@Anonymous wrote:
@SouthJamaica wrote:I beg to differ. If you borrow money from someone and are obligated to pay it back, that's "debt"
In the truest sense of the word, sure... but you and I both know that it's not real "debt" if you immediately pay it back, ie essentially using credit cards the exact way one uses debit cards, just adding 1 more step in the process to flow those dollars through the card. In this example there is no "real" debt yet someone can achieve a phenomenal credit score acting in this method. And many do.
I'm fairly certain that a person who's paid off all of his debts cannot get a perfect score.
That's pathetic.
@SouthJamaica wrote:
@Anonymous wrote:
@SouthJamaica wrote:I beg to differ. If you borrow money from someone and are obligated to pay it back, that's "debt"
In the truest sense of the word, sure... but you and I both know that it's not real "debt" if you immediately pay it back, ie essentially using credit cards the exact way one uses debit cards, just adding 1 more step in the process to flow those dollars through the card. In this example there is no "real" debt yet someone can achieve a phenomenal credit score acting in this method. And many do.
I'm fairly certain that a person who's paid off all of his debts cannot get a perfect score, except by 'tricking' FICO into thinking he does owe a little money, by
having a credit card report a balance, and by owing a little on an installment loan.
That's pathetic.
It's just data. Not certain why people seem to be taking personal affront from it... I'm one of the credit downtrodden but it's a known path to righteousness just takes a long period of time for me (6 years from my registration date here to get clean). People without debt are a bigger credit risk according to the data, and frankly, I can even see that as paying bills is just another routine like anything else in life.
The way to get back at the system is to simply manipulate your file to your advantage anyhow, and arguably that's what this particular board on this particular forum is all about anyway 
.
@Anonymous wrote:
@SouthJamaica wrote:I'm fairly certain that a person who's paid off all of his debts cannot get a perfect score.
That's pathetic.
No it's not. First of all there's no real world difference between a score from probably 780-850 (+/-) so anything in that range may as well be considered a "perfect" score. People that have "paid off all their debts" can certainly fall into that range quite easily.
Second, like many things in life you have to use the system. It's like investing. You may have had a few solid investments in your life, but if you aren't happy with where you're at as a result you can either do nothing or invest more.
Your statement is far too generalized. You're suggesting a person that has paid off all of his debts should be able to achieve a score of 850. Here's my question back to you. Say an 18 year old individual has a <1 year AAoA and exactly 1 account, ever, on his file. He's run it up, but paid it off. According to your simple, generalized statement this individual should be able to achieve a perfect score. Or are you only referring to people in their 30's+ with over a decade of history that have paid off say 15 accounts? Or somewhere in between these two individuals? Where is the line drawn? The point is there is no line, and that's why scoring takes into account a ton of different data, bucketing, etc. to arrive at an estimation of ones creditworthiness.
Now it's your reasoning that's flawed. I didn't say that everyone who has no debt should get a perfect score.
What I did say is that having paid off all one's debts should not be a barrier to a perfect score.
E.g. a person who's used credit cards, car loans, and mortgages.... paid off everything very satisfactorily.... should not be barred from a perfect score by having his credit cards at zero and his installment loans all paid off.
@Revelate wrote:It's just data. Not certain why people seem to be taking personal affront from it... I'm one of the credit downtrodden but it's a known path to righteousness just takes a long period of time for me (6 years from my registration date here to get clean). People without debt are a bigger credit risk according to the data, and frankly, I can even see that as paying bills is just another routine like anything else in life.
The way to get back at the system is to simply manipulate your file to your advantage anyhow, and arguably that's what this particular board on this particular forum is all about anyway
I definitely agree that it's great to know about the algorithms and how they work, and I find it fun to try to optimize my scores (within financial reality unfortunately).
But can't I be permitted a moment of philosophy?
And can't I be permitted a moment of reflection on what FICO is really all about?
Everything one reads about FICO which emanates from FICO suggests that it's about risk avoidance; but that's not really true. It's largely about risk avoidance, but it's partly about banks making money and incentivizing borrowing. That's the hidden part of FICO, one which you've done a great job of unearthing. That it's better to be in debt to a limited extent, than to not be in debt at all, in the world of the FICO monster.
@SouthJamaica wrote:
@Revelate wrote:It's just data. Not certain why people seem to be taking personal affront from it... I'm one of the credit downtrodden but it's a known path to righteousness just takes a long period of time for me (6 years from my registration date here to get clean). People without debt are a bigger credit risk according to the data, and frankly, I can even see that as paying bills is just another routine like anything else in life.
The way to get back at the system is to simply manipulate your file to your advantage anyhow, and arguably that's what this particular board on this particular forum is all about anyway
I definitely agree that it's great to know about the algorithms and how they work, and I find it fun to try to optimize my scores (within financial reality unfortunately).
But can't I be permitted a moment of philosophy?
And can't I be permitted a moment of reflection on what FICO is really all about?
Everything one reads about FICO which emanates from FICO suggests that it's about risk avoidance; but that's not really true. It's largely about risk avoidance, but it's partly about banks making money and incentivizing borrowing. That's the hidden part of FICO, one which you've done a great job of unearthing. That it's better to be in debt to a limited extent, than to not be in debt at all, in the world of the FICO monster.
SJ, everyone's entitled to their opinion as long as it doesn't violate the TOS, I was just expressing some surprise at how personally some folks appeared to take it. Heck this forum is a tremendous advantage to anyone who finds it who needs their credit reports... CreditMagic stated something important, and it's not just consumers it's actual fact that under the modern credit market anything above a 760 is simply gravy. If that does change and suddenly only the people with a perfect credit score can get some random widget then yeah, I'd tend to agree more but that's patently unlikely as there's not a large enough population to make much of a market for that.
Capitalist markets, for better or for worse (and I'm way in favor of free market personally), will ensure that never happens.
Absolutely I agree that it amounts to a profitability assessment in addition to the risk assessment portion: more accurate lending decisioning equates to more bank revenues end of the day and that's even the non-cynical opinion, but I don't necessarily think it was a tool simply to maximize profits for lenders: they attempt to do that without FICO's help anyway (credit default swaps in the mortgage crisis, LIBOR, could keep listing stuff)... no different than the creation of auto leases either to take another lending example: if they weren't making more money they'd never do them.
I do find it interesting that while FICO scores are becoming more relevant in all many walks of life, they're arguably becoming less important in the financial market with the rise of internal and alternative scores. People find it hard, in general, to measure others... FICO does it numerically on an accepted standard and it's hard to find another example for most people. While I agree many things get lost in the melange, i.e. I don't consider myself a bad person for example but I have a mediocre credit score; however, it's not personal, and said credit score isn't an accurate depiction on who I am as an individual, and I would encourage everyone to remember that fact that it's not who they are either.
Heck that's what a recon call is for anyway, have a good story for your credit sins 
@Revelate wrote:
@SouthJamaica wrote:
@Revelate wrote:It's just data. Not certain why people seem to be taking personal affront from it... I'm one of the credit downtrodden but it's a known path to righteousness just takes a long period of time for me (6 years from my registration date here to get clean). People without debt are a bigger credit risk according to the data, and frankly, I can even see that as paying bills is just another routine like anything else in life.
The way to get back at the system is to simply manipulate your file to your advantage anyhow, and arguably that's what this particular board on this particular forum is all about anyway
I definitely agree that it's great to know about the algorithms and how they work, and I find it fun to try to optimize my scores (within financial reality unfortunately).
But can't I be permitted a moment of philosophy?
And can't I be permitted a moment of reflection on what FICO is really all about?
Everything one reads about FICO which emanates from FICO suggests that it's about risk avoidance; but that's not really true. It's largely about risk avoidance, but it's partly about banks making money and incentivizing borrowing. That's the hidden part of FICO, one which you've done a great job of unearthing. That it's better to be in debt to a limited extent, than to not be in debt at all, in the world of the FICO monster.
SJ, everyone's entitled to their opinion as long as it doesn't violate the TOS, I was just expressing some surprise at how personally some folks appeared to take it. Heck this forum is a tremendous advantage to anyone who finds it who needs their credit reports... CreditMagic stated something important, and it's not just consumers it's actual fact that under the modern credit market anything above a 760 is simply gravy. If that does change and suddenly only the people with a perfect credit score can get some random widget then yeah, I'd tend to agree more but that's patently unlikely as there's not a large enough population to make much of a market for that.
Capitalist markets, for better or for worse (and I'm way in favor of free market personally), will ensure that never happens.
Absolutely I agree that it amounts to a profitability assessment in addition to the risk assessment portion: more accurate lending decisioning equates to more bank revenues end of the day and that's even the non-cynical opinion, but I don't necessarily think it was a tool simply to maximize profits for lenders: they attempt to do that without FICO's help anyway (credit default swaps in the mortgage crisis, LIBOR, could keep listing stuff)... no different than the creation of auto leases either to take another lending example: if they weren't making more money they'd never do them.
I do find it interesting that while FICO scores are becoming more relevant in all many walks of life, they're arguably becoming less important in the financial market with the rise of internal and alternative scores. People find it hard, in general, to measure others... FICO does it numerically on an accepted standard and it's hard to find another example for most people. While I agree many things get lost in the melange, i.e. I don't consider myself a bad person for example but I have a mediocre credit score; however, it's not personal, and said credit score isn't an accurate depiction on who I am as an individual, and I would encourage everyone to remember that fact that it's not who they are either.
Heck that's what a recon call is for anyway, have a good story for your credit sins
Don't worry, Revelate. I don't take it personally. I just agree with OP that it's a sad commentary that the FICO algorithm rewards current debt and penalizes being debt free.
As to your confidence in what you term the "free" market, well.... I'll bite my lip on that one