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Revelate
Posts: 9,477
Registered: ‎12-30-2011
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Re: Experian roles out new credit score

[ Edited ]

We aren't the customers for Experian.

 

It's going to be tested in subprime lenders, it wouldn't surprise me if one I used to work at is in the list (since they are firmly between PDL's and traditional unsecured loans) and pull EX exclusively.  It's not hard to test, but it takes time.  It's one extra generated score, one extra entry in a customer's database record, and one extra thing to check on the OLAP query later.

 

If the score provides better resolution than either FICO (which admittedly sort of sucks for under-banked people for all the known reasons) or their internal models, it'll get adopted.  If it reduces first-payment defaults in the deep subprime space, it'll absolutely be used.; however, it won't replace traditional FICO scores everywhere else.  This is sort of like the FHA / GSE's with that funky score for housing approval if you don't have a real FICO... but if you do, they'll use it without regards to anything else.  

 

Most of the industry and the CRA's are going to something like this, TU announced something similar earlier this year.  I'd be willing to bet Equifax likewise makes an announcement by the end fo the year at the latest.  Alternatively FICO themselves may try to come up with something, it may already be in their NextGen score for all I know.

 

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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stan_the_man
Posts: 855
Registered: ‎06-29-2010
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Re: Experian roles out new credit score


Revelate wrote:

We aren't the customers for Experian.

 

It's going to be tested in subprime lenders, it wouldn't surprise me if one I used to work at is in the list (since they are firmly between PDL's and traditional unsecured loans) and pull EX exclusively.  It's not hard to test, but it takes time.  It's one extra generated score, one extra entry in a customer's database record, and one extra thing to check on the OLAP query later.

 

If the score provides better resolution than either FICO (which admittedly sort of sucks for under-banked people for all the known reasons) or their internal models, it'll get adopted.  If it reduces first-payment defaults in the deep subprime space, it'll absolutely be used.; however, it won't replace traditional FICO scores everywhere else.  This is sort of like the FHA / GSE's with that funky score for housing approval if you don't have a real FICO... but if you do, they'll use it without regards to anything else.  

 

Most of the industry and the CRA's are going to something like this, TU announced something similar earlier this year.  I'd be willing to bet Equifax likewise makes an announcement by the end fo the year at the latest.  Alternatively FICO themselves may try to come up with something, it may already be in their NextGen score for all I know.

 


FWIW -- It doesn't have to reduce defaults, it just has to help them improve pricing to reduce their overall loses. For example, help creditors put higher risk customers into more expensive products.

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AZHeather
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Re: Experian roles out new credit score

Great....more places for them to get and add wrong information to your reports! YAY! :smileyfrustrated:


Starting Score: 634 EQ-FICO (4/20/12) 579 EX-FAKO (4/30/12) 629 TU-FICO (5/6/12)
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Revelate
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Registered: ‎12-30-2011
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Re: Experian roles out new credit score

[ Edited ]

stan_the_man wrote:

Revelate wrote:

<snip>

 


FWIW -- It doesn't have to reduce defaults, it just has to help them improve pricing to reduce their overall loses. For example, help creditors put higher risk customers into more expensive products.



Agreed, in general, but in the deep sub-prime unsecured market, increasing the profitability of a porfolio is often either reducing defaults, or more cynically stated, pushing the date of default further into the future of the loan.

 

Pricing models are not sophisticated in this strata, and when you go looking at the lenders in this space, it's pretty much one size fits all on the APR's (three-digits....) though compared to the roughly 400% on PDL fees, it's an excellent deal.  That's where I was looking at this score to be likely used and it's below the Capital One's of the world; typically anyone else only is going to offer secured products in this strata which in many cases obviates the need for this score anyway.

 

Edit: you may be right if the score provides better access for unsecured lending to no files, I just don't know how many people really exist other than dedicated cash-only folks who will get sorted in to the top in their new algorithm.

 

 

 

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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marty56
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Re: Experian roles out new credit score

My problem is that providing a score targeting subprime lending helps to add legitimacy to PDLs, Title Loan companies and the like.

 

What's next, a credit score for loan sharks?

09/12/2013 FICO: EQ: 772 EX:813 TU:752
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Revelate
Posts: 9,477
Registered: ‎12-30-2011
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Re: Experian roles out new credit score


marty56 wrote:

My problem is that providing a score targeting subprime lending helps to add legitimacy to PDLs, Title Loan companies and the like.

 

What's next, a credit score for loan sharks?


Maybe, but in exchange it might add legitimacy for these people too in trying to get out of the PDL mess.

 

Some of the folks in this strata don't have a cash laying around, in many cases they're strapped for cash (there was a post here a bit ago about that specific situation): they can't pay the upfront deposit on any secured card or secured loan... getting an unsecured loan is really the only choice, and the options they do have are routinely snickered at by folks on this forum and others.  OMG, 120% APR, why would you ever take that?  There's severely limited paths, and it is far better than the 400% PDL structure.

 

These folks have no positive information in their files, and it's a challenge to get anything on there too.  That said, there are paths that can be used to fix this  (vis a vis Cashcall and their like) but there's limitations there but the rates are way lower than PDL fees and at least some of them report... on one of the three bureaus, probably why Capital One pulls all three on the hope they can get better resolution currently, they'd likely love this new model.  Anyway, that's a foot in the door in FICO, and it's a LONG road refinancing down your debt as your credit score progressively increases.... we talk about 2-3 years to fix credit reports on this forum, it's probably close to double in their situation.  Cash has to be used first to survive, $99 bucks even for the partially secured deposit at Capital One is a challenge, if they even know to go ask there for a card.

 

This score might be a good thing overall as a result.  Yeah, for those of us with something useful in FICO's system, there's too many scores, there's too much confusion, why do we need yet another one?  But for the people below that point, which FICO doesn't handle currently (no kidding their credit score sucks), this possibly can give folks a chance to drag themselves out of the financial mess they have by enabling more lenders to get down into that strata, and do it more cheaply and more effectively too as competition invariably reduces prices.  I'm really all for that, there's no downside for me on that one, and this score isn't going to be used for me anyway and I'm nowhere close credit-wise to the pretty FICO people on this forum.

 

 

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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Revelate
Posts: 9,477
Registered: ‎12-30-2011
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Re: Experian roles out new credit score

Haha, and I thought Cashcall was high at 120ish percent.  This came in the mail today: a flyer from Plain Green, another unsecured subprime lending company.  It proudly proclaimed, 40% less interest rate than Pay Day Loans!

 

My cynical thought: "Great, it'll be 360% APR on this loan."

 

Fine print: 364% APR.  Good grief.

 

Anything which makes lending resolution more precise so that other companies get down to the subprime lending market is going to be a win for America.

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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drkaje
Posts: 3,492
Registered: ‎07-25-2008
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Re: Experian roles out new credit score

"Underbanked", LOL!


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Revelate
Posts: 9,477
Registered: ‎12-30-2011
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Re: Experian roles out new credit score


drkaje wrote:

"Underbanked", LOL!


Pretty certain that's a standard financial industry term these days, not kidding!

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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drkaje
Posts: 3,492
Registered: ‎07-25-2008
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Re: Experian roles out new credit score

Perhaps the "under banked" should rebuild, go with less credit a while, or whatever instead of going deeper in the hole with crazy scoring systems. When it goes south, we'll end up paying more for bailing out banks or about how this led to predatory lending.

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