FICO predictor of future risk , but what about recurrence????

[Anonymous]

I am just curious.  As we all know FICO score is a very strong predictor of a persons financial  risk  to a lender... true.    Many have falter either due to ignorance or due to failure to recognize the importance of a good FICO score or  youth etc.  I have observed that there are some people who have filed BK,  or paid late then correct the behaviour and have improved their financial risk and never repeat.  I have also observed that some people have file BK multiple times. or have admitted to recurrent episode of  poor financial judgement.

At some point whether by "credit repair"  or with time the errors will fall of the CR.  I am aware that this is a  very dynamic process our risk change,  ie FICO score changes form low to high etc.  The score change but did you really change as a financial  risk?  only you know the answer to that.

Well,  I am curious, Maybe FICO scoring model  is on to something bigger than just our immediate risk.  Maybe in knowing our financial history we can correct our financial future  for a very very long time by really watching our FICO score.  Or our financial lives are as dynamic as the score and bears no correlation to our financial behaviour 10 or even 20 years form now.

Tell me your thoughts on this.

[llecs]

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Credit-Wise wrote:

Well,  I am curious, Maybe FICO scoring model  is on to something bigger than just our immediate risk.  Maybe in knowing our financial history we can correct our financial future  for a very very long time by really watching our FICO score. 

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IMO, the emotional pain of being called over and over by CAs, for having a low FICO score, for seeing multiple red marks on my CR, and for knowing that I stiffed someone (intentionally or not) mentally forces me to become a better and more accountable person. FICO is a great indicator of past performance and pulling scores frequently is almost an addition. It isn't so much the score, for me anyway, but the content of the reports that drives me. I'd move heaven and earth before I'm late ever again.

[MarineVietVet]

It isn't so much the score, for me anyway, but the content of the reports that drives me

I feel the same way. It's what's reported that determines what the scores are. If I conduct my finances in a certain way (either good or bad)  the scores will directly reflect my actions. I realize that sometimes things happen that are out of our control but in almost all cases (for me) I determine my fate.

[haulingthescoreup]

Interesting point! How many people are responsible enough to learn from our past mistakes? And for those who aren't, would they even care what's on their reports?

As for the scoring formula predicting the risk of repeating past mistakes, I think that's why they build in the "fade" that comes with time. I'm guessing that those who file multiple BK's, for instance, unless they've been truly hit by medical/financial tragedy, are going to have lates reporting in between the BK's, because they just aren't responsible (ethical, honest, etc.) in using credit. Whereas someone who had a one-time disaster necessitating BK will probably have month after month after month of clean history reporting once they are able to get back in the credit game.