MyFico somethin fishy!

[Anonymous]

I ran my three scores today and they ranged from 650 to 690. I then ran a MyFico and it was almost 75 points lower. Can someone explain to me why no one can run consistent? How is a person who is trying to build a strong score to trust any place? My three scores came from the three agencies.

[HiLine]

The following thread contains answers to all your questions.

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Son-Of-Credit-Scoring-101/m-p/718550#U718...

[Anonymous]

YES IT IS FISHY: When their score simulation shows a moderate score increase if one pays the credit card balance in full and a large score increase if you pay it over 12 months with interest. An even larger score increase is shown if you click the "Best action" button with the recommendation to pay the credit card balance over 24 months (with interest of course). That is crooked. It looks like the score modelling algorithm is done with one goal in mind: PAY INTEREST to the masters (banks). THIS IS NOT FAIR!!!

[drkaje]

Paying on time, over time, also has to factor increasing account age with decreasing utility.

Also, we have to remember it's just a guesstimate and not based upon the real formula.

[chasmith]

So if you separate out pay now and no lates for 24 months, you should see roughly the sum of the two on "pay in full over 24 months".

[Anonymous]

One can make up a mathematical formula to justify almost anything and we, humans, are good at taking that to extremes.

In this case, the algorithm used (even if providing a range/guesstimate) is proposing me to align my behaviour to one that is to my financial disadvantage short and medium term for the sake of a "better credit score" (and I am paying for it too... - Hmm, I just got suckered in, right?). 

Question: Is the SYSTEM in place try to predict human financial behaviour OR is it modeling it to the advantage of big financial corporations?

[llecs]

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@Anonymous wrote:

YES IT IS FISHY: When their score simulation shows a moderate score increase if one pays the credit card balance in full and a large score increase if you pay it over 12 months with interest. An even larger score increase is shown if you click the "Best action" button with the recommendation to pay the credit card balance over 24 months (with interest of course). That is crooked. It looks like the score modelling algorithm is done with one goal in mind: PAY INTEREST to the masters (banks). THIS IS NOT FAIR!!!

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The simulation factors in more than just paying down a CC. On the CC alone, utilization is a huge deal in FICO scoring. I paid off $15k in balances in one month and brought my CC util down from 89% to 1% and saw gains of 125 on EQ and approx. 80 on TU. Whether I paid that utilization down in one month or 5 years, the end gain would be exactly the same with all else being equal.

But not everything is equal and the simulator accounts for that. The reason the simulator is saying you'll have a bigger gain over time vs. one month is because the simulator is accounting for possible gains outside of utilization. It is assuming that in one year your accounts will be a year older which can have a positive impact on your length of history and your average age of accounts which in turn can increase your scores more than just utilization alone. The simulator also accounts for aging of any negative accounts, lates, or any drain due to new accounts. A year from now the impact might be diminished or eliminated and that can account for the differences between your two scenarios.

[drkaje]

@ pajura,

It's a risk score, designed to tell lenders how likely it is you'll either default or pay late within the next two years. No more, no less.

Something intended to benefit consumers would be less secretive. All we can do is model our behavior when it comes to known factors that positively impact the numbers, when it makes good financial sense. Paying over time benefits lenders more than consumers due to interest so the model scores that higher.