I've heard people say this, but it's never made sense to me and sounds like something the loan industry has convinced people of just to sell more loans. Is it actually true?
Every time I've gotten a mortgage, they seem to just care about my income and whether I've had any missed payments on credit cards or other bills before.
And credit scores aren’t everything. Even with an >800 and money in the bank, after my startup was acquired, I couldn't get a mortgage because I didn't have any income I could show them.
Ya, not having income is a blocker, but you also need to take care of your credit score. I basically had no credit score because I was out of country for 11 years (and..unlike new immigrants, they don't give Americans a benefit of the doubt here), so credit cards and an auto loan was really important when I came back (not having had a car for 11 years made my insurance premium go up, also).
For sure, current income is a more important predictor of future income and future sufficient income is a predictor of future payment.
Installment loans are a decent part of credit scores, but mortgage lenders look into the details, so credit score isn't everything to them like it can be for smaller loans.
Also, buying a new car is much less of a hassle than buying a used one. The price difference between used and new ATM isn't so much to cover the extra hassle for many buyers. You want the car to be something that doesn't cause stress in your life, like many want a spouse/partner who isn't a constant drain on their emotions.
And then there are the many conveniences that are nice if you can afford it, but only if you can. It is purely a lifestyle upgrade, and not important to everyone, but it definitely makes some people happier, especially if they drive a lot.