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Its interesting that they claim no one single item can be worth a high numbers of points. Thoughts?
http://redtape.msnbc.com/2008/03/having-taken-a.html#posts
If any single credit item could have that much of an impact on a credit score, it would cast some doubt on the efficacy of the scoring system, which would seem fragile if it were subject to such wild swings.
Both Ulzheimer and Nelson say no one change could have such a dramatic impact on a score. In fact, they say, there is no way to assign a point value to individual items. Each time a lender gets a credit score, the scoring formula is re-run on an entire credit report, and a new score is generated from scratch. Because account balances are generally fluid, there is no way to assign exact values to any item.
There is an explanation, though, for large swings. Ulzheimer says that consumers fall into different buckets, or scorecards, within the Fair Isaac formula. One scorecard is for those with short credit histories, or "thin" credit files. Another is for those who have filed bankruptcies. Another is the "derog" scorecard, for those who have derogatory (unpaid) accounts in their files. Each scorecard uses a different formula. When a consumer shifts from one to the other -- something called "scorecard hopping" -- their score can shift dramatically up or down. So, a consumer who jumps from the "derog" scorecard to the "clean history" scorecard may indeed see a big credit score increase, for instance.
That means consumers with perfect credit can suffer much more from a single mistake, or a single dispute with a lender, than a consumer with bad credit.
ngerasimatos wrote:Its interesting that they claim no one single item can be worth a high numbers of points. Thoughts?
Credit ‘scorecards’ are key
Consumers can easily be tempted to use illegitimate firms to improve their scores – in part because it seems some consumers really do win the credit score lottery. There are countless stories from consumers who say they've removed one black mark on their report and pumped up their credit score 30 to 40 points -- which as we've seen could means thousands of dollars in savings each year.
ngerasimatos wrote:Credit ‘scorecards’ are key
There are countless stories from consumers who say they've removed one black mark on their report and pumped up their credit score 30 to 40 points -- which as we've seen could means thousands of dollars in savings each year.