Time for the Government to put an end to FICO

[Anonymous]

A high FICO score isn't helping me. I had FICOs of 809 TU/820 EQ last year, 300K in the bank, total debt of about 30K. I tried to apply for loans for a 400K house, offering to put 100K+ down and was getting treated like a dog by B of A, Wachovia and several credit unions. My problem: I work for myself and my income fluctuates wildly. Two years ago, there was a serious fraud perpetrated against me and I only made 30K net income on my tax return. Well, it really bothered the banks/credit unions that my net income could go from 125K the prior year to 30K the next. Last year, my income picked-up again but not high enough for me to get a favorable loan. The only loans they would offer me were either high interest or high fee loans. One of the credit unions approved me for a 230K loan with good terms but then withdrew the approval within a few weeks because "underwriting standards had changed" and wanted me to reapply and pay another $250- (this credit union has over 200K of my money on deposit, mind you, earning peanut interest!). Well, I withdrew the offer that I had made on a property and walked away. I was so disgusted by the situation that I started canceling a bunch of CCs, like the AMEX that I had for over 25 years, and only kept 2 newer affinity cards for frequent flyer/frequent guest credit. The cc cancellation actions (and a new cell phone activation credit application) sent my scores down to 750 briefly but they have been creeping back up as I have been paying down debt (total debt now is 6K). My scores are currently 790/790 but the banks still treat me like a pariah. I am starting to withdraw all of my money from the credit unions and banks because they don't pay any interest, so why should I give them the free use of my money. I HAVE BEEN FINANCIALLY RESPONSIBLE MY WHOLE LIFE AND THE SYSTEM ISN'T WORKING FOR ME! I am actually starting to think that living within your means and paying cash for everything is the way to go, and now, with lots of businesses, doctors, contractors, etc. offering me cash discounts, I am paying less for a lot of things than the rest of the public. 

[haulingthescoreup]

Welcome to all the new members here!

Just a general observation: FICO scores are a tool for lenders to use. They're just a tool. Some lenders use them wisely, others blindly base everything on just the score, and still others (I'm beginning to suspect) use FICO scores as a scapegoat for something that they wanted to do anyway. Sort of the lending version of saying "My parents won't let me go to the big party," when you really don't want to go anyway.

No lender has to bow to a FICO score, other than for those mortgages which are required to demand certain minimum FICO's. Every other lender can and should look at the entire credit profile of the individual applicant. Just because they're too lazy or dumb or overwhelmed or whatever doesn't mean that the tool (credit scoring) is bad. They're just using it wrong.

A lot of us have used the knowledge shared on the forums to greatly improve our own FICO scores. We might not necessarily like the realities of lending these days, but at least we now understand the system, and we know how to use it to our advantage. And interestingly, in the process, our usage of credit tends to be much more responsible, and our personal indebtedness is lower . It's not just games and manipulation. Many of us have genuinely become much more responsibly financially.

[Anonymous]

Well, I do sort of agree - according to what I've heard, even FICO can't explain their own formulas.

I just don't see how a single, three-digit number can even hope to present any kind of an accurate picture of a borrower's credit-worthiness.

The way I see it, there should be at least three numbers, two or three digits each:

- Debt to income ratio, expressed as a percentage. If this number doesn't meet the lender's criteria, disregard the rest and decline the application.

- Credit activity, expressed as a function of charges made to open accounts in the prior four week period (always 28 days)

- Late Payments, expressed as a function of payments made to open accounts in the prior 12 month period (always 12 statement cycles)

...for example. Three numbers where the formulas are determined by legislation and agreed to by all lenders licensed to operate in any state in the union.

Lenders use scores to determine PERCEIVED risk. However, as is often the case in real life, perception and reality can be separated by an extremely wide chasm.

[Anonymous]

As I mentioned before, the biggest issue with the FICO scores is not FICO scores themselves, it's what they are used to determine. The employer who turns down someone who could be an amazing employee, because she has a score below what's "acceptable". The person who has not had a chargeable accident in 20 years who is paying an exorbitant amount for his auto insurance, due to his score. I'm sure that there are other examples that could be mentioned. 

In the first place the scores that are pulled are not, usually, FICO's scores at all: they are the FACO scores from one or more of the big three credit reporting agencies. And, as I'm sure that everyone here can attest, those reporting agencies have a track record of being terribly inaccurate in what they report, and the value that they assign to those reports.

[fused]

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@Anonymous wrote:

In the first place the scores that are pulled are not, usually, FICO's scores at all: they are the FACO scores from one or more of the big three credit reporting agencies. And, as I'm sure that everyone here can attest, those reporting agencies have a track record of being terribly inaccurate in what they report, and the value that they assign to those reports.

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Actually, that is not true. The vast majority of lenders pull FICOs. Mortgage lenders almost always pull FICOs...and all three FICO scores too.

Credit Scoring 101

[Anonymous]

But I'm NOT talking about the big lenders...I'm talking about the abusive use of credit scoring for things that have NOTHING to do with the use of credit. And the organizations that pull those scores--who knows what they're using?

[fused]

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@Anonymous wrote:

But I'm NOT talking about the big lenders...I'm talking about the abusive use of credit scoring for things that have NOTHING to do with the use of credit. And the organizations that pull those scores--who knows what they're using?

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Can you throw out some names or entities?

[Anonymous]

I think everyone needs to wake up. Haha. Our entire credit system sucks period. Banking system sucks. Its funny to hear all these pro fico people hate to tell you fico is just as much to blame as banks credit companies Trans Union Equifax Experian and 100 other credit warehousing companies like trans Union. The government does nothing to help why because their salaries are paid by kickbacks by large companies. Don't be naive people. Transunion or even worse experian reports inaccurate information on your report you need an act of god to correct. I know I've had charge accounts at 3 yrs old OMG people I must have had an 850 fico or something at 3. Being a JR shows how f ed up credit companies are. It took 6 years of arguing and fighting to clear items. Experian and these guys send an electronic is it his account yes or no. Unfortunately we have people who don't give 2 bahoodles about what they do cause they are making minimum wage oh hell ill check yes. Now here comes fico who scores off the inaccurate reports LOL. So that makes fico just as screwed up because they use idiots like transunion and experian to base scores. Guess what they are just as much to blame people. Everyone knows how screwed up companies like experian are but we meaning the government do nothing and fico relying on these companies does nothing either. Wake up are you all sleeping. The whole system sucks and something needs to be done. Fico haha what a joke I suppose banks like citi bank used fico if fico is so f in good why did the government bail Citibank out ? Citibank can charge enormous interest yet they use your money to give others to make money. Ok thank you for giving me 2 percent interest then taking my money and charging people 5 times that for loans on homes and 12 times that on charge cards. Oh I'm sorry you're greedy but guess what bam you're going bust hey people lets borrow Citibank a few billion of our tax dollars interest free and they can do what they want with it omfg. In mean time some guy who's daughter had 5 heart transplants and fell behind on home payments oh to bad next time just have her offed so you can make payment sorry now get the f out of house LOL. Greed is one of seven signs of the end of the world. Society doesn't give a sh*t anymore. Politicians don't care maybe we need a few everyday normal people in office not people who have money lets put a few in that will actually do their job. Why do we help GM Citibank and others? They back politicians and I'm sorry I wish I had a few million to donate to a campaign because I wouldn't. Im sorry guys like George Washington who had nothing got nothing are rolling in their graves. People need to start standing up and being vocal. Instead we just suck on it. Im sorry we are just as bad as a third world nation. From our banking system to our medical you name it we suck. You can go out of country for cures and medicine for diseases why because other countries care about people. Here we don't care if people die. Its all because of greed. Wake up. Eventually this country will cease to exist why because everyone is out for themselves. Start helping the everyday people like the people in here and people on streets. Home of the Free haha believe it or not we aren't free Big Brother watches and you pay. In mean time rich get richer and little guy has to work 3 jobs to make rich richer..... Wake up America.........   Don't be so foolish and naive.  

[Anonymous]

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@llecs wrote:

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I have a confession. Much to FICO's chagrin for me saying this, I am a paid poster.

In an effort to curb any bashing of FICO and the credit industry, I have been paid to sit in a corner office, over-looking the Manhattan skyline, and adorned with 3 rubber tree plants, an oak desk, and a security badge with my name on it just in case I forgot who I am. Down the hall are my cohorts in their modest offices doing the exact same as I am. Security is pretty tight here and as I sip my 45-minute old mocha latte, and type this, I'm wondering how fast the men in plain suits will knock down my door and drag me out. The truth is out there. The truth must come out and I'm coming out.

For years I have been couped up in this office doing the same thing day in and day out. I sip my latte, post some impressive looking stuff, and cash my paychecks drawn from my 6-figure salary. I type post after post after post after post with 100,000+ paid posters, just like me, to impress the one who meandors on here looking to vent. Well, now you know. I'm shilling for FICO. Everyone posting on this thread, other than you, are paid posters too. Some get paid better than others based on the tone of their loyalty to the FICO score, but I'm done for. This is my last hurrah. Bob, Sammy, Jennifer, and bald guy in office 1802C, you can come out now too. This is your independence day. Come on out!! FICO, the company is very real, but the scores are fake! They are fake and so are the lenders that use them. FICO set up hundreds of phoney companies to pretend to give loans, just to promote a concept and make FICO look official. In fact, the borrowers are in on it too (they are fake too).

But it doesn't stop there. There's an ultimate conspiracy that goes all the way to the top. There's collusion with the Ne....wait a second..they are ramming my door. Gotta be quick. There's something more important you have to kno

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LOL

[Anonymous]

GEICO, Progressive and every other insurance company that I'm aware of, uses credit scores to set the rates for their insurance. Even if you were a current insured, had been insured with Company X for a decade, had had no chargeable accidents and were driving a three year old car, when the insurers began to use credit scores to determine the cost of policies, if your credit score was below what they considered optimal, your rates went up. Of course, no one at those companies will divulge the breakpoints for the different rate classes. They ARE now required to divulge that they use credit scores for rates. But that's it. 

I own my own business, so, to my knowledge, I have not personally dealt with a potential employer using credit scores to screen potential employees. But I know that my kids, and some of my friends, have. I know this because, in filling out the application for a particular job, they were asked to sign a waiver allowing the potential employer to obtain their credit score.