FICO 08 use of DTI

[Anonymous]

I took the caption below from BOA home loan "Learning Center".  Does anyone have thoughts on how FICO includes your income ( or even how it gets your income as its not in you credit report), as suggested below in the DTI section?

Stricter Guidelines for Bad Debt
FICO 08 is also designed to lower the credit scores of borrowers who have certain profiles, while protecting lenders against making bad loans:

High debt-to-income ratio (DTI). Basically, your DTI is the amount of money you earn compared to the amount of debt you carry. This balance of income vs. debt is a good indicator to lenders of your ability to repay your loans. If you carry a lot of debt compared to what you bring in each month, the new formula will significantly lower your credit score.

Eliminating "piggybacking." Piggybacking is a method of improving the credit score of your children or spouse by adding them onto your accounts and letting them benefit from your higher score. However, there are many "credit repair" websites that abuse the system by arranging for people with poor credit to become authorized users on accounts of strangers with better credit. FICO 08 is set up to eliminate the abuse of this practice.

More bad credit files. FICO 08 determines credit scores by separating all credit files into 12 different categories. The new formula introduces two new "bad credit" categories that will negatively affect millions of credit profiles. The Fair Isaac Corporation hasn't announced when the new scores will be available to consumers, so ask your lender if they are using this and how it may affect you.

[haulingthescoreup]

First of all, hardly anyone is using FICO 08 yet.

Secondly, the website is wrong. Lenders will consider DTI, but FiCO scoring can't and doesn't. Your income doesn't show on your credit reports, and FICO scoring only deals with what's on your reports.

I'm guessing that what they're trying to say is that carrying high balances as compared to your credit limits (aka, high util) is what hurts your scores. And that is true of all FICO scores. (And FAKO's as well.)

Dear BofA, making life just that much more confusing for consumers. If they can't get info on their "Learning Center" right, no wonder that no one can get straight answers from their CSR's!


eta: oops, sorry, I meant to say welcome to the forums!

Many of us especially appreciate new members bringing proof of lender cluelessness, so thanks for posting this!

Message Edited by haulingthescoreup on 02-17-2010 05:26 PM

[Jazzzy]

What worries me is the press we've read about the credit bureaus having models to "estimate" our income. The article said this would be based on things such as credit limits on our credit cards, etc. Apparently, there is also a giant database out there based on salaries.

The credit bureaus have enough problems with the debt side of the equation. I can't imagine the chaos that could ensue when they begin "estimating" our income.