How would you define FICO "gaming"?

[Anonymous]

An article entitled: 

 How More Americans Are Getting a Perfect Credit Score

and subtitled:

 “Super-Prime” consumers are gaming the system in their pursuit of a golden 850 rating.

appeared on Bloomberg News today.

https://www.bloomberg.com/news/features/2017-08-14/obsessives-have-cracked-the-perfect-fico-credit-s...

One quote:

“The scoring models may not be telling us the same thing that they have historically, because people are so focused on their scores and working hard to get them up,” Zandi says. Those score-fluffing strategies are “mucking with their relationship to the underlying credit risk.” Ethan Dornhelm, vice president for scores and analytics at FICO, said the company sees “no evidence of score gaming.” Recent increases in credit card delinquencies is on the banks, he said, since more low-scoring consumers are obtaining credit as lenders “aggressively compete for new card volume.”

Any thoughts on how to define "score gaming", and whether the company's assertion that it doesn't exist is accurate or just marketing?

[Anonymous]

I admit to gaming FICO for sure -- I wish FICO wasn't so bizarre as I'd prefer to use the full interest-free float to maximize my investment income, but I always pay my balances off before statement cut versus due date to maximize FICO scoring overall.

I also gamed FICO with the SSL since I didn't have any other loans (25-30 point boost, helped me qualify for a cashback rewards card I was always declined for).

In addition, gaming FICO has saved me hundreds of dollars a year on insurance costs that are based on FICO score.  Same with zip code gaming, too.

[Anonymous]

Part of Ethan Dornhelm's job is PR for his company (this is true for any VP or CEO who makes statements to the press).  His company is in the business of making scores.  These scores (in theory) are supposed to accurately gauge risk.  If a person can alter his score with clever tricks, then Ethan's product is not doing what he's like it to do as perfectly as he claims.

No PR rep ever admits to flaws in his own product.  They all say it's the best ever.  So of course what he says is complete BS.  If he doesn't know how people game his scoring system, he's unaware of an entire website owned by his company called "myFICO" -- the forums of which involve people endlessly explaining how to do just that.

The most reasonable description of gaming the FICO system, in my view, is this:

Deliberately altering your credit habits (in ways that don't involve financial responsibility) in a conscious and well thought out attempt to raise your FICO score.

Here are some examples:

Bob has one credit card.  It totally meets his financial needs.  But he reads on this forum that he will get a better FICO score if he has three or more cards.  Bob therefore adds two more cards.  He is gaming the system.

Bob has one credit card with a 2k credit limit.  It totally meets his financial needs.  His reported utilization  varies between 40% and 60%.   He always pays the balance in full after the statement prints.  But he reads on this forum that his score will be much higher if he pays his balance down to $5 just before the statement prints, and then pays in full after the statement prints.  He is gaming the system.

Bob has five credit cards and is preparing for a mortgage.  He always pays his cards in full (after the statement prints) and typically has all five showing a balance and a total utilization of 30-40%.  He reads on this forum that his score will be much higher if he pays four of his five cards to zero and keep the remaining card with a small balance.  He is gaming the system.

Bob has three credit cards but has never had an installment loan.  He reads on this forum about the Share Secure Loan Technique.  He has no use for the loan except as a trick to raise his score.  He is gaming the system.

I can think of many others, but those will get you started.

[SouthJamaica]

---

@Anonymous wrote:

Part of Ethan Dornhelm's job is PR for his company (this is true for any VP or CEO who makes statements to the press).  His company is in the business of making scores.  These scores (in theory) are supposed to accurately gauge risk.  If a person can alter his score with clever tricks, then Ethan's product is not doing what he's like it to do as perfectly as he claims.

No PR rep ever admits to flaws in his own product.  They all say it's the best ever.  So of course what he says is complete BS.  If he doesn't know how people game his scoring system, he's unaware of an entire website owned by his company called "myFICO" -- the forums of which involve people endlessly explaining how to do just that.

The most reasonable description of gaming the FICO system, in my view, is this:

Deliberately altering your credit habits (in ways that don't involve financial responsibility) in a conscious and well thought out attempt to raise your FICO score.

Here are some examples:

Bob has one credit card.  It totally meets his financial needs.  But he reads on this forum that he will get a better FICO score if he has three or more cards.  Bob therefore adds two more cards.  He is gaming the system.

Bob has one credit card with a 2k credit limit.  It totally meets his financial needs.  His reported utilization  varies between 40% and 60%.   He always pays the balance in full after the statement prints.  But he reads on this forum that his score will be much higher if he pays his balance down to $5 just before the statement prints, and then pays in full after the statement prints.  He is gaming the system.

Bob has five credit cards and is preparing for a mortgage.  He always pays his cards in full (after the statement prints) and typically has all five showing a balance and a total utilization of 30-40%.  He reads on this forum that his score will be much higher if he pays four of his five cards to zero and keep the remaining card with a small balance.  He is gaming the system.

Bob has three credit cards but has never had an installment loan.  He reads on this forum about the Share Secure Loan Technique.  He has no use for the loan except as a trick to raise his score.  He is gaming the system.

I can think of many others, but those will get you started.

---

I must say CGID, I wish I had more than 1 kudo to give you. This is one of the best posts I've ever read on MyFICO

[Anonymous]

You just made my day, SouthJ.  Thanks man.

Two others that occur to me:

Bob is a 21 year old college student.  He has never had a credit account of any kind.  His mom adds him as an AU to a 30-year old credit card with a $0 balance.  Suddenly he has an AAoA of 30, a profile age of 30, no derogs, and a very low utilization.  He has gone from having no credit to having amazing credit.  He has gamed the system.

Bob has a number of lates and other derogs.  He reads his reports and determines that all of those derogs are factually accurate in every respect.  Nonetheless he starts hanging out on this forum and learns about various kinds of tricks and technques for getting this true and accurate (if unflattering) data removed from his reports.  He is not doing anything illegal, but he is gaming the system.

[Anonymous]

CGID, I strongly agree with your overall point. Thank you for the well written reply. I am going to quibble a bit about one or two of your illustrations (with apologies to Bob):

Bob has one credit card.  It totally meets his financial needs.  But he reads on this forum that he will get a better FICO score if he has three or more cards.  Bob therefore adds two more cards.  He is gaming the system.

True, in this instance Bob is intentionally manipulating his FICO scores; but doesn't he emerge a better borrower as a result? Opening additional revolving accounts will give Bob a cushion in the event of sudden financial difficulties (think: unexpected medical/housing/auto expenses, interest rate rise, high bills due to a big-ticket impulse buy). Furthermore, since the scoring benefit will primarily occur once the new accounts have aged somewhat, Bob will have learned how to manage multiple credit card accounts for some time without missed payments. And since the balances will need to be relatively low, Bob will have had practice in exercising discipline by refraining from overusing his new, more generous spending power. Arguably, Bob is not gaming the system but becoming a more capable, sophisticated borrower.

Bob has one credit card with a 2k credit limit.  It totally meets his financial needs.  His reported utilization  varies between 40% and 60%.   He always pays the balance in full after the statement prints.  But he reads on this forum that his score will be much higher if he pays his balance down to $5 just before the statement prints, and then pays in full after the statement prints.  He is gaming the system.

Isn't Bob displaying responsibility as well as financial capability by being in the habit of paying his bills before the statements print? I remember reading that in commercial credit, the best rating is assigned to companies that pay their bills prior to being invoiced -- so presumably that is a valid predictor of both cash flow and future default risk. Furthermore, Bob has developed the habit of carefully monitoring his credit use.  This habit is surely meaningful. And while this is undoubtedly a limitation of current credit data systems and the FICO algorithm (which only use a current snapshot rather than trended data), Bob has identified himself to the algorithm as someone who uses credit by choice rather than out of necessity.

[Anonymous]

CreditGuyInDixie wrote:

[...]
Bob is a 21 year old college student.  He has never had a credit account of any kind.  His mom adds him as an AU to a 30-year old credit card with a $0 balance.  Suddenly he has an AAoA of 30, a profile age of 30, no derogs, and a very low utilization.  He has gone from having no credit to having amazing credit.  He has gamed the system.
[...]

I believe that the credit industry terms this kind of piggybacking "Authorized User Abuse". So, clearly, yes.

(Here is a research paper from the Federal Reserve on the practice: https://www.federalreserve.gov/pubs/feds/2010/201023/201023pap.pdf )

[Anonymous]

---

@Anonymous wrote:
[...]

Bob has a number of lates and other derogs.  He reads his reports and determines that all of those derogs are factually accurate in every respect.  Nonetheless he starts hanging out on this forum and learns about various kinds of tricks and technques for getting this true and accurate (if unflattering) data removed from his reports.  He is not doing anything illegal, but he is gaming the system.

---

This isn't really gaming the FICO system so much as gaming the FCRA and the dispute system, as well as whatever other legal tools can be used.  But it would be a problem in any scoring algorithm based on past performance, as well as manual review.  Or to put it differently, the issue here is the integrity of the data set, rather than the predictive accuracy of the algorithm.

Of course, to give the question broader moral perspective, lenders are gaming us in much the same way: always (or almost always) within the letter of the law but manipulative and calculating.

[Subexistence]

---

@Anonymous wrote:

I admit to gaming FICO for sure -- I wish FICO wasn't so bizarre as I'd prefer to use the full interest-free float to maximize my investment income, but I always pay my balances off before statement cut versus due date to maximize FICO scoring overall.

I also gamed FICO with the SSL since I didn't have any other loans (25-30 point boost, helped me qualify for a cashback rewards card I was always declined for).

In addition, gaming FICO has saved me hundreds of dollars a year on insurance costs that are based on FICO score.  Same with zip code gaming, too.

---

What is zip code gaming?

[SouthJamaica]

---

@Anonymous wrote:

@Anonymous wrote:

[...]
Bob is a 21 year old college student.  He has never had a credit account of any kind.  His mom adds him as an AU to a 30-year old credit card with a $0 balance.  Suddenly he has an AAoA of 30, a profile age of 30, no derogs, and a very low utilization.  He has gone from having no credit to having amazing credit.  He has gamed the system.
[...]

I believe that the credit industry terms this kind of piggybacking "Authorized User Abuse". So, clearly, yes.

(Here is a research paper from the Federal Reserve on the practice: https://www.federalreserve.gov/pubs/feds/2010/201023/201023pap.pdf )

---

The paper is about artificial procurement of authorized users and granters of authorized user status for pecuniary gain, not about the natural example given of a mother adding a son.