@Anonymous wrote:
@Anonymous wrote:
My total credit limits were at 80K+ though the have been reduced to around 50K since the bailouts. I have over 35 years of credit history and have never defaultred on anything, In fact, everything has been paid early. I have friends carrying higher credit balances whith less than half of my income/assets and no stable income, yet still score better. I'm just sying the the algorythm used by FICO is faulty or at least could be improved. One size does not fit all!
Banks made much better performing loans before they used FICO as a predictor.
FYI, I am a retired MBA CFP now working as a securities arbitrator with a fair amount of expertise in banking history, which seems to be a rare thing these days.
FICO doesn't care how stable your income is, what your income is, or what your assets are.
If you have 35K out of 50, that is 70% utilization.
So, the only negative thing on your report is 1 - 30 day late payment and you have over 35 years of history on your report? How recent is the late payment?
I agree that FICO could be improved, and apparently FICO believes so as well, seeing as they are developing a new formula.
ETA: Which score is that, from which CRA? And where did you get the score?
+1
The Fico score is only one component of the lending decision-making process. It was never intended to replace due diligence and the consideration of income, DTI, and other factors. It is a comparison of each person's risk factors compared to the overall credit population. Based on historical averages, the least riskiest borrowers have very low utilization and zero late payments, so having 70% utilization and one late payment are two definite negatives. It is up to the lender to consider whether income and DTI outweigh those negatives.
Part of the reason there may have been better performing loans pre-Fico is that lenders might not have been quite so greedy as in recent years, and didn't falsify loan documents (including Fico scores) and push loans for unqualified applicants. We also did not have zillions of dollars of near-worthless securitized debt instruments being bought and sold as if they were pure gold. None of which can be blamed on Fico.
In addition, the "good old days" also saw a number of worthy applicants denied because of discriminatory lending practices, something which the objective Fico score has helped alleviate ...
Message Edited by Revike on 04-26-2009 12:46 PM
