topic Re: Questions about FICO 08 in Understanding FICO® Scoring

Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 16:52:00 GMT

Good Morning:
I have worked very hard to obtain and maintain a good credit score. However I beleive that because of where I live (Low income neighborhood in NYC-Bedford-Stuyvestant) my credit score (Experian 757) does not mean as much as it would if lived elsewhere. Is this true? Do communities have credit ratings. My neighborhood has been hit hard by the subprime mess. I am greatful to God that I did not get caught up in it. I have a fixed rate martgage from a prime lender and 75% equity in my home. It seems as if my score is going to suffer through no fault of my own because of the state of the economy and where I choose to live. Is this true?
Also when will the new FICO formula go into effect? I want to buy scores after the change is made.

Re: Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 16:55:46 GMT

Auntie_Nell wrote:

Good Morning:
I have worked very hard to obtain and maintain a good credit score. However I beleive that because of where I live (Low income neighborhood in NYC-Bedford-Stuyvestant) my credit score (Experian 757) does not mean as much as it would if lived elsewhere. Is this true? Do communities have credit ratings. My neighborhood has been hit hard by the subprime mess. I am greatful to God that I did not get caught up in it. I have a fixed rate martgage from a prime lender and 75% equity in my home. It seems as if my score is going to suffer through no fault of my own because of the state of the economy and where I choose to live. Is this true?
Also when will the new FICO formula go into effect? I want to buy scores after the change is made.

Welcome to the FICO forums, from one Brooklyn resident to another!

Your address/zip code/neighborhood are not used by FICO for scoring purposes.

Latest word is that FICO 08 looks like it may be implemented in May, but not necessarily at all of the bureaus, and definitely not with most lenders. I would suggest going ahead and buying your scores to see where you stand, since it will still be quite a long while before you will be able to buy FICO 08 scores here.

Re: Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 20:16:54 GMT

Cheddar,

I JUST read in the lastest issue of BE mag that FICO '08 will not include AU accts in the scoring anymore.

A lot of people are going to take a big hit behind this one! WOW!

SerenityBound....indeed!

Re: Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 20:26:47 GMT

What is the latest? Is May really going to happen? Just for EX now, and maybe TU by end of the summer? Anyone heard specifics from myFICO or any other source?

From what I read, EQ will NOT be upgrading this year and maybe not for a few years. Or at least until their lawsuit with MyFICO is resolved...........

Re: Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 21:08:30 GMT

SerenityBound wrote:

Cheddar,

I JUST read in the lastest issue of BE mag that FICO '08 will not include AU accts in the scoring anymore.

A lot of people are going to take a big hit behind this one! WOW!

SerenityBound....indeed!

That is correct. FICO 08 will not include AU accounts in its scoring model, but it is not yet in effect.

Fair Isaac estimates that more people will actually see their scores go up from this change than will see their scores go down. Besides the AU change, there are some other minor tweaks being implemented, as well. A single late payment on just one account won't hurt as much as it does now, for example, as long as there are other accounts in good standing.

Re: Questions about FICO 08

Anonymous — Fri, 07 Mar 2008 21:24:05 GMT

Hmm, well credit score + up = fine by me.

Hopefully I can get some sorry CA DELs done before FICO 08 hits the streets.

SerenityBound...indeed!

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 03:29:27 GMT

This may sound very elemental, but sometimes the elemental can be illuminating for old men like me! Let me see if can get, with the help from the experts on here, this whole tangled process straight in my mind!

OK, I know that FairIsaac is in the business of generating mathematical scoring algorithms based on data provided to them, and they run it through one of maybe dozens and dozens of different computer algorithms that they have developed. They change their algorithms based on peer “bucket groups, and also apparently at the specification of other criteria that a client specifies. But no data is apparently reported by creditors directly to FairIsaac, Data goes first to each CRA, if it buys a score from FairIsaac, then, FairIsaac, through commercial contract with each subscribing CRA, generates a score that can only be called a FICO score if it was generated by a contract with FairIsaac… am I correct so far?

Now this is where my confusion really begins….

Which of the CRAs have a contractual agreement with FairIsaac to provide back to them (the CRA) scores that are true FairIsaac authorized and produced FICO® scores? It is stated over and over on here that only Equifax scores are actual FICOs, and others are FAKOs. But myFICO sells to us scores from all three CRAs, which indicates more than just business being done with EQ.

On the consumer version of FICO® that we get through this site, advertised and sold to us as myFICO scores, we can get a score directly from FairIsaac based on data reported from all three CRAs (EQ, EXP, and TU) that are called FICO scores by myFICO. They charge us for each separately. Do each of the three CRAs thus purchase and obtain scores generated by FairIsaac using the FICO algorithm?

If so, then why do EXP and TU have their own versions of credit scores, called Advantage scores, that are always called FAKO scores on here? Does that mean that they have their own, separate computer scoring algorithms that they generate totally independent of FairIsaac, and thus cannot be advertised or sold as FICO scores? And thus there can never be any correspondence between scores reported on myFICO and those sold by other vendors, because the math is not the same?

Does EQ also generate its own version of a credit score, not provided by FairIsaac, and thus not a true FICO?

And, even if a score is generated directly by FairIsaac, it appears that each CRA can then designate to FairIsaac one of a myriad of FICO algorithms it wishes FairIsaac to use when providing a score back to them? For example, on the myFICO Credit Information tab in the site menu, under the category of Inquiries, myFICO indicates that they use different algorithms, at the request of their customer, to calculate the effect of multiple loan/auto inquiries, with one algorithm using a 14 day shopping window, and another using a 45 day window, at the request of their customer.

No wonder there is so much confusion about credit scores that change for mysterious reasons other than the “rebucketing” catchall that many just use to eplain the unexplainable.

If we don’t know what computer generated our mysterious credit score, and thus whether it is a FICO, FAKO, or some hybrid using a pinch of this and a punch of that, they how can we ever understand our scores? And if we on here cannot answer those simiple questions, then i shudder to think that a creditor who pulls our score has anywhere the understanding that we on here have of where it came from, and what it means.

And now FICO08 is coming. Apparently, each CRA who subscribes to FICO has the option of whether to purchase and use the new or old version. Will individual creditors/lendors, when making a credit inquiry, also have to specify an addtional version or twek of FICO score they want, and if so, how in the world will we, the consumers, ever know or understand the rules?

I wont even dare mention CC enhanced, auto enhanced, mortgage, enhanced, etc. scores, or dare to ask whose computer is producing those babies, and whether they are generated totally indepently, or are in some manner tweaks of FICO!!! Does FairIsaac generate these scores? Or is a whole, brand new, different algorithm that has no relation to FICO? My head spins!!!

I wish someone could explain all of this to me!!!!

Message Edited by RobertEG on 03-07-2008 07:19 PM

Message Edited by RobertEG on 03-07-2008 07:23 PM

Message Edited by RobertEG on 03-07-2008 07:24 PM

Message Edited by RobertEG on 03-07-2008 07:29 PM

Re: Questions about FICO 08

sh9730 — Sat, 08 Mar 2008 04:32:12 GMT

Robert,

Seems to me you ve got it pretty correct. FICO was one of the (if not THE) original developers of the algorithims to take credit history date and provide a risk probabality of future default (that is really all FICO does) based upon that information.

As this score based risk program seemed to be proven reasonably accurate over time, it became more and more valuable to potential lenders. The FICO algorithim can be applied to ANY dataset, but as you know, the main players in the credit data repository business are EQ, EX, and TU. As a result, most lenders PAY for access to two things to help them assist a borrowers risk of default. The first is one or all of the data repositories databases (credit pulls as they are called), and the other is the right to use the FICO algorithm to assign a score to that data. Now, Im not that familiar with the business aspect of things, but my guess is that the CRAs, RESELL the rights to the FICO score and lenders pay just one place (ie they dont get billed directly from FICO but rather the CRAs which tack on a fee to get a FICO score), but I could be wrong about this part.

Over time, to meet requirements from lenders to assign different types of specific risk assessment, various "flavors" of the FICO algorithm were released by Fair Isaac. This is where you here about things such as Classic FICO, FICO 98, auto specific FICO, etc. . Again, all these various FICO products are used in conjunction with the DATA provided by the CRAs. (By the way, lenders, collection agencies and others PAY to insert data into the CRA databases and also pay to extract it. This is why sometimes items are not displayed on one CRA or another.)

SO, finally a few years ago, the CRAs got together and said "wait a minute!!! WE are the ones holding the data, and WE are the ones with the relationships with creditors, why are WE paying FICO just to assign a score to OUR data??! Why dont we cut that expense to us out of the equation?"

As a result, in a rare moment of callaboration, the CRAs got together and agreed upon a NEW scoring algorithm called Vantage or other names as appropriate or marketed. It CLAIMS to do the same thing that FICO does, again, that is assign a risk of future default. The number scale though similar, is not exactly the same as FICO, and supposedly they assign different (and what the CRAs believe is better) risk factors based upon the data in their repositories. FICO of course claims this algorithm is WAY too close to theirs and there are lawsuits in progress over that, but in the meantime they are still more than willing to get license fees from the CRAs to use the FICO algorithm to sell a score to creditors.

The main problem with the VANTAGE (or whatever name) system is that it is so far untested to the level that FICO has been, and as such not very many creditors have adopted it as the standard in the industry. As it is somewhat important that there be some standardization in the lending (especially mortgage) in regards to scoring, it is important that many lenders use the same system. Of course the CRAs would LOVE for more lenders to adopt their scoring system, and there are some indications that they are making small inroads, hence Fair Isaacs response to offer something new, in this case FICO 08!!

In the meantime, the CRAs spent alot of money developing their scoring system and they of course want some return on investment!! What better way than to offer their score directly to the consumer!!!???? This is especially cool since (other than EQ) they have no licensing agreement to provide the consumer a FICO score directly! SO, when they advertise "get your credit score", they are not directly lying. BUT, as you have point out, about 8 million times a day, someone THINKS they are buying a credit score used by the majority of lenders out there (FICO), but of course in reality they are not. Hence the confusion and anger displayed in this forum and others all over the internet!

One last thing....I believe that the CRAs hope that as a side effect of so many CONSUMERS getting their FAKOs, more lenders will in fact start to adopt them (and as they become more tested they very well may be). But not for awhile!

I think that is bout it!

Re: Questions about FICO 08

Anonymous — Sat, 08 Mar 2008 04:38:22 GMT

sh9730,

Excellent post! I think you nailed it.

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 04:47:34 GMT

I also subscribe, for credit monitoring purposes, to a service offered by CITI called Identity Monitoring. They sell scores that they call EQ, EX and TU scores, apparently purchased from an agency called CreditXpert, Inc., but they never, ever mention FICO. Apparently CreditXpert has their own algorithms that I doubt anyone in the credit lending community purchases for their credit lending decisions. In fact, here is their FAKO disclaimer, which makes their scores totally useless to me, and I have cancelled their service as of today:

"CreditXpert Inc. is not connected in any way to Fair Isaac Corporation. The CreditXpert Credit Score is not a so-called FICO® score. CreditXpert Inc. does not represent that CreditXpert Credit Scores are identical or similar to any specific credit scores produced by any other company. Moreover, score changes predicted by CreditXpert products are only estimates. CreditXpert Inc. does not guarantee that credit scores from any other company will change by the same number of points, if at all. Also, CreditXpert Inc. does not represent that potential problems found by its software in credit reports are real, or that correcting such items will result in changes to credit scores."

Yup, you heard that right! They are selling me a product, and in their disclaimer fine print, tell me that what they are selling me cannot, and they used the word, be considered as "real"!!!!! WOW!!!!!

Cheez, if CITI advertises their product as being the end-all for credit monitoring, and then disclaim that any of their software can detect "real" problems in credit reports, then this is tantamount to corp. double talk at the least, and fraud at the worst. These companies are deluging us with scores, promises, monitoring services, and misinformation. Thus, the purpose of my prior post on this thread. What is the real deal? Who should I pay my $$ to, and what do I get?

Message Edited by RobertEG on 03-07-2008 08:47 PM

Re: Questions about FICO 08

Anonymous — Sat, 08 Mar 2008 04:51:01 GMT

RobertEG wrote:

Cheez, if CITI advertisea their product as being the end-all for credit monitoring, and then disclaim that any of their software can detect "real" problems in credit reports, then this is tantamount to corp. double talk at the least, and fraud at the worst. These companies are deluging us with scores, promises, monitoring services, and misinformation. Thus, the purpose of my prior post on this thread. What is the real deal? Who should I pay my $$ to, and what do I get?

Agreed! The scores sold by most credit monitoring services are useless.

What is the real deal, you ask? FICO scores, of course.

You can get your EQ FICO score at MyFico and also directly from EQ.

You can get your TU FICO score at MyFico and also at transunioncs.com (note the "cs" at the end...this is not the regular TU website).

You can get your EX FICO score at MyFico and nowhere else.

You can get your TU or EX bankcard-enhanced FICO score on your online account screen if you have a WaMu card. (You can get both TU and EX if you have both a WaMu Visa and a WaMu MC.)

All the scores you get from MyFico are classic FICO scores. Other than the bankcard FICO score provided by WaMu, enhanced FICO scores are not available to the public.

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 05:10:30 GMT

THANK YOU for that comprehensive and initelligent response, sh9730! The best I have seen on here in a long, long time!

That was exactly the kind of knowlegeable real world info I was seeking, and not just advertising double talk!

I realize from your comments that FICO and FAKO are not matter and anti-matter. The real or fakeness is in the minds of the creditor who orders the scores! I think that Advantage scores even advertise that they have seven broad scoring categories, as opposed to the six advertised by FICO, but the additional category that they advertise of account balances is still included under FICO util, so it is just semantical in advertisiing, and tells us nothing about the merits of the actual algorithms that score each.

I will, in deference to reality, henceforth no longer use the term FAKO. The more correct terminology, based on your astute comments, is not that they are fake scores, but rather that they have not yet risen to the level of being the standard for most creditor decisions.

But as long as our creditors, and FairIsacc says over 90%, use FICO, then as Cheddar has said, that is what I will rely upon, and cast the others into the byte-bucket!

I am not looking for what may be, I am am looking for what is!

Thanks again for inciteful posts and clarifying posts by all!

Message Edited by RobertEG on 03-07-2008 09:10 PM

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 05:24:59 GMT

Thanks, Cheddar. Hey, I really hate to keep beating a dead horse, but let me make sure I understand! This is really, to me Credit Scoring 101 at its heart!!!

So, if I order, for example, a TU score from transunioncs.com, it is run through the FairIsaac scoring algorithm, based on what is reported to them by TU, but if I order it from transunion.com (without the "cs"), I get a score that is run through the Advantage algorithm, and not the FaiIsaac FICO algorithm?

Is that bottom line?

Re: Questions about FICO 08

sh9730 — Sat, 08 Mar 2008 05:26:36 GMT

Robert,

EXACTLY (to your post above)!!!

Re: Questions about FICO 08

Anonymous — Sat, 08 Mar 2008 05:29:23 GMT

RobertEG wrote:

Thanks, Cheddar. Hey, I really hate to keep beating a dead horse, but let me make sure I understand! This is really, to me Credit Scoring 101 at its heart!!!

So, if I order, for example, a TU score from transunioncs.com, it is run through the FairIsaac scoring algorithm, based on what is reported to them by TU, but if I order it from transunion.com (without the "cs"), I get a score that is run through the Advantage algorithm, and not the FaiIsaac FICO algorithm?

Is that bottom line?

You got it! Except: I'm not sure if the score you buy from transunion.com (without the "cs") is a Vantage score or not. It might just be a different non-FICO and non-Vantage score entirely.

TU provides non-FICO and non-Vantage scores through their TrueCredit monitoring service. To be fair regarding the "FAKO" nomenclature, it is usually used to refer to these types of scores offered by services like TrueCredit and the other monitoring service you mentioned earlier. Yes, the bureaus have developed the Vantage score to compete with the FICO, but the scores provided through these services are neither, an they are FAKOs in the truest sense of the word: they are used in real life by exactly ZERO lenders.

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 06:07:40 GMT

WOW! Thanks again! So you have added further clarity to my growing clarity! We have FICO scores, generated by FairIsaac, as the longer industry standard, and you have clearly specified where we can get them. Then we have, as sh9730 has said, the growing competing Vantage scores developed by the three CRAs as an alternate scoring method, but not the industry standard. However, neither may be what you actually get from a third party vendor. So... ROFL! what we may also be buying is a score that is neither FICO or Vantage computer generated, and thus maybe have been generated from the back seat of a van parked in front of the nearest 7/11, using a laptop computer from tarot cards!

How could any consumer who does not read this forum ever possibly understand that the score they buy from any commercial site may not be what any lendor willl use. And to know in advance what they willl use, and hold them to it.

Fico scores have a better chance of being what a lender willl use. I hate to disparage car salesmen, but with all the possibe credit scores they can conjur up and print out from their computers, and show a customer..."this is your published score!", many lendors will LOVE all this ambiguity, and few willl be knowledgeable enough to see through it! Sure, the non-FICO and non_Vantage scores may be used by zero lendors in making credit grant decsisions, but I do not put it beyond some lendors to use them in trying to convince us that your credit, and thus their loan terms, are below what you have earned and deserve.

I will put my FICO in my pocket any day!

Message Edited by RobertEG on 03-07-2008 10:07 PM

Re: Questions about FICO 08

Anonymous — Sat, 08 Mar 2008 06:20:57 GMT

RobertEG wrote:

So... ROFL! what we may also be buying is a score that is neither FICO or Vantage computer generated, and thus maybe have been generated from the back seat of a van parked in front of the nearest 7/11, using a laptop computer from tarot cards!

Bingo!

This is why the best advice on most credit monitoring services is to use them exclusively for the reports, while ignoring the scores completely, along with the "advice to improve your credit score" that tends to come with them. The advice to help your useless score is often counterproductive to your FICO.

RobertEG wrote:

How could any consumer who does not read this forum ever possibly understand that the score they buy from any commercial site may not be what any lendor willl use.

That is the million dollar question. Many, many consumers are being duped into purchasing fake scores and taking them as the gospel truth.

To throw another wrench into the works, Experian has developed their own score, as well, called the PLUS score, which can be applied to reports from all three bureaus.

So we have FICO scores, developed by Fair Isaac and used by 90% of lenders.

We also have the Vantage score, developed by the bureaus, and used by a small number of lenders.

We also have the PLUS score developed by Experian.

Finally, there are numerous FAKO scores that mean absolutely nothing to anybody but the people selling them.

Re: Questions about FICO 08

RobertEG — Sat, 08 Mar 2008 07:21:17 GMT

I will only close out my comments in this great thread by saying that I have been reading these forums for a year and a half now, and have learned so much, and gained 120 points in my score by listening to the advice that I have absorbed in here. But tonight brought me back to some basic questions that I have never understood, and finally threw out. And they were answered, in spades!. Day after day, I see posts... why is my TU, EX EQ score different? Patient posts by the pros on here in response, asking them where they went to receive the scores, and trying to explain the different scoring methods, and even sources for those scores. Yo comprendo, mi Amigos!

I never fullly understood, prior to this thread tonight, the fuller picture.

You guys and gals are super!

Thanks!

Message Edited by RobertEG on 03-07-2008 11:20 PM

Message Edited by RobertEG on 03-07-2008 11:20 PM

Message Edited by RobertEG on 03-07-2008 11:21 PM

Re: Questions about FICO 08

Mn_Vikes — Sat, 08 Mar 2008 13:27:23 GMT

This is the line that bugs me the most:

sh9730 wrote:

(By the way, lenders, collection agencies and others PAY to insert data into the CRA databases and also pay to extract it. This is why sometimes items are not displayed on one CRA or another.)

Why is it we can dispute data that is on our CR but not dispute data that is missing? Here is my guess

If all three CRA's had the same accurate information, we would only need one CRA

The only reason i can see for three CRA's is to generate confusion and increase cost to lenders and consumers buying whatever score they buy.

But why would a lender pay extra for confusing data? I know,

So they can confuse the consumer and justify higher rates.

Would Congress please stop spending time worrying if a baseball player used steriods and look into the lending practices that have caused such a mess.

Of course:

We consumers are just as much to blame.

Re: Questions about FICO 08

marty56 — Sat, 08 Mar 2008 14:34:22 GMT

I suspect most people here are happy that there is more then one CRA. Many people have posted here and asked which CRA a particular CC uses. While the reasons may vary, it comes down to the fact that one CRA might show a persons score or history being better and thus they are able to get what they want.

Whether it is missing data or a formula difference, many people here lare helped by this. Myself included.

Yes it costs more for us to get all our info but the difference between a FICO score of say 722 and 756 when say 4 points are added to it could make a world of diffrence in a car loan or a CC or mortgage.

I never liked single point of failures.