Does being Self-employed mean lower FICO?

I am self employed. I pay my bills but have quite a few inquiries into my credit because of my company. I am just learning that this lowers my FICO score. It is 670 (not bad but not good either) yet All bills are paid as agreed and on time. The "Canned" Fico score "analysis" by one company states that the FICO score is lowered because of the many inquiries to the CRA's.

This doesn't seem right. Is this happening to any of the rest of you or am I all wet on this?

It all depends what type of company you have - sole prop., partnership, or corporation. As a corporation, really they should not be pulling your report at all. I never give out a SSN, just my FIN. If they ask for a SSN I just skip over that question. I also do not give out my DOB, or home phone number. I have given my home address before though. As a corporation most companies know to base it off your Dun&Bradstreet Report, not your personal credit report - they should be judging the company's credit, not yours.
If you're a sole prop or a partnership they will pull your personal credit report, because you are the personal guaranteer and there is no corporate veil involved.


Hope this helps.

Dani

Yes, if your company is a sole proprietorship or partnership it will hurt your score. As Dani mentioned, they use your personal credit for these types of businesses. The problem is that business use of credit differs from personal use. Even with a perfect payment record you will get hurt with too many inquiries, high balances, wrong loan mix, etc.

I guess the only way out is to incorporate and then let all of the inquiries, etc. age off your personal file.

Of course, until that happens, you may be forced to take loans at higher interest rates and therefore higher payments, that you might have trouble making therefore sending you into default, all because your score was lowered even though you used credit responsibly (always paying on time).

There it is, the scenario that illustrates the point that credit scoring causes defaults rather than predicting them. Someone on this board has already mentioned this point.... what was her name?...... ;-)

hahaha!

Actually, that's exactly what happened to me when I was a mortgage broker.

"I guess the only way out is to incorporate and then let all of the inquiries, etc. age off your personal file."

That's not how it works either. The ss# of the officers is required until you ARE in B&D.

to my knowledge, the status of one's employment is not figured into the FICO scoring models. problems arise when you have alot of itemized deductions, depreciation, capital improvement, etc... that makes the bottom line on your 1040 unable to meet front and/or back-end debt to income ratios and you require "no-doc" financing. in this case, you need a minimum 680 middle score to get a fannie/freddie loan product of any kind.

take it from someone who's out a quarter million in the last three years, could have retired a millionaire by now, and has missed out on one opportunity after another, due entirely to the lending industry's adoption of FICO scores as sacro-sainte when it comes to whether or not you get a mortgage, and how much you will be price-gouged on rate and terms.

after almost five years of extensive research, expensive lawyers, and endless frustration and helplessness, this is a brief snapshot of what i see today. bear in mind that i have been in the real estate business since 1985, and have done two small but very lucrative projects here in the boston area; FICO put the lead into my boots just as the second project was finishing.

for all the gory details, go here:http://www.aaacredit.com/discuss/topic.asp?topic_id=15&forum_id=2&Topic_Title=%7BUN%7DFAIR++ISAAC+RUINS+LIVES&forum_title=Fair+or+Unfair&M=False&S=True

that's a long link; copy & paste the whole thing into your address bar if a click doesn't open the page for you. this was written in march, 2002.

here's a link to how fair "Fair" Isaac quackware profiling actually is; it strikes me as rather odd that they had to put the word "fair" into their company name. i know it was named after the founders back in the 1950's-- i'm sure back then, nobody was considering the possibility that these people would one day write computer programs that the vast majority of the lending industry in america would delegate to who is worthy of a home loan and who isn't, all under a veil of government sanctioned secrecy:---


http://www.rudyfoto.com/hol/arbeit.html
for those of you who don't speak german, "arbeit macht frei" means "works sets one free."

if no one, not the lenders or investors backing the now trillions of dollars backed by FICO scored bond portfolios [no, bond analysts don't get to know either], is allowed to understand the computer programs controlling this megasystem, why is it being allowed to continue? good question-- here's what i think--

convenience:- decision in 30 seconds, while you wait. if computers
could replace human beings entirely and give each and every loan
applicant an appropriate decision on their request for credit, we couldn't be having this conversation, and many people whose lives and livelihoods have been undermined or destroyed by this lunacy wouldn't be on the internet at 4:22 AM attempting to set things right again.

credit scoring was originally intended to be a tool, not substitute for experience bankers and underwriters who may have formed many close and mutually beneficial relationships with their clients. the mortgage broker who has underwritten several of my loans tells me one day i'm approved, the next day i'm declined because the investor backing the loan has increased theirrequired FICO score from 640 to 680, and i'm sitting at 664. no loan, period.
.

he who pays the piper calls the tune, and corporate investors are not bankers-- they rely upon the banking industry to know that their $200,000,000.00 is safe when they park it electronically in a bank in new york, yielding a far interest than that of US treasury bonds, or just about anything else for that matter considered as safe as safe can possibly be. zero risk. that's what they expect, and that's what they have always gotten.

enter FICO:--

i refer to christine's observations on this site that credit scoring is causing defaults and predicting very little. defaults are up a great deal throughout the nation:- this according to a fitch bond analyst
i met through my normal line of business [she came to me looking for an apartment]. this being the case, there has to be an offset of some kind to maintain fannie/freddie bond yields, and there is. it's being paid by the american consumer on a nationwide basis-- we are being charged excessive rates of interest on everything from our homes to our cars to our appliances to whatever we use credit to buy, based upon each person's FICO score. fannie and freddie are getting filthy dirty rich off this thing, and few people even know that they're being shafted every day. practically every person in the country is paying inflated interests, and the lending industry loves it, because their the one's getting rich off the blood and sweat of you, me and everybody. the stock market is in the toilet-- check out "Fair" isaac's shares-- they split stock this year.
ticker symbol is FIC

industry sloth and buck-passing:--

a fannie/freddie backed commitment letter can be issued on the spot if the secret, magic quackware gives an adequate score-- not a pre-approval, an actual commitment of government backed funding to virtually anyone-- apart from the score, the only other thing needded is a satisfactory appraisal of the property.

economics 101--- i'm proud of the c- i got in this subject when i was at harvard; i hated it like hell and consider myself lucky to have passed. it doesn't take an MBA from the business school to figure out that a borrower is more likely to default on their loan obligations if they're forced to pay a higher rate of interest. i have 15 years of flawless credit history, but FICO's quackware didn't like me, so i was carrying over a million dollars in debt, at rates of interest 3 to 5 percentage points of the industry norm. i couldn't get a 70% loan on any of my property because of FICO. i had to sell of two condominiums in 2000 and 2001 to relieve the cash flow problems this inordinate interest was causing. those condos today are worth $150,000 more than they were then-- the prime directive in real estate is "never sell"-- or if you do, the irs 1031a like exchange puts off capital gains tax. i would have done this, but when you get $70,000 out of a piece of property in a market where this amount of cash buys deeded garage spaces that rent for $300 a month, you're better off to bite the bullet, pay the tax, and get rid of debt. FICO says i'm not worthy of taking $200,000 in equity out of one of my properties--- the scoring models don't have a provision for loan to value, and in 1999 i made $130,000.

the boston globe published an article a few sundays ago stating that real estate prices here have increased 89% over the past 4 years. i had to sit it out because of my credit score.

i can't even find an attorney who understands the complexity of this issue, and any legal action would require filing multiple suits against a vast contingent of parties: UNfair isaac, the 3 cra's, the lender who turned me down in a letter desognating spefically my FICO score as the reason for the adverse action, and fannie mae/ freddie mac themselves.

it's after 5 and i'm finally getting sleepy.
goodnight everyone.

christine:-- if you still have the denial letter from wells fargo i faxed you earlier this year, please feel free to post it here in the forum, just remove my street address-- thanks--:rolleyes: