If you have assets in a brokerage account and you have a margin balance, does this debt impact your credit score?
One would think it might not, since this debt is backed by the assets held by the brokerage, and credit scores are apparently not based on assets but rather on income. But does anyone have any factually knowledge?
I thought that credit scores basically ignored income and went with current balances, credit utilization (and the almighty credit/utilization ratio), number of open accounts, number of recent applications, history of delinquencies, and such?
For those who have margin accounts, does it show up on your credit report? If you get a margin call (or some of your stock is sold because you couldn’t make the call in time), does it count as a delinquency (margin call) or repossession (stock sold because you missed the margin call)?
You could be right. I might be confusing credit scores with bank’s lending criteria. The latter are very heavily focused on income.
Credit scores are not based on income. The credit bureaus have no idea how much money you make.
Credit scores are based on:
That said, I have no idea if brokerages report margin accounts to the credit bureaus, as I’ve never had a margin account. Thinking about it, it seems like it would be in their interest to do so, so I would guess that they do.
In the absence of concrete information, I called Trans Union, and the guy there told me it does not get reported to them.
I then called E-Trade and that guy too told me they do not report it to the credit bureaus.
[Interestingly, the ET guy said this was the first time the question had ever been asked of him, and he had to research the answer. The reason it’s relevant to me is that I intend to take a margin loan, and am unsure if I should hold off until after a pending mortgage application is approved. You would think this type of situation would come up all the time.]