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The whole credit score model is 'ridiculous'

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Re: The whole credit score model is 'ridiculous'

Community Leader
Senior Contributor

Re: The whole credit score model is 'ridiculous'

I was hoping that trended data would become a big part of the CRA datasets.  If they were to, especially a rich history of payment data, then a lot of the "ridiculous" aspects of the current and past FICO models would get solved.

 

E.g. gimmicky stuff like ultralow utilization, or all cards at zero except one, or needing to open several extra credit cards.  None of that would be needed by FICO if it had solid TD to draw on.

 

We'll see if that every happens.

Community Leader
Senior Contributor

Re: The whole credit score model is 'ridiculous'

One of the problematic things about the article (in my opinion) is the the false dichotomy between FICO and income -- as if prospective lenders don't use both in their decisions.  It's actually a good thing that FICO doesn't include income or assets.  If makes it easier for a lender to clearly separate the three things when it makes decisions.

 

The FICO score lets them assess how a person handles payments and exisiting credit that he does have, and income and assets allow the lender to assess what size of an income stream the person has had.