How bad can things get on a credit report/ if you don't care.

This is a interesting situation one of my friends has fallen into.

In October of last year we pulled his crdit and fico scores.
His FICO was 799
He had no negative remarks and only about 18K stretched out over 220K of credit cards
Only installment loan was his house he purchased a couple of years ago.

We just pulled his reports and scores again this afternoon because of a bunch of letters from credit card companies that showed up yesterday.
Today his FICO was 446.

Here's the negatives.
Mortgage - over 90 days past due and shows as a foreclosure and account closed .(he said he really hasn't paid on the house for 6 months. But he still lives in it)

Judgment on public records for the home from the mortgage company.

This is how the lady at experian explained it.

His first 30 day late on the mortgage dropped his score by 30 points---------------------------769
His 60 day late on mortgage dropped it by 75 points-------------------------------------------696
his 90 day late dropped it by another 100 points-----------------------------------------------596
the judgment and foreclosure 150 points-------------------------------------------------------446

But its going to get much worse, here's why.
The letters he received from all the credit card companies either canceled his cards or dropped
the limits down to around 1000-1500 each. His total credit limit now is 20K.
Next months credit report will show him at almost 90% utilization of available credit. OUCH!
That will be another 50 points off at least.
If it happens he will have the lowest score I have seen.

All because he decided he wasn't going to pay for the house.
But I just find it unreal how it all snowballed so quickly.

Just thought I would share, just in case somebody else is thinking of walking away from a house. It appears to have consequences way beyond just not paying on the mortgage.

Thats AWESOME!

OP seems to be too happy about the situation to actually be "his friend".

vaylon said: This is a interesting situation one of my friends has fallen into.

In October of last year we pulled his crdit and fico scores.
His FICO was 799
He had no negative remarks and only about 18K stretched out over 220K of credit cards
Only installment loan was his house he purchased a couple of years ago.

We just pulled his reports and scores again this afternoon because of a bunch of letters from credit card companies that showed up yesterday.
Today his FICO was 446.

Here's the negatives.
Mortgage - over 90 days past due and shows as a foreclosure and account closed .(he said he really hasn't paid on the house for 6 months. But he still lives in it)

Judgment on public records for the home from the mortgage company.


This is how the lady at experian explained it.

His first 30 day late on the mortgage dropped his score by 30 points---------------------------769
His 60 day late on mortgage dropped it by 75 points-------------------------------------------696
his 90 day late dropped it by another 100 points-----------------------------------------------596
the judgment and foreclosure 150 points-------------------------------------------------------446

But its going to get much worse, here's why.
The letters he received from all the credit card companies either canceled his cards or dropped
the limits down to around 1000-1500 each. His total credit limit now is 20K.
Next months credit report will show him at almost 90% utilization of available credit. OUCH!
That will be another 50 points off at least.
If it happens he will have the lowest score I have seen.

All because he decided he wasn't going to pay for the house.
But I just find it unreal how it all snowballed so quickly.

 

Just thought I would share, just in case somebody else is thinking of walking away from a house. It appears to have consequences way beyond just not paying on the mortgage.Quoted for preservation

Not paying a mortgage for 6 months... No surprise in those scores. Is he a member of http://www.youwalkaway.com/ by chance?

igorthesmall said: Why didnt your friend max out his credit cards if he was going to walk away from his mortgage debt. Doesnt seem like it could have hurt his credit any worse.Clearly they have penalized even more for being a stupid debtor.
If he would have done an AOR, his score would be at least 50 points higher!

Thankfully its not me and yes he is a good friend, actually a very good friend. But he really doesn't care about this credit stuff.
So if it doesn't bother him it doesn't bother me.

But here's a little more info why it doesn't bother him.
He owns 3 very successful business's all in other people's names and they are proverbial cash cows.
He makes more in 1 week than I make in a month.
The guy never finances anything, he pays cash for new cars and houses.
The guy loves gold bars and Krugerrands and stores them in 5 gallon buckets.
Our golf games end with him loosing a Krugerrand.

He has the money to pay the house off and all the credit cards, he just refuses too.
How he is able to live in the house is beyond me.
I think he is planning on buying the house thru his attorney at the auction next month.

I just posted it because it was just ODD with the score! Not to get judgments on people's character's.

vaylon said: Thankfully its not me and yes he is a good friend, actually a very good friend. But he really doesn't care about this credit stuff.
So if it doesn't bother him it doesn't bother me.

But here's a little more info why it doesn't bother him.
He owns 3 very successful business's all in other people's names and they are proverbial cash cows.
He makes more in 1 week than I make in a month.
The guy never finances anything, he pays cash for new cars and houses.
The guy loves gold bars and Krugerrands and stores them in 5 gallon buckets.
Our golf games end with him loosing a Krugerrand.

 

He has the money to pay the house off and all the credit cards, he just refuses too.
How he is able to live in the house is beyond me.
I think he is planning on buying the house thru his attorney at the auction next month.

I just posted it because it was just ODD with the score! Not to get judgments on people's character's.
He doesn't seem to have any character to judge.

wiredspider said: vaylon said: Thankfully its not me and yes he is a good friend, actually a very good friend. But he really doesn't care about this credit stuff.
So if it doesn't bother him it doesn't bother me.

But here's a little more info why it doesn't bother him.
He owns 3 very successful business's all in other people's names and they are proverbial cash cows.
He makes more in 1 week than I make in a month.
The guy never finances anything, he pays cash for new cars and houses.
The guy loves gold bars and Krugerrands and stores them in 5 gallon buckets.
Our golf games end with him loosing a Krugerrand.

 

He has the money to pay the house off and all the credit cards, he just refuses too.
How he is able to live in the house is beyond me.
I think he is planning on buying the house thru his attorney at the auction next month.

I just posted it because it was just ODD with the score! Not to get judgments on people's character's.

If he buys houses in cash, then why does he owe on this house?

if his so smart and rich, why did he destory his credit?

i'm thinking this guy really isnt so smart and rich, and the cc bill is more like 220k and he paid 'cash' for all his toys using c.c. money

Nice fantasy. Playing golf for gold, getting a customer support lady explain the inner workings of the FICO models ... OP, you should think about starting to write fiction books. Be the next K. Rowling.

On a different note, I don't get it why everybody gets so upset and disgusted whenever someone mentions not caring abbout their credit score. "Uh-oh, he is destroying his credit " He doesn't care! Get it?

I'll give you an example. If you started studying hard today, in about 6 years or so, you could become a doctor. So (provided you are not one today), why are you not studying, "ruining your career"? The answer is simple - you just don't need to be a doctor.

dimatkach said: Nice fantasy. Playing golf for gold, getting a customer support lady explain the inner workings of the FICO models ... OP, you should think about starting to write fiction books. Be the next K. RowlingOr talk with "kevinkevinkevin" here on FWF

So let me get this straight. Your "friend" owns successful businesses under other peoples names and is filthy cash-rich. He likes his house but he no longer want to pay for it so he intentionally will let it go into foreclosure so he can buy the house back all-cash at a lower price? Money just doesn't buy class anymore...

SlimTim said: I don't think anyone cares what he does with his credit score, what's offensive is that he supposedly is deliberately skipping out on his obligations even though he, supposedly again, could easily pay for them.

In the country I am originally from, at one point in time the price for a bus ticket was higher than the fine for riding without one. Tell me this, if you were in such situation, would you still buy a ticket, or would you choose to just pay the fine?

Yup. Three businesses in other people's names, all wildly successful while evidently needing no effort on his part, stores gold in five gallon buckets, and buys cars and houses for cash.

Uh huh.

frank10b said: there are people like this who sleep in their car to save money.

Can't say I haven't tried it... WiFi helps too.

From reading this thread, I figured out what's going on. This guy is NOT stupid. He knows what he's doing. He is upside down on the house so he let it forclosed and then buys it back at a very reduced price. Is this legal? Question is it ethical?

I am serious about these questions because one has pointed out if you got on the bus and don't have a ticket. Why would you buy the ticket when the fine is cheaper than the ticket and you also run the chance of not being caught? It is of course, not ethical.

What about in situation like OP's?

dimatkach said: In the country I am originally from, at one point in time the price for a bus ticket was higher than the fine for riding without one. Tell me this, if you were in such situation, would you still buy a ticket, or would you choose to just pay the fine?

That's an interesting question. But it's really a pricing error, not quite comparable. You even imply that it was temporary and presumably corrected.

I do take advantage of pricing deals - things like no cost loans or back when "dot coms" were happy to lose money on every transaction, crazy offers they provided. So it sounds like I might choose the fine in your example. Maybe not though, I pay more than I strictly have to in lots of situations like tipping or donating.

But cases where I've explicitly made a commitment? I hold myself to those, whether it's a contract, work or personal agreement. Particularly when I have the means to easily meet my obligations. Screwing others simply because you can get away with it is a slippery slope. Those who I've seen do it inevitably let it guide more and more of their lives, and are very unhappy when they start running out of people who trust or respect them.

[edit:] Come to think of it, I did pay the full fare recently on a bus when I didn't have to. I use the bus system park & ride every 2 or 3 months when I go to the airport. In January, I fed my cash into the machine up front and the driver told me, "Just so you know, the fare went up $1 on Jan 1". I said something clever like "Oh, really?" with surprise and he indicated not to worry about it this time. I said, "No, actually, I've got the money." and fed my extra buck in. It's not unusual for me to NOT have an extra dollar on hand, and I would have thankfully accepted his grace period in that case.

vaylon said: The guy loves gold bars and Krugerrands and stores them in 5 gallon buckets.
Our golf games end with him loosing a Krugerrand.

5 gallons = .67 cubic feet.
9,000 Krugerrands occupy about 1 cubic foot of space. Link
Current value of 1 Krugerrand = US$ 1,000 (approx) Link

Value of a single 5-gallon bucket of Kruggerands = $6.1 million

How many buckets does your friend have?

vaylon said: Thankfully its not me and yes he is a good friend, actually a very good friend. But he really doesn't care about this credit stuff.
So if it doesn't bother him it doesn't bother me.

But here's a little more info why it doesn't bother him.
He owns 3 very successful business's all in other people's names and they are proverbial cash cows.
He makes more in 1 week than I make in a month.
The guy never finances anything, he pays cash for new cars and houses.
The guy loves gold bars and Krugerrands and stores them in 5 gallon buckets.
Our golf games end with him loosing a Krugerrand.

 

He has the money to pay the house off and all the credit cards, he just refuses too.
How he is able to live in the house is beyond me.
I think he is planning on buying the house thru his attorney at the auction next month.

I just posted it because it was just ODD with the score! Not to get judgments on people's character's.

He has 3 businesses in other people's names because he doesn't want anyone to know he owns them, like the IRS, right? Or could it be that he simply doesn't own any businesses?

If he makes more that you, maybe you should consider going to work at McD's as he does so well there.

He pays cash for houses, but he owes on the one in question?

He stores the Krugerrands in 5 gallon buckets? Has the guy never heard of 55 gallon drums?????

He loses a Krugerrand after every golf game? Why doesn't he look around on the ground and see where he dropped it?

Question for the TROLL, errr... I mean OP: Does your imaginary friend fly by just flapping his arms and going airborne, too? How successful has he been on turning lead into gold, ala his "Midas Touch" secret formula? Any other absurd anecdotes about your imaginary friend?

This whole story is BS.

Thankfully its not me and yes he is a good friend, actually a very good friend. But he really doesn't care about this credit stuff.

Yeah.. what a great friend you are! You bragging about his cash, gold (if things you said are true) will get him robbed and if not kill! There are plenty crooks out there looking to rob cash based business.

toy4two said: vaylon said:
He has the money to pay the house off and all the credit cards, he just refuses too.
How he is able to live in the house is beyond me.
I think he is planning on buying the house thru his attorney at the auction next month.

I just posted it because it was just ODD with the score! Not to get judgments on people's character's.

Reminds me of these rich clowns, when you don't care about your credit because you buy with cash you can live in oceanfront property FOR FREE in this real estate market:

Taken from thehouseingbubbleblog:

<text deleted>

Nonetheless, as I have followed several of the homes that my wife and I were interested in a few years back, they are all on the market now. What is shocking, that in each and every case, I have been told by brokers and banks that the owners, have ceased paying their mortgages in some cases for nearly 2 years and have continued to occupy these homes. Now, these are homes in excess of $2,000,000 in the very best neighborhoods in South Florida. Brokers have added that these buyers further complicated things by putting huge home equity lines on top of their mortgages and now have no possibility of selling their homes for amounts needed to cover their accumulated debt.

<text deleted>

There is no clean way to sell the home that would guarantee “clean title” hence a foreclosure is the only means to separate the property from the dead-beat speculator/squattor. Banks do not want to spend the $50,000 required to take a home through a foreclosure and clear the title — only to put the house back on the market for a deeper loss afterwards. Most likely, they have not revealed these owner occupied defaults to their shareholders, thanks to the sheer numbers of non-performing loans on their balance sheets, and the daunting task of foreclosing on all of them. This is the ultimate seizure and full stop of the market whereby everyone is standing in a stalemate. As one broker said to me, “these bums sitting in $3,000,000 homes overlooking the water are likely to be left alone by the banks for 2 years before the banks even get serious about foreclosure.”

So here is the difference between “walking away,” these folks are doing anything but walking away, they are sitting on lounge chairs sipping martinis living cost free! (not to mention that they have ceased paying property taxes and insurance). I can only imagine what this market will look like in the coming years . . .”

The problem there seems to be that the lending companies were obscenely STUPID when making the loans, nothing else.

As to not disclosing the losses, that is fraud, so they are most likely already recognized on the balance sheets, or look for huge class-action suits to start soon.