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Established Contributor
cashnocredit
Posts: 959
Registered: ‎07-18-2009

The Hill publishes flawed argument about FICO scores

Some guy opining about something he hasn't bothered to learn about first. He seems to think consumers have no control over Inqs that affect FICO scores. While I'm sympathetic about some of his points he clearly hasn't studied the topic he feels compelled to write about. If he had he wouldn't have said this:

 

 

they should not be penalized for credit inquiries over which they have no control



http://thehill.com/blogs/congress-blog/economy-a-budget/220771-credit-rating-companies-and-the-fico-...

 

 

 

 



I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

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Established Contributor
pakman92
Posts: 650
Registered: ‎03-01-2012

Re: The Hill publishes flawed argument about FICO scores


cashnocredit wrote:

Some guy opining about something he hasn't bothered to learn about first. He seems to think consumers have no control over Inqs that affect FICO scores. While I'm sympathetic about some of his points he clearly hasn't studied the topic he feels compelled to write about. If he had he wouldn't have said this:

 

 

they should not be penalized for credit inquiries over which they have no control



http://thehill.com/blogs/congress-blog/economy-a-budget/220771-credit-rating-companies-and-the-fico-...

 

 

 

 




This article seems to miss the point.  Apart from the inquiries issue OP points out, IMHO, the real problem is use and sale of FAKO by CRs which completely misleads the average consumer.


My Starting Score: EQ: 691 (11/30/11) TU98: 726 (11/30/11)
My Current Score: EQ: 779 (04/22/13) TU08: 835 (06/03/13)
DW Starting Score: EQ: 742 (03/02/12) TU98: 748 (03/02/12)
DW Current Score: EQ: 784 (03/11/13) TU08: 775 (06/03/13)
Valued Contributor
GregB
Posts: 1,670
Registered: ‎05-24-2007

Re: The Hill publishes flawed argument about FICO scores

It appears to be written by someone that has no understanding of the credit system. Our lawmakers mostly don't live in the real world or have any idea of how it works. This is just one more example of how poorly a lawmaker did his research before demanding another useless new law.

 

Very telling is the comment about a "perfect credit score". I would think anyone that even did a small amount of research would understand that it is not a 0-100% system. Also interesting that he thinks someone with "only a few late payments" would expect a score in the "seven or eight hundreds". He is dramatically exaggerating the effect if inquiries and ignoring that they only come about as a person applies for credit. I'm sure the actual statistics involved would be way over his head.

 

He might as well be saying "I don't have any idea about this BUT I think we should pass a new law to regulate this system".

Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011

Re: The Hill publishes flawed argument about FICO scores

So he doesn't think people should be punished for going on app sprees? Lots of inquiries and new accounts indicate a higher risk.  Quite disappointing to read someone with power to pass laws is that misguided.

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
Regular Contributor
omskillet
Posts: 118
Registered: ‎01-04-2012

Re: The Hill publishes flawed argument about FICO scores

I think the point of the article is that scoring system is too varied and not transparent enough. Its a poor summary of the Consumer Financial Protection Bureau report on the same issue.

 

I do have to agree with him that inquiries are often too damning in the current model. Sure the guy is a bit misinformed as to details that we all know as "insiders" here at myfico but I would read the CFPB report I'm refering and see if it gives you a different prospective on the article.

 

The gist is that people in general have very little idea what their score represents and whether or not one they buy is the "true" score or not. This causes confusion and stems from lack of transparency by the bureaus about how people are scored.

Super Contributor
marty56
Posts: 5,679
Registered: ‎10-06-2007

Re: The Hill publishes flawed argument about FICO scores


Dadaluma83 wrote:

So he doesn't think people should be punished for going on app sprees? Lots of inquiries and new accounts indicate a higher risk.  Quite disappointing to read someone with power to pass laws is that misguided.


Back in my credit dark days, having maxed all my CCs out, I still tried to get more credit.  I was turned down more times for # of INQs then the debt since they didn't need to look at that to know I was already in trouble.  While I was upset at time time, I realized that they did me a favor by denying me for that reason.

 

I would be great if FICO ignored INQs for things like cell phones, cable TV and even renting an apartment and also didn't ding you as much for an autoloan INQ or mortgage.

 

IMHO if you get hit for INQs and then deined for credit becuas of them,  FICO is probably doing you a favor. 

 

LOL I wish someone did that after I tried to open my 2nd credit card all those years ago.

09/12/2013 FICO: EQ: 772 EX:813 TU:752
Frequent Contributor
Dadaluma83
Posts: 364
Registered: ‎08-23-2011

Re: The Hill publishes flawed argument about FICO scores

The one good point is there is too much confusion about FICO and FAKO scores. Even people on this board get confused sometimes. Lets say the average person goes to free credit score.com and gets a score of like 830. They will think they have absolute perfect credit, then they go app and get denied for a 680 FICO score and a few baddies and wonder why their score is so much different.

 

It has always been widely believed that anything over 700 is a great credit score, but with so many scoring models now it is hard to know if the score is a true FICO.

 

I always hated those free credit report/score commercials. Not only were the songs stupid but I always hate it when a company says they will give you something for free, if you pay them to do it. :smileylol:

 

Pay us 14.95 a month and you get your "free" credit score. :smileylol:

FICO Scores: TU: 768 (Jan 2012), EQ: 755 (Jan 2012 Lender pull)
Frequent Contributor
daboss28
Posts: 483
Registered: ‎06-07-2010

Re: The Hill publishes flawed argument about FICO scores

The Guy's on drugs inquiries are not gonna drop you into the 500's.
Unless he fails too mention RECENT 60 and 90 day lates and high utility then yea
that should have been mentioned. Someone in that situation shouldn't be expecting
high 700 or 800 credit scores anyway.
EQ 715 8-4-12 // Walmart TU 720 8-11-12 // TU 04 744 (cc pull) 8-23-12 EXP (cc pull) 707 8-23-12
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Valued Contributor
crunching_numbers
Posts: 1,093
Registered: ‎02-15-2012

Re: The Hill publishes flawed argument about FICO scores

The author is a prime example of why we need to educate the general public on how credit scoring works. Because of propriatary reasons there is secrecy in the FICO model. That mystery creates confusion because it is not possible to explain the math behind the scoring. Having multiple FICO versions and models only complicates things further.  People are confused and the CB's are taking advantage of that fact. So are the CC companies when they send propriatary scoring results with credit decisions.


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