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Revelate
Posts: 9,758
Registered: ‎12-30-2011
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?

[ Edited ]

astritaho1979 wrote:

trumpet-205 wrote:

astritaho1979 wrote:

Ok since we all debating the credit criteria for approvals i was wondering

1 Should we get approved easy with a 720 fico for credit?

2 Are we far away from getting approved easy with 720 fico?

3 Why are we getting denied with the 720 fico since the fico says that 720 is a good credit risk

 

Now all the other criteria include for the applicant being at  utl9% and minimum 3yrs of AAOA


Because FICO score is NOT everything. Don't get too in love with FICO score, or any credit score for that matter.

 

There are other factors that weigh more than a calculated score.

 


it makes sense score is only good if the report is good.So how can the report be bad but score can be high?


Because to someone else's point, nearly everyone can get up to 700 almost regardless with what's on their report within a few years.  There are people only 3 years out of a BK with a 720, but they're going to have difficulty with certain lenders getting approved for things.

 

Many of the "elephant in the living room" derogatories, BK's, tax liens, repo's don't depress the score forever, we're talking perhaps -150 to start, but that starts fading pretty quickly.  As evidenced by my own report, my own tax lien (white elephant even!) was less impact on my credit report than my thin file, and that's just one such example.  

 

On the other hand, we have students here who opened one card six months ago, and lo and behold, 700+ on their first generated FICO, and sometimes that can be as high as 734 if I remember one anecdotal report correctly.

 

720 is the median, which means half the people are by definition above it.  There's nothing wrong with being a statistic, just this is near the peak of the bellcurve, and that's certainly not an outlier in the good direction where the gold-plated people are.  To reiterate, almost anyone can achieve a 720 or near it within a few years, and that's not enough to have lenders desperate to have you as a customer.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


Open123 wrote:

In my view, a score is most important during an automated review, since computer parameters are set to assign a certain value to different scores.  A 720 score with a few new accounts with 500 CLs used and paid off sparingly isn't the same as the 720 score with 100K in CLs with 50K annual usage.

 

During manual review, the score invariably almost doesn't matter.  All things being equal, what's in the CR file is much more importants, such as length of history, utilization, and how much one charges and pays.

 

In come is also important, but it seems to me that most lenders look at how much you use the card and how much you pay.  This gives them a pretty good indication of your disposable income, at least where it related to paying off CC debt.  

 

In my view, having a long history of using disposable income (the more, the better) to pay off credit debt is probably the most important factor during the manual review process.


thats the best answer i heard all day.U seems to have done your homework on this :smileyvery-happy:


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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


Revelate wrote:

astritaho1979 wrote:

trumpet-205 wrote:

astritaho1979 wrote:

Ok since we all debating the credit criteria for approvals i was wondering

1 Should we get approved easy with a 720 fico for credit?

2 Are we far away from getting approved easy with 720 fico?

3 Why are we getting denied with the 720 fico since the fico says that 720 is a good credit risk

 

Now all the other criteria include for the applicant being at  utl9% and minimum 3yrs of AAOA


Because FICO score is NOT everything. Don't get too in love with FICO score, or any credit score for that matter.

 

There are other factors that weigh more than a calculated score.

 


it makes sense score is only good if the report is good.So how can the report be bad but score can be high?


Because to someone else's point, nearly everyone can get up to 700 almost regardless with what's on their report within a few years.  There are people only 3 years out of a BK with a 720, but they're going to have difficulty with certain lenders getting approved for things.

 

Many of the "elephant in the living room" derogatories, BK's, tax liens, repo's don't depress the score forever, we're talking perhaps -150 to start, but that starts fading pretty quickly.  As evidenced by my own report, my own tax lien (white elephant even!) was less impact on my credit report than my thin file, and that's just one such example.  

 

On the other hand, we have students here who opened one card six months ago, and lo and behold, 700+ on their first generated FICO, and sometimes that can be as high as 734 if I remember one anecdotal report correctly.

 

720 is the median, which means half the people are by definition above it.  There's nothing wrong with being a statistic, just this is near the peak of the bellcurve, and that's certainly not an outlier in the good direction where the gold-plated people are.  To reiterate, almost anyone can achieve a 720 or near it within a few years, and that's not enough to have lenders desperate to have you as a customer.

 


i agree with you on most of the things ur saying the only thing that i would sugest fico to do would be to have the fico in to 3 categories
Fico 720 A 720 B 720 C so  if some one is new to credit but is correct for the first yr with the payments give them 720 C if someone with long payment history and strong report but mid utl give them 720 A so this way the underwriter can  base his decision base on fico score alone.Now this is my opinion.What do u think?


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*LOWES $6K *CMN BANK $5.2K-*PNC $5K*SCLUB DISC. $5K*
WMART DISC.4K*CMN BANK 3.75K*BANK OF AMERICA $3K* MACYS $2.2K*
JCP $1.8*TARGET $0.7K* UTL1%- AAOA 5.5- TOTAL 12 yrs History/
Transunion 718 Equifax 733- Experian 736
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CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


Open123 wrote:

In my view, a score is most important during an automated review, since computer parameters are set to assign a certain value to different scores.  A 720 score with a few new accounts with 500 CLs used and paid off sparingly isn't the same as the 720 score with 100K in CLs with 50K annual usage.

 

During manual review, the score invariably almost doesn't matter.  All things being equal, what's in the CR file is much more importants, such as length of history, utilization, and how much one charges and pays.

 

In come is also important, but it seems to me that most lenders look at how much you use the card and how much you pay.  This gives them a pretty good indication of your disposable income, at least where it related to paying off CC debt.  

 

In my view, having a long history of using disposable income (the more, the better) to pay off credit debt is probably the most important factor during the manual review process.


+1. This is right on target. Not all FICOs are created equally, and there's much that isn't reflected in one number.

 

Open, I wanted to get your opinion on this since you brought it up. At what point do you think most lenders flag someone as a high spender, seperate from their other customers? 30k? 50k? 100k? Maybe it's done in tiers/levels? I'm just curious at what point are you seen/identified as different from the rest based on spending?

 

 

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youngandcreditwrthy
Posts: 6,242
Registered: ‎08-16-2012
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?

My TU fico is 688 and EXP &EQ are like 730+ now.

But I never had problems getting credit cards when I was stuck in the 630-670 range! Lol

I'd say if you're 600 or above, you can get GE cards with $300-400 limits!
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jake619
Posts: 496
Registered: ‎11-13-2012
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


astritaho1979 wrote:

i agree with you on most of the things ur saying the only thing that i would sugest fico to do would be to have the fico in to 3 categories
Fico 720 A 720 B 720 C so  if some one is new to credit but is correct for the first yr with the payments give them 720 C if someone with long payment history and strong report but mid utl give them 720 A so this way the underwriter can  base his decision base on fico score alone.Now this is my opinion.What do u think?


 it already does this although probably in more than just 3.  they're called scorecards and buckets.

 

 http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/FICO-Scoring-Buckets-or-quot-Scorecards-q...


GangnamFICO wrote:

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Minor vulgarity edit --Rev



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CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


Revelate wrote:

astritaho1979 wrote:

trumpet-205 wrote:

astritaho1979 wrote:

Ok since we all debating the credit criteria for approvals i was wondering

1 Should we get approved easy with a 720 fico for credit?

2 Are we far away from getting approved easy with 720 fico?

3 Why are we getting denied with the 720 fico since the fico says that 720 is a good credit risk

 

Now all the other criteria include for the applicant being at  utl9% and minimum 3yrs of AAOA


Because FICO score is NOT everything. Don't get too in love with FICO score, or any credit score for that matter.

 

There are other factors that weigh more than a calculated score.

 


it makes sense score is only good if the report is good.So how can the report be bad but score can be high?


Because to someone else's point, nearly everyone can get up to 700 almost regardless with what's on their report within a few years.  There are people only 3 years out of a BK with a 720, but they're going to have difficulty with certain lenders getting approved for things.

 

Many of the "elephant in the living room" derogatories, BK's, tax liens, repo's don't depress the score forever, we're talking perhaps -150 to start, but that starts fading pretty quickly.  As evidenced by my own report, my own tax lien (white elephant even!) was less impact on my credit report than my thin file, and that's just one such example.  

 

On the other hand, we have students here who opened one card six months ago, and lo and behold, 700+ on their first generated FICO, and sometimes that can be as high as 734 if I remember one anecdotal report correctly.

 

720 is the median, which means half the people are by definition above it.  There's nothing wrong with being a statistic, just this is near the peak of the bellcurve, and that's certainly not an outlier in the good direction where the gold-plated people are.  To reiterate, almost anyone can achieve a 720 or near it within a few years, and that's not enough to have lenders desperate to have you as a customer.

 


+1. Perhaps it's because many people here are/were rebuilding, but 700 is nothing to get excited about. It's not a horrible score, but in the grand scheme of things there's nothing really special about it. For me at least:

 

<650 = horrible to downright horrible

650-700 = mediocre

700-740 = decent/good

740-780 = very good

780+ = excellent

FICOs: EX: 826, EQ: 817, TU: 810
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J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
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bs6054
Posts: 1,673
Registered: ‎11-11-2012
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?

[ Edited ]

Another question is, just how predictive are: a) FICO scores, and b) whatever modifications underwriters do when they manually review.

 

On a) From Business week:  http://www.businessweek.com/stories/2008-02-06/credit-scores-not-so-magic-numbers

 

While Fair Isaac was singing FICO's praises to bankers and ratings agencies, the model was breaking down. According to a Fitch study, the average FICO score of borrowers who stopped making home-loan payments was 589 in 2001, compared with 620 for those who were paying on time—a 31-point difference that pointed to FICO's predictive ability. By 2006, as subprime loan volume was surging, the gap had closed to just 10. Costello says the data suggest "there's something wrong with FICO." Adds Jeffrey E. Gundlach, a mortgage-backed securities expert who runs the TCW Total Return Bond Fund (TGMLX): "There's nothing in the FICO score that worked in terms of predicting the default and delinquency trends." Fair Isaac's own analysis shows only a "tiny bit" of erosion in the formula's predictive value for subprime mortgages over the past few years, an amount that's "not alarming," says Tom Quinn, vice-president for scoring solutions.

 


[Note that this was at the height of the crisis and Fitch was pitching an alternative model, but still.  Fico 08 grew out of this problem]

 

 

I would really be interested in b)!   Presumably loan companies keep track of how underwriters perform, in terms of approving mortgages that default, but do some of their modifications, or things suggested here (a history of high disposable income paying down debt etc) do any better or worse than the score itself?

Moderator
Revelate
Posts: 9,758
Registered: ‎12-30-2011
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


astritaho1979 wrote:

i agree with you on most of the things ur saying the only thing that i would sugest fico to do would be to have the fico in to 3 categories
Fico 720 A 720 B 720 C so  if some one is new to credit but is correct for the first yr with the payments give them 720 C if someone with long payment history and strong report but mid utl give them 720 A so this way the underwriter can  base his decision base on fico score alone.Now this is my opinion.What do u think?


Why are you so hung up on making the FICO score the end-all and be-all of credit approvals?

 

It's already a complicated enough animal to begin with, and some things such as income, DTI, assets, aren't and would be incredibly difficult to factor into the score but they're absolutely used when it comes to underwriting.

 

In your model, would we do the same thing for mortgages?  If so, if you think the last mortgage crisis was bad, get ready for the big one... and if not, where would you draw the line on it?

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 673, EQ 8 707, TU 720, EX 702* (09/02/14, EX older)
Goal Score: 700 on EQ '04 (01/01/15)


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astritaho1979
Posts: 451
Registered: ‎10-02-2011
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Re: WHAT IS THE FICO SCORE OF 720 REALLY MEANS TO THE LENDER?


Revelate wrote:

astritaho1979 wrote:

i agree with you on most of the things ur saying the only thing that i would sugest fico to do would be to have the fico in to 3 categories
Fico 720 A 720 B 720 C so  if some one is new to credit but is correct for the first yr with the payments give them 720 C if someone with long payment history and strong report but mid utl give them 720 A so this way the underwriter can  base his decision base on fico score alone.Now this is my opinion.What do u think?


Why are you so hung up on making the FICO score the end-all and be-all of credit approvals?

 

It's already a complicated enough animal to begin with, and some things such as income, DTI, assets, aren't and would be incredibly difficult to factor into the score but they're absolutely used when it comes to underwriting.

 

In your model, would we do the same thing for mortgages?  If so, if you think the last mortgage crisis was bad, get ready for the big one... and if not, where would you draw the line on it?


I was simply sugesting that we simplify the underwriting process by looking at the Fico from 3 diffrent angles when it comes to some one having 720 fico with 1 year history and someone with 720 with 13 yrs of history.


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