*FICO is a Scam*

[Anonymous]

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@NRB525Marine, did you also have baddies fully removed / aged off from your reports, so that no baddies remain?
Those score improvements are not just from a utilization reduction, though that does provide some score boost.

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It's perfectly possible that he gained 120 points from just the utilization reduction.  He only had 1 CC, meaning that his individual card utilization was his aggregate utilization.  He went from "maxed out" 98% utilization (both individual card and aggregate) to "ideal" 5% utilization.  As an absolute minimum I would have ballparked the gain here to be 80 points, with 120 points being perfectly reasonable.

[marty56]

If you have no major derogs on your CR, then util is probably holding you down.  If you max out all your CCs and PIF each month, the reported balance still shows you are maxed out even though you PIF each month and thus have no CC debt.  If you can PIF each month you can control the reported balance by paying the balance before your statement cuts.  Anything you can do to lower the reported balance will help your FICO score.

[Anonymous]

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@Anonymous wrote:

I want to preface this post with the following:  I made some bad financial choices earlier in life, no bankruptcies, but I did default on a couple of student loans and I got behind paying 2 credit cards and a cable bill that I disputed.  My score hovered around 620-650.  

Fast forward 5+ years, I am making considerably more money, my credit utilization is about 15% and I have not missed a single payment in 5+ years.  I recently made a payment to a card of $3k, bringing the balance down to ~$600, I figured I would check my score to see what effect it had.  Guess what, Equifax score dropped 25 points, Transunion and Experian both went up 1 point.  So you may be thinking, "well that large payment actually hurt your score because it shows inconsistency".   However, I consistenly make $2K payments per month. 

 This piqued my interest so I went and looked back at the previous 2 years worth of credit scores (FICO 8), no missed payments, steady salary increases over that time and my score has basically hovered about 5-10 points in the same range. 

Then I checked my FICO 9 score and low and behold every score was higher, ranging from 12 points to 33 points higher.

The conundrum (scam) that is FICO, I make a larger than normal payment and I get penalized, I make consistent payments for 2 years and my score hardly moves.

Am I really being punished for stuff that either has fallen off my credit report (greater than 7 years) or from stuff that falls into the 5+ years but less than 7 years bucket?  

Seems like a credit scoring system should naturally reward people that show a consistent payment pattern, especially over a duration of 5+ years rather than flatlining their score.

I would appreciate some feedback and hopefully advice from people that were/are in a similar situation.  Looking to have my mind changed about FICO, but presently I do not see that happening.

*Score hovers around 700

**Houshold Income $175K+

****DTI Ratio = 33%

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I would say if your DTI is 33 percent I would question whether you are making good choices.

As I mentioned in previous posts that people with the highest FICO scores defaulted more in the first 12 months of morgages generated in 2008 than the people with the lowest FICO scores did similarly in mortgages generated in 2006.  FICO has its failings.  I think that is why FICO 9 came out

My FICO 9's are in the 760's.  And my FICO 8's are in the 720's. I have Charges offs and foreclosure on my report.  FICO 9 are supposed to be an improvement on FICO 8.  The goal of FICO is to predict with things on a credit report how likely somone is going to default on a loan.  Creditors look at other things just your credit report to make decisions.  Income and DTI and whether you own a home come into play.  And how long you lived in your home.  I am highly unlikely to default on my debt as I have zero debt.  I let 1k report a month. 

Even if FICO scores have their faults it is not a scam.  Who are they scaming.  They are providing a service to creditors.   A system that isn't 100 percent predictor is not a scam.  It is like saying a SAT score is a scam because you scored very low but you think you can do well in college. 

[Anonymous]

@NRB my CC baddies (3) aged off of all my CR's back in 2016 after 7 years of reporting. I had the USAA secured since July 2013... the limit was always near 100%/paying just a little over the min., and just decided to pay it down to the $55 in March 2018. My CR's are still showing two loans from CitiFinancial paid off in 2010, and an "open" Sears/CBNA with/O/1200 balance, opened in 2007.

[Anonymous]

What I also noticed on my reports were that my AAoA's were just under 9 years, and date of oldest account was just under 12 years, and additionally I had no inq, and no new credit in 5 years, perhaps those factors may have played a role, when I payed the card down. The last report activity date on the Sears/CBNA was in 2012, so don't think that's doing anything pro, or con.

[NRB525]

Congrats on the score improvement.

It is very rare to see scores below 640 without baddies, because typically there has been history on the accounts, multiple credit products as the cardholder tries to juggle, and thus not a perfect maxing out of utilization.

So effectively by 2009, all your accounts got closed, some with baddies? Then they aged off over 7 years?

[Anonymous]

I wouldn't think it would be very difficult to see a low 600's score without the presence of baddies, especially on a thin/young file, as they are quite volatile to profile changes.  If someone has a low-mid 700's score with maybe 2 accounts and 1 year of credit history with ideal utilization on say a $500 CL card, all it takes is going from a small balance to reporting a $450 balance and a 100 point loss could come quite easily. 

[Thomas_Thumb]

Generally a profile fresh to credit that just crossed 6 months to be scoreable will have a Fico 8 in the 700 to 720 range if the file is clean and aggregate UT is under 29%. When my DD's Fico score 1st reported she had 2 of 2 cards with balances (aggregate UT around 25%) her Discover Fico 8 score was 710.  Not sure that it's possible for a clean file to score below 650  even if the file is young as long as aggregate utilization is under 49%.

That being said, I do recall one poster reporting that a friend or relative had achieved a clean file score of 590 after managing to max out 11 cards (over 89% UT on each card). Check out the links relating to major score drops listed in the below post

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORECARDS/m-p/4361047#M102264

[Anonymous]

Fico is a product sold to financial inst. no way it can be a scam it's based on data from your history if ya score is flat probably your own fault reading will help to better understand.

[Anonymous]

FICO is without a doubt a scam. It works to give creditors a assessment of how much interest they will make off you over time. It is stacked for the lender. Paying off too much too fast means the creditors don't make as much. It is designed to benefit lenders that pay for FICO scores by statistically figuring out which customers will pay the most fees. Customers that pay off every month and rack up points are not as profitable.