Past Due: Radio 154 – Robert Kiyosaki’s Dad & The Credit Scores Banks Like
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We discussed two different questions on today’s show – from real estate looking like an asset, but behaving like a liability, to which credit scores banks prefer to use when they make lending decisions.
Shawn in Garland, TX wanted to get some thoughts on Robert Kiyosaki’s statement that real estate behaves like a liability. It’s an interesting argument that Kiyosaki presents in his bestseller Rich Dad, Poor Dad, but I addressed the issue of semantics and that we don’t want to confuse expenses with actually owing people money. Likewise, the biggest component missing from the typical American household regarding their home truly behaving like an asset is time. The more we move in and out of house, the more frequently we reset ourselves back to the most expensive time in the mortgage: The early years when we primarily pay interest.
Keith and Julie wanted to know how banks use the credit scores from Experian, Equifax, and TransUnion to make lending and pricing decisions. I covered how they select the score that will dictate the underwriting decision, and how other financial institutions – like insurance companies – can use credit scoring data to create their own measures when determining premiums. If you haven’t checked your credit report recently, be sure to get your free annual credit report from each of the three bureaus at AnnualCreditReport.com.
If you have a specific question, I’d be happy to answer it and further cultivate the wisdom of the Past Due Radio masses. The experiences of our listener base provide plenty of insight we all can learn from; don’t hesitate to ask – I’m happy to help!