Rant: FICO scoring is meaningless junk

[Anonymous]

A bit of a rant.. So, I'll probably upset alot here but In my credit learning it seems a FICO score is meaningless and lenders do not care what your score is. They use the other factors such as negatives, age of accounts, utilization etc.. Seems some have even thrown out FICO score out completely and use their own internal scoring. 

You can have a low FICO score and be approved and have a high score and be denied credit. 

With that all said why does my thin young profile have a 739 Ex FICO 9? It's 1 point away from Very good. My credit is only 7 months old.... HOW!? Looking at this again made me make this post. When I apply for credit i'm often going to get denied for my credit history being too short. Keep in mind FICO says my credit is supposedly Good to Very Good and lenders say my history is too short. Complete disconnect here. 

Overall seems like a bunch of meaningless junk.

[pinkandgrey]

I've always said that the number doesn't matter as much as the factors BEHIND the number. It's possible to have a good score with bad financial/credit habits just like it's possible to have a lower score even if you're highly responsible. 

[Anonymous]

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@Anonymous wrote:

A bit of a rant.. So, I'll probably upset alot here but In my credit learning it seems a FICO score is meaningless and lenders do not care what your score is. They use the other factors such as negatives, age of accounts, utilization etc.. Seems some have even thrown out FICO score out completely and use their own internal scoring. 

These other factors make up your score.  There are minimum requirements where scores do matter but it depends on where and what you are applying for.

You can have a low FICO score and be approved and have a high score and be denied credit. 

Correct.  A high score is not equivalent to a guaranteed approval.

With that all said why does my thin young profile have a 739 Ex FICO 9? It's 1 point away from Very good. My credit is only 7 months old.... HOW!? Looking at this again made me make this post. When I apply for credit i'm often going to get denied for my credit history being too short. Keep in mind FICO says my credit is supposedly Good to Very Good and lenders say my history is too short. Complete disconnect here. 

7 months is extremely short in the credit world.  While your credit may be "good" during the 7 months that you've had it, you need more time to prove yourself to lenders that you are an acceptable risk to lend to including multiple accounts, installment loans, and higher credit limits.  Most people can manage a card for months.  To manage multiple accounts over the course of many years and without failure helps to prove you are financially responsibly.  

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[Brian_Earl_Spilner]

Think of it as a class where everyone starts off with an A, but it's up to you to keep it an A. Not very impressive at the getgo, but if you can keep it an A, that's what matters.

[Andypanda]

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@Brian_Earl_Spilner wrote:

Think of it as a class where everyone starts off with an A, but it's up to you to keep it an A. Not very impressive at the getgo, but if you can keep it an A, that's what matters.

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But with FICO people don't start with a 850. One needs an aged file, proper credit mix, as well as low utilization and no baddies to get an 850. One even needs a 2 yearsto get a 760, which would get a person what they need with good rates, and the first year to pass so tge inital hp to get inital credit to become unscorable.

[Brian_Earl_Spilner]

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@Andypanda wrote:

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@Brian_Earl_Spilner wrote:

Think of it as a class where everyone starts off with an A, but it's up to you to keep it an A. Not very impressive at the getgo, but if you can keep it an A, that's what matters.

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But with FICO people don't start with a 850. One needs an aged file, proper credit mix, as well as low utilization and no baddies to get an 850. One even needs a 2 yearsto get a 760, which would get a person what they need with good rates, and the first year to pass so tge inital hp to get inital credit to become unscorable.

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The score needed for the best rates is 750 which is achievable by someone with less than 1 year of credit history. The rest is extra credit if you want to put in the work, but it's not needed to succeed in credit. Less than 10% of the population will ever get to 850.

[thom02099]

You have a very good beginning.  We don't know the specific details of your report, but you've obviously done something right.  Keep doing what you're doing and always keep in mind that, in the Game of FICO, it's a marathon and not a sprint race. 

And while I understand your rant, also keep in mind that it is not junk when ~90% of lenders use FICO scoring.  Sometimes you get to explain yourself when applying for credit.  

[KJinNC]

I agree with this point, and it's one I've made probably half a dozen times as a sidenote in other threads.

Any given lender can do whatever they want, but this seems to be an issue with all/most lenders, which suggests to me that FICO's formula does not meet the market need.

If lenders are going to analyze your credit themselves, and GENERALLY give more weight to things like account ages, number of inquiries, credit-seeking behavior etc than the FICO score does, then doesn't that indicate there is a problem with the FICO score?

FICO's customers are lenders. The product FICO offers lenders is scores to help lenders make decisions more rapidly and with more confidence. So any time someone with a good FICO score is denied or someone with a low FICO score is approved, that indicates a disconnect between the product and how the customer wants to use the product.

Long story short, I think FICO should add more weight to things like account age and number of inquiries, to match what their customers are going for. Because like the OP, my scores are deceptive, perhaps for some of the same reasons (though I think I probably have more new accounts and inquiries - we both have limited account ages in general). Basically, I think our scores should be lower, to align with reality.

Maybe this isn't an issue except in these weird credit-building first-year scenarios and therefore isn't worth fixing, though. We might be the exception and not the rule.