Credit-scoring system is about to undergo change

[Anonymous]

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@Anonymous wrote:

Going from 8 buckets to 12 ...

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Minor correction - according to the article, FICO is changing from 10 total scorecards to 12 total scorecards. The number of "good credit" scorecards (8) is unchanged; the number of "bad credit" scorecards is doubling from 2 to 4.

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@Anonymous wrote:

They got the name of the FICO spokesman wrong -- it's Craig Watts, not Chris Watts. What else did they get wrong??

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I think their comparison of risk between AU and joint users, as it relates to the "primary" cardholder, is incorrect. They tried to make it sound like it was a lot easier to drop a risky AU than to drop a risky joint cardholder. However, if the primary cardholder wants to prevent an AU from making further charges, it doesn't just require a phone call to the CCC requesting the AU be dropped, it also requires that the AU's card be retrieved, and even that doesn't prevent internet transactions if the AU knows the account number, expiration date and security code.

In reality, if a "primary" cardholder is worried that another cardholder (either AU or joint) could abuse the shared account, the only effective action (in both cases) is to close the account or transfer it to an individual account with a different account number. The only way an AU is easier to drop is if they have never received a card, and/or do not know the account information, something which is often tricky to enforce.

[Anonymous]

I'm thinking of a number.

60 million.

I've beaten the AU drum with a 30% stick for a while. Now we get a number of affected consumers, many of whom are going to turn out to be spouses with already comingled finances.

We also get two implicit statements that those of us working to improve their credit, but are still lingering in subprime Gehenna, are about to get kicked.

Now, that's not really a bad thing if your credit is pretty good, but if you're on the margin or trying to establish your credit, it could mean trouble.
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People with thin credit history or poor credit will likely see their score either jump or drop significantly, he said.

As we get closer to a "Go Live" date, I'm gonna be real interested to see my FICOs before and after.

[Anonymous]

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@Anonymous wrote:

I'm thinking of a number.

60 million.

I've beaten the AU drum with a 30% stick for a while.

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Not that it's a huge difference ... but other FICO quotes have mentioned that only 25% (50 million) will see a change in their score, meaning 10 million have an AU that is completely diluted by other TLs, and their score won't change.

Of the 50 million, I think there is a large number at the thick-file end, looking at maybe only a 1-, 2-, 5-point drop. But there's 5-10 million at the other end who should be credit-building like crazy for the next 6 months. The sad thing is there are many in that group who may be completely unaware of the impending effect on their scores.

[Anonymous]

Revike wrote:

The sad thing is there are many in that group who may be completely unaware of the impending effect on their scores.

If a credit freak like me missed that my Wells Fargo CC had DW as an AU rather than a joint holder, then yep there's gonna be many unhappy people in the next few months.

[PCR20]

The artical says:

"But 40 of the top 50 financial institutions in the country rely on FICO scores to determine whether to approve a loan and what rate to charge. "

Does anyone know who any of the 10 companies that don't use FICO scores are and what they use instead?

Does this mean there are credit companies that you can apply for that won't ding your FICO Scores?

Message Edited by TCarson on 07-18-2007 04:50 PM

[Anonymous]

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TCarson wrote:

"But 40 of the top 50 financial institutions in the country rely on FICO scores to determine whether to approve a loan and what rate to charge. "

Does anyone know who any of the 10 companies that don't use FICO scores are and what they use instead?

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I think the statement from the article might be somewhat misleading. AMEX for example pulls CRs--likely EX or TU--but they have their own internal scoring and approval criteria. Old default with them, and they blacklist you. BK on your CRs, no dice. However, the BK thing might be a new trend and/or a conditional trend. Some have gotten AMEX recently with a BK on their CRs.

I've also heard Discover uses their own internal scoring method, but they too will pull CRs.

[Anonymous]

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@MidnightVoice wrote:

TU - in my own private hot tub with flatscreen TV

EQ - gentle sidestroke

EX - pool of molten excrement in the lowest pit in that hot place down below 

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Hey midnite, that is me across the molten pool waving.

[MidnightVoice]

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@Anonymous wrote:

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@MidnightVoice wrote:

TU - in my own private hot tub with flatscreen TV

EQ - gentle sidestroke

EX - pool of molten excrement in the lowest pit in that hot place down below 

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Hey midnite, that is me across the molten pool waving.

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I thought that figure looked familar.........

[Anonymous]

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@Anonymous wrote:

I also saw that the recomendation was made that spouses and family members currently listed as AUs move to Joint ownership of these accounts... I have seen this advice on the boards here as well, but I have to say it is NOT AN EASY PROPOSITION to convert long standing individual good accounts into joints... My wife and I have called all of our credit cards to address this, and so far NO GOOD... Nearly all of them said that they do not convert accounts to joint without having first taken into consideration the credit profile of the other, and in most cases they recomended opening new accounts, thus losing the Hx that boosts the FICO.

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We tried calling Citi, Discover and Amex and *all* said that they did *not* offer joint accounts even for spouses and that there is *no way* to open a joint account either new or by taking an existing account with one authorized user and turning that account into a joint account. They didn't say anything about checking the credit profile of the spouse who is currently the authorized user, just said NO. We have good (excellent credit scores, no bankruptcies etc etc, but they were just not interested. We are in TX, credit card bills are paid from joint account, but they all said there is *NO such thing* as a joint account. Anyone have success with Citi, Discover or Amex? I'm confused about other people appearing to achieve this. Maybe we're using the wrong words, LOL.

[Anonymous]

I don't think we have much to worry about. As soon as the supply of easy credit and subprime mortgages (read: fiat money) stops flowing into consumers' pockets, you can stick a fork in the U.S. economy; it's done.

If we ever do find lending standards raised and credit all of a sudden unavailable to a large percentage of the population, know that economic collapse and a depression are only months, maybe a year or two away at most.