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The whole credit score model is 'ridiculous'

  • The Equifax data breach should shine a light on the faulty methodology all the ratings agencies use to create credit scores.
  • These scores, based on convoluted calculations, make little financial sense in many regards.
  • The whole system is "crazy." We need more innovative ways to assess financial responsibility and creditworthiness.

 

https://www.cnbc.com/2017/09/27/equifaxs-bad-methodology-is-worse-than-its-data-breach-commentary.ht...

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Re: The whole credit score model is 'ridiculous'

Couldn't agree more. I don't think they could've come up with a more nonsensical, schizophrenic system even if they tried. 

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Re: The whole credit score model is 'ridiculous'

Good article!

 


Fico 08: 720/721/719 TU/EX/EQ
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Re: The whole credit score model is 'ridiculous'

Net worth has little to do with one's behavior with regards to loan or credit card repayments.

 

Article didn't really mention anything else: it might not be a perfect system but there's a lot of data standing behind it.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Re: The whole credit score model is 'ridiculous'

[ Edited ]

Revelate wrote:

Net worth has little to do with one's behavior with regards to loan or credit card repayments.

 

Article didn't really mention anything else: it might not be a perfect system but there's a lot of data standing behind it.


While true, I would argue that it does factor into how likely the creditor is to get their money back if things go sideways.  

 

My primary beef with the current system is that it is still relatively difficult to obtain accurate, complete, credit reports on a timely basis.  I don't feel that paying $30/mo to services like MyFICO is anywhere near reasonable for the average person.  And sitting here waiting for the quarterly dribble of info my $30($90/qtr) provides is pretty pathetic.  I choose to do so, during my rebuilding, but it's absurd that it should cost that much to access this information.  There is no reason why CRA's can't provide access to this information to consumers in real-time, for free.  If not, allow me to opt out of your ability to hold my personal financial information.  It is a priviledge that they have access to this information.  They should start acting like it.  

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Re: The whole credit score model is 'ridiculous'

Amen Brother! 

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Registered: ‎09-19-2013

Re: The whole credit score model is 'ridiculous'

Gdale, thanks for sharing the link. It is an interesting point of view.

 

I remember vividly how outraged I was when I discovered the credit score rules. At the time I had two credit cards with very low limits that I routinely maxed out (because the limits were so incredible low) but paid in full every month by the due date. (I’ve always been allergic to paying credit card interest). I naïvely assumed that since my bills were paid in full my score would be quite high. Of course we know my score was actually low because I had two maxed out cards reported each month.

 

I don’t know what the “fix” is for the absurdity. I have long since resigned myself to learn the game and play it the best way I can to come out on top. I do agree with Midwestcoast. Our reports and scores should be made available for free to us on demand. We should also have the ability to freeze and unfreeze our reports for free as well.

Current scores (FICO 8): EX-793, EQ-766, TU-760
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Re: The whole credit score model is 'ridiculous'

The article is way to simplistic. The system is far from perfect but it works well.

Fico 8 11/8/16
Equifax 836, TransUnion 836 12/30/16 , Experian 842 1/11/17 . AAOA 12 years Oldest 17
No inquires since 2014
All credit reports frozen
Fico 8 Equifax Bankcard 866 12/27/16
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Re: The whole credit score model is 'ridiculous'


MIDWESTCOAST wrote:

Revelate wrote:

Net worth has little to do with one's behavior with regards to loan or credit card repayments.

 

Article didn't really mention anything else: it might not be a perfect system but there's a lot of data standing behind it.


While true, I would argue that it does factor into how likely the creditor is to get their money back if things go sideways.  

 

My primary beef with the current system is that it is still relatively difficult to obtain accurate, complete, credit reports on a timely basis.  I don't feel that paying $30/mo to services like MyFICO is anywhere near reasonable for the average person.  And sitting here waiting for the quarterly dribble of info my $30($90/qtr) provides is pretty pathetic.  I choose to do so, during my rebuilding, but it's absurd that it should cost that much to access this information.  There is no reason why CRA's can't provide access to this information to consumers in real-time, for free.  If not, allow me to opt out of your ability to hold my personal financial information.  It is a priviledge that they have access to this information.  They should start acting like it.  


But that wasn't the design goal of the mainline FICO algorithms.

 

There are other ones which predict collection potential, just sayin Smiley Happy.

 

Also for credit report accuracy you can cover that with Credit Karma and one of Experian's free services.  The $30/month or whatever the latest products are cost that much as a result of the scores and the licensing money that gets handed around for the various algorithms in use

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


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Re: The whole credit score model is 'ridiculous'


MIDWESTCOAST wrote:

My primary beef with the current system is that it is still relatively difficult to obtain accurate, complete, credit reports on a timely basis.  I don't feel that paying $30/mo to services like MyFICO is anywhere near reasonable for the average person.  And sitting here waiting for the quarterly dribble of info my $30($90/qtr) provides is pretty pathetic.  I choose to do so, during my rebuilding, but it's absurd that it should cost that much to access this information.  There is no reason why CRA's can't provide access to this information to consumers in real-time, for free.  If not, allow me to opt out of your ability to hold my personal financial information.  It is a priviledge that they have access to this information.  They should start acting like it.  


I strongly agree... real-time, on demand access to both (truly full) reports and scoring should be freely available to all consumers.

 

But we're actually much closer to that now than ever before:

 

Equifax directly supplies daily report pulls for free to everyone (on trustedid.com, sign up for free at equifaxsecurity2017.com). Also appears to offer a lock/unlock service for free.

 

Transunion directly supplies daily report pulls for free to everyone (on trueidentity.com, sign up for the free membership). Also appears to offer a lock/unlock service for free.

 

Experian directly supplies monthly reports with FICO 8 scores for free to everyone (on experian.com, with free signups scattered across a bunch of Experian-owned sites and apps).

 

When you include the many CC lenders that offer FICO 8 TU/EX scores (to customers or even to the general public, like Discover's creditscorecard.com), most needs are actually covered fairly well - this is amazing progress since 2013-2014 or so.

 

The big gaps that we're still missing are:

Daily free Experian reports and free lock/unlock (hopefully they'll start matching EQ/TU on that soon)

Free Equifax FICO 8 scores (oddly unpopular with CC issuers for their free monthly scores)

Free "mortgage" FICO scores (at least there are multiple paid sources now - fairly recently these were impossible without a "real" pull)

 

 

EQ8:844 TU8:845 EX8:850 (MyFico) - 2017-10-16

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