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Re: FICO doesn't understand the credit card game

I AGREE TOTALLY - EVEN THOUGH I AM IN THE TO 96% -- I HAD PERFECT -- HOWEVER, YOU HAVE TO FIGHT THE CREDIT BUREAUS WHO DO NOT KEEP CORRECT INFORMATION - I AM FLAGGED BECAUSE I HAVE TOO MANY CREDITOR INQUIRING - I CAN'T STOP THEM - THEY SEND 100 OF REAL CREDIT CARDS AND OFFERS MONTHLY.  AND, MINE DISPLAYS THAT I OWE ONE BANK FOR THE SAME REAL ESTATE 175,000 AND 143,000 AND NEVER EVEN SIGNED THAT MORTGAGE -- IT WAS PAID (I NEVER SIGNED ANY LOAN AGREEMEN) IN JAN OF 07 -  EVEN AFTER ASKING FOR THEM TO UPDATE IT, I HAD TO GO THROUGH THE LENGTHY PROCESS OF DISPUTING....FICO ALSO DOES NOT DO WHAT THEY PROMISE.  THESE 3 CREDIT BUREAUS ARE RIPPING PEOPLE OFF ONLINE  -- I THINK I WILL JUST SUE THE 3 IN MAGISTRATE COURT (MY STATES LOW COURT) FOR 5,000.00 FOR PRODUCING AND TRANSMITTING FALSE INFORMATION.  ARE THEY REALLY GOING TO PAY AN ATTORNEY IN A VERY SMALL STATE TO FIGHT ME?  I, FORTUNATELY, DO NOT NEED A LAWYER....ANYONE ELSE EXPERIENCING THIS?
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Re: FICO doesn't understand the credit card game

just_curious,
 
With all due respect, here is what you are missing, in my opinion.


just_curious wrote:
 
I have credit lines totaling well over $200K on my CCs, plus two more without limits.  Many open 15+ years, one well over 30.


Your age of accounts is taken into account by FICO.  You have no valid complaint regarding these points, and they are irrelevant to your arguments.
 
In addition, your $200K CL is also taken into account.  It is the denominator in the utilization calculation.  Again, no valid complaint.

just_curious wrote:
 
I pay every card, every month well before the due date, no matter what the amount owed (and it is never a strain on the checking account).

Your payment history is also taken into account by FICO.  Again, you have no valid complaint here, and this statement is irrelevant to your arguments.
 
Your real argument, it seems to me, is that unless you "play the game" and pay your CCs before the statement cuts, FICO deems you more of a credit risk than you believe you are, because you always PIF.  In addition, your utilization is typically high because you use your cards to earn rewards.
 
Guess what?
 
It doesn't matter why you use your cards.  You are a greater risk in that respect than someone who doesn't charge up their cards and PIF them every month.
 
Remember, your payment history is irrelevant when it comes to utilization.  You are duly credited for your stellar payment history through a different part of the FICO algorithm.
 
All else equal, the cardholder who charges up his or her cards in a given month is a greater risk than the cardholder who doesn't.
 
This is true prima facie.
 
That is all the utilization aspect of the FICO model attempts to show.
 
And it is correct.
 
If there is a flaw in the FICO system regarding utilization, it is not that we are dinged for using our cards, whether it's for rewards or out of financial necessity.  In my opinion, the flaw lies in the fact that we are able to fool the system by paying our bills at unusual times during the billing cycle.
 
However, this ability to fool the system in no way validates your argument.  The fact remains that those who use their cards heavily represent a greater risk than those who do not.
 
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Re: FICO doesn't understand the credit card game



cheddar wrote:
just_curious,
 
With all due respect, here is what you are missing, in my opinion.

You are a greater risk in that respect than someone who doesn't charge up their cards and PIF them every month.

The fact remains that those who use their cards heavily represent a greater risk than those who do not.

Actually, no.  Ability to pay [which is indirectly reflected in the payment history] matters too, actually.
 
I believe you have examined only one variable in a multi variable world.  Someone who charges $3,000 per month on their cards (with lines totaling $25,000 - 12% utilization) and pays only in part each month [thus incurring interest costs] because it is a strain on their capacity to pay is, in fact, a higher risk than someone who charges $30,000 per month (with lines of $100,000 - 2.5 times the utilization) but can easily PIF without strain. [Neither of these are me, I should point out.]
 
In other words, you have left out the ability side of the equation.  Since FICO doesn't have income and asset info, the idea I have floated - to actually reflect a PIF history correctly - is a reasonable approximation.  I assure you that I am not a higher risk than those who use their cards less heavily than I do, and my track record proves it.  FICO just hasn't learned to deal with it.
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Re: FICO doesn't understand the credit card game

There is no statistical model that can account for the entire population, normally person of great wealth has establish relationship with some banks and therefore he is less dependent on the system (hence, I am sure there are some individuals out there with much greater wealth than me with lower Fico scores than mine yet higher credit limits and better credit opportunities due to the personal relationships they have with their banks). If your CL are so high, your utilization should be very low hence the balances that are reported before you PIF should have very little impact on your score. Regardless, I doubt FICO will change their model (who as a statistician I asume is very efficient in predicting most individuals behavior) just to please you.
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Re: FICO doesn't understand the credit card game



just_curious wrote:
 
Ability to pay [which is indirectly reflected in the payment history] matters too, actually.

Ability to pay matters, but FICO scoring doesn't measure one's ability to pay. FICO scoring measures likelihood to matter ANY debt.
 
Ability to pay is an assessment of one's assets and income as measured against the debt. A person with no blemishs on their credit history at all, with a FICO score of 814, might be a poor match for a $2.5 million home loan and income of $75K. However, they would likely be an ideal match for a $250K home loan, even zero down, because they possess the ability to pay back that loan.
 
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Re: FICO doesn't understand the credit card game

[ Edited ]
The question is not whether FICO understands the credit card game, for you can bet that they do, since the CCC's are one of their primary customers.  Consumers are not FICO customers in the grand game.  Rather, the question is whether the CCC's can continue to get away with their rampant "suck them in the good FICO performers" strategy with all kinds of great offers, and then hope they make one late pay to anyone in the universe, allowing them to then jack them to default rates of their userious choice.  Corporate policies.  Thereby destroying the credit scores of even some of the best FICO consumers.
 

Default rates imposed for late payments, exceeding credit limits and bounced payment checks typically are levied on cardholders with poor credit scores, often incrementally. But state banking regulators and watchdog groups report a growing number of complaints of maximum default rates being imposed on erring customers with above-average credit scores of 700 and higher. They has been a growing trend to go go after even the higher past FICO scorers, using their high scores to suck them in, and then using anything in their arsenal to jack up their rates for any pimple on their record, no matter how small.  Yes, They understand and love the game that they support! 

The tighter rein on credit-card debtors comes amid heightened scrutiny in Congress of suspect industry practices. Lawmakers fear wary lenders will resort in the months ahead to "hair-trigger repricing" of interest rates on cardholder's existing balances at the least provocation. "We find it totally unfair that if you're one day late, you get hit with a 30%-plus interest rate," said Linda Sherry, director of national priorities for Consumer Action. "There's been a pervasive attitude of hands-off the industry because we don't want to tinker with the marketplace, but some of its practices are just patently wrong."

"Some issuers are pointing to the hits they've taken from the subprime mortgage fallout as a reason Congress shouldn't regulate the credit-card industry," said U.S. Rep. Carolyn Maloney, D-N.Y., chair of the House Subcommittee on Financial Institutions and Consumer Credit. But "the hands-off approach prior Congresses have taken to this industry has spawned unfair practices that hurt consumers, including hair-trigger repricing."

In a bid to forestall tighter regulation, leading card issuers Citibank and Chase declared this year they'd abandon highly criticized "universal default" policies. Under that practice, banks boost a cardholder's interest rate for delinquencies on outside accounts or a drop in their credit score even if they have a flawless payment record on that lender's account.

Consumer advocates said the banks made that concession knowing they'll need to take a harder line with customers as delinquencies rise and would face intense heat in Congress if they sharply hiked rates for so-called "off us" activity.

Citibank, which dropped universal default in March, declined to disclose whether it is since hiking late payers to maximum default rates more often or swiftly. "We reprice to our default rate only a very small portion of customers," spokesman Sam Wang said.

The decline in Americans' home equity due to slumping real-estate values is limiting cardholders' ability to pay off higher-interest credit-card debt with home-equity loans. As that resource becomes unavailable to more borrowers, experts say, lenders are taking aggressive measures to limit their exposure on unsecured credit-card debt.

Credit-card lending is the riskiest personal debt for banks to hold because, unlike mortgages or car loans, it's not secured by collateralized real property they can seize if borrowers fail to make payments.

But credit card lenders have learned that low introductory and balance transfer rates, often touted to consumers as their "privilege" for having secured a high credit score, are effective means for inticing customers to aborb higher debt, with the hope them them, the credit card company, that the consumer will  then either not pay what was lent within the intro period, or better yet for them, will miss a payment with someone that will allow them to then cancel the lower rate, and jack up the screw, to astronomical rates, and great profits!

Yes, Virginia, they know who Santa Claus is!

 



Message Edited by RobertEG on 01-03-2008 04:01 PM

Message Edited by RobertEG on 01-03-2008 04:03 PM
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Re: FICO doesn't understand the credit card game

what is your credit score?
I'm really wanting to know that one..
I just had a conversation with the forum members about scoring and my stated position is what I believe excellent credit is and you are the epitomy of it. However the forum members did remind me of the importance of utilizing your revolving credit.  And in your case you definitely use it and pay your balances but have a less than perfect credit score. So now..this is the perfect opportunity to make either my point and theirs or both...so help us all learn
1.You carry no balances
you are assuming that you should be in the 800's but unfortunately you are not..
so what exactly is your score...750.
With your credit being so clean and you of course assuming that you have the income to do as you wish. What is your gravitation towards obtaining a better score? Are you like me in thinking that you should be rewarded as the top member of the credit ladder for 30 years of great performance or are you trying to figure out how to get those numbers on your side......What purpose will it serve for you? You seem to have what you need in the world of money. 
So tell us how much do you get a year from charging.......in cash back.
hope this is not too much......to ask
 

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Current Score: EQ 730 TU 710
Goal Score: 800 to 850


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Re: FICO doesn't understand the credit card game

Hmmm.  Let's see if I can figure this out.  So FairIsaac has as a primary customer for their credit scores the CCC's.  One hand generates the scores that the other hand uses. The other hand then passes back the gratitude to the one hand who used the score to make money.  Both with the goal, not of fairness to consumer Isaac, but rather with the goal of serving each other and making money.  I fault neither for that, for it is capitalism.  Not always pretty.  I am practical, not cynical.  That is why this forum is so neat... it allow us to counter their greed tactics with some of our own..   CCC;s ideally seek out a current consumer with a high FICO score to reduce their risk upon lending, but also love it when a late payment subsequently shows up in the FICO reports, or the once blissful and thankful cosumer extends his or her credit obligation with enticing introductory offers.  Once the smell is off the rose, the CCC can then can use it to jack up the rate for the consumer that they just praised the month before for their great prior credit restraint, as manifested by their prior, and maybe now plummeting, FICO score..  Peter pays Paul, but you can bet that Peter and Paul would have nothing to pay each other if it were not for Joe Blow consumer, pauing them both, keeping the whole system alive.  Aint capitalism grand!!!!
Someone has to pay in the grand scheme.  If anyone is naive enough to think that FICO scores are generated for consumer benefit, then I have a plot of land supporting the Brooklyn Bridge that I will galdly sell to you, providing you have a FICO score of at least 739!
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Re: FICO doesn't understand the credit card game

[ Edited ]

Midnight wrote

Basically, FICO is a statistical analysis, and does not (and cannot) treat individuals as individuals.  30 plus years of perfect payments is only 7 years - only the last 7 years are counted in the score.  35% of the FICO score is utilization of of available credit.  Income is NOT a factor - FICO does not know your income.

The above seems contradictory:

  1. Just curious states that his credit has been perfect for over 30 years
  2. You say that “only the last 7 years are counted in the score…”
  3. The fico pie chart indicates that the length of history accounts for 15 percent of your score.
  4. My credit report for fico states that my length of credit history is very good with my oldest account being 14 years.
  5. It also states that Fico high achievers opened their oldest account 19 years ago on average.
  6. Based on your quote it seems contradictory can you please clarify what you are talking about…

 

 

 

 

 


Message Edited by sherry on 01-03-2008 08:48 PM

Message Edited by sherry on 01-03-2008 08:48 PM

Starting Score: EQ 730 TU 721
Current Score: EQ 730 TU 710
Goal Score: 800 to 850


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Re: FICO doesn't understand the credit card game



sherry wrote:
One thing I would like for you to clarify is
the 7 years that you were talking about with credit. I believe you said that fico only looks into the your history for 7 years however it seems contradictory in that the length of credit history is a big factor in credit scoring so how can you uphold this statement as an absolute truth.
please explain.



I know we'll hear back from RobertEG, but basically FICO notes the existence of your credit history for however far back, but it looks into the content of your credit history for the last 7 years (10 for BK.)
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
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