charges on the annual fee. After I had that removed, I asked them how they could do that when I already had a card(s) being serviced at my new address. No explanation. I cancelled my other cards and told them to GTH. 

Fri, 08/08/2014 - 16:23 | 5067326 Bumbu Sauce
Bumbu Sauce's picture

Behold the reckoning of placing one's hope in the earning of future wages.

Fri, 08/08/2014 - 17:31 | 5067610 AdvancingTime
AdvancingTime's picture

Anything to put lipstick on this pig! The Fed has been superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop.

The Fed  must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect. To make matters worse little has been done to address our structural problems and make America more competitive, this will massively thwart growth going forward. More on this subject in the article below.

 http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...

Fri, 08/08/2014 - 18:48 | 5067901 d edwards
d edwards's picture

Hey! Let's lower our lending standards so more people with sketchy credit histories can get loans they can't pay off. What could go wrong?

Fri, 08/08/2014 - 19:50 | 5068187 laomei
laomei's picture

Subprime isn't a problem if you redefine subprime.

Fri, 08/08/2014 - 20:42 | 5068375 Kreditanstalt
Kreditanstalt's picture

Obviously government policies of inflation aren't limited to money and credit...

Fri, 08/08/2014 - 20:48 | 5068402 oooBooo
oooBooo's picture

This will make it more difficult for lenders to judge risk. The end result will be fewer loans not more.

 

Fri, 08/08/2014 - 22:01 | 5068646 Semi-employed W...
Semi-employed White Guy's picture

This is the financial equivalent of the faggot youth soccer leagues where everyone get's a trophy.

Fri, 08/08/2014 - 23:04 | 5068811 daveO
daveO's picture

It reminds me of grade school. The teacher didn't (or wasn't allowed to?) want to flunk the idiots, so she'd add extra credit on tests. I'd do them too, get a 120 on the test, but only 100 on the final report card. Another extension of the Fed's moral hazard. "No idiot child, or freeloader, left behind."

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