@Anonymous wrote:I didn't know I owed them $46 -- that's why the debt went upaid for so long, not because I was in financial trouble and couldn't pay it, jsut like the $5 I neglected to pay MBNA in 2000, that they decided was worth reporting to the credit bureau. Columbia reported it because their collection agency didn't record the fact that I had paid it. If I could pay over $3000 on my bills in February of 2007, why would I have trouble coming up with $46? My credit score has been over 700 for years -- how is that an indicator of financial troubles?If Columbia House's intention is to make my life difficult for $46 and FICO supports them in this, then this credit score game has truly reached absurd heights. Especially since I paid the money once they brought it to my attention that I owed them. This is the most ridiculous thing I ever heard.
Brammy's right... the key to the FICO score is prediction of the future. If you have an excellent history, the score assumes that you don't forget, make mistakes, etc etc because you've never done so. Once it sees the collection, like Brammy said, that's a red flag that you might be starting to have issues.
The FICO score doesn't care about they why's of a negative, because they can't possibly KNOW why. This is purely a numbers and percentages game... your score drop says that of the people in the group you were in, a single negative is a relatively large risk factor of continued accumulating negatives. In Brammy's case, the numbers already say he hasn't been perfect, so the new negative is less of a surprise.
If you wanted FICO scores to take into account the why's of particular situations, there would be hundreds of thousands of people in a call center, contacting every single person in the country whenever there was any change in their report asking them to explain the change. It'd be overwhelming. There's no choice but to predict you as a higher risk, because the statistics say that new collections for people in your good credit group have a tendency to indicate continued problems.
Consider getting a speeding ticket. You could never have exceeded 55 in your life, but one day you get a ticket because your speedometer got stuck. Your insurance company doesn't care why you were speeding; they'll still raise your rates because of the ticket, even though it wasn't your fault, because that's where overall tendencies lie.
I actually considered being an actuary for a career... these are the people that sit there and do nothing but research the numbers to come up with predictions and tendencies based on what essentially is basic numerical data. That's the hard fact of living in a society of 300 million people. It's impossible to take everyone's individual circumstances into consideration - you have to make generalized predictions.
@Anonymous wrote:I don't think the analogy of speeding with default on credit is a good one. For one thing, the credit score depends on history. Therefore, past behavior is a factor in the score. With driving, past history can never predict what will happen the next time one drives, because there are too many uncontrollable variables.Sorry, but if we're to be judged and our capabilities are to be determined by these numbers, then they must be arrived at by the most specific and sophisticated formulas possible. I don't buy the idea that we should just accept this ridiculous across-the-board way of arriving at our evaluations.
Are you saying that if you were an insurance company, and you had a 17 year old with 5 accidents on his record, you would charge him the same as a 55 year old with a spotless record spanning 40 years? If what you say about past driving history not being predictive of the future, then the insurance and actuarial industries are a total sham. But... that's a whole other discussion.
I don't disagree with your opinion that these numbers should be derived as accurately as possible. But no matter what formula you throw at it, it's still a formula, and there are going to be people who, when you take the time to consider the subjectivity of their situation, certainly don't fit the formula.
For all we know, they've already done the research that shows, however counterintuitive that it may sound, that it makes no difference (or a small enough difference to be statistically insignificant) how much the amount of the collection was; simply the fact that the collection exists might be a much more reliable indicator of future probability. It might not make total sense, but they don't set rates based on what seems to make sense in our head... they set them based on what the numbers of millions of previous similar situations say is likely to happen.
What you suggest is certainly a desirable concept, but for all we know they've already taken what you suggest into consideration. For all we know they haven't, too... it's impossible to say.
Message Edited by Nuggy on 04-08-2007 10:19 PM