the subprime bailout is only for mortgages right?

so for credit cards, auto insurance, car purchases, college loans, and any other type of installment loan, you are screwing yourself to tank your credit score, and this stuff stays on your credit report for 7 years, and the bailout is only for 5.

i'm not saying the bailout is a good idea, but effing up your credit score to save a few bucks on your mortgage is financially insane.

The whole 'credit' system is backwards anyway. To reward good credit is great; to penalize bad credit is one of the most ignorant ideas yet. If someone has financial problems, do you think it's smart to punish them by charging more, to add to their finacial problems?! What genius screwed that math up?! When a basketball player makes a shot, great! Reward them with points! It's all mathmatical! It should all make sense. If they miss, no points(no reward). But do we also punish them? Do you think it would be fair to move the basketball hoop further away because a player missed the shot? Or make the ball heavier? Or make the floor slippery? How about all three? Sometimes, that's how bad it gets when a person falls victim to financial blunders. This morgage problem us linked to predatory lending anyway. So, perspectively, their just giving those who got screwed in the first place another chance. If you choose to reduce you fico for this reason, do it carefully.

yes, wiseone, again, i'm no fan of the current credit scoring system, but yes it is a good thing to punish those with poor credit ratings with higher interest rates.

Higher rates are supposed to dissuade those with poor debt/equity ratios from getting more debt than they can handle. It's not like credit is really required to live in the US. You can pay for things in cash, you can rent with a deposit, and you can live below your means.

Plus, if it had turned out that the system had worked properly and fewer people could afford housing, then the law of supply and demand would have kicked in making those houses more affordable with no crash ever occurring.

The hangups with the system are that the scoring system is constantly tweaked and is propreitary, so it doesn't reward those who are financially prudent, as they can't work to get the best score and lowest rates possible. It is also secret, unless you (in most states) pay to see your score.

Finally, as this mess shows, the ranges between the low and highest credit scores were not wide enough, and a large amount of the subprime lending amounted to 'questionable' lending if not outright fraud.

Getting in on the bailout won't affect your credit record. No one will know if your rate was frozen or not, to my knowledge. And if you're strategic about lowering that credit score, you can bring it right back up within 6 months to a year. And we're not talking about "a few bucks" here.

On a mortgage of $200,000, a homeowner who gets in on the bailout would be saving an estimated $6,000 to $14,000 per year for 5 years.

Sounds like it's worth it to me...

Tracy,

1: getting in on the bailout won't effect your score, because your score has to already suck to get in on it.

2: lowering your score (if you have a decent score) to get in on it would require you to destroy your credit rating.

3: No, it wouldn't, unless you had an extremely crappy score to begin with. to save $6k a year on a $200k loan, you'd have to go from 9% to 5%. If your loan was at 9% or higher, you have a crappy credit score. You'd have to go from 14% to 5% to save $14k per year. If you have a 14% home loan, then your mortgage company hates you.


On average, most people will save $2k to $3k, and you'd pay 20%+ interest on your credit cards, eating up that gain.

Do the math. It's not a good bet to ruin your score for that amount of money.