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FICO Score Stress Indicators/Indexes

CassieCard
Senior Contributor

Re: FICO Resilience Index?


@sarge12 wrote:

Here is the issue I have with this resiliency index as a predictor of economic issues in a downturn. It does not look at what will most influence my credit score, and is not included in the data used.

Our current profiles are being compared to a group of profiles that had our profile data in the past. The dataset for this EQ-FICO Resilience Score is probably 1 to 2 years wide around the time of the Great Recession.

 

The more our profiles have in common with the ones that ended up with derogatories, the higher our Resilience Score. Same goes for all the rest of the usual FICO scores. This is the logistic regression part.

 

All we have to do is think about what people with derogatories might have done along the way. High utilization, inquiries, taking on more debt, missing payments, etc. Some of these are going to have a great effect on everyone's profile - even those with 850's.

 

Having a lot of money saved and a great job certainly isn't a good predictor: Biggest Defaulters on Mortgages Are the Rich 

28 FICO Scores + FICO RESilience Index + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of Resilience: EQ FICO Resilience Index Score Leaderboard (59 People!)

Message 81 of 1,053
sarge12
Valued Contributor

Re: FICO Resilience Index?


@CassieCard wrote:

@sarge12 wrote:

Here is the issue I have with this resiliency index as a predictor of economic issues in a downturn. It does not look at what will most influence my credit score, and is not included in the data used.

Our current profiles are being compared to a group of profiles that had our profile data in the past. The dataset for this EQ-FICO Resilience Score is probably 1 to 2 years wide around the time of the Great Recession.

 

The more our profiles have in common with the ones that ended up with derogatories, the higher our Resilience Score. Same goes for all the rest of the usual FICO scores. This is the logistic regression part.

 

All we have to do is think about what people with derogatories might have done along the way. High utilization, inquiries, taking on more debt, missing payments, etc. Some of these are going to have a great effect on everyone's profile - even those with 850's.

 

Having a lot of money saved and a great job certainly isn't a good predictor: Biggest Defaulters on Mortgages Are the Rich 


But since savings is not ever included in a credit report, neither could even come close to being predictive of credit issues. The credit score can because it is considering late payments and such. If the credit report is clean in both my credit report and someone else who defaulted last recession had similar credit report data, it is not considering that the other card holder might have no savings. Having emergency funds available has much more affect on what a persons ability to stay current on paying their bills than anything else. I agree that having a lot of money is not a great predictor, but if someone has for 15 years always payed in full because they care about their credit, they are not going to default on debt when the economy gets bad with 20 times their entire debts in liquid savings. They just aren't. Those rich mortgage defaults are not people with 15 years of a clean credit report.

TU fico08=831 03/29/21
EX fico08=830 04/13/21
EQ fico09=840 04/01/21
EX fico09=828 04/03/21
EQ fico bankcard08=858 03/23/21
TU Fico Bankcard 08=862 03/29/21
EQ NG1 fico=802 01/21/21
EQ Resilience index score=58 03/09/21
Unknown score from EX=784 used by Cap1 07/10/20
Message 82 of 1,053
CassieCard
Senior Contributor

Re: FICO Resilience Index?


@sarge12 wrote:

@CassieCard wrote:

Our current profiles are being compared to a group of profiles that had our profile data in the past. The dataset for this EQ-FICO Resilience Score is probably 1 to 2 years wide around the time of the Great Recession.

 

The more our profiles have in common with the ones that ended up with derogatories, the higher our Resilience Score. Same goes for all the rest of the usual FICO scores. This is the logistic regression part.

 

All we have to do is think about what people with derogatories might have done along the way. High utilization, inquiries, taking on more debt, missing payments, etc. Some of these are going to have a great effect on everyone's profile - even those with 850's.

 

Having a lot of money saved and a great job certainly isn't a good predictor: Biggest Defaulters on Mortgages Are the Rich 


But since savings is not ever included in a credit report, neither could even come close to being predictive of credit issues. The credit score can because it is considering late payments and such.

It's really 'approximately predictive' with this sort of analysis.  If our reported utilization goes to 60%,  that puts us on a vector toward one of the derogatory scorecards and we lose points. Maybe we are going to PIF right after the statement, but the profile data won't show that until next month. There's no 100% guarantee we're going to default on anything, of course.

 

Somewhat real-time savings and paycheck data could definitely help us out with that, but that really opens up a can of worms.

 

If the credit report is clean in both my credit report and someone else who defaulted last recession had similar credit report data, it is not considering that the other card holder might have no savings.

You're not much of a risk if your report is clean with low utilization. Everyone had that at one point - it's basically 100% commonality and can't be used to predict anything.

 

Having emergency funds available has much more affect on what a persons ability to stay current on paying their bills than anything else. I agree that having a lot of money is not a great predictor, but if someone has for 15 years always payed in full because they care about their credit, they are not going to default on debt when the economy gets bad with 20 times their entire debts in liquid savings. They just aren't. Those rich mortgage defaults are not people with 15 years of a clean credit report.


There were an awful lot of executives and other high-earners who lost their job during the Great Recession. Credit scoring would have to know all of our outstanding debt obligations to make a determination against savings.

 

I bet there were a lot of people who chose to keep the emergency fund as high as possible and stop making some or all of their monthly payment obligations. Like those rich people that just walked away from debt. So what if they get a 500 FICO 8, right?

 

I really do understand what you're saying, and my credit profile would definitely benefit if more of that type of data was incorporated into the algorithm, but I'm very uncomfortable with any scoring model having access to that level of information. The new FICO 10 T with trended data doesn't bother me at all, and I think that's a good compromise.

 

But I also know how many fintech startups are out there incorporating that data right now while trying to convince everyone it's necessary and FICO is ancient technology. It seems inevitable at this point that artificial intelligence and even more invasive data will become the new way of life in credit risk analysis.

28 FICO Scores + FICO RESilience Index + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of Resilience: EQ FICO Resilience Index Score Leaderboard (59 People!)

Message 83 of 1,053
Kenro
Contributor

FICO RESILIENCE INDEX - New horror show?

So I just recently found out about this new great metric! I've been working very hard for my credit rating and got to high 700's all across on fico 8's.

My resilince rating is 72 which is 'very sensetive' aka junk. Do you ever get to the point where you just want to give up?? I mean basically it looks like anyone who has any balances is high risk.

Message 84 of 1,053
CassieCard
Senior Contributor

Re: FICO RESILIENCE INDEX - New horror show?


@Kenro wrote:

So I just recently found out about this new great metric! I've been working very hard for my credit rating and got to high 700's all across on fico 8's.

My resilince rating is 72 which is 'very sensetive' aka junk. Do you ever get to the point where you just want to give up?? I mean basically it looks like anyone who has any balances is high risk.


Just keep doing what you've been doing and you're going to be fine. Having high 700's still counts for a lot.

 

All that '72' means is that you have some things in common right now with people who eventually got into trouble.

28 FICO Scores + FICO RESilience Index + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of Resilience: EQ FICO Resilience Index Score Leaderboard (59 People!)

Message 85 of 1,053
Andypanda
Established Contributor

Re: FICO RESILIENCE INDEX - New horror show?

Do financial institutions even look at the resilelice index when considering giving someone a financial product I.E. loan or CC?

Message 86 of 1,053
CassieCard
Senior Contributor

Re: FICO RESILIENCE INDEX - New horror show?


@Andypanda wrote:

Do financial institutions even look at the resilelice index when considering giving someone a financial product I.E. loan or CC?


I don't think so, based on an earnings call transcript where the CEO of FICO was asked about it.

 

"It'll be bundled with the FICO Score. It will be widely available to anyone who's buying FICO Scores. It is currently in test, as you said, with Equifax and the Dow, Experian will have it out too. TU should follow. And yes, we have high expectations because it's been very well received today." - William Lansing, CEO FICO, answering a question about the FICO Resilience Index, see link above for full answer

28 FICO Scores + FICO RESilience Index + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Keeper of the Scrolls of Resilience: EQ FICO Resilience Index Score Leaderboard (59 People!)

Message 87 of 1,053
sjt
Senior Contributor

Re: FICO Score Stress Indicators/Indexes


sjt wrote:

My score is 52. It seems odd that folks with high scores have just ok resilience scores. 


Check my May reports and my score went down 5 points to 47. Nothing really changed from the previous month except revolving debt went from $146 to $99. FICO scores still the same.

 

Resilience Index 5.1.20.jpg

 

American Express: Platinum Charge, Optima, Business Gold, Delta Business Platinum, Business Cash
Barclays: Arrival+ WEMC
Capital One: Savor WEMC, Venture VS
Chase: Freedom U VS, CSR VI
Citibank: AAdvantage Platinum WEMC
Elan/US Bank: Fidelity VS
Credit Union: Rewards Visa
FICO 08: (3.04.21) EX: 838 / EQ: 850 / TU: 848
Message 88 of 1,053
EW800
Valued Contributor

Re: FICO Score Stress Indicators/Indexes

No change to my FICO Resilience Index between 4/1/20 and 5/1/20...  46 both times.  I am guessing that there is not much I can do to lower the score, as I have been at basically zero debt (other than $25 or so on one revolving account and $100 sitting on a 0% installment loan) for a few years now.  It appears that it is the quantity of open revolving accounts that I have, even though all but one are $0 balance.  

 

Year 2012: All Scores in the 520 range, during a foreclosure, CC Settlement and high UTIL. Very ugly days...
Jan 2021: EX8: 850; EQ8: 850; TU8: 850 -- Middle Mortgage Score: 824
In My Wallet: Discover $73.7K; Cap1 Venture $42.7K; Amex ED $38K; Amex Optima $2.5K; Amex Delta Gold $18K; Citi Costco $21K; Cap1 Plat $8.4K; Barclay $7K; Chase Amazon $6K; BoA Plat $21.6K; Citi TY Pref $19K; US Bank $4K; Dell $5K; Care Credit $6.5K. Total Revolving CL: $285K
My UTIL: Less than 1% - Only allow about $10 a month to report, on one account. .
Message 89 of 1,053
EW800
Valued Contributor

Re: FICO Score Stress Indicators/Indexes

Anyone have any idea what the lowest Resilience Index Score is that we have seen thus far?  

 

Year 2012: All Scores in the 520 range, during a foreclosure, CC Settlement and high UTIL. Very ugly days...
Jan 2021: EX8: 850; EQ8: 850; TU8: 850 -- Middle Mortgage Score: 824
In My Wallet: Discover $73.7K; Cap1 Venture $42.7K; Amex ED $38K; Amex Optima $2.5K; Amex Delta Gold $18K; Citi Costco $21K; Cap1 Plat $8.4K; Barclay $7K; Chase Amazon $6K; BoA Plat $21.6K; Citi TY Pref $19K; US Bank $4K; Dell $5K; Care Credit $6.5K. Total Revolving CL: $285K
My UTIL: Less than 1% - Only allow about $10 a month to report, on one account. .
Message 90 of 1,053
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