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What the score "upgrade" means to you

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Quazar
Member

Re: What the score "upgrade" means to you

Well rhe change to 08 is a Bull**bleep** change and makes paying $14.95 each month for myFico useless. I want to be able to see what mortgage and auto lenders see. Sonif and when I'm ready to shop for a mortgage or car I want to know what score they are most likely to see...to see if it is worth the credit hit to apply for a loan is a good chance of approval or not.

I liked that I could see my 04 score and know that if I go for a mortgage Inpretty much know ahead of time what the mortgage company will see and if I have a good chance to get approvesd

Now looking at an 08 score and having no idea what the 04 score is...I'm back where Ibwas befire...walking in talking toba lender totally blind to what score they wil pull bqck.
Message 51 of 68
Revelate
Moderator Emeritus

Re: What the score "upgrade" means to you


@Quazar wrote:
Well rhe change to 08 is a Bull**bleep** change and makes paying $14.95 each month for myFico useless. I want to be able to see what mortgage and auto lenders see. Sonif and when I'm ready to shop for a mortgage or car I want to know what score they are most likely to see...to see if it is worth the credit hit to apply for a loan is a good chance of approval or not.

I liked that I could see my 04 score and know that if I go for a mortgage Inpretty much know ahead of time what the mortgage company will see and if I have a good chance to get approvesd

Now looking at an 08 score and having no idea what the 04 score is...I'm back where Ibwas befire...walking in talking toba lender totally blind to what score they wil pull bqck.

Equifax Score Power, or sign up for an account with DCU: both still provide Beacon 5.0 scores.

 

Auto lending we've never had the ability to see an auto enhanced score unfortunately.  All handwaving fengshui predictions on that count.




        
Message 52 of 68
HiLine
Blogger

Re: What the score "upgrade" means to you


@cem13 wrote:

Well I disagree with your assessment that the credit worthiness did not change.  Then why the need for a new formula?  


You are confusing an objective quality with a subjective measurement. If your credit profile did not change, that means, by definition, that your creditworthiness did not change either.

 

A credit score is a way to measure your creditworthiness. By definition, a different scoring model should give you a different score given the same creditworthiness. 

 

If you have trouble following, think of a credit score as a measurement of beauty. One scale may give Kelly Brook a 10, and another may give her an 8. Exact. Same. Person.

Message 53 of 68
cem13
Established Contributor

Re: What the score "upgrade" means to you

Hello HiLine,

 

Again, I respectfully disagree with your assessment.  We are using the same analogy but we draw very different conclusions.  Nothing in my credit profile changed significantly compared to the '04 algorithm.  However the '08 algorithm dropped by score by 25 points.  So by definition the new model CHANGED the way they measure "credit worthiness".  If the models were exactly the same then the score would be the same and the "credit worthiness" remains the same.

 

So by changing the model by definition means that FICO believes there is a change on how to meausre credit worthiness and how to relay that information.  You second paragraph would hold true if the scale dropped as well.  For example if the top score dropped from 850 to 800, then your statement holds true.  So if the scale remains the same, your credit profile remains the same however the new measuring system changes: the score value (up or down) changes. 

 

In your analogy of Kelly being ranked a 10 from one person and an 8 with another is EXACTLY my point.  Beauty is in the eye of the beholder.  The '04 model is DIFFERENT than the '08 model but the credit profile is the same.  If the '04 model thinks you are a 10 with a score of 750, then the '08 model thinks you are an 8 with a score of 700.  So if your score changes (up or down) it will be viewed by that beholder (Lending Institution) changes.   The scale did not change.

 

So the new '08 model measures differently than the '04 model.  It changes what FICO views as important.  Each bank has the right to pick whatever model they choose to measure us with.  So our credit worthiness is viewed differently with each different model.  This is basic calculus.

 

Now that we agree that the '08 model is different and it changes the way it measures credit worthiness; now we have to test this model to maximize our scores.  It appears that AU accounts are key.  However, some have theorized that the numbers of cards with balances are important too.

FICO 08 JUL23: TU 850; EQ 846; EX 843. Clean since BK7 D/C 6/2011.
Message 54 of 68
HiLine
Blogger

Re: What the score "upgrade" means to you

Well, were you aware of the fact that FICO 08 is not even a new score model?
Message 55 of 68
user5387
Valued Contributor

Re: What the score "upgrade" means to you


@cem13 wrote:

Hello HiLine,

 

Again, I respectfully disagree with your assessment.  We are using the same analogy but we draw very different conclusions.  Nothing in my credit profile changed significantly compared to the '04 algorithm.  However the '08 algorithm dropped by score by 25 points.  So by definition the new model CHANGED the way they measure "credit worthiness".  If the models were exactly the same then the score would be the same and the "credit worthiness" remains the same.

 

So by changing the model by definition means that FICO believes there is a change on how to meausre credit worthiness and how to relay that information.  You second paragraph would hold true if the scale dropped as well.  For example if the top score dropped from 850 to 800, then your statement holds true.  So if the scale remains the same, your credit profile remains the same however the new measuring system changes: the score value (up or down) changes. 

 

In your analogy of Kelly being ranked a 10 from one person and an 8 with another is EXACTLY my point.  Beauty is in the eye of the beholder.  The '04 model is DIFFERENT than the '08 model but the credit profile is the same.  If the '04 model thinks you are a 10 with a score of 750, then the '08 model thinks you are an 8 with a score of 700.  So if your score changes (up or down) it will be viewed by that beholder (Lending Institution) changes.   The scale did not change.

 

So the new '08 model measures differently than the '04 model.  It changes what FICO views as important.  Each bank has the right to pick whatever model they choose to measure us with.  So our credit worthiness is viewed differently with each different model.  This is basic calculus.

 

Now that we agree that the '08 model is different and it changes the way it measures credit worthiness; now we have to test this model to maximize our scores.  It appears that AU accounts are key.  However, some have theorized that the numbers of cards with balances are important too.


There are a couple of issues here worth mentioning.

 

One is that a score like 750 doesn't necessarily mean the same thing for different scoring models.  To really tie this down, you'd need to have access to the future delinquency rates associated with a score, and that information is not easy to come by.

 

Re the issue of whether a given credit report reflects a certain degree of creditworthiness, independent of scoring model, the answer may be tricky.

 

The reality is that credit standards shift over time, in part due to changes in consumer behavior and various changes in the lending industry.

 

For example, the 08 scoring model tries to crack down on "tradeline renting" (the AU change).  If a person was relying on this in the past, then the 08 scoring model may be an unwelcome surprise.

 

Message 56 of 68
cem13
Established Contributor

Re: What the score "upgrade" means to you

The fact that FICO '08 is not new illistrates my point.  The point is that the model is DIFFERENT.  So the exact same credit file will yield a different score and a change in perception by the lending institutions.  It does not matter that FICO is new or not.  The key is that it is DIFFERENT.  Different cannot equal the same for a vast majority of people.

 

The FICO '08 ignores collections under $100, while FICO '04 does not.  So if someone had a collection of $99.50; the FICO '08 model will benefit them.  Banks who use the FICO '08 model will judge this person as a better risk because their score will be higher (no collections on file).

 

I do not pass judgement on either (or any for that matter) model.  I just want to know what I am being judged against and how can I maximize my score.

FICO 08 JUL23: TU 850; EQ 846; EX 843. Clean since BK7 D/C 6/2011.
Message 57 of 68
cem13
Established Contributor

Re: What the score "upgrade" means to you

I agree with your assessment here.  A score of 750 with the '04 model and a score of 720 with the '08 model does not necessarily mean an increased risk for default.

 

As a math major, I understand there are probabilities listed that are 1000's of lines think.  FICO gets millions of dollars to write these programs and I bet many of these employees are Ivy League Type wizards.

 

The likelihood of default changes daily with different factors.  It is nearly impossible to predict with a 95% confidence interval who will or will not default and on any given day.  So they modify the models based on the current default rates.

 

The goal is to predict default.  Each scoring model does that based on statistics.  Is it 100% accurate?  I will bet the farm the answer is NO.  The bell curve (Standard Deviation) is too wide.  There are too many factors involved to predict accuracy.  The bell curve is not normally distibuted either, it is skewed to the high side.  This makes things complicated for the lay person to predict.  This is why there are "buckets".

 

These are very exciting topics and I would really enjoy writing one of the models.  In a previous post, the OP wanted to try to "Reverse Engineer" the algorithm.  This would be nearly impossible; however, for those to do not have anything complicated, it could be engineered fairly closely.

FICO 08 JUL23: TU 850; EQ 846; EX 843. Clean since BK7 D/C 6/2011.
Message 58 of 68
09Lexie
Moderator Emerita

Re: What the score "upgrade" means to you


@cem13 wrote:

I agree with your assessment here.  A score of 750 with the '04 model and a score of 720 with the '08 model does not necessarily mean an increased risk for default.

 

As a math major, I understand there are probabilities listed that are 1000's of lines think.  FICO gets millions of dollars to write these programs and I bet many of these employees are Ivy League Type wizards.

 

The likelihood of default changes daily with different factors.  It is nearly impossible to predict with a 95% confidence interval who will or will not default and on any given day.  So they modify the models based on the current default rates.

 

The goal is to predict default.  Each scoring model does that based on statistics.  Is it 100% accurate?  I will bet the farm the answer is NO.  The bell curve (Standard Deviation) is too wide.  There are too many factors involved to predict accuracy.  The bell curve is not normally distibuted either, it is skewed to the high side.  This makes things complicated for the lay person to predict.  This is why there are "buckets".

 

These are very exciting topics and I would really enjoy writing one of the models.  In a previous post, the OP wanted to try to "Reverse Engineer" the algorithm.  This would be nearly impossible; however, for those to do not have anything complicated, it could be engineered fairly closely.


You've made some excellent posts but it's difficult to follow who you might be responding to without quoting.   I noticed that you might not know how to respond to posts by using our quote feature. 

 

 

1.  Click "reply" on the post you want to respond to.

 

 

 

2013-11-21_1619_Reply_Button.png

 

 

 

 

 

 

 

 

2. To the right of the Spell Check button -- and above the message post window -- you will see the quote button.  It should look like this:

 

 

 

 

 

Quote Function.jpg

 

 

 

 

 

3.  Tap the quote bubble to insert the text of the post you are responding to and the block of text will appear in the message post window.

 

 

 

4.  Type your response below the quoted block of text and then click preview if you'd like to proof the post before submitting, or click "Post" at the bottom of the message post window.

 

 
Message 59 of 68
Anonymous
Not applicable

Re: What the score "upgrade" means to you


@cem13 wrote:

 

The goal is to predict default.  Each scoring model does that based on statistics.  Is it 100% accurate?  I will bet the farm the answer is NO.  The bell curve (Standard Deviation) is too wide.  There are too many factors involved to predict accuracy.  The bell curve is not normally distibuted either, it is skewed to the high side.  This makes things complicated for the lay person to predict.  This is why there are "buckets".

 


 

Since you're a math major, I will ask you some questions if you don't mind:

 

If the scores are supposed to predict something (say, likelihood of default in 2 years), wouldn't a 100% accurate score mean everyone had a credit score of either 0 or 1? Vs. what I think the scores do mean, which is "percentage of consumers like you who [insert outcome here]" Or did you mean a different definition of 100% accurate?

 

For skew, I thought FICO was long tail on the left, fat tail on the right.  Is that the same as "skewed high"?

Message 60 of 68
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