topic Personal Experience in Understanding FICO® Scoring

Personal Experience

Anonymous — Tue, 05 Jun 2007 16:01:04 GMT

I've just read the new myFICO ASK column --- about paying off old bills and its affect on FICO scores and I think it's mostly garbage. Let me tell you my experience.

I have paid off old bills and negotiated others. I've worked hard to clean up my credit --- BUT paying those bills does NOTHING for your FICO scores. As long as that delinquency remains on your credit report, you're screwed. No matter what I paid off, nothing went up in the way of FICO scores. In fact, they fell in some cases. Why? Because paying off and closing the account may also have reduced the credit level.

As for the seven year limit --- don't hold your breath. I've received some credit reports that actually have "Date Scheduled for Removal" on them. The interesting thing is that not all the reports, in fact most of them, do not contain this information. I was LIVID when I saw some of it. Nine, ten, eleven years were there. Bankruptcy --- off the record after seven years (by law I'm told) --- TEN years.

And then there are some companies that keep recording your deliquency, over and over, even after the account has been closed. A good group for this is Capital One. Once the account is closed for delinquency, they contiue to charge you monthly interest and report it monthly --- for about a year --- as a new delinquency with increasing balance. For the next year, the same thing happens about quarterly. So, what they are doing is extending the date that this delinquency will stay on your record.

Does paying off your bills make a difference? Yes, in the fact that it takes a load off your mind and gets you out from under the harassment of collection companies. You may not know this, but if a collection company cannot collect from you, they sell the debt to another collection company, and the whole routine --- including reporting --- starts all over again. On your credit report, its reported as a new debt without reference to your original delinquency. So ALL OF THEM may remain on your credit report. You're screwed again.

Only removal of these offensive items will inprove your scores with regard to them.

Nobody cares why these debts were delinquent -- illness, disability, etc. (Mine was a long-term nervous breakdown and despite letters from my psychiatrist, nothing helped.) Nobody cares if you work your butt off to be honest and correct them. Credit agencies are nothing more than self-righteous bastards, as are the people who take self-important pleasure in reporting to them. We're all dead-beats and con-men to them.

So --- pay your debts but face reality. It does NOTHING for your FICO scores --- which are as useless as SAT scores, MCAT scores, LSAT scores, and any other satandardized process. (Even FICO isn't standardized --- just look at your scores at all of the three majors. Sometimes you'll find a 100 point difference. I did.) You're not an individual kids! You're a SCORE.

Re: Personal Experience

Anonymous — Tue, 05 Jun 2007 16:42:42 GMT

It may not have improved your credit scores however other lenders can see that you have made good on them. As long as you had open accounts other lenders would be more likely to shy away from giving you new credit. It may be 7 years to come off your credit report, but at least you can start getting new credit now. :-)

Re: Personal Experience

Anonymous — Tue, 05 Jun 2007 17:09:27 GMT

kgkphd wrote:
As for the seven year limit --- don't hold your breath. I've received some credit reports that actually have "Date Scheduled for Removal" on them. The interesting thing is that not all the reports, in fact most of them, do not contain this information. I was LIVID when I saw some of it. Nine, ten, eleven years were there. Bankruptcy --- off the record after seven years (by law I'm told) --- TEN years.

Welcome to the forum, and sorry to hear of your difficulties.

Here's a good thread about credit reporting timing (thanks Tuscani): http://http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=2689

Technically, the 7-year limit for reporting charge-offs and collections is 7.5 years, but the CRAs mostly go with 7.

TU and EX or EQ (can't remember) include, as a convenience to you, the estimated date that the TL will drop off your report; they are not required by law to report it. Creditors are required to report to the CRAs the DOFD, but again, the CRAs are not required to include it on your report. EX or EQ sometimes does. Call the CRA to get the DOFD. Add 7 years to it, and that's when the TL should go. If it doesn't, dispute it as outdated.

BK -- it depends what type it is. If it's a Ch. 13, it drops after 7 years. If it's a Ch. 7, it drops after 10 years.

Hope this helps.

Re: Personal Experience

Anonymous — Tue, 05 Jun 2007 19:08:22 GMT

I can feel your frustration!

I'm working on helping my husband get a few of those CA's for medical bills removed from his report too by sending DV letters. Same debt reported 4 times! Twice with one CA and again with two others, probably sold as you mentioned. As soon as we figure out which one can validate the debt, he'll try a PFD.

It's aggravating since insurance should have paid this in the first place. In the meantime, all he can do is get inaccuracies taken care of and figure out what FICO considers to be good credit habits.

Hopefully, you'll find a lot of good information in these forums that'll help and motivate you to disect your credit report and start getting that incorrect information removed!

Message Edited by Felicity on 06-05-2007 03:08 PM

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 05:04:17 GMT

A collection account is supposed to come off in seven yrs. However, the way collection accounts work is: the company you have the account w/sells that account to a collection agency. That collection agency may sell it to another if they can't collect on it, and so on and so on. Each time the collection is sold it is a new collection on your credti report. So even though the original collection may have been 10 yrs ago the account may have been sold many times each time starting the clock over again.

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 06:54:55 GMT

kgkphd wrote:

I have paid off old bills and negotiated others.

If you can't get a PFD, never pay a collection unless you have to pay it.

kgkphd wrote:

As for the seven year limit --- don't hold your breath. I've received some credit reports that actually have "Date Scheduled for Removal" on them.

Call the CRAs and find out the DOFD yourself. Keep printed copies in case they try to reage the TLs.

kgkphd wrote:

I was LIVID when I saw some of it. Nine, ten, eleven years were there.

Dispute, and if they don't remove, sue.

kgkphd wrote:

Bankruptcy --- off the record after seven years (by law I'm told) --- TEN years.

BK7 is 10 years. BK13 is 7 years.

kgkphd wrote:

Once the account is closed for delinquency, they contiue to charge you monthly interest and report it monthly --- for about a year --- as a new delinquency with increasing balance. For the next year, the same thing happens about quarterly. So, what they are doing is extending the date that this delinquency will stay on your record.

If they do, and you can prove it, a consumer lawyer would LOVE to talk with you. DOFD cannot be changed. If it is, you can sue the CA or OC and the CRA.

kgkphd wrote:

Does paying off your bills make a difference?

Only if you get a PFD.

kgkphd wrote:

it takes a load off your mind and gets you out from under the harassment of collection companies.

Knowing what I know now, I relish CA harassment. If I were currently enduring it, I'd be recording phone calls and racking up violations for lawsuits.

kgkphd wrote:

You may not know this, but if a collection company cannot collect from you, they sell the debt to another collection company, and the whole routine --- including reporting --- starts all over again. On your credit report, its reported as a new debt without reference to your original delinquency.

Doesn't reset the DOFD. If it does, you sue.

kgkphd wrote:

Only removal of these offensive items will inprove your scores with regard to them.

It's worth repeating. Never pay a CA outside of a PFD unless you have to pay them.

kgkphd wrote:

Credit agencies are nothing more than self-righteous bastards, as are the people who take self-important pleasure in reporting to them.

In theory, CRAs simply report the facts and investigate honestly. Reality is they make money from the lenders because more subprime borrrowers means more money made in interest, penalties, fees, etc.

kgkphd wrote:

We're all dead-beats and con-men to them.

The sermons on ethical credit repair methods in this forum get under my skin.

Re: Personal Experience

Momof5 — Wed, 06 Jun 2007 15:11:51 GMT

Noah,

My pet peeve is when the less experienced folks claim "yeah, it didn't help to pay those but future creditors will/may take the "paid" into consideration..."

Where have they been living? Under a rock? The ONLY creditors that will take it into consideration is a mtg approval and you better still have a decent enough score. Anyone else will kick you to the curb.

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 19:45:32 GMT

@Anonymous wrote:
I've just read the new myFICO ASK column --- about paying off old bills and its affect on FICO scores and I think it's mostly garbage. Let me tell you my experience.
I have paid off old bills and negotiated others. I've worked hard to clean up my credit --- BUT paying those bills does NOTHING for your FICO scores. As long as that delinquency remains on your credit report, you're screwed. No matter what I paid off, nothing went up in the way of FICO scores...

What are your FICO scores now?

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 20:13:54 GMT

@Anonymous wrote:
but again, the CRAs are not required to include it on your report.

Sure they are.

(g) The term "file," when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.

(a) Information on file; sources; report recipients. Every consumer reporting agency shall, upon request, and subject to 610(a)(1) [§ 1681h], clearly and accurately disclose to the consumer:

(1) All information in the consumer's file at the time of the request,

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 21:50:59 GMT

@Anonymous wrote:

@Anonymous wrote:
but again, the CRAs are not required to include it on your report.

Sure they are.

(g) The term "file," when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.

(a) Information on file; sources; report recipients. Every consumer reporting agency shall, upon request, and subject to 610(a)(1) [§ 1681h], clearly and accurately disclose to the consumer:

(1) All information in the consumer's file at the time of the request,

While the text of a statute seems straightforward, there is often case law that goes along with it for interpretation. ("It depends what the definition of ' is' is." ) I honestly don't know if it makes a difference here.

But even if the CRA has this obligation, its liability is limited if it screws up. The consumer can't sue unless the CRA provided false info "with malice or willful intent to injure such consumer." The CRA is only liable if it "willfully fails to comply" with the statute. The CRA is liable for its negligent noncompliance, but only to the extent of actual damages suffered by the consumer. (I'll save the bandwidth by not reproducing the entire text of §§610(e), 616, and 617 of the FCRA).

You can say all you want about CRAs being evil, but I think it may be hard to prove they are deliberately out to get you, [TheNewWorldMan's views notwithstanding ] or that you suffered quantifiable damages due to their negligence in not reporting the DOFD.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Wed, 06 Jun 2007 22:46:25 GMT

I don't think CRAs are EVIL --- just a stupid invasion of our privacy. If the FICO scores were worth a **bleep**, then all three agencies wouldn't have such disparate scores. If you want to, you can play with the scores --- like "piggy backing." But the way things are, they are unfair (so much for the fairIsaac) --- they present a one-dimensional aspect of a person that does not necessarily represent the true picture.

It's like cramming for the SAT --- it doesn't mean your THAT smart. it means that you've learned how to take the stupid test.

Now only that, if CRAs were worth a **bleep**, why is it that we are ALWAYS engaged in constantly checking our reports for errors, even encourged to do so. Because CRAs are the biggest screw-ups in the financial world.

Let me remind you of one financial rule that is all over the investment world. Look at ANY propectus --- ANY PROSPECTUS --- and there will be, in very small letters --- "Past performance is no guarantee of future returns." That means your money can go up in smoke and there is no recourse short of fraud. Your money is unsecured. But if a bank wants to deny a home loan, A SECURED DEBT, they do so without consideration that "Past performance is no guarantee ..." even of bad results. If that were the case, 90% of the investment funds out there would be out of business.

Yours

Anonymous — Wed, 06 Jun 2007 22:49:40 GMT

As to MY FICO scores --- NOYB. However, I will tell you that I boosted my FICO scores by a quite legitimate method --- playing the game. I am still plagued, however, by those assinine negative reports.

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 23:13:31 GMT

They aren't out to get us. We are not important. The problem is, we are not the customers of the CRAs. We are the products they sell. If the products produce alot of income for the end customer (lenders that charge higher rates), then why would you want to fix what isn't broke in their eyes?

Re: Personal Experience

Anonymous — Wed, 06 Jun 2007 23:45:56 GMT

I never said that they were out to get us. I'm not paranoid. I just say that they are a useless impediment to honest people.

If a bank wants to know if they should give us a loan or not --- let them do some due diligence, like they used to --- not rely on a bunch of losers.

Yes --- we are the product --- or at least our backgrounds are. Let's cut off the supply. Start a campaign to have letters written to the CRAs demanding that they no longer can save or send credit information on us; that all previous permissions to that effect are rescinded and that any received henceforth are to be considered in error. Maybe we should just file a class action in the name of ALL people listed on these CRAs.

That would dry up these clowns' supply.

But if you think CRAs are screwed up, I'll bet you never heard of the MIB --- Medical Information Bureau --- which was set up by the insurance industry and does for it what the CRAs do for banks. Think your medical records are private? Think again. So what if you're standing 8 feet behind some guy who's picking up a prescription. His prescription and YOURS are in a computer at the MIB.

Either we screw these guys now or we'll be in deep kimchee later on.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 00:39:51 GMT

kgkphd wrote:
I don't think CRAs are EVIL

CRAs may not be evil, but they will suffice until evil comes along.

Oh look. A CA just showed up.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 02:49:44 GMT

The problem with lenders going back to "due diligence" is that the costs of lending money goes up. Therefore even if you are considered a good credit risk your rates will be higher than what could be offered by using CRAs.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 03:25:02 GMT

Good thought, but not true. Before, FICO, banks did their own due diligence and selected their business accordingly --- and yet interest rates didn't suffer because of it. Today, banks and other lenders are too damned lazy and greedy. They rely on losers like Fair Isaac to provide them with a brainless way of doing business and pocket the net. There is NOTHING magic about a FICO score. Your numbers on your most recent eye exam have greater validity and are more useful.

Like I've said before --- it's like to stupidity of the SAT scores --- another way for lazy, unthinking people to NOT make decisions on their own. Has the SAT helped improve college education any?

In 2003, the government surveyed college graduates to test how well they could read texts and draw inferences. Only 31% (less than 2/3) were able to complete these basic tasks at a proficient level, down from a pitiful 40% ten years earlier. Less than half of all college graduates graduate with a broad proficiency in math and reading. So, how have SAT scores helped? --- especially since ETS keep dumbing down the tests.

You may ask why I bring this up? Because its directly analogous to the FICO situation. Numbers without meaning are given meaning.

FICO scores have not improved the level of foreclosures, for example. In fact, the level of home foreclosures in on an upswing. Why? Because tons of over-anxious, poorly prepared people jumped into 1% teaser mortgages with negative amortization that, after five years left them with even bigger monthly payments than they would have had before. And the real estate market melted, leaving them with the promises of big capital gains that were never realized.

Banks used FICO scores to approve those loans --- without considering the consequences of the type of loan, the nature of the market, and whether or not there was a likelihood of the owner being able to make the future payments. And yet FICO will ruin these people in the future, 7 - 10 years, because they were given loans --- largely based on those scores --- that they should never have gotten, and the foreclosure will be reflected in the FICO scores.

If banks were really doing the due diligence that they did for so many years, your loan application would consider you as you, as you are now, and not some moronic number created by brainless people for brainless people.

Maybe Fair Isaac and the CRAs aren't evil --- but they are a close approximation.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 03:35:15 GMT

Yes.. Forclosures are on the rise. I assume you are alluding to the "subprime" mortgage field when stating that lenders used FICO scores to approve customers who where not in a good position to buy a home. It isn't that higher FICOs allowed people to qualify for the homes. Rather some lenders lowered their standards. In the mid 90s if you had a 580 fico you needed a large down payment (10% or more) and you would have to provide 2yrs tax returns and only allowed 40% for DTI. Up till recently if you had a fico of 580 you could get into a home with no money down and no income verification and a DTI of 50%. These lenders acted rectlessly and they and their consumers suffered for it.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 03:51:45 GMT

I will agree that banks did lower their standards somewhat. Mortgage insurance (miracle mortgages) did a good deal to help make them complacent. Today, nobody will look at you with a FICO less than 660. But this all goes back to what I was saying --- whether or not you pick a 580, a 660, or a 720 --- banks and the FICO "geniuses" have no idea of what it is all about. The numbers in and of themselves are useless, yet thay have taken on a meaning and life of their own that are not justified.

If the banks had not looked at the FICO scores and were froced to really do due diligence, lots of those negatively amortized loans would never have been issued. People may have had to buy more modest homes, but they wouldn't be in deep kimchee now.

I used a legitimate strategy (not piggy backing) to boost my FICO scores. I discussed it with a long-time mortgage broker who told me it would never work because this and this and this in the FICO method. I did it anyway. My scores went up 44 to 93 points (depending on the CRA). So much for knowing how FICO works.

Doesn't this last part just prove my point? 44 to 93 points!!!! If FICO were logical, systematized and meaningful, the disparity wouldn't be there. And because of those stupid OLD negative statements, I am still fighting.

Re: Personal Experience - Your's On "Evil" CRAs

Anonymous — Thu, 07 Jun 2007 04:13:33 GMT

Oh don't get me wrong, fact is many many brokers and loan officers and even a fair amount of underwriters don't know jack when it comes to how credit is scored and what affects it.Your example with the broker you mentioned is an excellent example.

I've worked for various lenders over the past 5yrs; auto, credit cards, and mortgages. A year and a half ago I started my current position, underwriter a JPMorgan. I have learned more in the last 1.5yr than the previous four.

Keep in mind that FICO is not the end all. The most extreme example I can think of is two customers I had recently. The 1st had a fico of 608 with several charge offs and the 2nd was in the 720s with not one late. I was able to lend more at much lower rate to the 1st customer than the 2nd. The reason was: the 608 customer had lived in the same home for 35yrs, been at the same employer for 33yrs, had a checking & savings with my employer as well as several loans and credit cards that had all been paid on time. While the 720 customer had moved twice in the past yr, changed employers 3 times in two yrs and did not have any accounts with my employer. The 720 was not stable the 608 was stable and showed loyalty to my employer so I gave her a lower rate and more money.