No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
@Fucuscore wrote:
The only ones that benefit from Fico scores are the banks! The scoring model is absurd and I believe it spins down a person's true credit score so the banks and probably our government can jack the interest rates and fees up and pad their pockets. How could my Experian Fico score have dropped 14 points in a matter of 3 months with the only change being that I paid one debt completely off and lowered another. I paid off two mortgages last year and my total debt is only $7000 owed on a credit card. So why in the hell would my score be 678? It's also funny that the three reporting bureaus show my credit score is 739 and an "excellent" status. It's all just a way to make us people that actually pay our bills jump through crazy hoops. No one actually knows why the Fico model scores the way it does as evidenced by my in depth questioning regarding my 14 point drop....even my bank is scratching their head. So why is there no competition for this absurd computer program that puts American consumers at the mercy of the banks. I think Fair Issac should be called the exact opposite.
There is no reason for banks to want scores that don't reflect risk. It's in their interest, and hence FICO's company interest, for scores to reflect risk as accurately as possible. Credit scores are not simple and they can't really can't be made simple. They are based on millions of credit files and are statistically derived. In any given case they can appear to do pretty strange things. Especially when you shift between scorecards, aka buckets, I had my FICO score drop from 750 by 50 points and the only reason was that my oldest account reached 4 years. Turned out the new category gives far more (negative) weight to how many cards had balances (all of them) even though utilization was quite low at around 10%. Prior to reaching 4 years having all my cards report balances had only a small effect. It's quite likely that when people first get credit they use most of their cards and after they have had credit a while the ones that continue to use most of their cards are slightly higher risks. It is just the way statistics works when creating these scoring algorithms.
While I somewhat agree with you there should be more clarity (it would sort of break validity of the model). FICO isn't a truly complicated subject: pay your bills on time, every time, don't rack up tons of credit card debt, be somewhat mindful of seeking new credit, and have a decent mix of open tradelines, and that pretty much covers 95% of it.
There's nobody including FICO themselves who would say that the scores are designed for the end-consumer: the fact is the banks, credit unions, and other similar establishments are their customers, not us; however, everyone gets the same model and version for a given credit product from a given lender, so it's one of the more egalitarian measurements in society. It's not perfect, but it does work for what it was designed to do.
That said there are competing models to FICO, the CRA's Vantage Score likely being the most popular of them; however, FICO is fairly well ingrained in some of the major areas especially the mortgage market where it's the only game in town other than possibly the alternative FHA financing program.
In any event, if you are willing to share more information about what your report data looks like, we may be able to offer some suggestions as to why your score may have dropped. Fully paying a debt, if it was an installment tradeilne for example, if it closes and you don't have others in an open state, that may be a ding against your score; however, getting into the details is more complicated than I intimated above and as such more information would be needed to try to have any hope of accurately assessing what may have occurred in your situation.
@Fucuscore wrote:
The only ones that benefit from Fico scores are the banks! The scoring model is absurd and I believe it spins down a person's true credit score so the banks and probably our government can jack the interest rates and fees up and pad their pockets. How could my Experian Fico score have dropped 14 points in a matter of 3 months with the only change being that I paid one debt completely off and lowered another. I paid off two mortgages last year and my total debt is only $7000 owed on a credit card. So why in the hell would my score be 678? It's also funny that the three reporting bureaus show my credit score is 739 and an "excellent" status. It's all just a way to make us people that actually pay our bills jump through crazy hoops. No one actually knows why the Fico model scores the way it does as evidenced by my in depth questioning regarding my 14 point drop....even my bank is scratching their head. So why is there no competition for this absurd computer program that puts American consumers at the mercy of the banks. I think Fair Issac should be called the exact opposite.
You are correct. FICO benefits the banks. That's why it exists. It's a tool to help banks determine the relative credit risks of customers. There is no such thing as a "true credit score." There is only FICO. So if your FICO score is X, then your true credit score is X, like it or not.
This is not to say that the methodology that FICO uses can't raise eyebrows. To determine exactly why your Experian score changed, you should pull the entire report and see what's going on. There may be errors in the report or there may be factors that you're not considering, like a change in utilization percentage.