Ways to improve credit scoring

[McNugget]

I think one of the first ways to improve credit scoring is to do away with authorized users. Make each individual be accountable and responsible for their own score.

[Anonymous]

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@McNugget wrote:
I think one of the first ways to improve credit scoring is to do away with authorized users. Make each individual be accountable and responsible for their own score.

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FICO announced that they were doing exactly that as they were gearing up to release FICO 08 (later renamed FICO 8).  There followed a massive angry reaction amongst consumers which I call the Housewives' Rebellion -- just because they were women who had no credit accounts of any kind except those of their husbands.  The proposed plan by FICO to drop AUs would have made them unscorable and even if they did add a credit card in their name it would change their Age of Oldest Account (AoOA) from 20 years to 2 months (say).

So FICO backed off and developed an "anti-abuse" module designed to ferret out people who were not "legitimate" AUs (spouse, child of parent, etc.).  Of course, that approach still left the problem intact of an 18-year old being suddenly made to seem as though he had been using credit for 30 years.  That certainly seems like "abuse" to me, but whatever.  FICO made the best political decision it could at the time.  Perhaps in FICO 10 it will make another attempt at dropping AUs from its scoring, given that women who only have cards through their husbands are less common now than they were back in 2007.

[Anonymous]

Trended data, hurestics, etc.. Take into account size of payments vs minimum due, if more than one payment is made during a billing cycle, percentage of an accounts balance being decreased over a span of multiple billing cycles, if a balance is steadily increasing/decreasing and by what percentage is this going up/down each month. How frequently an account is used, detect spikes in usage and if the balance is quickly paid off or is it revolving?

There seem to be many things that could be used to gain a deeper understanding of someones credit habits by using already available data, it just needs to be analyzed in a clevor way.

Another side to this coin were to be if FCRA mandated that all utilities and property management companies provide customers/renters with the option to report account information. This point I feel strongly on.

[Anonymous]

@KKlouzal, I agree with you and will also suggest that companies who make use of the punitive or negative side of credit reporting should also have to use the positive side. Just as renters shouldn’t have to seek out a way to have their timely payment history reported (since they can be sent to collections for not paying and have it impact their credit), so too should consumers get positive reporting for cell phone and contractual TV payment accounts. Verizon, AT&T, et al, can and will happily report your delinquency, so in fairness they should be required to report your timeliness as a positive tradeline as well.

Basically, mandate the payments reported that Experian Boost is offering to factor in. You have to pass a credit check and usually take a HP, and they’ll hit your credit with bad news, so level the field for the consumer and require these companies to report the good so the consumer has a way to get more than just bad press.

[Anonymous]

A credit score, when we get down to it, is like a dating app profile. 

You're desperate for someone to date. You put everything you've got into creating that perfect profile pic, list of interests, etc.

The people reading your profile (the banks)? They're eager to date, but not eager to specifically date YOU. Even if you'd be nearly perfectly matched in reality, in the app if there's anything about your profile that seems off, chances are they'll instantly give you a thumbs down and move on to the next one. 

The banks are like a [highly desirable person according to whatever criteria you seek when dating] - they have more people seeking them out than they can possibly date.

I myself am currently monogamish with Amex. TD Visa is my piece on the side. And Capital One is my friend without benefits.

[Anonymous]

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@Anonymous wrote:

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@McNugget wrote:
I think one of the first ways to improve credit scoring is to do away with authorized users. Make each individual be accountable and responsible for their own score.

---

FICO announced that they were doing exactly that as they were gearing up to release FICO 08 (later renamed FICO 8).  There followed a massive angry reaction amongst consumers which I call the Housewives' Rebellion -- just because they were women who had no credit accounts of any kind except those of their husbands.  The proposed plan by FICO to drop AUs would have made them unscorable and even if they did add a credit card in their name it would change their Age of Oldest Account (AoOA) from 20 years to 2 months (say).

So FICO backed off and developed an "anti-abuse" module designed to ferret out people who were not "legitimate" AUs (spouse, child of parent, etc.).  Of course, that approach still left the problem intact of an 18-year old being suddenly made to seem as though he had been using credit for 30 years.  That certainly seems like "abuse" to me, but whatever.  FICO made the best political decision it could at the time.  Perhaps in FICO 10 it will make another attempt at dropping AUs from its scoring, given that women who only have cards through their husbands are less common now than they were back in 2007.

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As a Canadian I find the AU thing fascinating. Being an AU means absolutely nothing here - it doesn't even get reported. My wealthy sister discovered this when applying for a no foreign-exchange fee card (exceedingly rare here) on her own and being offered a $600 credit limit. Neither her mother, nor her grandmother, were ever foolish enough to not establish a financial record in their own name, so it was quite shocking my sister hadn't.