topic Re: Credit Score Reform needed in General Credit Topics

Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 17:10:09 GMT

Hello,

After waiting on hold for 30 minutes to speak to a FICO rep I was enlightened with some facts about credit scores and the rigged system FICO has in place to take care of its business partners... and no, I dont mean you the consumer.

Before ANYONE out there adds a credit card, big or small, keep this in mind. It will lower your credit. How much? Well, just by adding 1 CC this week I dropped my credit 19 points. Thats quite a bit considering how long it takes to gain back those 19 points. Was I notified of this prior to applying for this CC? Nope. Was I actually told that adding a CC would help my credit and build my worthyness? YES. So why the opposite reaction on my credit score? Well, it turns out that credit history is a combined average of all of your accounts. So adding a new CC to your portfolio just added a baby to your established accounts. What kind of system penalizes you for adding a new account and being approved? What kind of system takes the average history of accounts instead of total combined years of those accounts? A flaud one.

So I asked the rep. How long until I get those 19 points back? - No idea. Thats comforting. Your system takes them away immediately but you have no idea how long it will take to get back the points I earned? Reform is needed.

But it didnt stop there.

She went on to tell me it was better to keep a balance on my CC than pay it off in full? That doesnt sound like smart business so I asked why. The answer was interesting but lacked thought. - So it shows that you have been using the card - . WoW. While this sounds innocent at first glance what it said to me loud n clear was - We are in bed with the CC companies - . Why else would they want you to make a bad business decision and instead of pay off the CC in full to avoid interest rates, actually keep a balance and PAY INTEREST RATES?

Pretty rigged system you FICO people have come up with and I think its time for reform. This isnt smart business. This isnt fair business. This is just business and I dont think credit scores and peoples lives should be played with in the same manner big corp. plays with their customers.

Re: Credit Score Reform needed

QAMngrGirl — Tue, 12 Feb 2013 17:41:31 GMT

Why would a system used to determine credit worthiness be tipped in the consumer's favor? They aren't viewing potential risk, the lenders are?

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 17:53:40 GMT

Why would a system used to determine if a consumer makes smart business decisions force them to make bad ones?

Ex. Pay interest rates.

Re: Credit Score Reform needed

QAMngrGirl — Tue, 12 Feb 2013 18:00:08 GMT

It's common knowledge the front line CSR's (and even the next line) are not necessarily read up on what is good for consumers, they are sales people. Credit is a privlege, not a right. Proper research to the pros and cons of obtaining, maintaining, and properly using your credit should be done prior to applying for any credit (card or otherwise). There are terms & conditions to consider, there are dings to your credit report to obtain (or be denied) said credit. Consumers taking responsibility for their part in the credit process, and making informed/educated decisions would be more beneficial than handfeeding what's best for consumers, leaving out what benefits the lenders.

This is, of course, just my opinion. Knowledge is power.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 18:07:05 GMT

Typical, Coined, Corporate Answer.

Nice work. Only took two posts to get a TCCA!

So you are saying the CSR employed by FICO was wrong? I waited 30 minutes to speak to someone to get innacurate information?

How many consumers know that just opening a CC will immediately lower their credit score? And to follow that up, know why it will lower it? Whats the harm in letting people know prior to filling out the application? Knowledge is power right?

Re: Credit Score Reform needed

Gunnar419 — Tue, 12 Feb 2013 18:10:11 GMT

@Anonymous wrote:

Before ANYONE out there adds a credit card, big or small, keep this in mind. It will lower your credit. How much? Well, just by adding 1 CC this week I dropped my credit 19 points. Thats quite a bit considering how long it takes to gain back those 19 points. Was I notified of this prior to applying for this CC? Nope. Was I actually told that adding a CC would help my credit and build my worthyness? YES.

I'm sorry, but you are as much a victim of your own lack of research as you are of any flaws (and there are many) in the credit reporting system.

Half an hour on these boards or almost any other credit-education site would have told you that inquiries and new credit knock at least a few points off your score, but that using that credit responsibly over time does raise scores.

Re: Credit Score Reform needed

InvincibleSummer3 — Tue, 12 Feb 2013 18:12:25 GMT

Who told you life was fair? Go find that person, and kick them in the shins. Seriously.

This is a board full of people trying to educate themselves. We don't work for FICO. And if you don't want to use credit, you certainly don't have to. I went for over a decade without a credit card. It's possible. You could also get in touch with your elected representative if you think reform is needed.

Insulting people on this board isn't going to help.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 18:19:33 GMT

Who was insulted?

TCCA isnt an insult, its a common practice.

The two posts above me are not the voice of the consumer. That is clear. So much angst in their tone. For what?

I say educate further. Tell the consumer before they apply that immediately after opening their CC their credit score will take a hit. And not by a "few points" as eluded to above but by as many as 19-20 points. AND on top of that, the mighty FICO has no idea how long it will take to earn back those points if you maintain the same credit worthyness that earned you them in the first place......

Knowledge is power!!! - Except where it inteferes with profits.

Re: Credit Score Reform needed

QAMngrGirl — Tue, 12 Feb 2013 18:21:53 GMT

@Anonymous wrote:
Typical, Coined, Corporate Answer. Don't be nasty, It's not necessary and you will lessen your chances of actually getting responses.

Nice work. Only took two posts to get a TCCA! Nice acronym, I am corporate, however, I am not typical or coined.

So you are saying the CSR employed by FICO was wrong? I waited 30 minutes to speak to someone to get innacurate information? Actually, I misread this - I didn't realize you were berating a FICO CSR, thought it was only a CC CSR. Either way, it is not their job to inform you of research you should do yourself, if possible negative impacts on your credit could be a problem.

How many consumers know that just opening a CC will immediately lower their credit score? And to follow that up, know why it will lower it? Whats the harm in letting people know prior to filling out the application? Knowledge is power right? Reading the terms and agreement in FULL before applying, in addition to researching the possible issues (again, prior to applying) covers these. Yes, knowledge is power. But it does require effort to obtain at times.

That being said, I hope you find support for your cause. Cheers!

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 18:26:30 GMT

Sorry, those answers are coined. Dont take that personal. I'm surely not that your using them.

Lets move away from what I should have known and all that jazz.

Can you tell me why FICO wants the consumer to carry a balance and pay interest rates instead of pay off the CC in full?

Thank you for your response.

Re: Credit Score Reform needed

QAMngrGirl — Tue, 12 Feb 2013 18:28:42 GMT

@Anonymous wrote:
Sorry, those answers are coined. Dont take that personal. I'm surely not that your using them.

Lets move away from what I should have known and all that jazz.

Can you tell me why FICO wants the consumer to carry a balance and pay interest rates instead of pay off the CC in full?

Thank you for your response.

Nope, I don't work for FICO.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 18:39:12 GMT

I don't work for FICO either. What I know is from tons of research and finding out things before I jump headfirst into something so I am not blindsided by the outcome.

You are reading way to much into what you were told about CC usage. It is a fact that FICO does like to see some usage on your CC. Some does not mean half your credit limit or more. Having a small amount, around 9% or less is useful. It is also a fact that FICO does not like to see all your CC report a 0 balance. It shows you are using your credit but, using it wisely.

You do realize that your score is not based solely on the use of a credit card.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:02:41 GMT

Jumping head first? - Makes it sound like I grabbed that application, threw caution to the wind and filled out so fast I spelled my own name wrong.

Its also a slight at me but I dont take it personal. You have an agenda. - To make me look different than everyone else, thus this surely only happened to me -

When in fact millions of potential CC applicants have no idea that just the simple act of opening a card will lower their score. Shouldnt they know prior to filling out the application? Shouldnt it be disclosed and agreed upon prior to? Why not?

I see all these signatures with people hoping to raise their credit score. Isnt that the "goal" some are looking for? Should opening a CC lower that score your trying so hard to raise? I'm looking to educate further. Make it very clear what happens and doesnt happen. Some of you have lost the message in your mission to cast me out.

And, just having a CC means its in use. You may not be making purchases on it but if you didnt want it, you would cancel it. FICO requiring you to keep a balance has nothing to do with usage and everything to do with corporate handshakes. THEY dont keep a balance on their terms and pay interest rates. THEY PAY IN FULL. Why the cold treatment to their consumers? Why make consumers make bad business decisions? Decisions they themselves would not and do not make? The answer is clear unless you are biased.

Re: Credit Score Reform needed

InvincibleSummer3 — Tue, 12 Feb 2013 19:31:22 GMT

What I've done, after getting informed via this very board:

I pay off almost all of my credit cards. Do they carry a balance? Sure. About $7.00. Even on a card with an exorbitant interest rate, the yearly interest on $7.00 is not much. For me, it's worth it. Like I said, I have no problem not using credit cards. I did it for years. I choose to play the game. I know that opening a card will lower my score, but I also know that the score will rebound over time.

Credit is a tool. Nothing more.

This is the part where you are insulting:

-we're all full of corporate canned answers.
-we have an agenda
-we're trying to make you look different
-we've lost the message

-"the answer is clear unless you are biased" (i.e. unless you agree with me.)

Not everyone who chooses differently than you do is stupid or misguided. Or employed by FICO.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:38:19 GMT

Well, you state yourself, you did in fact get a new CC WITHOUT researching the affects of doing so. The before and after. You took the word of someone that it would help your score. And yes, in the end it will. Your scores will bounce back from the initial reporting and lose of score.

I have no agenda toward you at all. You are speaking half truths and I am trying to help you understand the whole truth. Your looking different has nothing to do with what happened to you and your lack of knowledge. It happens to others alot.

The act of opening a CC is between you and the CCC. It would be up to them to disclose to the consumer what will happen when you open a new line of credit. You can't blame FICO for that. However, with the invention of the internet, came the ability of persons to do research. If you look up FICO, what happens when you apply for credit, etc, there are very clear answers as to the ends and outs of applying for credit.

The people here on this forum are very clear on what happens and doesn't happen when applying for and receiving a new line of credit. If they didn't before they became members, they were educated on the process and can now make decisions without feeling the need to blame others.

No, just having a CC doesn't mean it is in use. It means it is available to be used.

No one is trying to cast you out. You are doing a good job of that on your own. You came here and posted your opinions and when others tried to educate you you became defensive and placing blame everywhere except where it needs to be placed. No matter how you look at it, it is up to you to educated yourself.

I am not biased. About anything.

Re: Credit Score Reform needed

Gunnar419 — Tue, 12 Feb 2013 19:37:47 GMT

OP --

I'm one of the people who answered you above. I don't work for FICO, either. I don't even particularly like FICO, Equifax, Experian, TransUnion, or any large financial institution. For you to come charging in here blaming everybody but yourself and assuming that anybody who disagrees with your a tool of FICO or anybody else is laughable.

Then you say you're in favor of educating the consumer. Well ... here, right where you are, are consumers educating each other. And funny thing, you don't appear to be at all in favor of it.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:42:41 GMT

There are a lot of things consumers 'should' know before making any decisions. This applies to everything from buying a fast food meal to buying a house. The information is out there and with a little research you will have the answers you seek.

Credit card companies are businesses and a business needs to lower risk in order to prevent major losses and stay in business. They use a calculated credit score based on your information (FICO or another variation) to measure that risk. There are a lot of things that remain in secret (which I don't approve of), but most of what needs to be known is publicly available. As for the need to keep a balance thing, it is only half true (probably the rep misunderstood). While it is true that you need to have some utility showing to get the best scores this doesn't mean carry a balance and pay interest. You can have excellent scores without ever paying interest. Use whatever cards you use and pay all in full minus 1, let the last one report (let the statement arrive) and pay it before it is due. Reported a balance, didn't had to pay anything and also showed activity on the other cards. win-win-win.

When you go buy at (insert fast food chain) they don't tell you our food is extremely high on 'x' which may cause 'x'... they just sell you the food and sometimes provide you with the nutritional info (sometimes you have to ask). It is up to you to do the research and decide what is best.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:48:53 GMT

A coined answer is just that. If you take offense to it maybe look into why you take offense to it. Maybe you should search google prior to taking offense as to why your taking offense?

Corporate answers. Coined answers. Their easy and lazy. Blaming me for a flaw in the system is convenient. Saying "you should have known, blah blah blah" is easy and lazy.

And while your all on your high horse how about we get back to the topics instead of me?

Topic 1.

Opening a credit card (something advocated by all companies affiliated with credit) lowers your score. Not due to the inquiry, but due to the AVERAGE length of credit history. And no, this isnt common knowledge or even semi common knowledge to the average consumer. It should be.

Topic 2.

FICO requiring you carry a balance on your CC for a more favorable result than paying your CC in full. Again, FICO does not carry balances on their terms and pay interest to their lendors if they can avoid it, yet they require you to make a poor business decision they themselves would not make. Seams odd and dare I say it, rigged?

Those are the topics on the table. Or we can continue to discuss me.

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:54:36 GMT

Your win-win-win scenario seams like a bit of work for something that should be fairly easy and show signs of a responsible business person.

PAY IN FULL.

But thats not what FICO wants. They want you to do something they will not do themselves.

In the real world, carrying a balance should be worse than paying in full. UNLESSSSSSSSSSS. There is money to be made.

Millions of people paying small interest rates to have better credit. Nah... thats not profitable....

Re: Credit Score Reform needed

Anonymous — Tue, 12 Feb 2013 19:56:41 GMT

Nothing we can say is going to stop your rant. Its just that a rant. You got pissed off because of a score you don't even care about getting lowered when you got a new line of credit. You aren't getting the answers YOU want and are placing the blame on everyone and everything else.