Re: FICO Scores
10-07-2012 03:18 PM
Every time my American Express balance goes up from one month to the next there is FICO hit. What gives? I charge many things on American Express so my monthly balance can be as low as $1K and has gone as high as $5K, but what difference does it make in that my payment record clearly indicates that the bill gets paid in full almost every month. In the last several years there have been only a couple times when I carried a small balance over to the next month. In other words, I have never missed a payment and while I usually pay the bill in full on the very few occasions when I have made a partial payment it was in the neighborhood of half the amount owed, well above the minimum payment. More ridiculous, A couple months ago I got dinged because the balance on a Visa card that I seldom use went from the usual twenty or thirty bucks to three hundred dollars, an amount that was paid as soon as the bill arrived. Look at our annual household income compared to our outstanding debt and our record of debt payment and tell me that these are important changes in my credit history. I'm really losing faith in the FICO system. Your hard bound rules don't seem to take into account your clients overall financial situation.
1. FICO doesn't know what your income is. It isn't in your credit reports and FICO scores only consider information in credit reports, and only some of that. FICO scores do not use income, age, sex, zip code, employment, savings, investments amongst others.
2. FICO scores do not distinguish between those that carry a balance and those that pif each month. Mostly because they can't tell from the info in a credit report. Recently, Experian and possibly others allow creditors to post more detail about each months payments but not all banks report it and scoring hasn't caught up either. Modern FICO scores (such as EQ's) do treat charge cards differently from revolvers, and assumes the reported balance will not be carried over, and doesn't ding you for it. MyFICO's TU score is old and it does ding you but not many creditors use that vintage.
so my moniker is, well, rather out of date.
WM Discover $800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k