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A bleak account

2007 Credit Score News

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Influence: Media, Search engines

MSN Live Search's top ten results score an F.


Influence: Media, Search engines

Yahoo!'s top ten results score an F.


Influence: Media, Search engines

Google's top ten results score an F.


FICO 08 held hostage
Day 36, 11/5/07

In credit scoring, don't believe anything until you (finally) see it.


Get your credit score. Get the FICO score.
A byzantine, ambiguous, confusing process brought to you by the credit bureau oligopoly. But, just remember this: Get the FICO.

Consumers are bombarded with come-ons from hucksters all over the internet and television, and the sure-fire ways to get a meaningful credit score are less than obvious.


Influence: Media, Wikipedia
Errors: Incorrect correction of commonly incorrect term, and a link to the wrong term

Wikipedia: "In the U.S., three credit reporting agencies [the legal term is "consumer reporting agency"] [link to the wrong term] (incorrectly called credit bureaus), Equifax, Experian, and TransUnion, calculate a borrower's credit score using their own different computation formulae."


Influence: Media, lying, challenge
Asking them to stop

A Dow Jones MarketWatch writer suggested having lenders lie to the credit bureaus. posted a comment on the story page asking the author to remove the suggestion.


Influence: Media, Wikipedia
Wikipedia's errors regarding credit scores

Rumor and myth, track and kill.


Influence: Media, lying
Anarchy, and media's unethical suggestion to usurp the credit reporting system

Stand by for sleaze.


Secured credit cards
Add accounts, build your credit report history, and improve your credit score (increase your savings, too).

... Just as sure as that, some of you will not succeed. Some of you will run the thing up to the hilt, some of you will fail to pay on time, and some will do both.



Newsweek: September 10, 2007. "Kim Dicce, a Realtor in Tampa, where housing inventory is piling up, notes that lenders now seem to be requiring buyers in her area to put 15 to 20 percent down and have a credit score above 700."


Fannie Mae: "With a Flexible 100 mortgage, you don't need to make a down payment and can provide as little as $500 of your own money toward closing costs."

Freddie Mac: "For borrowers with excellent credit history, the Freddie Mac 100 Mortgage eliminates the need for a down payment... For Non-Loan Prospector Freddie Mac 100 Mortgages, minimum Indicator Score of 700 and no bankruptcy, foreclosure or deed-in-lieu of foreclosure within last seven years."

CBS: "So, if you want to buy a home, you should expect to put down at least 10 percent of the purchase price to get a reasonable mortgage."

Hokey smokes.

Freddie Mac: July, 2007. "No down payment required, no minimum Borrower Contribution required."


Fake-O FICO Funk: More dupes
Others who bought into the 678 rumor

Forbes, Marketplace, Orange County Register, Sacramento Bee, Illinois Association of REALTORS, Fort Worth Star-Telegram, columnist Bob Bruss,, CNN

Baltimore Sun columnist pops the housing bubble media hype bubble

"From the headlines, you might think that lenders will never offer another mortgage... With rising defaults in the subprime market, lenders are returning to underwriting standards of five years ago - before the hot real estate market gave rise to interest-only and other exotic mortgages." (alt, alt)


New: Credit scores in mortgage lending
How the mortgage loan industry uses FICO scores

Vague information and specific information.



Fair Isaac on the 678 myth
Straight from the horse's mouth: It's not 678

Is the average FICO score 678?

Fair Isaac spokesman: "The average FICO score is not 678. Fair Isaac prefers to cite the median FICO score which is 723, since knowing the median score is more helpful to consumers than knowing the average score."

Have you ever cited the mean FICO score? In describing the average FICO, have you ever used anything but... [more]

Meanwhile, Experian continues its juggernaut where consumers are most vulnerable: Local television news web sites, where the average guy expects to get the truth. They continue to advertise that the "average credit score" is 678, but referring to their PLUS score, not the FICO. New graphics!


email to CBS
The direct approach to changing the media culture

From: Greg Fisher (
Subject: Give Your Credit Score A Boost
Date: 8/21/07

Regarding "Give Your Credit Score A Boost," The Early Show, 8/15/07

This headline appears at

"CBS News financial consultant suggests creating fictitious credit history - Recommends asking your lender to lie to the credit bureaus."

Will you make a retraction?


Experian first to offer FICO 08
September 07 mystery solved

Also, book author outlines a parents' poison pill, the joint account: "As joint owners, each of you will be liable for the bill."

CBS News financial consultant suggests creating fictitious credit history
Recommends asking your lender to lie to the credit bureaus

In a segment for CBS News’ The Early Show, contributor Ray Martin gives the advice, "After bringing past due accounts current, contact the creditors who report late payments on your credit report and ask them to make a good faith adjustment to remove the late payment information from your credit report files." Anchor Julie Chen fails to question the tactic.

The "good faith" or "goodwill" adjustment (a euphemism for lying) scam is a favorite among journalists, Fair Isaac message board moderators, and even one state. Also, see 7/22/07, and 12/30/00.

Lying caused the current subprime mortgage crisis, and a lie within a person's credit report misrepresents the risk of lending to that person.

The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system. - The People, The Fair Credit Reporting Act

Wacky Wikipedia
Pseudo-encyclopedia blows it again

"According to Fair Isaac the median score is 723 (half of scores above and below)[3] whereas according to Experian (using the Fair Isaac risk model) the average credit score is 678 (lowest scores are farther from the median than the highest scores).[4]"

Apparently, that statement was added by Joe Kress, and he got the idea that 678 is some kind of average of the FICO score by reading See Fake-O FICO Funk.


Capital One caves
Stops conniving limits reporting practice

Companies can report how and what they want, even if it is incomplete— while the credit bureaus stand by and let it happen, ignoring a fundamental idea of the Fair Credit Reporting Act, completeness and accuracy. So, what else is new?

Not my job. The credit bureaus' trade organization spokesman: "But, to put the CRAs in a position of being a small claims court, to try to adjudicate, and be the oracle of truth is the wrong place for it to be."

Washington Post: "Over the years, Capital One has brushed off criticism that it was needlessly harming its customers by withholding their account limits from the credit bureaus."

June 19, 2007, National Consumer Law Center testimony, U.S. House of Representatives: "A Federal Reserve Board study indicates about that 46% of consumers have at least one revolving account in their credit files that does not contain information about the credit limit."

Harney, 2006, the credit limits lawsuit: "Instead plaintiff William A. Harris, Sr., charges Equifax, Experian and Trans Union with failure to comply with the Fair Credit Reporting Act."

2004, Capital One on Capitol Hill: "Senator SARBANES: Well, I just want to ask Mr. Hildebrand. Does Capital One report the maximums on the credit limits?"

Mystery. Conspicuously absent from the Harney Washington Post story is the "40 to 80 points" bit:

Capital One Financial, based in McLean, said it will start reporting all cardholders' credit limits to the three national credit bureaus -- a step that could boost the FICO credit scores of some of its 50 million card customers within a few months.
The Harney story on other papers' websites:

Capital One Financial Corp., based in McLean, Va., says it will now report all cardholders' credit limits to the three national credit bureaus — a step that could boost the FICO credit scores of some of its 50 million card customers by 40 to 80 points or more within a few months.
Who gave Ken Harney the 40-to-80 figure?

Where did Terry Clemans (the same guy who laments the loss of the authorized user boondogle) get the 20-to-50 number?

Who told the Consumer Federation of America and Washington Mutual that 700 is the magic number?

Where did LendingTree get the 675 figure?

Where do any of these people get those numbers they throw around?


Misinformation: Consumer Federation of America / Washington Mutual / Washington Post / et al
Trail of a rumor

Consumer group/bank commission survey to make headlines. Create inaccurate press release. Major daily parrots press release. Inaccuracy spreads through syndication. tries to save the world from itself.

From: "" (
Subject: CORRECTION - Credit scores, damage control
cc: "Steve Brobeck" (,,
Date: 7/31/07 12:35 PM EDT [After the 2nd request (this email), the story is corrected: "Last Update: 7/31/2007 2:41:00 PM" - Reading Eagle]

See the correction by the Washington Post: "This article incorrectly said that debt-to-income ratio affects consumers' credit scores. It does not."

You published the same story. Please correct it.
See 7/23/07 entry.

Insurance scores, demographics
FTC releases information about race/score

FTC press release: "Therefore, the use of scores likely leads to African-Americans and Hispanics paying relatively more for automobile insurance than non-Hispanic whites and Asians."

FTC report conclusion: "The FTC’s analysis demonstrates that credit-based insurance scores are effective predictors of risk under automobile insurance policies... It has not been clearly established why scores are predictive of risk."

Consumers Union (Consumer Reports) press release: "FTC Study Confirms That Credit-Based Insurance Scores Mean African Americans & Hispanics Pay More for Auto Coverage"

For more on race and credit scores, see 9/25/05, 1/5/05 and 11/1/02.


Equifax broke the law
Failed to make a full disclosure

Equifax has a casual relationship with compliance with the federal Fair Credit Reporting Act. Since 1996, you're supposed to get all of the information they have in their files about you, but in practice, Equifax gets away something less than that— breaking the law. See 10 years ago
It was a long, hot, summer

In 1997, TransUnion, Experian and Equifax just didn't want to hear about giving consumers their credit scores.


Misinformation: Consumer Federation of America and Washington Mutual

From: "" (
Subject: Credit scores, damage control

"In addition, many said they believe that their state of residence and ethnicity affect their scores. They do not. Their debt-to-income ratios, payment history and credit lines do." - Want Better Credit? Know the Score. By Nancy Trejos, Washington Post Staff Writer, Saturday, July 21, 2007; Page F01

Apparently, the writer got the idea that income has something to do with calculating FICO credit scores from the Consumer Federation of America and Washington Mutual survey's press release:

Know demographic factors influencing score:
Ontime loan payments
Debt to income ratio
Maxed out credit line

Correct the error before other media outlets see it and perpetuate it. There are enough rumors.


Myth and misinformation
(and malarkey)

The information explosion isn't always a good thing. Here's the Mirth Myth page.

More begging: Lawyer's hokey trick
And the media love it

Misguided practitioner gets away with suggesting the pathetic begging "good faith adjustment" bit. The dorky goodwill ruse.

"'Be persistent if they refuse to remove the late pays,' the credit expert emphasizes. 'Remind them that you have been a good customer that would deeply appreciate their help.'"
Oh, brother. Trains. Trucks. Prison. Mama. Heavy drinkin'. D-I-V-O-R-C-E.

Yes. Be sure to us the word deeply. Say it with feeling. Start crying or something.

The law says, "A credit service organization (or a salesperson, representative, or independent contractor) cannot... Remove, or assist or advise the buyer to remove, accurate and non-obsolete adverse information from the buyer's credit record."

Jamison must be above that law. Of course. That's it: He's a lawyer.

Don't tie up the agents with idiotic requests so they have less time for legitimate disputes. Customer service is bad enough without cornball tactics to change history bogging it down. Suck it up and put some money in the bank so you don't make another late payment.

"The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system." - U.S. Congress, The Fair Credit Reporting Act


New Quirks section. First up: Authorized user
From the news desks: Everybody and their mother, cobbling together a complete story

Authorized user; seasoned tradelines; piggyback; riding on the coattails of somebody else's credit history. Tune in for the fireworks.

The basic story is out, and now the press is chipping away at it— uncovering the details— and collectively increasing the volume. Critical mass. More bulk. More heft. And, with the built-in made-for-media mystery about which bureau will adopt FICO 08 first, the hype ain't going away soon. This wasn't a story by the watchdog media until Fair Isaac made the big announcement.

Nobody's perfect (inquiries, authorized user, 850), Fair Isaac. So, while you're on a tear, make this the next big thing: Factoring company accounts (masquerading collectors). Your Wizardship, make it so.

Now, back to your regularly scheduled programming.

Wikipedia's 12 year-old crackpots
"IMPORTANT NOTE: Recent changes to the calculation system have caused authorized user information to be taken off of your credit report."

That's not what Fair Isaac said.

1. Nothing is coming off of any credit reports. Fair Isaac doesn't have that authority.
2. It is not a recent change. It hasn't even happened, yet.

Fair Isaac said, "The adjustment removes authorized user accounts from consideration by the scoring model in FICO 08, the newest version of the Classic FICO credit score which Fair Isaac expects to become available to lenders starting in September."
USA Today - "Your Money: Building a credit history is about to get harder"
One of the three credit bureaus — Experian, Equifax or TransUnion — will adopt the new scoring model in September, says Ron Totaro, vice president of Global Scoring Solutions for Fair Isaac. He wouldn't identify which one. The remaining two credit bureaus will adopt the new scoring model by mid-2008, Totaro says.
Dubious advice: "Ulzheimer [] also recommends keeping your balance below 30% of your available credit."

"For FICO High Achievers the ratio of revolving balances to credit limits is 7%, on average."

The 7% figure is conspicuously absent from the sample given that "lower revolving account balances" is the first or second thing out of any expert's mouth.
WaPo, Singletary - "A Credit Score You've Earned"
"Watts said 1 percent of consumers will not be able to be scored at all if the authorized user's information is removed from the calculation of their FICO score."
Carolina Newswire - "FICO ‘08 - We Live In A Credit Score Driven World - Get Ready For A Major Change"
"About 60 million consumers will be affected by plans to roll out a new credit scoring formula in September by Fair Isaac Corp., the developer of the widely used and accepted FICO score."
Dallas Morning News, Yip
"Our belief is that the majority of consumers' scores will go up at least slightly as a result of the changes we're making in the formula starting in September," Mr. Watts said. He declined to be more specific.


Fake-O FICO Funk: LendingTree is for saps
Get a website. Write a bunch of stuff.

A history with all its warts. And now, with real time email.

Consumer Reports WebWatch study, July 5, 2007
"Sites Offering ‘Free’ Credit Reports: Worth Consumer Consideration?"

Subtitle: "Review of 24 Sites Shows Potential for Confusion and Unnecessary Expenses"

Press release | Abstract | The report | Blog comments

Fun with Numbers contestant: Money Magazine
Reporter's revelation: "A report is not a score."

"Scores generally range from 300 to 850, with most folks clustered in the 600s and 700s."

Folksy, but inaccurate. All FICO scores range from 300 to 850. And, in a story titled, "How to ace your credit score," they neglect mentioning the FICO Score Simulator.

Fannie Mae (Tweedledum)

"And less than 5% of our book has a FICO score below 620."


Fake-O FICO Funk
New section debuts at The Credit Scoring Site

Experian doesn't know its left hand from its right from its other left. Anecdotes, antidotes and mairzy doats.

Authorized user, The Experts
"Credit-score revamp won't halt mortgage fraud, experts say"

Ah, The Experts.

"'Anybody who wants to commit fraud is generally three steps ahead of someone who is trying to prevent it,' says Ginny Ferguson... an acknowledged expert in the all-important scoring systems lenders use to judge borrowers' creditworthiness."

See You in September mystery. Fair Isaac has a contract that won't allow it to reveal which credit bureau gets the new FICO version first (similar to a previous byzantine agreement).

Have Lew and others call you an expert and you'll be an expert, too.

SoCal (where else?) lawyer, "expert," and television star specializing in credit restoration Edward Jamison reveals more ways increase your score.
NBC star

  • A "keynote speaker for New Century Mortgage's Closemore University."
  • Can somebody translate this? "Contrary to what the credit bureaus would like you to believe, credit repair does work and can work to some extent for 100% of people in most circumstances."
  • eek. This is what is has come to in America, and it is pathetic and sick. He suggests that you beg to create a history that never was.
    "Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment... Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer that would deeply appreciate their help."
Maybe he got that idea from Fair Isaac's message board's Credit Scoring 101 (written by a Fair Isaac employee):


Fun with Numbers, hired guns, settling, confusion
Christian Science Monitor story: "Simple ways to raise your credit score"

Fun with Numbers: Take fifty points off his score for not even reporting the scale right: "On a scale of 350 to 850, scores in the 500s were good enough to secure a mortgage just last year. But now... "

It's getting expensive: "Sometimes just having a lawyer step in [with a letter] will break the automation and get the bureaus to pay attention," says Liz Weston, an MSN Money personal finance columnist... "

But, according to our protectors, the FTC, "Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost."

On the third hand, the chairman of the U.S. House of Representatives Financial Services Committee gave the purpose of the June 19, 2007 hearing in his opening statement:

Chairman Frank: We did learn, when we did the hearing [preceding the FACT Act of 2003], that one of the problems was that people, for instance, who challenged what they believed were [sic] an inaccurate report stemming from a dispute with a particular merchant were at a disadvantage; that the practice of many of the merchants, we were told-- the retailers was, simply, to check their own paperwork. And if their paperwork showed that a mistake-- that a charge was incurred-- they insisted on it, even with no opportunity, no forum in which someone could say, "That wasn't me." And our purpose here is to look into this and to make sure that consumers who can document an error have a chance to do so. So, that is the purpose for this hearing.

CS Monitor: "For a fee, he says, they'll negotiate a lower payment to a collections agency, but the consumer's credit report will bear a painful seven-year scar that reads, 'Settled for less than full balance'... 'It's cataclysmic to a FICO score to have a locked-in, unpaid collection debt' on a credit report, Mr. Dahlheimer [Lutheran Social Service] says."

Fair Isaac: "As far as the FICO credit risk score goes, the paid-in-full status is going to have little, if any, effect on the person's score."

YouTube videos, congressional hearing


Equifax inquiry Type of Business non-disclosure
Just another day at the office of secrets in Atlanta

Here's part of the Equifax Credit File disclosure that comes in the mail. That credit report costs $10. Equifax likes to say that it is the report where they completely comply with the law regarding disclosure to the consumer; they like to call it the "regulated" disclosure.

It ain't regulated enough. You won't get the type of business making an inquiry into your file with this report.

Equifax mailed report inquiries
(click image for larger view)

But, pay Equifax $29.95 and...


Congressional hearing
U.S. House of Representatives. Video, text and press reports.

Transcript of Q&A to come.


Authorized user fallout
Now the exciting buzz is on collateral damage

Trade association guy wants spoiled-brat preferential treatment to continue. "Terry Clemans, executive director of the National Credit Reporting Association, said in an interview that while he understands 'Fair Isaac's need to solve the (application fraud) problem, I would think there must be some less drastic ways to filter out' legitimate authorized user accounts from the new breed of rented credit card accounts." - Kenneth Harney, Washington Post/syndicated column, 6/17/07

The house-wifey-dependent relationship (apparently, many still not liberated). - "Many women who use their spouse's credit card are unaware that they are not joint holders of that card." - Terry Savage, Chicago Sun-Times

The credit expert (del mundo). "This change will affect about 30 percent of people with credit reports, or about 60 million consumers, said John Ulzheimer, president of educational services for and a former manager with Equifax and Fair Isaac."

G-Men. "The Federal Trade Commission is looking into the selling of piggybacking rights to determine whether the process violates the Credit Repair Organizations Act, a section of the Consumer Protection Act dedicated to ensuring that buyers of credit repair services receive information necessary to making an informed purchase, and to protect the public from deceptive practices in the area of credit repair."


Supreme Court on insurance and the FCRA
"Adverse action" notices not always required

Risk-based pricing is a grey area. SCOTUS decides Geico General Insurance vs. Edo, and Safeco Insurance Company Of America vs Spano, Burr and Massey. Caveat emptor.

"The Supreme Court overturned the decision of the U.S. 9th Circuit Court of Appeals that insurance companies are required by the Fair Credit Reporting Act (FCRA) to issue adverse action notices whenever the use of a consumer’s credit information does not result in that consumer receiving the best possible rate." - InsuranceNewsNet

"The Court also ruled that the benchmark for determining whether FCRA notice is required at new business should be the rate the applicant would have had if the company had not taken his credit score into account, not a benchmark of what the 'best' rate is." - AP

"Routine notices that a consumer's credit score had resulted in higher rates 'would take on the character of formalities, and formalities tend to be ignored,' he [Justice Souter] said." - David Lazarus, San Francisco Chronicle

TransUnion markets thin-file credit score
Joins others in the underbanked segment

TransUnion coopts the score casually named Link2Credit from L2C, Inc.

L2C is located in Atlanta, the home of TransUnion rival (and leg of oligopoly of three) Equifax.

Others running it up the flagpole:

"The Thin-File Problem" - Mortgage Banking Magazine, March, 2007


VantageScore addressed authorized user before FICO
Second-fiddle Experian complains to Feds about FICO getting all the attention

"In light of this loophole and the potential threat it poses to lenders, a decision was made during the development of VantageScore to exclude authorized user tradelines, both with good and bad payment histories reported on them, from the final score algorithm." - Experian, May 7, 2007 advertisement comment to the FDIC, Docket No. 2007-09

Odd, confusing contradictory statement from

Authorized user: You may use the account, but another person is responsible for the debt. If the account is not paid as agreed, the late payments will not be reported in your credit history, enabling you to begin building a credit history with no risk. - "Reports on Credit," Experian Consumer Education Department
More fun at the expense of Experian, The House of 1,000 Scores: "If you hold a joint credit account, have co-signed a loan or have authorized use of another person's credit, these items could affect a score if they appear on your credit report." - Credit score basics FAQs, Experian

Snooty Experian Brit short on fundamental explanations in 1997: "Unfortunately, I was abroad on holiday last week and did not receive your original email when I called my messages up on my return to the country."

Joes Blow chime in.


FICO to nix authorized user
Announcement of an announcement from Fair Isaac

"However, after discussions with lenders and industry officials, Fair Isaac said it intends to announce this week that all future versions of its FICO score methodology will no longer consider authorized user accounts, said Tom Quinn, Fair Isaac's vice president of scoring solutions." - AP (alt, alt, alt)

Fair Isaac news release

(also, see 5/2/07 and 9/21/06 updates)

Fair Isaac on those whose scores are propped-up by Daddy's accounts: “The [sic] many honest consumers who learn good credit skills with the help from a family member, that feature will be removed." Bub-bye.


FICO Score overhaul
Started well before the subprime mortgage fallout

"'Some consumers' scores will go up slightly, some will go down slightly,' says Fair Isaac spokesman Craig Watts... Ron Totaro, Fair Isaac's vice president of global scoring solutions, says the FICO revamp has been in the works for 14 to 18 months and is not a reaction to recent criticism." - San Francisco Chronicle, May 20, 2007

White House FICO Credit Score Requirements
660 is the magic number

For new travel card applicants with FICO scores under 660, restrictions apply.

Hillis/Slack Settlement
Equifax and Fair Isaac defendants

"Defendants agree that their Offerings and Associated Literature will not use the phrases 'credit repair,' 'credit rebuilding,' 'credit fix,' 'repair your credit,' 'fix your credit' or combinations of those words... "

"The Plaintiffs allege that the Defendants violated certain sections of the federal Credit Repair Organizations Act ('CROA') in the course of the marketing and sales of their credit score and credit repair products."

Equifax and Fair Isaac provide links to the settlement web site.

Equifax 10-Q: "Plaintiff contends that Equifax Consumer Services, Inc., and Fair Isaac are 'credit repair organizations' under the CROA and that the transaction by which he purchased Score Power® was in violation of the CROA and fraudulent."

Fair Isaac 10-Q: "The plaintiff also claims that the defendants are 'credit repair organizations' under CROA."

"A Guru Offers Help on Credit Scores, but No Longer Makes Any Promises" - "Now there is one claim she [Suze Orman] can no longer make: that the credit-score kit with her name and face on it can actually improve the creditworthiness of the person who buys it." New York Times, May 7, 2007 (alt)

U.S. Code, Credit Repair Organizations Act

The Congress makes the following findings:

(1) Consumers have a vital interest in establishing and maintaining their credit worthiness and credit standing in order to obtain and use credit. As a result, consumers who have experienced credit problems may seek assistance from credit repair organizations which offer to improve the credit standing of such consumers.

(2) Certain advertising and business practices of some companies engaged in the business of credit repair services have worked a financial hardship upon consumers, particularly those of limited economic means and who are inexperienced in credit matters.


Fair Isaac tweaks the FICO score formula
Will add two new "scorecards" to the Classic FICO algorithm in September

The update addresses originations and new accounts, higher risk (subprime) borrowers, and those with thin or young files.

Official press release: "As FICO Score Passes 100 Billion Mark, Fair Isaac Announces Plans to Launch More Powerful FICO Score" - Newest model of industry-standard consumer credit risk measure increases predictiveness by 5-15 percent in testing


Fair Isaac will expand the number of classifications that consumers fit into. Those who have declared bankruptcy are put into a "segment" with others who have done the same; if not, they'd be assessed too harshly relative to people who have never missed a payment in their lives. The company will expand from 10 to 12 segments.

Credit scores and subprime mortgage loan defaults
Blaming the FICO score for the meltdown

Monday morning quarter-backing begins as the influential post their stories.

But the monstrous national foreclosure statistic is only half the story. On the other side are the CDO (collateralized debt obligation) and MBS (mortgage-backed security) investors— some the mysterious hedge funds— who had no problem taking the risk for a whopping return. The brave money men taking the hit are not easy to identify.

It's not like nobody saw it coming. We just hate gloom and doom predictions. Living beyond our means? Oh, come on! Saving? Who needs it? A mere 620 credit score? Boring. Besides, there was no time for that— we didn't want to miss the equity bonanza! We'll all be rich.

Just like the dot.coms, junk bonds, the Roaring 20s, and tulip mania, there's nothing new under the sun.

"Credit-score panacea failed to stop US mortgage crisis" - "Traditional down-payment demands were dropped. Borrowers were taken at their word because checking a salary took too long. Proof of savings, housing history, a job -- sometimes these, too, fell by the wayside." (alt) - Reuters

"Opinions differ on effectiveness of FICO score" - "Don't blame the messenger... That might not be anyone's idea of a great corporate slogan, but executives at Fair Isaac Corp. are finding themselves playing defense this year about the company's most vaunted product." (alt) - Minneapolis Star Tribune

"The Cracks in Credit Scoring" - "Economists fear the problem could spread to $450 billion of subprime mortgages... 'There's been a real overreliance on statistics when you're dealing with loans to people," says Gary E. Wendlandt, chairman and CEO of New York Life Investment Management LLC.'" - BusinessWeek, November 25, 2002


"Why we shouldn't be bailing out subprime lenders or borrowers" - "Our glorification of homeownership as the American dream has turned tenants into second-class citizens." - San Francisco Chronicle

Subprime history lesson.

"In depth: Subprime lending crisis" - Financial Times

The Mortgage Lender Implode-O-Meter - "Tracking the housing finance breakdown: a saga of corruption, stupidity, and government complicity."
  • "Subprime mortgage industry meltdown" - "This special series of stories from Bankrate looks at the subprime market meltdown, how it came about, and what's being done to limit the damage."
  • "Lenders tighten standards on subprime"
    About 85 percent of mortgage borrowers have credit scores of 620 or higher. So far -- knock on wood -- most of these prime customers needn't worry about being turned down for home loans on the basis of their riskiness as borrowers, so long as they're willing to let the lender verify their incomes and assets.
"Subprime worries shake up housing market" - "'The idea is all the 'dumb money' is out of the market,' said Ken Straw, broker for Realty Benefit in Lake Forest, using a slang term for subprime loans." - Orange County Register

"Subprime Lending: An Investigation of Economic Efficiency" - "We see the possibility, therefore, that future subprime borrowers will benefit from better service and lower rates and fees." - Fannie Mae Foundation, 2004

Subprime|620|Prime graphical distribution point-chart - The Consumer Federation of America and the National Credit Reporting Association, 2002


Nevada, New Hampshire warn against authorized users
Nevada: "Potential criminal penalties"

Scandal isn't a word that is usually associated with credit reporting. But, here's a rehash of a dirty little story while we ignore an elephant in the living room. It's all about a shady practice referred to as "seasoned tradelines," "authorized user," and "piggybacking" (the term tradeline is credit-bureau jargon for a record of a credit account on a credit report). The notion is paying to have someone else's credit record added to your own to increase your credit score. Theirs is added to yours in the form of an authorized user tradeline with you as the authorized user.

So, if you pay for a seasoned (chronologically lengthy) tradeline, are you really an authorized "user"? Not according to the agreements: "I understand that the authorized user cards issued in my name will not be distributed to me and that they are retained by the company for reporting purposes." Of course, your credit file doesn't know that. And the score doesn't know that.

It's class warfare. One pollyanna pop journalist suggests the maneuver as she cutely refers to it as the "piggyback"— like we all live in the suburbs with station wagons and have rich relatives. The reality is that the Haves get their father to add them as an authorized user, but the Have-Nots (whose father is in jail), have to suck it up and get their own credit record the hard way. Enter the opportunists, the brokers. | | | | | | |

and, "Technology, Integrity, Ethics, Results"

Avoid the whole thing and get a secured credit card. You'll kill two birds with one stone: Establish a savings account, and get a credit report tradeline. Sure, the tradeline isn't "seasoned," that is, it isn't 25 years old, but you get the point. Its the hard life-lesson thing.

State of Nevada Mortgage Lending Division: "This month, MLD began receiving information from mortgage brokers and lenders that had been contacted by a company— Trader’s Cooperative, Inc.— that provides fictitious credit lines to boost credit scores for a fee." Another advisory.

State of New Hampshire Banking Department: "When you do this [sic] raise your score artificially in order to have better credit, you are purposely misrepresenting your credit to a lender, and that is not legal." update September, 2006: "Bad FICO score? Bad credit? Just rent some! When daddy won't make you an authorized user on his seasoned tradeline." Hucksters, and fun with Craigslist. "Some banks don't report authorized users to credit bureaus, says spokesman Curtis Arnold... Reporting by lenders to credit bureaus is voluntary, says Steve Katz of TransUnion."

Ken Harney column, April, 2007: "Fair Isaac, developer of the FICO score, said that the 'inappropriate use' of trade lines is 'an industry-wide issue' and that the company is in discussions with the FTC."

Terry Savage, Chicago Sun-Times: "This has to be the first great scam of the new millennium." (alt)

An actual web page with the title, "Illegal Credit Repair In Days."

Congress, representing you:

"Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system."


Fair Isaac's new FICO score forums
Talk back to the wizard

"myFICO provides FICO Forums as an educational and entertaining platform for people to share their credit knowledge and personal financial experiences with other members of this online community."

Entertaining? For those who like watching people in agony, perhaps. It's not like you'll find a bunch of rich guys trying to increase their 800 to an 850.

Before you (and you know who you are) go over there, really, step outside into the fresh air for some perspective. Get in, get the information, get out, move on, and get back to life. If you spend a lot of time on that message board, your personal financial habits are probably very, very unhealthy. Practice common-sense personal financial management, and see learning about FICO scores as enhancing your perfection, not climbing out of the same hole over and over again. So, promise that you'll transcend. While you're posting, please keep saying, "savings." Please, savings. Repeat: Savings.

For the geeks, this is a watershed event. Fair Isaac is the authority on FICO scores because they are calculated by Fair Isaac's secret formula. If you don't get the real answers in their forum, where else could you? Watch for posts by "Barry."

Here's a reader who had an a-ha moment when he found out he was flim-flammed into buying a Fake-O score, instead of a FICO score:

", even though I PAID Experian to give me my score, the score they gave me is incorrect?? *(^&(*&^^*!!!!!!"


Blogger uses FICO Score Tracking
612 to 804 in 16 months

"You may also notice the ridiculously large amount of total available credit I now have (the total credit lines I have available from the 7 accounts)." is the blog. Also, see the author's review of Fair Isaac's FICO Score Deluxe.

Media Creation uses FICO Score Tracking
726 to 490 in 11 months

"I’m still trying to make sense of this whole credit score / FICO score mess."

Meet clueless Casey Serin. In this strange tale of a real estate mogul wannabe, his colossal failure and search for redemption, blogger learns one more lesson: The difference between Fake-Os and FICOs. Tune in to a real-life Truman Show-- everybody sees what's going on but him. How will it end?


Insurance Credit Scores in the Supreme Court
Higher rates based on credit report data; Warren Buffet

Homeowners and auto insurance credit scores. 13 states filed joint friend of the court brief. "The consumers said that when a consumer’s credit information resulted in the consumer receiving a higher rate, insurers should have sent out 'adverse action notices' required under FCRA and acted in 'willful' disregard of the FCRA in not doing so." AP: "Justice Stephen Breyer said implementing an expansive notification requirement would be like the 'boy who cried wolf' and that notices likely would 'go right in the wastebasket.'" (alt)

  • Resources for GEICO General Insurance Company, et al. v. Ajene Edo, No. 06-100
  • Fair Credit Reporting Act: "Duties of users taking adverse actions on the basis of information contained in consumer reports."
  • Regulation B: Equal Credit Opportunity Act (ECOA) adverse action notices
  • The issue played out in Texas
  • 2004: "FCRA Adverse Action Notices: Unwelcome Uncertainty for Insurers"
  • Safeco Insurance Co. of America v. Charles Burr (No. 06-84, Sup. Ct.), and GEICO General Insurance Company v. Ajene Edo (No. 06-100, Sup. Ct.)
  • "JOINT APPENDIX - On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit"

Another high-falutin' study featuring a score not used in mortgage lending

Michael A. Turner, The Political and Economic Research Council (PERC), et al. Thin-file consumers. Wealth-building and poverty-ending ideas for poor. Proposes using more nontraditional and alternative credit data in credit scores for mortgage loan underwriting. New data in consumer files (credit reports): Cellular phone companies and utilities payment histories. Suggests "utility and telecommunicatons data" (mentioned 84 times) as a source for data to help minorities and poor build wealth. Follows on the heels of another study similarly based on a score nobody uses. Much like Experian and its PLUS Score, furthers and continues providing statistics using a second-rate scoring model while Fair Isaac remains mum on the same with the FICO. Refers to Fair Isaac as "Fair Isaacs [sic] & Co. (FICO)" and "Fair Isaacs." "John Carter at Equifax taught us that credit scores do not always go up when positive payment data are added." Provided a new and creative use for demographic data. Creepy reference to "silent partner" Acxiom. Americans' pathetic saving habits and weird relationship with checking accounts (indisputable proof of rent payment) not mentioned.

"Dr Turner has been researching this topic and is in New Zealand as a guest of Dun & Bradstreet (D&B) a leading credit bureau... "

See "50 million have no credit score"

So, what's the big deal? Lazy lenders. Programs for no credit scores: "No Credit? No Problem!’ - Taking the Nontraditional Route To Bring Borrowers into the Prime Mortgage Market" - OCC

Experian: "Department of Justice Closes Inquiry into Experian’s VantageScore"
But Fair Isaac's suit continues

Only one of the three blind mice seemed to be interested in making a public statement. Experian is obsessed with everything credit score, but can't come up with a winner. VantageScore mute.

Flipper Nation
Using your credit score for fun and profit. Or just fun.

There's more where this came from at:
If you cannot view this video, you can check it out at YouTube instead.


Fun with Numbers contestant: Equifax
(Reeling in a WHOPPER!) Unbelievable, but true; apparently, hotlines to Fair Isaac out

Equifax Grand Proclamation #1: "FICO® scores range from the 300s to the 900s, but almost all consumers have a score between 500 and 850."

Equifax Grand Proclamation #2: "Your score ranges from 300 to 850, but the majority of scores fall within the 600s and 700s."


This is Equifax's third entry in the Fun with Numbers sweepstakes. Stop over for the clarity hilarity and "facts" from "EquiFacts"! While Fair Isaac tries to finesse the consumer's understanding with the FICO Score "300-850" gold seal, its Atlanta business partner continues to muddy-up the waters behind them. Retail Credit Company: 100 years old, but they still get up in the morning and struggle through every day!

PRESS CORPS!  Your Equifax buddy is Robin Holland, Chief Senior Worldwide Corporate Development Executive Vice President Officer— of Consumer Affairs (video). Before the internet stops your presses forever, call today for the clarity, and don't play nice— you know, like the old days when you gave a rip! Here's your ready-made question: "What is the highest FICO score?" Stir it up.

Max goes to Philadelphia
Hawks the VantageScore

Head-to-head with Fair Isaac, Experian's Maxine Sweet (Ask Max) does the other two bureaus' dirty work for the three-headed monster, VantageScore. Boy Wonder Barrett "Boom-Boom" Burns was short-staffed at his office due to slowdown sales never starting, and had to stay in Stamford to answer the phones.

Meanwhile, the patronly Federal Reserve enjoys its new-found providence over credit reporting, stepping in with adult supervision.

Another credit scoring article, "Myth" story no. 2879...
... and one more zinger from the Washington Post

"'I just assumed that the credit bureaus knew I was paying off my bills and everything was getting fixed automatically, but it wasn't,' said Cavanaugh, 58, a receptionist at Holy Cross Home Care and Hospice... [w]eeks later, Cavanaugh's FICO score was up to 662 from 408, she said."

250 points! A-Ha! Errors! Rep. Barney Frank is the new Chairman of the House Financial Services Committee and says hearings are due. The Credit Scoring Site author weighs in with a tip for the committee: Even though the law says you can get all of the information in your consumer file, you can't, really. Really.

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