Professions that throughly understand FICO scoring?

[masscredit]

I was thinking, it must be nice to work deep in a profession that throughly understands FICO scoring. Much deeper than what we know/try to figure out. A level that understands what it takes to maximize CLIs and scores. What would some of those professions be and will anyone here admit to being at that level?

[RonM21]

It would be nice to know the deep details. All we can do is do the best with what info everyone has compiled.

[RobertEG]

Regardless of occupation or knowledge of the consumer, the FICO scoring algorithms are legally protected as trade secrets, and Fair Isaac is careful not to disclose details that would enable one to fully understand and thus duplicate the algorithms. 

They are not protected by patents, and thus if known, can be freely used.

Thus, the assumption that certain parties could, based on education or profession, thoroughly understand the workings of the FICO algoritms is not the case.

[surferchris]

Agreed...lol, you probably need to get a PhD in Mathematics and then get hired at Fair Isaac.  But then of course, you would have to sign a confidentiality, so you couldn't tell anyone else anyhow...

[Anonymous]

Perhaps we can find a former FICO employee that left on bad terms that has an axe to grind, willing to spill the beans.

[masscredit]

Why is some of this such a closely guarded secret?  You'd think they would want people to know so they can better themselves. 

[RobertEG]

Their scoring algorithm is their business.

If others could reverse engineer the algorithms, they could sell the same product and compete.

A business has to decide whent they invent how to attempt to protect their investiment.

They can either chose to apply for a patent or they can choose to keep the invention a trade secret.

The advantage of a patent is that it gives them the legal right to exclude anyone from making, using of selling the invention for approx 20 years.

The disadvantage is that a patent requries full disclosure of how to make the invetion, and once the patent expires, anyone is then free to make, use and sell the algorithms.

They must apply for a patent within a year of any public use of their algoritms.  They did not do so, and thus have given up any ability to obtain a patent.

They must now continue to protect their invention by keeping it a trade secret.  Fortunately, their invetion is such tht it cannot be reverse-engineered simply by knowing the output or product.  Most mechanical investions cannot be kept as trade secrets by the fact that they can be reverse-engineered by simply tinkering with the device.

Trade secret laws permit them to obtain confidentiality agreements for all emplyees.  Violation of the confidentiality agreement subjects the party to criminal and/or civil action.

[masscredit]

Thank you for the detailed reply. I thought our scores are like being graded on a test in school. A person would get a good grade if they understand what they were taught.  When it comes to credit, a person should have the knowledge of what they are supposed to do then do it ( if they can).  They would have a good score because of that.  Many people know the basics - pay bills on time and don't be over extended.  And then there are people that take that a step further.  They micromanage their accounts, watch utilization and toss in a loan here and there to maximize their scores. A lot of tests are done to figure out what works and what doesn't.

i understand your description and understand that scores are a business. Consumers usually have to pay to get them so EQ, TU and EX make money.  I don't understand why they don't give consumers greater knowledge.  Someone can give one card a lot of use and not receive a CLI for years while another card will hardly be used and receive an increase every 3-4 months   There is a deeper layer when it comes to credit.  Maybe I'm wrong but I think we should know about that like we know that our bills should be paid on time. 

[Aahz]

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@masscredit wrote:

i understand your description and understand that scores are a business. Consumers usually have to pay to get them so EQ, TU and EX make money.  I don't understand why they don't give consumers greater knowledge.

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Because FICO isn't in the "consumer pleasing/educating" business.  They are in the "credit extension advisory business".  

While MyFICO.com is the consumer portion of FICO, it's a tiny division that (likely) runs at a pretty small profit.  The selling of scoring models to lendors is both the foundation of FICO and its money tree.  Sharing detailed info about the algorithm does NOTHING to increase sales or profits from the lendors that finanacially support the company.

[iv]

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@masscredit wrote:

Thank you for the detailed reply. I thought our scores are like being graded on a test in school. A person would get a good grade if they understand what they were taught.  When it comes to credit, a person should have the knowledge of what they are supposed to do then do it ( if they can).  They would have a good score because of that.  Many people know the basics - pay bills on time and don't be over extended.  And then there are people that take that a step further.  They micromanage their accounts, watch utilization and toss in a loan here and there to maximize their scores. A lot of tests are done to figure out what works and what doesn't.

i understand your description and understand that scores are a business. Consumers usually have to pay to get them so EQ, TU and EX make money.  I don't understand why they don't give consumers greater knowledge.  Someone can give one card a lot of use and not receive a CLI for years while another card will hardly be used and receive an increase every 3-4 months   There is a deeper layer when it comes to credit.  Maybe I'm wrong but I think we should know about that like we know that our bills should be paid on time. 

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This does seem to be a common misconception...

A scoring rubic for grading in a school (at least in theory...) is based on clear, documented goals (ideally spelled out in advance of testing) - and mastery of those goals results in good grades. (Yeah, yeah, it doesn't always work that way in all schools... but it's meant to.)

Credit scoring... isn't like that at all.

Something I posted in a different thread last month is fairly relevant here:

"Scoring models (and reporting retention) aren't designed with "fair" as a main criteria.

They are designed to be statistically predictive across lenders' customers bases.

Most of the "if I was building the model" posts I see seem to treat it like building an elementary-school grading rubric: do a/b/c to demonstrate mastery of x/y/z, and receive an "A".

But reporting/scoring isn't like that.  It's more: identify the slice of customers who will return $X profit at X% interest, the slice who will return $X profit at Y% interest, the slice who will return $X profit at Z% interest, and the slice to avoid.

The reporting/scoring doesn't care about you. Just about the statistical group you are in, and what terms to offer that group for best profit."

Notice that nothing in there provides a motivation for lenders, CRAs, or FICO to to provide specific knowledge targeted at increasing an individual's score. The only real business motivations are to decrease delinquencies and increase returns... (Some seem to think that this is some deep, dark secret conspiracy... but it's just business, and hardly a secret.)