financial crisis - Page 3

Mistfit · 14-10-2008, 14:57

Quote:

Originally Posted by ProPain

For ua non-US citizens. What's the range on those credit scores?

Slightly dated info but this gives a decent idea.

Quote:

Most scores range from 340 to 850. The higher the score, the better. An excellent score is typically viewed as 700 or above. Borrowers with FICO numbers in this range will be offered the best financing options and mortgage rates. About 30% of Americans have scores from 600-699. Plenty of financial institutions are willing to work with people with some blemishes in their financial histories. However, people with numbers under 500 will pay more in interest rates and fees if they are approved for credit. Banks and other lending institutions typically use the middle score from the three supplied by the reporting agencies to evaluate and process loan applications.

What is outdated in this snippet is what the banks are willing to lend to.. 5 yrs ago these numbers above were true.. now it seems that if you have a FICO of less than 650-675 your basically screwed. And even people with higher scores than that are getting turned down due to factors like debt/income ratios. Banks are scared.

I presume that I am effected by this 'crisis' much more than the average individual seeing that I am in the housing business. For those of you who do not know I own a retail Manufactured Housing Lot.

My industry as a whole as seen a collapse over the last 3 years. I live in Michigan which traditionally has been a big state for shipments of Manufactured Homes. In 1996 for example over 13,000 manufactured homes were sold in Michigan. To give you a comparison, this year through July only 658 homes were sold into Michigan.

For a more personal take on the issue, 4 Years ago my company sold around 80-90 homes a year and we employed around 15-18 people total. 2007 my company sold 36 homes and we only carry 4 employees now. We have had to downsize considerably and sub-contract out many of the things that we used to do internally.

I agree with Stapel wholeheartedly in the fact that the biggest problem is trust. Painting the issue with broad brushes I sum my current customers up like this; the people out there with money that have the ability to purchase a home are too frightened to make a move because of all of the negative things going on in the world.. they are hoarding. The people willing to make a move and buy a house are finding it more difficult to get the credit they need to make the final purchase.

In the end, this year has been the straw that broke the camels back for me. I will be closing my business the 1st of December. It is a sad and difficult time in my, and my families lives. I am the 3rd generation of my family to be in this business and I am the one shutting it down. I can no loner afford to pump the amount of cash needed into the business to keep it afloat.

Personally I will be ok. I am lucky in the fact that my wife makes really good money and has a rock solid job. She is a pharmacist.

Well anyway that is my rant for the day..

Tubby Rower · 14-10-2008, 15:14

Quote:

Originally Posted by Mistfit

In the end, this year has been the straw that broke the camels back for me. I will be closing my business the 1st of December. It is a sad and difficult time in my, and my families lives. I am the 3rd generation of my family to be in this business and I am the one shutting it down. I can no loner afford to pump the amount of cash needed into the business to keep it afloat.

Personally I will be ok. I am lucky in the fact that my wife makes really good money and has a rock solid job. She is a pharmacist.

Well anyway that is my rant for the day..

Dude that sucks. I'm sorry for you.

I haven't chimed in here, because I don't really have anything new to say. But here is my tidbit anyway.... My 401k dropped $20k over the past month just before gaining $5k last night. The graph here is a daily record of my 401k balance since 1-1-2001. I don't pay much mind to it, I just thought that it would be neat to see it all at a glance when I retire.

As far as credit scores go, I've also attached a screenshot from www.myfico.com They are the people that invented the credit score. FWIW, my wife hasn't had a job for 5 years (staying home with the kids was important to us). When we bought our house last year, she had a credit score of 812. So income is not a part of the scoring model.

Shabbaman · 14-10-2008, 15:23

Terrible news Mistfit. I can imagine this is a personal loss that's perhaps greater than the financial loss. What are you going to do next?

@tubs: according to the interest rate I pay for my mortgage my credit score'd be over 850, so I feel good about myself now

Mistfit · 14-10-2008, 15:25

I really do not know what I am going to do with myself.. I will likely take the winter off and then start thinking about what I want to do when I grow up.

Tubby Rower · 14-10-2008, 15:33

When we moved, our interest rate is 6%. It sucked because at our old house, our interest rate was 5.35% Anyhoo, it's a comfortable payment and the company I work for (nuclear fuel) is looking to build new nuke plants. So I doubt that the jobless trend will hit us much, except for no cost of living increases.

socralynnek · 14-10-2008, 16:19

Sorry, mistfit!

Not nice to hear.

The credit scoring is really strange. And part of the problem I guess.

A journalist from germany who was sent to America for some time by his newspaper wrote an article describing that he had difficulties getting a credit for buying a car when he moved. Reason: No, he didn't earn too little. Quite the opposite. He nver took a credit in Germany. He never used a credit card to giving credit (only direct transfer of money).
So the bank wasn't allowed to give him credit. So, they declared one point where his balance at one account at his bank was slightly below zero to him repaying that credit. Then he could buy a car...

Strange, isn't it.

Even worse: Banks were buying and selling each other some financial stuff they had no knowledge about, trusting rating companies to the max.

BTW, over here credit cards are only used as a payment option, not as a way to finance what one buys. I know no one having a debt on his credit card (what I buy with my credit card is taken from my bank account a few days after). Just a random fact (I read this morning that some people say that the credit card bubble in US is going to collapse next, because too money people have a too high debt on their credit card and won't be able to pay the interest)

Tubby Rower · 14-10-2008, 17:20

Quote:

Originally Posted by socralynnek

BTW, over here credit cards are only used as a payment option, not as a way to finance what one buys. I know no one having a debt on his credit card (what I buy with my credit card is taken from my bank account a few days after). Just a random fact (I read this morning that some people say that the credit card bubble in US is going to collapse next, because too money people have a too high debt on their credit card and won't be able to pay the interest)

it wouldn't surprise me. Some (maybe a lot) people are carrying balances on their credit cards that are near their limit. The vast majority of these people have a poor credit score and thus a high interest rate (20%+) . So in essence the banks have been getting just interest back on these customers with no hope of ever getting the principle back.

FWIW, the only credit card that I carry a balance on is one in which I was able to get a fixed interest rate until the balance is paid off that happened to be lower than our car loan, so I transferred the car loan over to it. The rest of my cards get zeroed out every month. The ones that we use on a monthly basis earn rewards of at least 1% of the charges. So the net sum cash flow has been from the banks to me

.

Rik Meleet · 15-10-2008, 10:52

Very interesting TV-programme yesterday on the background of all this. Tegenlicht.
See the website here, and if you have a chance to see it on uitzendinggemist, I recommend it.

Rik Meleet · 15-10-2008, 10:57

Quote:

Originally Posted by Mistfit

I really do not know what I am going to do with myself.. I will likely take the winter off and then start thinking about what I want to do when I grow up.

Use the winter to learn Chinese. No joke.

http://www.dailyreckoning.com.au/tea...se/2008/07/28/

Matrix · 17-12-2008, 00:06

The FED decreased their interest rate to 0% or 0.25%. Can someone explain to me what that means? If it's 0% than I suppose banks should borrow as much as possible, since inflation will make it much easier to repay it afterwards. So that would simply be crazy and make the FED backrupt. But is that possible at all?

So far I've been fairly able to explain what's going on in general, but this interest rate thing is beyond me.

14-10-2008, 15:23	#23
Shabbaman Administrator Join Date: Mar 2003 Location: Costa La Haya Posts: 8,494	Terrible news Mistfit. I can imagine this is a personal loss that's perhaps greater than the financial loss. What are you going to do next? @tubs: according to the interest rate I pay for my mortgage my credit score'd be over 850, so I feel good about myself now __________________ "Our spam is backed with COMETS!"

14-10-2008, 15:33	#25
Tubby Rower Moderator Join Date: Aug 2005 Location: Middle of VA. Posts: 3,896	When we moved, our interest rate is 6%. It sucked because at our old house, our interest rate was 5.35% Anyhoo, it's a comfortable payment and the company I work for (nuclear fuel) is looking to build new nuke plants. So I doubt that the jobless trend will hit us much, except for no cost of living increases. __________________ 3/2006 : Now, surely that must be because some fists might have caused internal damage to certain delicate parts?

14-10-2008, 16:19	#26
socralynnek Moderator Join Date: Nov 2004 Location: USS Defiant Posts: 3,827	Sorry, mistfit! Not nice to hear. The credit scoring is really strange. And part of the problem I guess. A journalist from germany who was sent to America for some time by his newspaper wrote an article describing that he had difficulties getting a credit for buying a car when he moved. Reason: No, he didn't earn too little. Quite the opposite. He nver took a credit in Germany. He never used a credit card to giving credit (only direct transfer of money). So the bank wasn't allowed to give him credit. So, they declared one point where his balance at one account at his bank was slightly below zero to him repaying that credit. Then he could buy a car... Strange, isn't it. Even worse: Banks were buying and selling each other some financial stuff they had no knowledge about, trusting rating companies to the max. BTW, over here credit cards are only used as a payment option, not as a way to finance what one buys. I know no one having a debt on his credit card (what I buy with my credit card is taken from my bank account a few days after). Just a random fact (I read this morning that some people say that the credit card bubble in US is going to collapse next, because too money people have a too high debt on their credit card and won't be able to pay the interest) __________________ Being without a signature since November 2004.

15-10-2008, 10:52	#28
Rik Meleet Moderator Join Date: Sep 2004 Location: Nijmegen, Netherlands. Posts: 2,504	Very interesting TV-programme yesterday on the background of all this. Tegenlicht. See the website here, and if you have a chance to see it on uitzendinggemist, I recommend it. __________________ Social life ? Sounds like fun !! Where can I download that ?

17-12-2008, 00:06	#30
Matrix Administrator Join Date: Mar 2003 Location: Tampere, Finland Posts: 4,828	The FED decreased their interest rate to 0% or 0.25%. Can someone explain to me what that means? If it's 0% than I suppose banks should borrow as much as possible, since inflation will make it much easier to repay it afterwards. So that would simply be crazy and make the FED backrupt. But is that possible at all? So far I've been fairly able to explain what's going on in general, but this interest rate thing is beyond me. __________________

14-10-2008, 15:25	#24
Mistfit King Join Date: Apr 2005 Location: idunno. Posts: 2,428	I really do not know what I am going to do with myself.. I will likely take the winter off and then start thinking about what I want to do when I grow up.