Quote from @Chris Martin:
Many years ago, decades actually, people with high debt loads, like us real estate investors, could not achieve high credit scores. The algorithm would limit scores based on arbitrary absolute numbers, like $2,000,000. If your debt was over this amount, then your score could not go over 780. I know in N=1 terms, because years ago when my personal reported debt balance fell to a hair under $2M my score improved by about 30 points.
As I usually do, I google (BP search doesn't seem to work right (see my other posts)) to see if "850" and "FICO" is relevant, and this is what I got back:
So here it is. The impossible. 850 out of 850 ... for a real estate investor. It's a first for me, ever. It is clear they changed their algorithm from years ago, because I still have quite a bit of debt with almost no (or almost no, taxable) income;) It's interesting because credit companies don't consider income. If your income (not mine unfortunately) is $2 billion and your debt is $2 million.... shouldn't that BOOST your score? If your (taxable) income is ZERO and your debt is $2 million, how can you achieve an 850 score? I'll all ears to opinions from the BP Nation.
BTW, I don't endorse "credit scores" at all, but I know I have "played the game" contrary to the opinions of people like Dave Ramsey, who declares in How To Improve Your Credit Score Without Debt and countless other videos that debit is the devil. It is and it isn't. I'm just glad that the FICO world knows that "high debt" (in their context) doesn't mean 850 isn't possible. All opinions appreciated. Pro or Con. I plan to finance an F-150 lightning shortly so I like 850.
Time being a factor. I'm curious, when your score was under 800 what was the average maturity of your loans (mortgages included)? Because a lot of investors sell, buy and (the most often overlooked) refinance, Their average account length decreases. Time has 15% baring on your score which could potentially explain the lift you received later. Could this be a factor in what you experienced, If not what other factors do you think could be?
Congratulations on your multiple accomplishments, score and assets, Well done!
