This came via Zerohedge and ConvergEx. I have to say it is ingenious.
If the US Government were applying for a loan, what would its credit score be? ConvergEx's Nick Colas estimates it at 655 (based on www.myfico.com) - which is higher than we suspected - but consistent with the structural belief in both sovereign and personal debt rating systems that historical payment patterns matter more than ability to pay, leverage, or loan amounts.
Via ConvergEx's Nick Colas:
If the U.S. Government were applying for a loan, what do you think its credit score would be? Let’s plug some data into the “Free Credit Score Estimator” on www.myfico.com (the consumer outreach site for Fair Isaac, one of the three major providers of personal credit scores in the United States). There are 10 questions to the survey, which I will summarize here, along with the answers I plugged in:
If the US Government were applying for a loan, what would its credit score be? ConvergEx's Nick Colas estimates it at 655 (based on www.myfico.com) - which is higher than we suspected - but consistent with the structural belief in both sovereign and personal debt rating systems that historical payment patterns matter more than ability to pay, leverage, or loan amounts.
Via ConvergEx's Nick Colas:
If the U.S. Government were applying for a loan, what do you think its credit score would be? Let’s plug some data into the “Free Credit Score Estimator” on www.myfico.com (the consumer outreach site for Fair Isaac, one of the three major providers of personal credit scores in the United States). There are 10 questions to the survey, which I will summarize here, along with the answers I plugged in:
- How many credit cards do you have? I answered “5 or more” on behalf of Uncle Sam, the largest number offered in the survey. The follow up question is “How long ago did you get your first credit card? I entered “More than 20 years ago,” the longest time frame choice offered.
- How long ago did you get your first loan? The answer that seems to best fit is “More than 20 years ago.” Pretty much the same as the prior point – the U.S. has been a net borrower for a long time indeed.
- How many loans or credit cards have you applied for in the past year? Trick question, this, I think. I was conservative and answered “6 or more” since government bond auctions are pretty regular affairs.
- How recently have you opened a new loan or credit card? I entered “More than 6 months ago.” The last increase to the Federal Debt Limit was in January, to the current $16.4 trillion.
- How many of your loans and credit cards currently have a balance? Bit of a tough one, this. Technically, the U.S. government has one massive credit card – the ultimate Black Card, really. But if you parse this out among the various buyers of U.S. sovereign debt, the more honest answer is “9 or more,” which is what I entered.
- How many of your loans and/or credit cards have a balance? “9 or more” as well here.
- Besides any mortgage loans, what are your total balances on all other loans and credit cards combined? The highest amount you can choose is $20,000. I checked the box there.
- When did you last miss a loan or credit card payment? Thankfully, the U.S. can enter “I have never missed a payment.”
- How many of your loans and/or credit cards are past due? Again, thankfully, “0” is the answer.
- What percent of your total credit card limits do your credit card balances represent? As of September 28th, the U.S. Government had borrowed $16, 027 billion on its Statutory Debt Limit of $16, 394, or 97.8%. I check the “90-99%” box.
- Please indicate if you have ever gone through any of the following negative financial events in the last 10 years: bankruptcy, tax lien, foreclosure, repossession, or account referred to a collection agency. Toss up call – I check “No.”
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