Is median Fico score of 720 accurate? Raves and rants

[diggumsmacks]

I saw this on another thread and wanted to bring up this point. I don't believe the Us has good credit because of all the forclosers and high interest rates that are bleeding and suppressing hard working Americans. I think we all know that it's common sense that we are getting raped by our financial institituions like are banks and CCC, I'm sure we can all draw a line all the way to the CRA's. It makes me sick. I do enjoy coming on to this forum and learning from everyone else mistakes and sharing my own ( haven't really shared any as of yet). Here's one scam I think that is bogus. Ben Bernanke and his henchmen, are saying that the US economy is warming up and our GDP is growing a little too fast, in other words we are spending too much money and they are worried about inflation getting out of hand and hence raising the prime interest rate. What I was wondering is that It's a fact now that Americans are saving less and less money and spending more,I forgot the actual statistic but it's shameful, so my question is this if the Average US taxpayer is spending more and more the government sees this as an inflationary warning, but if we are spending on credit, is that actually configured in GDP growth. Perhaps that factor should be added in to how the Fed determines interest rates. I know it is a very dangerous thing for us and our economy so to answer my question perhaps the Fed should raise interest rates but unfortunately the American lust for spending couldn't be offset now matter how high they would be paying out our veins. So for all of you here learn from all the mistakes you see here and share your own. After thing deeply on this subject I realize more people are using credit these days not to mention all those title pawns/ check cashing center popping up all over the place. I don't see the average American credit score being 720 I think that some B.S and the CRA are in it too. However, I think it's good that we all get on here and read and discuss our finacial problems because they dont' away on their own. I guess that all the ranting I have to rant about for now...

[ilovepizza]

"The average is about 723, according to Fair Isaac statistics."
Source

"The median FICO score is 725, says Craig Watts of Fair Isaac, the company that compiles the scores."
Source

"According to Fair Isaac, the median score over the entire population is about 715"
Source

"The median score is roughly 720."
Source

THIS ONE WINS!!!
"with 720-725 being the median FICO score"
Source

How do they calculate?? Every time I pull my score does that count in to the average? So do more people in the 720 range pull their score more maybe? Do they exclude duplicates for each persons social? I think they took how ever million, billions and just averaged all score pulls together. It might be like a vote where people are able to vote over and over again. Maybe the 720s pull more credit reports. Just offing conversation... It doesn't really matter. Everyone can raise their score! But how many people were not factored in to this. Do they even know their score? If they never pulled their score or applied for credit, do they even have a score? hmmm.

Message Edited by ilovepizza on 06-20-2007 10:12 PM

[diggumsmacks]

I agree from the handfuls of people I help with their credit their scores are in the low 600's however I did meet a kid 19 years of age, who I turned on to fico and I got him to do a score watch and he had a 710...I wanted to throw up!

[diggumsmacks]

Now for the rest of the population: 27 percent rank above 600, and 13 percent weigh in above 500. Only 2 percent have scores of 500 or below, according to Fair Isaac numbers. That was from one of your sources!!! What a bunch of crap! Come on they talk to us like we are stupid. I know many of people that have royally screwed themselves and gone below 500. Come on even our own Goverment has dept utilization up too 99% ...haha So far the war has cost close to a trillion dollars if they had a credit check they score would be way low. I wouldn't loan them any money specially with the fact that most Americans are in debt and it only going to get worse. 2% of people below 500 is a bunch of crap, the lies of FairIsaac has no limits. LOL But you are right pizza lover! We can change, in our case we learned the hard way, but either way we learned.

[MercyMe]

Sigh ... and here I thought I was doing alright with a climbing 600 something.  Guess not.  )

  What is the average credit score?The real median credit score (the one lenders use). Don't believe everything you read (particularly about average scores in the 670s).

"The Median FICO Score in the U.S. is 723." - Fair Isaac

Let's have a little fun. The day this page was first written is February 2, 2007, Groundhog Day. Here are a few of our friends saying what they think the average score is:

• Google: average credit score 678
• Yahoo: average credit score 678
• MSN: average credit score 678

Check in here from time-to-time and use those search engine links to see if the nuts change their ways.

This is like your mother telling you that you only need Ds to get into college, your father telling you that eight yards is a first down, or your science teacher telling you that water boils at 100 degrees Fahrenheit. They tell you the average credit score is 678 when it is 723.

Fair Isaac, the score creator, says that the median is 723. So, which is it: 678 or 723? Somebody is lying. Pop-media commentators don't help (search for the word lousy).

FICO score distribution

Here, the FICO score national distribution is illustrated by a graph that shows how many people have what score. Think of your score as a ranking, not a rating. Your FICO lies somewhere on a line between 300 and 850. When you increase your score, you actually move up in the order. At 499 or lower, you rank in the lowest 2% on the scale. At 600, only 15% of the population have a lower score than yours. 723 is the median FICO score. That is the middle of the distribution, where half of the population is lower and half is higher (that is the only average statistic that Fair Isaac has released to the public). If you have a score of 800 or above, you're in with 13% of the population.

If you had the median FICO credit score, 723:

75 million people behind you | YOU | 75 million people in front of you

But, what does that really mean in terms of a borrower's performance or behavior? The FICO score measures the likelihood that you will make a payment 90 days late or worse (bankruptcy, for instance) in the next two years. It predicts that that will happen to 87% of those people with scores under 500. At 750 and up, it will happen to 3% of the population. At 800 and above, the system predicts that only 1% of the people will have a 90-day late payment or worse in the next 24 months.

                        Percentile          % Of People          Score          Delinquency Rate
                            2nd                      2%                  300-499                 87%

                            7th                       5%                  500-549                 71%

                           15th                      8%                  550-599                 51%

                           27th                     12%                 600-649                 31%

                           42nd                    15 %                650-699                 15%

                           60th                     18%                 700-749                   5%

                           87th                     27%                 750-799                   2%

                          100th                    13%                 800-850                   1%

What is a median? What is an average? Are they the same thing?
The median is a type of statistic, and a type of average. The median of a distribution is the middle number. If a distribution is:

1 - 2 - 3 - 9 - 10,

then the median is 3, the middle number. Fair Isaac uses the median to describe an average FICO score.

Sometimes an average is assumed to mean the mean-- the sum of all the numbers divided by the number of numbers. But the 723 Fair Isaac refers to is not the mean.

Behind the scenes: Credit scores in mortgage lending
Mortgage loans are bought and sold in the "secondary market" as "mortgage-backed securities" in blocks of millions of dollars. Here are some examples of descriptions of those pools:

• Weighted average FICO credit scores: 733, 726, 727
• "The weighted-average FICO score of the loans in the pool is 745, and approximately 74.88% and 2.70% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively."
• The weighted-average FICO score of the loans is 752.

The bottom line
Talk to a few people in lending and they'll tell you that a 723 FICO credit score is good enough. But, they're salesmen. They won't tell you that 723 is only the exact median (the middle score) of everybody who has a score. So, if that's only average, you might consider shooting a little higher. 13% of the scored U.S. population have an 800 or higher.

[diggumsmacks]

Good work with the reply but I still think that the average fico score of 720 is a lie with no proof. Ask 10 people you know if they know their fico score and see whatcha get , I definately know that 2% of Americans are below 500 is not true. I know too many people that have finacially dug a hole with the way things are going it's only going to get worse. Why do you think the government got in bed with the CCC and the banks? They don't want us declaring BK because it's going to get bad.

[Revike]

The median FICO score is 723, so 50% of those with scores are between 723 and 850, and the other 50% are between 300 and 723. This means that scores for the top half fall within a narrow 127-point range, while scores for the bottom half fall within a much wider 423-point range.

Use this example of a 5 score group:

565
620
723
735
747

The median score (middle score of the group) is 723.

The average score (565+620+723+735+747)/5 is 678.

Fair Isaac is citing the median score, while Google/Yahoo/MSN are citing the average score.

Message Edited by Revike on 06-21-2007 06:55 AM

[ilovepizza]

Did Fair Isaac's give a source or explain how they calculated this median?

Message Edited by ilovepizza on 06-21-2007 07:13 AM

[ALEXREDD]

I think we're kinda missing the point.  We're looking to point out math errors (median vs. average, etc.) when I don't believe the figures THEMSELVES are accurate.

It's like I say, "I make, on average 10 million a year" and then later say, "My median income is 9 million".  In both cases I'm lying.  Whether or not the math adds up or not is irrelevant.

I'm saying that until an independent auditor (Deloitte and Touche, for example)  verifies the average FICO, I think its fair to disregard it.  The CRAs and lenders have a financial incentive to provide inflated numbers for the AVERAGE FICO, while in practice extending loans to people with much lower ones.

I agree with FICO that someone with (a REAL) 720 FICO is less likely to default on a loan than a person with a FICO of 520.  I just believe it goes against the industry's financial interests to reveal an average score that is closer to sub-prime than 700.

P.S.  A few years ago FICO put out a blurb on credit scores based on political party affliation.  At the time, I thought it was funny as it showed Dems having higher credit, on average, then Repubs (but not by much).  Now I think,  "wow, they just pulled that out of their....."  Again, until an independent audit is done, they can say the average FICO is 800.  IT'S A MADE UP STATISTIC.

[MidnightVoice]

Cynical though I am, I think it is possible to have a median of 720 and an average in the 670s in the US.

In the US, the average age of people with credit scores will be in the 40s.  Many of them have probably got over many of their financial troubles and got a mortgage and a family that is growing older.  Many of them will have kids racking up student loans, but be OKish themselves.  They will have long credit histories and very old cards

For that half of the population, a score of 678 or above will be reasonale.

And statistically, this board is NOT a representative sample