Credit Score Reform needed

[Anonymous]

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.

[QAMngrGirl]

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?

[Anonymous]

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

Ex. Pay interest rates.

[QAMngrGirl]

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. 

[Anonymous]

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?

[Gunnar419]

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@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.

[InvincibleSummer3]

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.

[Anonymous]

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.

[QAMngrGirl]

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@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. 

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

[Anonymous]

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.