Risk management models will always be a guessing game. Unless you can see into the future, there is no real way of knowing who will default on a loan/card, be it within 12 months or many years. You don't need to be an analyst to know that when events like Covid hit, even people with stellar credit ratings may fall into the financial crater. All that is certain, at least in my mind, is that any new models will not benefit the end consumer.
@indiolatino61 wrote:Risk management models will always be a guessing game. Unless you can see into the future, there is no real way of knowing who will default on a loan/card, be it within 12 months or many years. You don't need to be an analyst to know that when events like Covid hits, even people with stellar credit ratings may fall into the financial crater.
Credit scoring isn't about predicting who will default; it's about assigning probabilities of default to certain subpopulations based on credit score. Think about it as a distribution, like this:
[U.S distribution of FICO credit scores and probability of default by FICO credit scores from 2000 to 2002.]
Where someone in the 700 to 749 subpopulation is over 4 times as likely to default as someone in the 750 to 850 subpopulation. And someone 650 to 699 twice as likely to default as someone 700 to 749.
You never know who in particular is going to default. You just know the probability of default for a certain group.
And I think you're correct that economic disasters like Covid can shift the entire curve.
Yet another schitty turd. 
@FicoMike0 wrote:I just got turned down for another cli by USB based on a turd of 574. Says
" too few joint accounts" (does anyone still do those?) and
"Too many recent bank card accounts"
I'm 1/6, 4/12, 7/24.
Those will all drop one next month.
I'll apply again and see if my score changes.
For comparison, my tu fico8 is 810.
"Too few joint accounts?" That just sounds like lenders are making excuses up as they go along. It's just as bad as having a paid-in-full mortgage being a negative. Also, a FICO of 810 and TURD at 574 is ridiculous. This scoring model has to be re-evaluated. At any rate, the best of luck to you.
