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FICO: Traits of People With High Credit Scores?

As realtors, we often have the complicated, and highly sensitive task of running background credit checks of our clients. Landlords want to make sure that a potential tenant is a responsible person who earns a solid income and is able to pay rent on time. Just as well, potential home buyers need to have a credit check to be eligible for a mortgage.

FICO recently came out with a list of traits that exhibit “high achieving” traits, but how relevant (and obvious, really) can they get with this list?

Available on RealtorMag.com, below is a list of traits from FICO:

  • 96 percent have no missed payments on their credit report. For any who have a missed payment, it occurred, on average, about four years ago. (Payment history makes up 35 percent of a person’s credit score.)
  • They tend to have a well-established credit history and rarely open up new accounts. On average, the oldest credit account was opened 25 years ago. Overall, according to FICO, these “high achievers” tend to have credit accounts that are at least 11 years old.
  • They’re not always debt-free: They average about seven credit cards, including both open and closed accounts, and have an average of four credit cards or loans with balances. One-third of “high achievers” have balances of more than $8,500 on non-mortgage accounts. The remaining two-thirds have total balances of less than $8,500.
  • About 1 in 100 have a collection listed on their credit report. What’s more, 1 in 9,000 has experienced tax liens or even a bankruptcy.
Of course, it would be nice to not miss a payment. This list appears to be very optimistic and does not at all reference how difficult it is to become a high-achiever in our current economic climate. Whether or not a person has had 7 credit cards or 21, whether they’ve had it for 11 years or 5, their list of high-achievers must have had very fortunate financial circumstances to come out of the recession with little mark on their credit report.
“In a challenging economic period, the fact that we all have a chance to be high achievers is very good news. The lesson from these high achievers is that it’s never too late to rebuild and score high,” says Anthony Sprauve, credit score advisor for FICO.
Maybe these traits are better served as guidelines? As a real estate company, we have now become accustomed to bad credit, as many have been affected by the recent economic downturn over the past few years. There are those clients with bad or OK credit who were once “high-achievers” and know what it takes to bounce back. But many still do not.
“About 1 in 100 have a collection listed on their credit report. What’s more, 1 in 9,000 has experienced tax liens or even a bankruptcy”–Hmm, good to know?

 

 

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