Lack of credit scoring knowledge

[pizzadude]

Does Lightstream still pull only EQ or did they switch to TU ?

[FICOdawg]

Apparently either/or TU or EQ     

[Realist]

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@FICOdawg wrote:

As part of the FICO journey to 800, I find it interesting how much John Q Public is clueless about their credit scores.     I'll admit until I found out my score was in the low 700s since I always paid on time and had numerous loans/mortgage/credit cards and never rejected for a loan that I had a truly good score.

FICO generates BILLIONS of scores per year and yet this forum is fairly slow given the impact FICO has on people's wallets.

I read a recent Reddit where someone wrote that "after you hit 700 is doesn't really matter".     Oh how clueless that statement is given the extra interest you pay.      I hate to think how a couple simple moves would have saved me money over the years because I didn't want to add credit accounts or increase credit limits because I did not "need" it.     Seems real opportunity to better educate consumers on FICO scores.          

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It's not just ignorance about FICO scores, but also part laziness in general.  Willful ignorance.  Willful laziness.

I can give a few examples in my sphere of influence about simple financial awareness.

1.  In-law.  Their financial advisor says they should only own one credit card.  For those that are financially aware, this isn't great for expanding your credit profile.  They aren't necessarily financial fools either.  But if they weren't a slim profile before, they are, or soon will be.

2.  We needed gutters for home and polebarn.  Got 6-12 quotes, 99% of them ranged in price from $8000 to upwards of $18000.  Talk about usury in the form of outlandish prices, and some of them even showed up in suits and ties, wanting the spouse to be present, etc.  The one percent I did find, local small company, quoted $2000, showed up in a t-shirt and jeans, formed the gutters onsite.  Provided superior service for six inch gutters, and can't recommend them enough.  Pushed him about four jobs so far due to his excellent business practice so far.   In-law, gets a random quote or two around $10k, and sits on it with no action.  Two (2) years later even after they had seen ours, they mention they needed gutters.  We say give this guy a call.  Why did you wait two years to bring this up?  It was in your face every time you came over, we told the story a few times.

3.  In-law.  Has some stuff going on with the front door and glass panel frame.  Decides to go with whomever they choose at selection number one, at a tune of ridiculous in cost.  I quoted out something similiar, for nearly half in cost.  While not perfect, there was tremendous room for savings.  All of the siblings earn about the same in income, so either these ones are too rich for our tastes, or the like to toss money to the wind.  The answer to that they like to toss money away.

FICO scores are a thing most people know.  They don't know much about the arrival in the score, other than to pay on time, and don't miss a payment.  Many people don't take the time to care or learn about it.  That usually happens after an adverse activity.  I would say they're too busy with month to month, or year to year financial situations, that FICO scores only register, when you need to include FICO scores for loans.

[Thomas_Thumb]

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@Realist wrote:

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@FICOdawg wrote:

As part of the FICO journey to 800, I find it interesting how much John Q Public is clueless about their credit scores.     I'll admit until I found out my score was in the low 700s since I always paid on time and had numerous loans/mortgage/credit cards and never rejected for a loan that I had a truly good score.

 I hate to think how a couple simple moves would have saved me money over the years because I didn't want to add credit accounts or increase credit limits because I did not "need" it.     Seems real opportunity to better educate consumers on FICO scores.          

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It's not just ignorance about FICO scores, but also part laziness in general.  Willful ignorance.  

FICO scores are a thing most people know.  They don't know much about the arrival in the score, other than to pay on time, and don't miss a payment.  Many people don't take the time to care or learn about it.  That usually happens after an adverse activity.  I would say they're too busy with month to month, or year to year financial situations, that FICO scores only register, when you need to include FICO scores for loans.

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... Well ignorance of Fico details can be ok. The key component to top tier credit and excellent scores IS having a few accounts which are used, always paid on-time and in full. Beyond that keep a couple CCs open for long term aging. The rest is icing on the cake.

My daughter has only 2 credit cards  from 2015 and her Fico 8 scores have been over 800 since 2021 except a few dips to 780. No late payments, always pays in full and maintains low reported utilization.

You can be completely ignorant of Fico scoring model details and have 850 scores. That was my situation when TU Fico first reported on my Discover card statement 2/2014. Score was 850 and stayed there month after month. I thought the score was *B.S.*.

In 7/2014 I paid for a Fico score from EQ and it was 764. In 12/2014 I paid for a 2nd score from EQ and it was 796. Discover continued to report my Fico score at 850. Again, I am thinking the Discover Fico score must be bogus because it never changes.

I stumbled onto the Fico forums in 4/2015. I discover there are multiple Fico models in use. After some analysis I determined my TU score was Fico 8 and my EQ score was Fico 04 (referred to as score 5). Thus began my journey down the rabbit hole.

My wife remains uninterested in the inner workings of Fico. Primarily cares about living within our means and always paying bills on time. However, she is a believer in cash back credit cards and not over paying for goods and services.

Her scores were 850 as well. When our loan was paid and closed those 850 scores disappeared. I knew the reason why but she did not. I told her but she still has no interest in learning more. I guess she feels the sky won't fall as long as bills continue to be paid ontime.

[FICOdawg]

The US FICO average is about 715 so I seriously doubt many people casually end up with scores north of 800.

Most people buy a car or a house when then need a car or a house.      That can lead to higher interest depending on timing.     How many people are aware to open credit card accounts you don't even need to pad account age and utilization?    I'll bet a pretty small percentage of the populace and yet, these few things costs consumers BILLIONS in dollars in higher interest rates.

My point is the top scores would be more attainable for fairly large number of folks with a pretty small education campaign.    

[FlaDude]

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@Realist wrote:

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1.  In-law.  Their financial advisor says they should only own one credit card.  For those that are financially aware, this isn't great for expanding your credit profile.  They aren't necessarily financial fools either.  But if they weren't a slim profile before, they are, or soon will be.

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When I first got a job that required frequent travel, my only card was an Amex Gold. On my third trip in my first month, card was declined at car rental counter. I called and they said my usage was outside my normal spending pattern. It was Sunday night and the agent said I needed to talk to some department that wasn't in until Monday morning. After some back and forth the agent agreed to approve the car and the first hotel night. Got it all taken care of on Monday morning, but learned not to travel with just one card, preferably at least three from different issuers. So even ignoring the scoring issue, having only one card is putting all your eggs in one basket.

[FICOdawg]

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@FlaDude wrote:

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@Realist wrote:

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1.  In-law.  Their financial advisor says they should only own one credit card.  For those that are financially aware, this isn't great for expanding your credit profile.  They aren't necessarily financial fools either.  But if they weren't a slim profile before, they are, or soon will be.

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When I first got a job that required frequent travel, my only card was an Amex Gold. On my third trip in my first month, card was declined at car rental counter. I called and they said my usage was outside my normal spending pattern. It was Sunday night and the agent said I needed to talk to some department that wasn't in until Monday morning. After some back and forth the agent agreed to approve the car and the first hotel night. Got it all taken care of on Monday morning, but learned not to travel with just one card, preferably at least three from different issuers. So even ignoring the scoring issue, having only one card is putting all your eggs in one basket.

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If you travel a lot, a couple travel rewards cards (at least one hotel and one airline card) is almost compulsory.      I will never have an AMEX I've seen it not be accepted in tons of locations.    Always have at least one MC and one Visa.    There are some places like Singapore where the taxis ONLY take MC etc.     

[FICOdawg]

It's not just ignorance about FICO scores, but also part laziness in general.  Willful ignorance.  Willful laziness.

I can give a few examples in my sphere of influence about simple financial awareness.

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I think that's 1000% wrong.   On the lower income side of the spectrum, credit opportunities aren't available.     You obviously have a bias and don't think of the entire sphere of incomes.    As a product of aging out of the Foster care system I can assure you during my 20s and getting started in adult life was more about survival than having role models and mentors.   

The ironic part of being lower income is those people need every dollar and they endure higher lending costs.    As if often said, "it's expensive to be poor".        

A pamplet with examples or other means to educate consumers would go a long way.   Today if someone is declined it's generic for the reason.   They also don't disclose that "if you had this and this to get a higher score you'd have paid a lower rate".       The idea of ADDING credit cards to improve a score is absurd but it's actually rewarded for credit mix and eventually account age......    

[FlaDude]

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@FICOdawg wrote:

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If you travel a lot, a couple travel rewards cards (at least one hotel and one airline card) is almost compulsory.      I will never have an AMEX I've seen it not be accepted in tons of locations.    Always have at least one MC and one Visa.    There are some places like Singapore where the taxis ONLY take MC etc.     

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Certainly with the info widely available now that's easy to see. In my case it was the early 90's, the web was in its infancy, and the wealth of information we take for granted wasn't in place yet. Generally other than that one case, Amex has been good to me, and even back then was widely accepted by airlines, car rental agencies, hotels, and restaurants so worked pretty well for travel. NPSL worked well for me too (other than a tense 12 hours), since the credit limits I could get back then on regular cards didn't cover a month's worth of travel that would add up before I got my expense check.

[FICOdawg]

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@FlaDude wrote:

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@FICOdawg wrote:

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If you travel a lot, a couple travel rewards cards (at least one hotel and one airline card) is almost compulsory.      I will never have an AMEX I've seen it not be accepted in tons of locations.    Always have at least one MC and one Visa.    There are some places like Singapore where the taxis ONLY take MC etc.     

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Certainly with the info widely available now that's easy to see. In my case it was the early 90's, the web was in its infancy, and the wealth of information we take for granted wasn't in place yet. Generally other than that one case, Amex has been good to me, and even back then was widely accepted by airlines, car rental agencies, hotels, and restaurants so worked pretty well for travel. NPSL worked well for me too (other than a tense 12 hours), since the credit limits I could get back then on regular cards didn't cover a month's worth of travel that would add up before I got my expense check.

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I travel internationally extensively and AMEX would leave you high and dry in many locations.     Local/non-chain hotels throughout Asia and Africa you'd be in a lurch for sure.     I've seen people have to do run around and find an ATM to get cash because local hotel did not take AMEX or Discover.