Hey Everyone!
My goodness.
Though this posting is just as important as the next, I'm thinking it has been posted in the wrong forum. I'm going to ask the moderators to plz move to the General Info section for better fit the topic. Thanks! 
UGH!!! iPhone
Starting Score: 642
No system is perfect 
.. if it makes you feel better I got Chase Freedom in January 2013 with 790 Fico and 22,99% APR!!... now after 15 months I tried to convert it to a Signature version and of course denied again with 802 Fico last week... I am probably considered white collar in your terms and Chase simply does not care about Fico scores or income... .. I am glad that it is the only lender that does not get me best terms or close to best terms. Systems are not perfect and never a guarantee. I am waiting for the explanation letter and curious to see what they would like to see. Sometimes you simply do not understand decisions but life goes on
Thanks for posting. Here is my input.
- I've never had an unfair experience with our moderators, Lexie or any of the others. Sorry if you felt otherwise, but I haven't seen it
- "The Fico scoring models are made to benefit the corporation, not the consumer". Of course they are. Usually a product is made to benefit the people who purchase said product.
- "Have you ever seen a person on this board post about a credit card division performing a financial review of their particular account(s)?". American Express does this all the time, which is who I assume that you are talking about. Mnay of the members here find it to be annoying, invasive, etc. They also have the lowest default rate in the industry, so apparently they are doing something right.
- "You should easily be able to go onto the Fico website and be able to find proper information in regard to how your report is scored and modeled.". Come now, let's be reasonable, you can't really believe this? Why would they disclose their exact scoring mechanism? That's their business, their moneymaker, and proprietary information. And why are you just calling out FICO? I can't go to AMEX and ask them how they calculate their risk model. Or Chase. Or others.
And while on an emotional level I totally get the income aspect, I don't understand the argument as much from a business aspect. Someone with a higher income is going to have more financial doors and avenues opened to them than someone with a lower income.
I do get and sympathize with some of it though. In any event though, thanks for posting your opinion.
I'm actually laughing.
First off, the consumer is judged by annual income not because of the credit score, but because IT IS REQUIRED ON ALL CREDIT APPLICATIONS! They don't look only look at the score! On all applications, the issuer reserves the right to lend credit based on one's credit report/score, income, and housing payments. Although someone may have a lower score (the original poster decided to put 695, which, keep in mind, is technically a prime score in the auto lending industry), their income makes them look better. Wouldn't you rather lend money to someone with a good reliability, but has more money (and therefore can pay you back quicker and easier with a "on-paper" little risk of not having money that month), than someone who has perfect reliability, but is going to take years and years to pay you back and scrap by and may have to make other choices down the line which can involve possibly not paying you back because they decided to take out a $65k car loan instead of going for the car that fits their budget? It's not just human rationale, it's business. Are their exceptions on both sides? Of course! That's just how it's viewed, unfortunately.
The FICO models weren't made for the consumer. They were made for the businesses. Why do you think we have to pay for our scores (or our credit card issuers do)? We're lucky enough that the government feels they should step in and at least allow one to view their credit report for free once a year so that the consumer DOESN'T get screwed over! Realize that as of today, FICO scores are a business product. Not a right.
Also, if two people have the same scores, and one doesn't get the loan but the other does, it could be so much more than simply income separating the two, although a possible contender. (Remember, annual income is required on the application and is viewed ALONGSIDE the credit score and report, which does NOT take income into consideration). It could be person A has a 680 with 1 bankruptcy but flawless payment history, and person B has a 680 but with numerous late payments. How are you to tell the difference by just considering score? That's what a review of the credit report is for (and, yes, when you send that credit card application in, the auto computers that are processing your application don't just look at credit score. They're using an algorithm that takes your credit report, income, and housing payments into consideration. The likelihood that you have the exact same credit profile as somebody else with the same score as you on this forum is small, it's too small and biased of a sample.)
Keep in mind I just decided to vent, and didn't want to spend hours of research and citations just to get my point across. It's possible not all my facts are straight, and if so, please please feel free to cite what's correct! Citation is a beautiful thing, and very important for the scientific method Be careful what you spout, and be sure to have legitimate sources if you are trying to pose a theory. And by legitimate, I mean not some "sheeple" blog or website...try actually going somewhere that has documented case studies...
While I do not agree with the OPs viewpoint as per FICO scores having different weights based on income (this seems ridiculous to me), it is well known that lenders take both FICO and income into consideration when granting a loan. Many have their own internal scoring models that could include income and employment. Of course lenders are going to include these extraneous factors if they are proven to mitigate risk.
Is an active-duty soldier more likely to pay his bills on time, keep his/her job, and get consistently promoted than a grocery store cashier? I think so. And the banks probably think so too, but FICO doesn't compute this. It is an external risk-based calculation made by the lender.
There is more to being approved for credit than a FICO score. Fair to the consumer or not, these other aspects of consideration are relevant factors that lenders have decided will keep them from losing money and remain profitable. They are the ones lending their money and they are not obligated to do so... it could put them out of business if they ignored all preceived risks.
As for FICO, however, this is an algorithm applied to a credit report. The reports do not contain income information. No extra risk-based criteria are required to generate a score. The score does not change if you update your employer on credit reports. It doesn't change if you update your address or name either. These factors are not part of the FICO score.
@longtimelurker wrote:
@-NewGuy- wrote:
- "You should easily be able to go onto the Fico website and be able to find proper information in regard to how your report is scored and modeled.". Come now, let's be reasonable, you can't really believe this? Why would they disclose their exact scoring mechanism? That's their business, their moneymaker, and proprietary information. And why are you just calling out FICO? I can't go to AMEX and ask them how they calculate their risk model. Or Chase. Or others.
Right, but what I would find interesting: You can imagine an fairly simple relatively ungameable model being made public:
-100 points for each 30 days late within the last 6 months, -50 between 6-12 months, BK -500 in the last 6 months etc...
+1 per account for each month of positive payment history
etc etc
Then I wonder how that compares in accuracy to the current models. Presumably not all that well, but then there might be some almost unnecessary tweaking in the models to add to the mystique (so that issuers are willing to pay!)
- I've never had an unfair experience with our moderators, Lexie or any of the others. Sorry if you felt otherwise, but I haven't seen it
Well, I did (not Lexie). But I put it behind me, except for vowing to make that person and all his/her descendents suffer for all eternity. Proud of my restraint.
My initial inclination was to make a blanket statement about mods, but everyone is different to I tried to limit to just me. And I'd be proud of it too. LOL
Yes, that would definitely be an interesting experiment. Honestly, I think that one of the more confusing aspects of FICO scoring is the bucketing, which doesn't get a lot of attention. Also one of the more mysterious aspects of FICO scoring. In comparison to your above scenario, it might mean that point values (both positive and negative) are altered depending on what bucket the consumer is in. Also, if the consumer is in the 'major derogatory' bucket, their score may be capped at a certain amount, no matter how many positives are present, until the derog falls off and they are moved into another bucket. Bucket adjustment is a reason that someone can lose fifteen points overnight with the only change being their accounts aging a month (perhaps moving them from the 0-2 years AAoA bucket to the 2-5 years AAoA bucket, where scoring is different).
Just for clarification, I made up the bucket names, but I know there is a major derog bucket.
Anyway, good stuff. Always enjoy your posts LTL.
I've read through it, and there are some points in there that I would agree with, there are some that I would not. I wouldn't say that FICO sets anybody up to fail, but does it favor the lender? Well, Yes, it does. Where does FICO make it's money? Who is paying for all this? It's the lenders not the lendees. So I have no problem with that.
This post is a matter of opinion and was written well, except for the part about calling out Lexie, didn't like that much. But myFICO supports honest and fair opinions and especially the manner in which they are written. So I don't see that this would need to be removed nor the person banned.
July 2013 score: EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
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Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
June 2017 update: All scores over 820, just pure gardening now.