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Author: JaviAir Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 311074  
Subject: Re: Do NOT apply for a Capital One credit card!! Date: 8/28/2004 11:25 PM
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<<<No, what I'm saying is if the OP is saying 40 points will <snip> tried to ruin my credit, cost me 10,000's of dollars in higher interest rates, hurt my chances of fulfilling my dream of starting my own business and living a better and more fulfilling life, etc. etc. etc</snip> then he was on the brink of bad credit anyway. Going from 700 to 660 would definately suck for the OP...but it wouldn't do what he's saying it would do. Only being on the bottom end of FICO would do what the OP is saying.>>>

I agree that I might have gone a little overboard on the possible consequences, but let's see by just how much:

Some common mortgage rates based on credit scoring (from the FICO website):

720-850 = 5.75%
700-719 = 5.87%
675-699 = 6.41%
620-674 = 7.56%

Now, remember that the 40 points is the hit I got for the high ratio only. As I explained, I am also getting hit for having a low credit limit, but I don't know how much that is affecting me because I've unknowingly had it for a while and I don't know my score prior to that. So let's assume that it's a 10 point hit like in the example I used earlier. If I have a 722 score, a 50 point hit could send me down three levels, from a 5.75% to a 7.56% rate (BTW, I believe that most lenders set their FICO levels at 20-point increments, so that scale above might be a bit optimistic)

For a conservative $150,000 30 yr. fixed mortgage at those rates, the total sum of payments would be:
at 5.75% = $315,000
at 7.56% = $379,800

So theoretically the difference could cost someone $10,000's. No exaggeration there after all.

And the whole dramatic thing about ruining my chances of starting a business and living a better life and yadda yadda yadda, well... I guess it really could hurt those chances and might get me turned down by more lenders, but in reality it would be just one more obstacle to overcome and not the final nail on the coffin for that dream. I was angrier at the principle than at the actual damage done. Sometimes you have to scream to be heard.



PS: Dean, thanks for that explanation, and I'll be emailing you my fax number soon.
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