Daily Archive

Every day I look at my stats and I look at what questions are popular out there.  Every day, the same questions come up from people who want to know more about finance.  They always ask about FICO.  They want to know how to see their FICO, they want to know how to change it, they even want to see which FICO is required to qualify for a loan.  My big fear is that young people are going to start becoming obsessed like their parents about FICO.

 Having been a loan officer for a long time, let me say that loan officers are the most overpaid, underworked people in the job market.  What they do requires no skills, little training, and absolutely no personality.  The sum total of what most loan officers do is this:

• Make sure all lines are filled out on application.
• Look at FICO score.
• Compare requested amount with chart that dictates what loan can be approved.

This is obviously only part of the story, but this is as much as many loan officers will ever find out.  FICO is as important as any other private company that says how good you are at anything else.  It’s high school all over again.

Now for some truth amid all the myths you have read in other places.

1. I know personally, and have seen applications come across my desk, 18 year olds who have “700″+ FICO scores, even though they don’t have any actual credit.  What they have is parents who have put them on credit cards to use for emergencies.  The kids get the benefits of the long credit history without doing any of the actual work.
2. Conversely, I know people in their late 50’s and older who have never had problems with homes, cars, etc, with no FICO score whatsoever.  They may be widows, or divorcee’s who have no individual credit, but have had a good history.

To most loan officers, the young person gets the loan, and the older one doesn’t.  Is that right?  Does that seem fair?

What you can do.

Instead of obsessing over an arbitrary number, focus on paying your bills on time, living up to the obligations that you start, and not borrowing more than you can really afford to pay.  As long as you do these things, as well as staying employed, your FICO will be fine, but most importantly, you will be fine.