Posted On: August 25, 2008, 3:36 pm CDT

Posted By: Dawn

Yes, banks have been using credit scores for decades. BUT- when you're sitting in front of a loan officer and they are showing you low credit scores due to a specific period in your life that you were late on a few payments, you actually have the opportunity to say
"My grandfather died suddenly and I had to pay $4000 of his funeral" or "We were hit by Hurricane Frances then Jeanne- we didn't work for 6 weeks" (as I have had both over the last 4 years) or "that bill on TU is paid, check the Equifax report- it's correct" or "that bill is the same one that appears three times on TU, twice on Equifax, and once on TRW- and is shown as paid on ONE of the Equifax reports - since the insurance finally paid it as they should have in the first place (that was a hospital bill for the birth of my son that was coded wrong and not paid for over a year)

If those few months are the only periods you're showing as a risk, you still tend to get better rates then if they are strictly taking your score as a factor.

I agree with the posters on this board that feel if the credit scores are SO important, they should at least give you the chance to discuss their findings. Credit card companies decide based only on scores, but you don't NEED credit cards. You have to have insurance and things that you have no control over shouldn't penalize you.

Divorce, death or illness in the family, identity theft, health insurance being slow to pay, natural disaster, any number of reasons that you might fall behind for a short period of time can cause your credit score to drop. I actually transferred my high interest rate card to a low interest rate card and cancelled the high rate card. My credit score DROPPED for three months. Didn't miss a payment. Didn't 'lose' the card. I called and cancelled it because the interest rate was too high. I had to 'miss' a mortgage payment when my grandfather died. Needed the money for the funeral. My mortgage company allowed me to add $200 a month the subsequent payments until it was paid. No late fees, but my credit score took a massive hit, even though I paid every penny as agreed.

IF they would actually bother to find out the details behind a credit score, I'd be more inclined to agree with the posters that swear by credit score underwriting. I do agree that a HISTORY of late or no pays does indicate a high risk factor. But the whole "You're score is bad, you're going to pay more" without any recourse is just aimed at higher premiums.

You could have a credit rating of 850 for 5 years, then you miss payments for a month due to an emergency, your credit score drops to 600 even if you make double payments the next month and catch up. Does that mean you're a bad risk? Does that mean you should be penalized for the next year?