Low FICO Score Might Not Be What It Seems
I was talking to a friend once who works for a loan company that is very
aggresive in making loans (and money!).
They wanted him to do some studies to see if people with bad credit...
which other companies decline... could be accepted by them and make
a profit.
Sooooooo.....
He worked and worked and discovered that if a person is late or has
defaulted on a *medical loan* (i.e. hospital bill, legal bill, doctor's office
bill) will still be a good credit risk.
If someone defaults on such a loan, it's usually because the insurance
company was supposed to pay, but didn't... or hasn't yet ... or something
along that line. And just because a person stiffs a hospital, it has NO
correlation to how they would pay on their mortgage.
So once he discovered this, his company gleefully looked again at people
with poor FICO scores and if it was because of a medical debt, they
loaned them money with a higher rate of course. And those loans were
very good and very profitable.
I don't know why I'm telling you all this. But it seemed interesting to me
as a "piece of trivia" to know when reviewing someone's credit.
What say you?