Interesting - seems mortgage brokers have access to precise info about how fico scoring works

[Anonymous]

On this forum I notice it seems very trial and error regarding the effect on one's credit score when taking certain actions.  Recently I was applying for a mortgage and had one report at 804 and another at 795.  To give me slightly more benefit on rate, we needed a mid-score of 800 or more.  My broker talked to an "expert" in their department who apprently knows exactly what the effect will be of taking various actions; in my case he instructed me pay down one of my installment accounts by an exact amount.  He stated that if I did this I would get 6 additional pts.  I did pay it down by the amount he said and I did get the 6 pts.  I wonder how they know this?  Apparently they have a much better score simulator than the one available to avg. Joe on this site?

[MattH]

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@Anonymous wrote:
On this forum I notice it seems very trial and error regarding the effect on one's credit score when taking certain actions.  Recently I was applying for a mortgage and had one report at 804 and another at 795.  To give me slightly more benefit on rate, we needed a mid-score of 800 or more.  My broker talked to an "expert" in their department who apprently knows exactly what the effect will be of taking various actions; in my case he instructed me pay down one of my installment accounts by an exact amount.  He stated that if I did this I would get 6 additional pts.  I did pay it down by the amount he said and I did get the 6 pts.  I wonder how they know this?  Apparently they have a much better score simulator than the one available to avg. Joe on this site?

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Probably they just have a great deal of experience, I very much doubt Fair Isaac would allow their crown jewels to leak out into the broker community.

[RobertEG]

I concur with MattH.  The FICO scoring algorithm is a closely guarded trade secret.  But anyone is free to attempt to "reverse engineer" trade secrets provided they dont illegally obtain proprietary information from the holder of the trade secret in those efforts.  Those who keep their technology a trade secret rather than getting patent protection take their chances.

Your mortgage company has enough breadth of experience to make good short term guestimates, at least in this case.

But their guestimate was not very difficult, in that it was for only one very short term tweak.  Add a few more variables into the equation, and a longer span of projection, and I doubt that their "experts" will be any closer than the anecdotal information that you can get on this site. 

They did not "know" anything superior.  It was just a fairly obvious short term, and limited projection.

[Junejer]

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RobertEG wrote:

I concur with MattH.  The FICO scoring algorithm is a closely guarded trade secret.  But anyone is free to attempt to "reverse engineer" trade secrets provided they dont illegally obtain proprietary information from the holder of the trade secret in those efforts.  Those who keep their technology a trade secret rather than getting patent protection take their chances.

Your mortgage company has enough breadth of experience to make good short term guestimates, at least in this case.

But their guestimate was not very difficult, in that it was for only one very short term tweak.  Add a few more variables into the equation, and a longer span of projection, and I doubt that their "experts" will be any closer than the anecdotal information that you can get on this site. 

They did not "know" anything superior.  It was just a fairly obvious short term, and limited projection.

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Perhaps, but for a product like FICO scoring, FI is going to want to have that remain a secret for a lot longer than the 20 years that a patent would provide.

[marty56]

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Nordic wrote: 
I wonder how they know this?  Apparently they have a much better score simulator than the one available to avg. Joe on this site?

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Probably the same way someone picks numbers for a winning Lotto ticket.  LOL I bet many people here could have done the same thing.

I am suprised at the mortgage companys comment about your score since everything I have seen about mortgages would indicate the best rates are around 760+.

[MattH]

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@Junejer wrote:

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@RobertEG wrote:

I concur with MattH.  The FICO scoring algorithm is a closely guarded trade secret.  But anyone is free to attempt to "reverse engineer" trade secrets provided they dont illegally obtain proprietary information from the holder of the trade secret in those efforts.  Those who keep their technology a trade secret rather than getting patent protection take their chances.

Your mortgage company has enough breadth of experience to make good short term guestimates, at least in this case.

But their guestimate was not very difficult, in that it was for only one very short term tweak.  Add a few more variables into the equation, and a longer span of projection, and I doubt that their "experts" will be any closer than the anecdotal information that you can get on this site. 

They did not "know" anything superior.  It was just a fairly obvious short term, and limited projection.

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Perhaps, but for a product like FICO scoring, FI is going to want to have that remain a secret for a lot longer than the 20 years that a patent would provide.

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Also, much of what FICO does would likely not be patentable, because a PHOSITA (click the link!) can easily guess at many aspects of how they do their statistical data mining.  I've never worked in the financial industry but in my work as a pharmaceutical researcher I use many similar techniques as reviewed in this paper that I read just last night for instance.  The detailed decisions Fair Isaac makes of algorithmic details are driven by their databases, and in the US there is no intellectual property protection for databases as such.  US courts have consistently rejected the so-called "sweat of the brow" theory, allowing the expression of ideas to get copyright protection and allowing sufficiently novel ideas to get patent protection.  Since effort alone, even very extensive effort, does not of itself create IP, it may well be the case that for many aspects of the FICO secret sauce only trade-secret protection would be appropriate.

Fair Isaac does have a number of curent and pending patents, of course:

• patent-pending technology
• patent fight with IBM
• The above fight was settled
• Fair Isaac Sep 2006 patent
• Fair Isaac 2007 version of same patent

 

 However, even if Fair Isaac could obtain full IP protection of their formula from patents alone, imagine the possibilities for people to tweak their credit scores if the exact algorithm were known.

Message Edited by MattH on 02-11-2009 07:47 AM

[MattH]

Speaking of Trade Secrets, Kentucky Fried Chicken just got a new vault for their secret formula...

[marty56]

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@MattH wrote:

Speaking of Trade Secrets, Kentucky Fried Chicken just got a new vault for their secret formula...

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I'm hearing that a group of pigeons are trying to use FOIA to gain access to the information.

[MattH]

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@marty56 wrote:

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@MattH wrote:

Speaking of Trade Secrets, Kentucky Fried Chicken just got a new vault for their secret formula...

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I'm hearing that a group of pigeons are trying to use FOIA to gain access to the information.

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Speaking of pigeons...

article

Can you say "topic drift" 

[Junejer]

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MattH wrote:

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@marty56 wrote:

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@MattH wrote:

Speaking of Trade Secrets, Kentucky Fried Chicken just got a new vault for their secret formula...

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I'm hearing that a group of pigeons are trying to use FOIA to gain access to the information.

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Speaking of pigeons...

article

Can you say "topic drift" 

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No, but I can say threadjack.