Credit Score in 78731>Question Details

Mark Garner, Real Estate Pro in Austin, TX

Does anyone see the Government granting credit score adjustments for the millions of borrowers who lost their homes to bad lending practices?

Asked by Mark Garner, Austin, TX Tue Jun 26, 2012

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Mack McCoy’s answer

A credit score is a measurement of how well you manage credit, without regard to the inducements to take on debt.

I agree with you about the "bad lending practices," - offering loans to people at discounted rates below what their credit history would warrant.

However - the reason for credit reporting is so that the next entity looking to extend credit, even on stupid terms, knows whether you've been good at paying your bills on time.
3 votes Thank Flag Link Tue Jun 26, 2012
No. Why let people off the hook on a loophole when their 'bad payment practices' is the reason their credit is jacked?!?!?!?
2 votes Thank Flag Link Tue Jun 26, 2012
Nope! I seriously doubt that will ever happen. However, many lenders that I use are trusted advisers for my clients, and they're helping them increase their credit scores over a 6-12 month period. Start now!
2 votes Thank Flag Link Tue Jun 26, 2012
Never heard of that... not sure how they could even accomplish this. First you would have to prove you lost your home due to bad lending practices. Many people lost their home due to the economy and countless people walked away from homes they could afford because the value dropped.

While I am sure there were a lot of bad loans made people also have to take responsibility for their actions. I know there of plenty of people who were taken advantage of but there are just as many if not more who worked the system to their advantage.
2 votes Thank Flag Link Tue Jun 26, 2012
When a customer is handed something for nothing they are going to take it. When the bank offered a house for little down, no closing costs, inflated values and no documentation to support ability to pay this is when the problems began. Yes, the consumers knew the risk of what they were signing and agreement to be obligated to pay. Hopefully this riptide will settle to help Americans get back above water and land on solid ground. Great comments and insight by all!!
1 vote Thank Flag Link Tue Jun 26, 2012
The government does not create or market credit scores. This is a tool created by third parties to help judge the credit worthiness of the people with the scores. Interesting I once saw a graph of credit score vs default rate. Almost a near perfect straight line. The lower the credit score, the higher the default rate. The higher the credit score the lower the default rate.

I think it would be difficult to quantify or prove what a bad lending practice was and that this particular person was damaged by this and therefore should have their credit scored adjusted.

While there were perhaps predatory lenders, I often think the consumers were also equally to blame. People on all sides of the transactions were often overextended and new it was too good to be true, or should have known better.

It's time we all start taking responsibility for our actions and not blaming other people. That will just get us in trouble again with a false sense of security.
1 vote Thank Flag Link Tue Jun 26, 2012
Bruce Lynn, Real Estate Pro in Coppell, TX
No. Absolutely not.

First, as already noted, credit scores are calculated by private entities. The government's not going to tell Experian, et al., to raise the credit scores of certain people by x number of points. Just won't happen.

Second, and more important, the borrowers lost their homes due to bad decisions on their parts. Mark, Mack, and the others have it right. Just because something's offered to you doesn't mean you have to take it. There were plenty of homeowners who resisted the siren song of "free money, credit to all, make a fortune." They made appropriate decisions and their credit scores reflect that. Others made poor decisions, and their credit scores reflect those poor decisions.
0 votes Thank Flag Link Tue Jun 26, 2012
Don Tepper, Real Estate Pro in Burke, VA
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