Score formula makes no sense, here's why..............

[Anonymous]

I have a score of 787 (was as high as 815). I have virtually no debt. I have about $100,000 in available credit, and never use more than about $3-5000.00 of it at any given month (that's only utilizing 3-5% of my available credit at any given time), but even that is paid off at the end of every month. I have about $150,000.00 in cash in the bank.

I recently bought tires. The retailer said I could get 10% off if I opened an account of $1,500.00. I said sure! I was going to save $60! My credit score went down 15 points! How is this???? Does Fair Isaac realize that I have $100,000.00 in available credit, and am only utilizing 3-5% of that credit?  

Secondly, I use a different credit card every month because of rewards programs on different cards. So, a number of months goes by when I don't use a specific card. Well, when I go back to using that card, FICO raises my score stating that "there has been an increase in one of my accounts???" Don't they see that I just paid off another card by virtually the same amount as the increase in the new card??? Don't they see that I have 30 times the amount of cash in the bank than I have debt????? Don't they see that the percentage of credit used to credit available is extremely low and does not change???

Fair Isaac's formula is flawed and archaic. It could be a lot better at formulating scores. I should have a score of at least 825? They say the scores range to a high of 850. How the heck would one get a score of 850????? I've done everything perfect (including over twenty years of sterling credit history), and mine is 787???? Ridiculous!

[MidnightVoice]

Any every professional baseball player should bat over 500.  After all, the only think they have to do is hit a little ball. 

[llecs]

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gretz1851 wrote:

I have a score of 787 (was as high as 815). I have virtually no debt. I have about $100,000 in available credit, and never use more than about $3-5000.00 of it at any given month (that's only utilizing 3-5% of my available credit at any given time), but even that is paid off at the end of every month. I have about $150,000.00 in cash in the bank.

I recently bought tires. The retailer said I could get 10% off if I opened an account of $1,500.00. I said sure! I was going to save $60! My credit score went down 15 points! How is this???? Does Fair Isaac realize that I have $100,000.00 in available credit, and am only utilizing 3-5% of that credit?  

Secondly, I use a different credit card every month because of rewards programs on different cards. So, a number of months goes by when I don't use a specific card. Well, when I go back to using that card, FICO raises my score stating that "there has been an increase in one of my accounts???" Don't they see that I just paid off another card by virtually the same amount as the increase in the new card??? Don't they see that I have 30 times the amount of cash in the bank than I have debt????? Don't they see that the percentage of credit used to credit available is extremely low and does not change???

Fair Isaac's formula is flawed and archaic. It could be a lot better at formulating scores. I should have a score of at least 825? They say the scores range to a high of 850. How the heck would one get a score of 850????? I've done everything perfect (including over twenty years of sterling credit history), and mine is 787???? Ridiculous!

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15 points isn't that bad. FICO doesn't like to see new credit. Those 15 points resulted from the new TL reporting and possible inquiry ding for having a high score. Most of those points will return w/in 6 months with nearly all of them returning within a year. My avg. loss has been 20-25 points per new TL. Creditors don't like to see applicants with new accounts. It often is a sign that the applicant is desperate for credit and may be in financial stress.

No, FICO doesn't care how much cash you have in the bank. Banks don't report your cash balances to the CRAs. I take it you are referring to a ScoreWatch alert? Sounds like one. They are just alerting you to the fact that the card is being used. You can go into your SW settings and set it to NOT alert you in the future. That alert has no bearing on your score at all, for the reason that you have super low utilization. The alert comes in handy if you have a dormant CC that you haven't used in a while. If you receive an alert that the card has been used, then that's info that you'd like to have (e.g. stolen CC, unauthorized charge, etc.).

Maybe the only thing holding you back is your avg. age. It is possible that the only thing that can help your score is time. Adding new accounts certainly doesn't help, though. Also try to get all your CCs report $0, with the exception of one CC, and let that one CC report $1. You may see a bump there.

If you could change the formula, what would you change about it?

[Anonymous]

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@Anonymous wrote:

Fair Isaac's formula is flawed and archaic. It could be a lot better at formulating scores. I should have a score of at least 825? They say the scores range to a high of 850. How the heck would one get a score of 850????? I've done everything perfect (including over twenty years of sterling credit history), and mine is 787???? Ridiculous!

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It took 30 years of pristine credit history for me to finally receive an Experian score of 842!

[Anonymous]

Wow! That is definetely the highest score I've seen. Well, I will say this: I will never open up a new credit account to save money on my purchase (even though a smart consumer would).

[Anonymous]

What would I change about it??  Well, if someone has $100,000.00 worth of available credit, and only utilizing $3,000.00, and they open up a new account (AT A TIRE STORE FOR GODSAKE!) for $1,500.00, I think the system should  be smart enough to recognize that A) the person is not sinking in debt  B) It's at a TIRE store, and C)it's only $1,500.00.  Can they see that I have open credit cards with $20,000 of unused credit????  This HAS to be recognized or the formula is totally flawed.

Heck, I think they should give a HIGHER score to those smart enough to open a new account to save money!!!! 

[MidnightVoice]

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@Anonymous wrote:

What would I change about it??  Well, if someone has $100,000.00 worth of available credit, and only utilizing $3,000.00, and they open up a new account (AT A TIRE STORE FOR GODSAKE!) for $1,500.00, I think the system should  be smart enough to recognize that A) the person is not sinking in debt  B) It's at a TIRE store, and C)it's only $1,500.00.  Can they see that I have open credit cards with $20,000 of unused credit????  This HAS to be recognized or the formula is totally flawed.

Heck, I think they should give a HIGHER score to those smart enough to open a new account to save money!!!! 

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It is a statistical analysis, and as such many people are outliers and get treated better or worse than they should be.  That does not invalidate the statistics.

Of courese, we rarely get people saying the formula is terrible because they have a higher score than they deserve 

And effectively, once one reaches 760, it makes no difference

[Anonymous]

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@MidnightVoice wrote:

It is a statistical analysis, and as such many people are outliers and get treated better or worse than they should be.  That does not invalidate the statistics.

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Stats wasn't my favorite class in college, but I do understand the importance of statistical analysis in the financial world. I agree the formula is flawed in several aspects. Getting dinged 10-25 pts for opening a charge account to save money is ludicrous, especially when this is only affecting utilization at a minimum. Fico does not like new accounts, but if you do not use credit accounts, you will have low scores. Double edged sword!

As far as getting treated better or worse, Fico scoring is flawed when it comes to other areas of accounts also. For instance, if an account goes into CO mode, fico scores the account the same if the balance is later paid or not paid, or in some situations, it dislikes that the balance is actually paid. So, if a major setback, such as job loss, or an accident causes you to not be able to pay the account, the CO will bring you way down in score. Then if you pay the account in full instead of filing Bankruptcy, fico still scores you as a deadbeat!

The CRAs are flawed also and are contributing to a lot of problems on fico scores by reporting incorrect information, and then their dispute review process is another can of worms!  I am sure no matter what statistical analysis formula is developed in the future, there will always be unfair situations. Everyone cannot be pleased all of the time- Including ME!:

I can't wait until my flawed fico world reaches 700+.

[Anonymous]

I do not want to contradict Midnight because for the most part I agree, but the formula is flawed in certain ways. However, that flaw is simply that it IS a statistical model, a formula crunching numbers, you are expecting some degree of intelligent analysis (AI) like a human would look and evaluate the credit and that's not possible. At least not now, who knows 20 years from now, our kids might get better formulas that are smarter and think like we do.

[MidnightVoice]

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@Anonymous wrote:
I do not want to contradict Midnight because for the most part I agree, but the formula is flawed in certain ways. However, that flaw is simply that it IS a statistical model, a formula crunching numbers, you are expecting some degree of intelligent analysis (AI) like a human would look and evaluate the credit and that's not possible.

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In the good old days a real live person would look at the CR and adjust for the formula's quirks.  Alas, we are too computer orientated for that to happen now