In-law and friend both defaulted on TS loan. 50 pt FICO credit drop.

[Grammarhero]

I won’t answer any more questions about this. Just wanted to point out there are credit consequences to defaulting on TS loans.

In-law defaulted on $4k TS loan. Friend defaulted on $5k TS loan. Neither of them were sued, had liens, or had wage garnishes placed on them for the defaulted amount. Besides 50 pt credit drop, they escaped relatively unscathed.

I know ChiefsBust and simpsontruckdriver didn’t have their credit affected, but it can happen.

Edited: I redlined the words in the upper left hand corner showing the screenshot is from a credit report. The TS resort reported the default/foreclosure to the three credit agencies.



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[OldGuy]

Don't answer is fine, but I don't understand what is being demonstrated by the account statement, other than that account was delinquent.

Did you intend to post something showing a drop in the FICO score?
- - - - - -
Maybe related, maybe not, I'm a little skeptical about credit ratings right now. In the last couple of months we've had way, way too much on our credit card due to some unusual, irregular expenses. Way more than normal.

Then, $50000 cash just got put in our checking account. That, too, is very irregular and unusual.

And our FICO score has not moved a single point.
- - - - - -
On topic again, it would be nice if someone that comes here talking about walking away from their timeshare debt would stick around after the fact, and document what happens, or doesn't happen, to their credit rating.

 

[Grammarhero]

Don't answer is fine, but I don't understand what is being demonstrated by the account statement, other than that account was delinquent.

Did you intend to post something showing a drop in the FICO score?
- - - - - -
Maybe related, maybe not, I'm a little skeptical about credit ratings right now. In the last couple of months we've had way, way too much on our credit card due to some unusual, irregular expenses. Way more than normal.

Then, $50000 cash just got put in our checking account. That, too, is very irregular and unusual.

And our FICO score has not moved a single point.
- - - - - -
On topic again, it would be nice if someone that comes here talking about walking away from their timeshare debt would stick around after the fact, and document what happens, or doesn't happen, to their credit rating.

The screenshot is from an individual credit report, as reflected in the upper left hand corner. Looking at the individual’s score history, the 50 pt drop coincided with the TS loan default.


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[echino]

I don't see the credit score on that screenshot. The "rating" line with numbers 30-60-90-120 shows days in arrears.

 

[ausman]

Those figures look like days delinquint to me, is this the screenshot you meant to put up.?

 

[Grammarhero]

I don't see the credit score on that screenshot. The "rating" line with numbers 30-60-90-120 shows days in arrears.

I try not to put too much personal info on a public forum like TUG. Heck, even the TS loan screenshot default on a credit report was already too much.


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[Grammarhero]

Those figures look like days delinquint to me, is this the screenshot you meant to put up.?

Yes. But if you look at the upper left hand corner, you will see it’s from a credit report.


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[Grammarhero]

For anybody with excellent credit that is thinking about defaulting on a TS loan, your credit score drop might be more pronounced. Additionally, if your TS loan is more than $4k/$5k, then your credit score drop might be even pronounced.

Both my in-law and friend had about a 700 credit score (good) dropping to 650 (fair) based on defaulting on a $4k/$5k TS Liam.

I estimate that my defaulting on a $10k TS Loan would drop my credit score from 820 to 670, or 150 points.


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[Grammarhero]

Don't answer is fine, but I don't understand what is being demonstrated by the account statement, other than that account was delinquent.

Did you intend to post something showing a drop in the FICO score?
- - - - - -
Maybe related, maybe not, I'm a little skeptical about credit ratings right now. In the last couple of months we've had way, way too much on our credit card due to some unusual, irregular expenses. Way more than normal.

Then, $50000 cash just got put in our checking account. That, too, is very irregular and unusual.

And our FICO score has not moved a single point.
- - - - - -
On topic again, it would be nice if someone that comes here talking about walking away from their timeshare debt would stick around after the fact, and document what happens, or doesn't happen, to their credit rating.

My gah. Shouldn’t you have picked up the screenshot is from a credit report and not account statement?


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[OldGuy]

I understand you are trying to make a point, which I don't disagree with, but agree with everyone who has replied.

What is shown is a delinquent account statement. If you say their FICO score dropped 50 points, it does not show on that statement, even when I squint and study it really hard.

 

[OldGuy]

Maybe related, maybe not, I'm a little skeptical about credit ratings right now. In the last couple of months we've had way, way too much on our credit card due to some unusual, irregular expenses. Way more than normal.

Then, $50000 cash just got put in our checking account. That, too, is very irregular and unusual.

And our FICO score has not moved a single point.

Another thing that makes me skeptical of FICO scores is this . . . We bought our present FL house with an interest-free cash advance on our credit card account. Not the down payment . . . the entire purchase. That increased our net worth 4 to 5 times more than the amount of the cash advance. We did not owe any interest and we were never delinquent on anything.

The cash advance was not due for 18 months, with no interest accruing, and we had plenty of cash assets to pay it off when it came due.

But our FICO went down 100 points.

 

[RX8]

There is no doubt a derogatory trade line is going to hurt a FICO score. Depending on how many other varied as-agreed trade lines (auto, mortgage, revolving), and how long, will ultimately decide how much of a FICO impact. One with few trade items and limited history would very likely see a much bigger hit.

I used to approve auto loans and quite frankly, I didn’t put too much weight in timeshare defaults when making a decision. Many banks however use FICO to determine the rate. So, while one with a timeshare default may be approved they just might be paying a higher rate.

 

[RX8]

Another thing that makes me skeptical of FICO scores is this . . . We bought our present FL house with an interest-free cash advance on our credit card account. Not the down payment . . . the entire purchase. That increased our net worth 4 to 5 times more than the amount of the cash advance. We did not owe any interest and we were never delinquent on anything.

The cash advance was not due for 18 months, with no interest accruing, and we had plenty of cash assets to pay it off when it came due.

But our FICO went down 100 points.

FICO knows nothing about net worth or how much you have in the bank. Your FICO dropped because your credit card utilization increased which reduced your available credit. For example, you have $10,000 in total available credit with nothing owing and then the next month you max out the $10,000 leaving you with 100% of your available credit utilized. If that happens your credit score will drop significantly. FICO scores will start to be impacted at 30-40% utilization.

 

[OldGuy]

FICO knows nothing about net worth or how much you have in the bank. Your FICO dropped because your credit card utilization increased which reduced your available credit. For example, you have $10,000 in total available credit with nothing owing and then the next month you max out the $10,000 leaving you with 100% of your available credit utilized. If that happens your credit score will drop significantly. FICO scores will start to be impacted at 30-40% utilization.

Yup.

Pretty much what makes me skeptical of FICO. It did not know they we did not need credit.

 

[OldGuy]

I didn’t put too much weight in timeshare defaults when making a decision.

Given the general perception of timeshare, and the very-public awareness of how near-impossible it is to get rid of them, I suspect many who make loan decisions feel the same way. If, other then the timeshare default, everything is fine, I suspect there is an sense of understanding.

 

[T_R_Oglodyte]

Yup.

Pretty much what makes me skeptical of FICO. It did not know they we did not need credit.

Jim - whether or not you are skeptical of FICO is irrelevant because you don't use it for anything. By the same token, your skepticism of FICO is irrelevant to the people who do use FICO. And if you applied for credit after your FICO score took a hit, your skepticism would still be irrelevant.

 

[cubigbird]

Credit reports and FICO scores are nothing more than an indicator of how good of a customer you are to a lender.

 

[OldGuy]

Credit reports and FICO scores are nothing more than an indicator of how good of a customer you are to a lender.

Yup, I forget that sometimes . . . I think it is about your financial well-being, and it is not.

https://www.investopedia.com/terms/f/ficoscore.asp

 

[OldGuy]

Given the general perception of timeshare, and the very-public awareness of how near-impossible it is to get rid of them, I suspect many who make loan decisions feel the same way. If, other then the timeshare default, everything is fine, I suspect there is an sense of understanding.

than, not then.

 

[LannyPC]

If, other then the timeshare default, everything is fine, I suspect there is an sense of understanding.

I kind of wonder that too. If one were a lender and a customer came to the lender looking for a loan and the lender saw that the customer defaulted on a timeshare mortgage and/or the MFs which eventually led to foreclosure, which point of view would the lender take?

Would he take the glass half-empty point of view figuring "This person defaulted on a mortgage and let a valuable property go into foreclosure. This person is obviously careless with purchases and investments. He could very well default on a loan we give him," and reject the potential borrower.

Or, could the lender take the half-full point of view saying, "This person did what he had to do to get rid of this liability. This will now free up [insert amount of annual MFs here] each year for him to pay back the loan as well as not force him to take vacations when he can't afford them," hence feeling that the potential borrower would not be a high-risk customer?

 

[OldGuy]

If I was the one passing judgment on a loan approval, and I saw that someone defaulted on a timeshare loan to improve their financial health, that would be a plus.

If the applicant had defaulted on their mortgage or their auto loan, that would be a minus.

What I'm trying to say . . . poorly I might add . . . is that I think that is a common feeling among the general public, that there are things that you should be financially responsible about, and then there's things that you sorta get a hall pass on.

 

[T_R_Oglodyte]

If I was the one passing judgment on a loan approval, and I saw that someone defaulted on a timeshare loan to improve their financial health, that would be a plus.

If the applicant had defaulted on their mortgage or their auto loan, that would be a minus.

What I'm trying to say . . . poorly I might add . . . is that I think that is a common feeling among the general public, that there are things that you should be financially responsible about, and then there's things that you sorta get a hall pass on.

People who are in the business of making large numbers of credit decisions (car dealers, credit card issuers, etc.) don't review individual applications. They don't have the time to make individual case decisions. Instead they just run the credit reports, cross check whatever little bit of financial they have asked you to provide (f you say on the application that you own a house, that should match up with what is in the credit report) and they apply company policies regarding what gets approved and what doesn't get approved. And I would think it's extremely unlikely that any company credit policy is going to say - "and boost the credit score for someone who has defaulted on a timeshare loan".

Maybe be on a high ticket item, where the dollar value is high enough to justify making case-by-case credit decisions - perhaps if you're buying something like a yacht - they may delve in deeper and something such as net worth will apply. But if you as a buyer are so tight on money that you had to default on a timeshare loan as an act of debt triage, it's not likely that you have enough free cash to buy that big ticket item.

 

[OldGuy]

. . . poorly I might add . . .

.

 

[OldGuy]

you don't use it for anything..

We don't use our FICO score for anything because we do not need credit . . . which probably explains why our FICO score is so dang high. If you don't need to borrow money, you can, and if you need to borrow money . . . well, you know where I'm going.

 

[rapmarks]

We never paid attention but unexpectedly had to buy the house where our daughter and children were living. So a thirty year mortgage and going through all kinds of questions. Anyhow, you all are invited to our mortgage burning party which will be a combination birthday party for my husband when he hits the big 105.