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12/18/06

Forget about getting the perfect credit score
Hoax replete with "300-850" seal of genuiness

Perpetrator Fair Isaac ("the industry's most trusted source") confesses, “There really is not an 850 score.”

Dumb asymptote.

More Fun with Numbers

The name says it all: FreeCreditReport.com
Case Number: L06-3-1149 (Experian)

Attorney General of Florida:

Allegation or issue being investigated: Failure to adequately disclose negative option enrollment in credit monitoring with "Free" credit report, deceptive advertising, misleading domain name, and failure to honor cancellations in violation of Chapter 501, Part II, Florida Statutes (Florida Deceptive and Unfair Trade Practices Act).

Real-life examples
Newsday.com: "AIM HIGH: A good credit score opens the way for loans - and even jobs"

Terry and Wilmino increase their scores.

"Regret the Error: Need rewrite"
Los Angeles Times; 317 words to correct errors

"The article further said owing more than 70% of available credit is a red flag to scorekeepers... Fair Isaac does not consider 70% a key threshold, Watts said, adding that lower utilization is better for one's credit score."

Original article

Insurance scoring
Oregon tests practice with first public vote in the U.S.

Oregon Secretary of State - Measure 42

Consumers Union (publisher of Consumer Reports)

• "Oregon Ballot Measure to Ban Credit Scoring for Insurance Loses Following $5 Million Industry Ad Campaign" - "Even consumers with good credit can be forced to pay higher premiums because of the peculiar way that insurance companies weigh credit data."
• MEASURE 42 - Questions & Answers

Fair Isaac CEO resigns
Replacement must like cold weather

St. Paul Pioneer Press: "Fair Isaac Corp.'s chief executive of almost seven years has resigned, the Minneapolis-based analytics firm said Wednesday, the same day it reported a 38 percent drop in fourth-quarter earnings."

Fun with Numbers
Zany experts

ABC News: "... it was just 598 on a score of 300 to 800."
Yahoo!
    •  "Credit scores range from 375 to 900 points... "
    •  "... the range of all FICO scores is 300 to 900."
About.com: "The typical range for credit scores is between 375 and 900... "
Ameriquest Mortgage: "Credit scores range from 350-850."

GAO report to the Senate:
"CREDIT CARDS - Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers"

"In addition, about two-thirds of cardholders we interviewed were unaware or did not believe that a drop in their credit score could cause an issuer to seek to assess higher interest rates on their account."

Fair Isaac fires back
Partner paradise party-pooper sues Equifax, Experian and TransUnion. Experian expresses "disappointment."

Fair Isaac's was the first suit filed that day:

Title: Fair Isaac v. Equifax, et al Judge: Patrick J. Schiltz Magistrate: Raymond L. Erickson Note: Trademark From 10/11/06 Date/time filed: 10/12/06 08:19 Case number: 0:06cv4112

Fair Isaac press release: "Through yesterday's legal action, Fair Isaac is asking the three credit reporting agencies and VantageScore Solutions, LLC, to stop the unfair competitive activities outlined in the suit, and to conduct business in a way that serves the best interests of the financial services industry and consumers."

Equifax press release: "Equifax believes that Fair Isaac’s lawsuit is without merit and the company plans to vigorously defend itself and VantageScore Solutions LLC."

TransUnion (the artist formerly known as Trans Union, formerly formerly known as The Credit Bureau of Cook County) press release: "TransUnion believes the legal action taken by Fair Isaac is without merit and we will aggressively defend this lawsuit."

Reuters: "Peg Smith, an Experian executive vice president, said she had not seen the lawsuit and declined to discuss its merits.... In an interview, she said 'we have about 600 clients' buying VantageScore."

MarketWatch: "Fair Isaac also said the VantageScore model's score range partially overlaps its trademarked 300-to-850-point range, creating potential market confusion... VantageScore assigns scores between 501 and 990 points."

PLUS is another fake-o score, from Experian, on a scale (330-830) obliquely similar to FICO. Says Experian of its "National Risk Score," it is "used by lenders across the nation... We have altered the scale to make it easier to compare to other well-known models."

Atlanta (Equifax's home town) Journal-Constitution: "Whether Fair Isaac wins the case depends on whether it can prove the credit reporting bureaus purposely sought to 'injure' the firm through illegal or improper means, said Joseph F. Brodley, a law professor at the Boston University School of Law." (alt)

The newcomer. Press release, 9/25/06, "VantageScore Solutions Names Veteran Banker Barrett Burns President and CEO": "'VantageScore is a decidedly superior scoring methodology that fills a void in the market by providing lenders with choices in credit scoring,' Burns said."

Insurance scoring goes to the Supreme Court
One hour of oral arguments

MarketWatch: "The companies are challenging a Ninth U.S. Circuit Court of Appeals, San Francisco, decision they argue sets a lower standard of liability under the Fair Credit Reporting Act for failing to disclose that credit score factors adversely impacted an insurance price quote."

Insurance Journal: "The high court combined Safeco Insurance v. Burr, 06-84 and GEICO General Insurance v. Edo, 06-100 when it noted it would hear oral arguments."

http://www.freedomworks.org/uploads/20060825.pdf
http://caselaw.lp.findlaw.com/data2/circs/9th/0335695op.pdf
http://www.citizen.org/documents/hartfordopp.pdf
http://www.uschamber.com/...
http://www.uschamber.com/...
http://www.freedomworks.org/...

Bad FICO score? Bad credit? Just rent some!
When daddy won't make you an authorized user on his seasoned tradeline

"Credit fix dismissed as house of cards" - "Companies such as Creditlauncher-.com and Seasonedtrades.com have transformed a common white lie in the real-estate industry into a full-fledged business." (The Columbus Dispatch, March 6, 2006)

Some of the offers to improve your FICO credit score:

"Think about having a perfect credit history, without the long wait, and hard work." - $1000 to $3100

"The information you're about to read will change your life... Considering that you've now raised your credit score by up to 200 points ,[sic] what price tag would've made it a good investment?" - $1000 to 3000 (press release)(more)

"What Our Company Offer's [sic]"

The word from some fancy journalists:

Liz Weston, the millionaire: "Piggyback on someone else's good credit... The fastest way to establish a credit history can be to "borrow" another's record, either by being added to a credit card as an 'authorized' or joint user or by getting someone to co-sign a loan for you." ("9 ways to build a killer credit score," MSN Money, undated)

Smart Money / Wall Street Journal: "Find a friend or family member willing to add you as an authorized user on an old credit-card account in good standing." ("Boost Your Credit Score And Snag a Better Rate," Anne Kadet, undated)

New York Times: "But if they are added as an authorized user on a card issued to someone else a parent [sic], perhaps the credit history of that card may be reflected on the user's credit report as well." ("How to Improve Your Credit Score," Jay Romano, May 7, 2006)

about.com: "The easiest way to establish credit is to 'borrow' someone else's credit history."

Columnist tying herself into a knot:

Spouses should help each other build better credit. Just be forewarned that as much as your past good bill-paying habits can bring his credit scores up, his bad habits (left unchanged) can bring yours down.

"This (Seasoned Trade Lines) is using that loophole to artificially inflate someone's credit score with intent to get a lender to give them a loan they wouldn't otherwise qualify for. It's not the conduct, it's the intent behind the conduct that could criminalize it," Dollar said.

Scores and records of other consumer habits
(and how to get access to yours)

"But did you know that companies have access to more information about you than just your three-digit credit rating?" ("YOU, by the numbers," The Columbus Dispatch, September 17, 2006)

Jury orders Equifax to pay $351,000
Because credit reporting ain't brain surgery

"More than two years after her Social Security number was stolen, Suzanne Sloane's credit score was still hundreds of points less than it was prior to the identity theft, the couple said in January."

Kids and virtual world credit scores
Will they save their money, buy a bicycle and save the planet, instead?

"Whyville's Club Scion now boasts a Scion Solutions Office where Whyvillians are met by a virtual Toyota Financial Services advisor who walks them through the loan process and helps them learn about their "WhyCO" scores. The WhyCO is designed to emulate the FICO(R) in real life." (alt, alt)

"CAUTION! The secret score behind your auto insurance"
Consumer Reports,  August, 2006

Press release: "CONSUMER REPORTS WARNS DRIVERS ABOUT THE SECRET SCORE BEHIND AUTO INSURANCE RATES" - "But with the worst possible insurance scores, the premium would increase 29 percent to $1,468 at GEICO and 47 percent to $1,706 at Nationwide."

"... a driver with a great credit score whom lenders would normally bless with a low-interest mortgage could wind up with a less favorable insurance score and thus... ," Consumer Reports,  August 2006

"Caught in the storm of insurance scores," - "The devastation caused by Hurricanes Katrina, Rita, and Wilma shows us that people without adequate insurance may face compounded tragedy." View Point - The Consumers Union Perspective

Insurance information from The Credit Scoring Site

Brookings Institution
A big study based on the wrong credit score.

"Credit Scores, Reports, and Getting Ahead in America," Matt Fellowes, May, 2006 - "For this analysis, we rely on TransUnion’s credit score in the trend database, which ranges between 350 and over 850."

50 million have no credit score

Slide show "FICO scores and the Credit Underserved Market," Fair Isaac, December 30, 2005: "This non-homogenous group includes immigrants, young adults (especially non-college youth), recently divorced/ widowed, and groups culturally adverse to credit use (retirees, ethnic groups that distrust banks/credit grantors)"

Press release, 7/27/04: "Fair Isaac Launches FICO Score to Help Lenders Grow Presence in Credit-Underserved Markets" - "Extending the FICO score family and tapping into a unique mix of non-traditional data sources enables us to deliver the same kind of highly predictive, objective risk evaluation that businesses have come to expect from FICO scores."

There are, apparently, people at Fair Isaac who actually talk like that.

U.S. population: 299 million. Approximately 210 million are adults according to Fair Isaac. 50/210 = X

7/9/06

• Misinformation
  • Fun with Numbers (a regular feature-- now with audio!)
    • Two goofs in one sentence: "Credit-Reporting Agencies Create New Scoring Format," by Michele Norris and Robert Siegel, All Things Considered (National Public Radio), 03/15/2006, with expert Evan Hendricks who said:

      "The other two are still talking about using a numerical score, which will be a new scale from 500 to 900... "
      
      [That's not, true. 501-990]
      
      "... where the scale we know with Fair Isaac is 350 to 850."
      
      [Speak for yourself. 300 to 850]

    • "They claim the new scores will vary less than the existing FICO score, which can differ by 100 points on an 850-point scale." ("New school of credit scores," Matthai Chakko Kuruvila, San Jose Mercury News (CA); 03/15/2006.)

      The scale is 550 points.

  • Wikipedia (let's see how wiki they are in fixing this one):

    Some financial advisers, including famous financial advisor Dave Ramsey, advocates (sic) against using debt but rather use your personal income to build wealth and save for purchases. He reports that even though he is a millionare his own FICO score is 0 because he does not borrow money or have any debt.

    While he may have no score due to lack of information in his credit file, a score of zero is impossible because the lowest FICO score is 300.
    
    
• Inside the black box
  • "Suits Challenge Credit Bureaus" (Kenneth R. Harney, Saturday, July 1, 2006; Page F01, The Washington Post): "Nonetheless, said William A. Harris Sr. in his complaints, each of the bureaus allows credit card giant Capital One to withhold the credit limits on its customers' card accounts -- knowing full well that such omissions frequently lower consumer credit score calculations." (alt)
  • 2003, Senator Sarbanes: "Well, I just want to ask Mr. Hildebrand. Does Capital One report the maximums on the credit limits?"

• VantageScore. Experian press release:

  Costa Mesa, Calif., June 20, 2006 — Experian, the global information solutions provider, today announced that VantageScore from Experian and comprehensive educational resources are now available to consumers nationwide at www.vantagescore.experian.com.

• The Credit Scoring Site and creditaccuracy.com author's comments to the Federal Reserve, May 22, 2006:

  In 2004 I told you that credit reporting agencies are not providing consumers all information in their files (a requirement since 1997).

  Since then, I scrutinized consumer reports (credit reports) for more information not disclosed to consumers by the agencies, and I found more.

  See the story unfold, with letters of response from the agencies, at http://creditaccuracy.com/0005.htm. Please address it.

  Others' comments to
  • Fed
  • FTC
  • Treasury OCC: Write to regs.comments@occ.treas.gov; request coments for Docket 06-04
  • FDIC
  • OTS
  • NCUA

• Fair Isaac cuts
  • AP: "The restructuring also calls for a new chief marketing officer role and the transition of some engineering, quality assurance and maintenance work to Bangalore, India."
  • Reuters: "They have fallen 18.6 percent since March 14, when the major U.S. consumer credit reporting agencies, Equifax Inc. Experian and GUS Plc's TransUnion LLC, announced a new credit scoring system that would compete with the FICO scores."
  • Minneapolis/St. Paul Business Journal: "Fair Isaac Corp. said Thursday that it is cutting 200 jobs as part of a broad-based restructuring plan."
  • Fair Isaac: "Customer Centricity Drives Reorganization at Fair Isaac" - "'Achieving our EDM vision requires a client-focused, relationship-based approach that creates clear, differentiated value for our clients and industries,' said Tom Grudnowski, CEO of Fair Isaac."
  
  
  
• Triggers - "takes one-to-one marketing to a new level"
  • Portland Press Herald: "Lists of people who are applying for a new mortgage or a refinancing have become big business for the country's three largest credit reporting agencies."
  • Washington Post, Kenneth R. Harney: "TransUnion did not comment on whether it provides overnight contact data."
  • Direct Marketing Association: "'TransUnion Turnkey Triggers gives our customers an automated solution that leverages both our predictive data and direct marketing expertise to execute all aspects of a marketing campaign.'" [Michael Browning, executive vice president of TransUnion’s Marketing Solutions division]
  • TransUnion press release: "Chicago, May 24, 2006 – TransUnion today unveiled TransUnion Turnkey Triggers, a new service that assists marketers in reaching prospective customers within hours of learning about changes to their credit profile that may predict newfound responsiveness to a targeted firm offer... 'This takes one-to-one marketing to a new level,' said Michael Browning, executive vice president of TransUnion’s Marketing Solutions division."
  • Richard Becker, Equifax: "Credit, behavioral and transaction-based triggers are emerging as the weapon of choice for direct marketers with the moxie to take on declining industry response rates."
  • BusinessWeek.com: "Thanks to David Porter at Pacesetter Mortgage in Michigan for explaining how you can get your name taken off the list for getting unsolicited loan offers."
  
  
  
• Kenneth Harney, FICO/Fake-O controversy: "Nonetheless, prominent on the TrueCredit.com site is the statement that the TransUnion score is 'how you may be viewed from a lender's perspective.'" (alt)
• Allstate - Chicago Tribune: "Other settlement provisions call for Allstate to make its new insurance scoring algorithm publicly available."

• FCRA regulations
  • Press release
  • Federal Register notice:

    The Agencies believe that, in advance of proposing guidelines and rules implementing section 312 of the FACT Act, it is appropriate to solicit public comment on issues relating to: (1) The criteria in section 623(e)(3) of the FCRA that the Agencies must consider when developing accuracy and integrity guidelines; (2) what constitutes reasonable policies and procedures for implementing the guidelines to ensure the accuracy and integrity of information that is furnished; and (3) the considerations in section 623(a)(8)(B) that the Agencies must weigh when promulgating rules that identify circumstances when furnishers must reinvestigate disputes raised directly by consumers.

  • Previous comment submitted by creditscoring.com & creditaccuracy.com author, 9/17/04, regarding credit reporting agencies Equifax and TransUnion's illegal practice (hiding information from consumers): "Since your study deals with disputes of accuracy of consumer information, it would be incorrect for you to assume that a consumer can obtain all the information in his files in the first place."
• Catherine MacRae Hockmuth, "Married & Mortgaged": "So when you're kid comes home and says, 'I've got an A' in home economics you can say, 'Me Too' -- hopefully."
• VantageScore
  • The Triumvirate
    • Equifax
    • Experian
    • TransUnion
  • Nomura: "Unless those entities embrace it, the outlook for VantageScore is bleak."

    An aside: Nomura quotes creditscoring.com:

    There are many conflicting reports about the exact range of the FICO score scale. Most reports place the low end of the range around 300 to 350 and the high end of the range around 850 to 900. See What Is the Credit Score Range.

  • Credit Technologies, Inc.: "FANNIE MAE: At this time, we have no plans to switch to this new score for our credit evaluation purposes."
  • Advantage Credit: "A potential benefit of the score for consumers and brokers is that VantageScoreSM looks at the past 24 months of activity, while FICO scores take many years into account. This can help borrowers with credit issues more than two years in the past."
• (from the You-Must-be-Joking / Tail-Wagging-the-Dog Dept.) Bankrate: "Credit cards that hurt your credit score" - "[Fair Isaac's] Watts says consumers who hold no-limit credit cards can work around the lack of a credit limit by running up a high balance one month and paying it off."

• Orlando Sentinel: "While the 20-point difference between a 740 and 760 FICO score might be virtually nonexistent, the 20-point spread between 590 and 610 can be expensive, depending upon the lender and the other factors that go into the equation."
• Whitfield et al v. Radian Guaranty, Inc., No. 05-5017 (3d Cir.)
  • FTC: "The [FTC] brief then points out that Section 615 of the FCRA requires a user to provide a consumer with an adverse action notice whenever that user takes adverse action 'with respect to' that consumer."
  • Kenneth R. Harney, Realty Times: "The case that provoked the FTC to file a "friend of the court" brief March 17, involves a Virginia couple whose credit files contained erroneous negative information."
  • Originator Times: "The brief addresses a lower court ruling that held that a mortgage company was not required to provide a consumer with a Fair Credit Reporting Act (FCRA) adverse action notice even though, as a result of the information in a consumer report, the company had charged a higher mortgage insurance premium, and that premium was paid by the consumer."
• Today's Fun with Numbers contestant - Kathy Kristof, LA Times: "It's likely, however, to be similar to what goes into the FICO scores, which range from 350 to 850."
• Betty Lin-Fisher, Akron Beacon Journal: "It may take months to years until lenders start fully using the new [VantageScore] scoring model, say some in the financial industry.
• "PENNSYLVANIA ASSOCIATION OF MORTGAGE BROKERS OFFERS CONSUMERS TIPS TO IMPROVE CREDIT SCORES" - "Keep your credit card accounts open and active by using your cards at least once every five months, even if it is for a tank of gas." "

• Fair Isaac on VantageScore
  • Totaro trash-talk
    • San Francisco Chronicle: "'They haven't been successful at stealing our market share with their own proprietary scores,' he observed. 'So now they're making another attempt by holding hands.'"
    • LA Times:

      Ron Totaro [612-758-5364], vice president and general manager of global scoring solutions at Fair Isaac, said the credit-reporting companies "have all had their own credit scores that they have tried to sell against us, and they've been wildly unsuccessful. This is them trying to take another crack at our fortress."

      FICO scores are used in more than 75% of lending decisions made by banks, mortgage brokers and auto dealers, Totaro said. "Even assuming this is a slightly better mousetrap, I think it's going to be very hard to get lenders to switch," he said.

    • USA TODAY: "FICO's system is 'ingrained' in lenders' computer systems, and they're unlikely to replace it with VantageScore, he contends."
    • MarketWatch: "'We've been dealing with folks trying to come up with another type of credit score and it really hasn't impacted us. We don't see this particular item impacting our business in any way,' Totaro said." (FIC stock)(BusinessWeek: "Fair Isaac dips on credit bureau pact")
    • Reuters:

      "As far as whether it's a real economic threat to us, we feel pretty comfortable," said Ron Totaro, Fair Isaac's vice president and general manager of global scoring solutions.

      "We have a best-in-breed product that our clients are very happy with," he continued. "The switching costs for our clients are also huge and it's our FICO scores that are used by regulators and the secondary markets."

  • Fair Isaac CEO
    • AP: "'Do the customers . . . really want to go through the pain of converting to another system?' Grudnowski asked. 'I think only time will tell.'"
    • Boston Globe: "Thomas G. Grudnowski, the chief executive of Fair Isaac, said that 'for the past 20 years, we've been both cooperating and competing with the credit bureaus . . . and that will continue.'"
• KCBS: (audio) "Holly Quan and Stan Bunger talk to credit report expert Evan Hendrix [sic] about the new Vantage Score system, a new way to analyze and calculate your credit score." (second blue button)(alt, audio)

• Secret VantageScore - "The New Standard in Credit Risk Scoring"
  • The scale is 501 to 990. In the Robert Parker wine scale, you get 50 just for showing up.
  • The official FAQ
    • Apparently, "How can I get my score?" is not asked frequently. That's probably because-- with our prior experience-- we already know their response: Go away, you can't have your score.
      • Terry Savage, Chicago Sun-Times: "Equifax says it'll wait until lenders accept this new score before marketing it to consumers. That's expected to take at least six months."
      • Caroline Mayer, Washington Post: It doesn't predict anything until lenders say so.

        "The new scoring system will not be valuable to consumers 'unless the credit grantor adopts and uses it,' said Paul J. Springman, chief marketing officer for Equifax. He said his firm would switch as soon as lenders accept the new system. 'That will take more than six months,' he said."

  • Background
    • Internet domain
      • vantagescore.com domain was registered by "Trans Union LLC" on January 30.
      • Two-year commitment: expires 2008 (by contrast, creditaccuracy.com and creditscoring.com are registered through 2012).
    • Corporation: "VANTAGESCORE SOLUTIONS, LLC" was incorporated in the state of Delaware exactly one month before the official announcement of the company's existance. File number 4109899.
    • Who's who
      • TransUnion: "Chet D. Wiermanski is vice president of TransUnion’s Analytic Decision Services group responsible for identifying, evaluating and developing new business opportunities involving predictive modeling and related consulting services."
      • A virtual company; no physical address on its web site, no president.
  • Press releases
    • vantagescore.com
    • TransUnion
      • Joint release; dateline in alphabetical order
      • "VantageScore(SM) To Set New Standard For The Marketplace - TransUnion Says - New Score to Fill Void of Consistency and Choice in the Industry"
    • Equifax
      • Joint release
      • It's another secret formula, so you'll just have to take their word for it, again. "No other model does a better job of delivering objective and consistent credit scoring."
    • Experian
      • Joint release
      • "Experian launches new credit scoring system, VantageScore^SM" - "The new scoring system addresses the potential weaknesses in existing scoring solutions in the marketplace because any variances in credit scores between credit reporting companies will be attributed to data differences within each of the three consumer credit files and not to the structure of the scoring model or interpretation of the data."
  • The Wizard speaks
    • Kathy M. Kristof, Los Angeles Times

      "Ron Totaro, vice president and general manager of global scoring solutions at Fair Isaac, said the credit-reporting companies 'have all had their own credit scores that they have tried to sell against us, and they've been wildly unsuccessful. This is them trying to take another crack at our fortress.'"

    • Eileen Alt Powell, Associated Press: "'Do the customers . . . really want to go through the pain of converting to another system?' [Fair Isaac's] Grudnowski asked. 'I think only time will tell.'"
  • Jean Chatzky: "Stephen Brobeck, executive director of the Consumer Federation of America, said the new score will create problems... 'It's a terrible idea.'"
  • Matthai Chakko Kuruvila, San Jose Mercury News: "The changes in credit scoring underscore the intimate way credit lives with consumers as a measure of self-worth."
  • GIGO, Businessweek Online, Peter Coy

    "... VantageScore can't overcome the problem of incomplete or inaccurate information. "Garbage in, garbage out," says Greg Fisher of Dayton, Ohio, who runs two web sites on the subject, creditscoring.com and creditaccuracy.com."

• Christopher Conkey, The Wall Street Journal: "Atlanta-based Equifax says annual revenues for its "personal solutions" division, which sells consumers credit scores (used by lenders to assess risk and set interest rates), reports and monitoring services, jumped by more than 60 percent to $115 million over the last two years, outpacing the 19 percent rise in its $800-million-a-year division that sells credit information and risk-assessment tools to businesses."

• CHRISTOPHER CONKEY, Staff Reporter of THE WALL STREET JOURNAL: "How to Boost Your Credit Score - Increasingly, Employers, Others Check Your Ranking; Do You Really Need That Store Card?": "For consumers, this increases the importance of understanding the tricks for improving your score." (5/5/08 update: Credit bureaus do not include scores in pre-employment screening reports.)
• Revisiting: Getting your "score" with your free credit report
  • annualcreditreport.com (the official web site dictated by federal law): "You can also purchase a credit score when you request your free annual credit report through this website."
  • Sacramento Bee: "Learning the score on credit reports"

    By the end of the process, [California state Sen. Jackie] Speier was so ticked she slammed her pen down: "You know what. We're going to have a hearing on this whole mess."

  • Business Week, Toddi Gutner:

    When you request a free credit report, each bureau will offer to calculate a credit score for $6.95. Experian and TransUnion use proprietary formulas; Equifax uses FICO scores. Pass up these offers because the information is not as comprehensive as you'll get elsewhere, and lenders are less likely to look at these scores. (alt)

  • Washington Post, Kenneth Harney:

    For example, only Equifax will sell FICO scores -- the scores used by most mortgage lenders to evaluate your application for a loan. The cost will be $6.95 per FICO score. TransUnion and Experian will sell their own non-FICO scores for around $4 each.

• Channel 8, Austin
  • Fun with Numbers: "Credit scores range between 300 and 900 points and are figured on several types of criteria."
  • The Bar: "A FICO score below 650 will affect your ability to receive good credit."
• Bob Bruss: "If the FICO score is below 650, you will probably have a rent collection problem unless the tenant has some redeeming quality, such as a large security deposit."
• "If your credit report shows that you had six or more inquiries in the last 12 months that you triggered, you are eight times more likely to go bankrupt than somebody without any inquiries," [Fair Isaac spokesman Craig] Watts said.
• Your punishment for bankruptcy, the credit reporting industry's dirty little secret (even though the records are public, they still can't get it right): "You are dealing with one of the most frustrating post-bankruptcy issues."
• In Minnesota: "Credit Score, Insurance Rate Link Challenged" - He [Mark Kulda, a spokesman for the Insurance Federation of Minnesota] said driving records are no longer a reliable method for determining risk because traffic courts have made it easier for drivers to clear their record

• Ups and Downs
  • (up) "TransUnion Announces Consumer Credit Scores Are Rising; U.S. Consumer Credit Risk Improving" (11/10/05)
  • (down) Chicago Tribune, Becky Yerak: "Loan conditions ease to aid sales" - "The average Fair Isaac Corp., or FICO, score for new-vehicle buyers has slumped to its lowest level since 1985, according to CNW Marketing Research Inc., which tracks car-buying habits." (12/16/05)
• The Horrific Library Fine Controversy
  • 1/3/06, Wall Street Journal, Jane Spencer: "A New Threat To Your Credit Rating, Unpaid Parking Tickets, Library Fees Start to Hurt Consumer Credit As Strapped Cities Seek Payment" - "The company [Equifax] says it is not fair to include them in credit reports since municipal fines are reported unevenly around the country." (alt)
  • 1/9/06, NBC Nightly News, Carl Quintanilla: "Overdue library books impact credit scores" - "And when you do pay the debt, try to get a letter that agrees to remove the mark from your record."

    In other words, if you don't like your credit history, make one up.

    Not so fast, NBC. The regulator, the FTC says:

    Nevertheless, newspapers, radio, TV, and the Internet are filled with ads for companies and services that promise to erase accurate negative information in your credit report in exchange for a fee. The scam artists who run these ads not only don't deliver — they can't deliver... When negative information in your report is accurate, only the passage of time can assure its removal.

    And Congress weighs in:

    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.

• "Credit Education" from Fair Isaac
  • "Understanding Your FICO Score" dated 7/05. Twenty and thirty-somethings hold up signs. Shown: 526, 631, 680, 712, 720, 734, 743, 785. 63% of those people have below average FICO scores.
  • Life imitates art in a freakish intersection
    • The example in the above booklet, "John Smith" (score: a less-than-perfect 775, beneath the 80th percentile), lives in-- of all places-- Dayton, Ohio, the dateline of The Credit Scoring Site.
    • John Smith of Dayton in another example from Fair Isaac.
• Fun with Numbers
  • Forbes:
    • The Loan Page, Mortgage Library - Understanding Your Credit: "Scores can range from the 300s to about 900, though most borrowers fall in the 600-700 range."
    • Scott Reeves, "Using Credit Wisely": "Typically, the score is reported on a scale of 300 to 900."
  • The Mortgage Professor: "FICO scores range from 350 to 850."
• FTC: "As detailed in the notice, which will be published shortly and is available now on the FTC’s Web site, the ceiling on allowable charges for certain disclosures under the FCRA, Section 612(f)(1)(A), will increase from $9.50 to $10.00 in 2006."
• Getahn Ward, Nashville Tennesseean: "Nashville's minority groups pay more to borrow money" - "Floyd Weekes, executive vice president of black-owned Citizens Bank in Nashville, said blacks' scores tend to be lower."
• Bankruptcy
  • EPIC (Electronic Privacy Information Center): "If the individual is listed as having filed for bankruptcy, it results in a 160-220 point deduction on their credit score."
  • American Bankruptcy Institute Bankruptcy Law Changes Q&A
  • "Late Payment Secrets Revealed!," By John Ulzheimer and Emily Davidson: "From a scoring perspective, a single 90 day late payment is as damaging to your credit scores as a bankruptcy filing, a tax lien, a collection, a judgment or repossession."
  • Expert opinions vary
    • MSNBC, Vanessa Richardson:

      Experts agree that filing for bankruptcy should be the very last option to take, since its effects on your credit last longer than other debt-recovery methods.

      “You will have essentially trashed your credit for the ten years,” says John Ulzheimer, vice president of the After Bankruptcy Foundation, a nonprofit organization that teaches people how to recover from bankruptcy. “Recovering is difficult because you have to establish your credit, and in the meantime you’ll be paying usury rates of 20 to 30 percent to creditors.”

      So, that's what the vice-president (and "expert") says. But the founder (and expert) says, "You can establish mainstream credit after bankruptcy...in less than eight months."

      ?

      See the vice president's less-than-perfect credit score (75th percentile).

      Letters to the founder.

  • Realty Times, David Reed:

    Here's the real kicker about bankruptcies and credit scores: a bankruptcy by itself, while damaging, is not life threatening. One can always re-establish good credit in a relatively short period of time. But combine a bankruptcy with any subsequent negative item whatsoever and the result is seriously damaged scores.

  • FHA: "HUD Handbook 4155.1, Mortgage Credit Analysis for Mortgage Insurance, One to Four Family Properties, CHAPTER 2: Mortgage Credit Analysis": "A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy."
  • VA: "Lender's Handbook, VA Pamphlet 26-7," Chapter 7: "You may disregard a bankruptcy discharged more than two years ago."
  • Fannie Mae, Single Family Selling Guide, Part X: "Underwriting Guidelines, 302.10: Prior Bankruptcy or Foreclosure" - "Generally, we require a minimum elapsed time of four years between the discharge of a bankruptcy or the completion of a foreclosure and the date of the mortgage application."
  • Wharton Financial Institutions Center, David K. Musto: "The Reaquisition of Credit Following Chapter 7 Personal Bankruptcy"
  • Fair Isaac, Janice Horan:

    "An examination of debtor psychology shows that individuals react with profound humiliation toward delinquency. As multiple creditors take simultaneous action toward a borrower, this humiliation is exacerbated. With this in mind, it is even more obvious that creditors must understand the scope of borrower indebtedness to appropriately design treatment strategies."

  • Credit reporting agencies
    • Equifax
      • "Our Bankruptcy products enable you to... "
      • "Migrating to Bankruptcy Navigator Index® 3.0 – the newest bankruptcy risk model available from Equifax"
    • TransUnion: "The [debt management model] score also assists lenders in making objective decisions to offer improved concessions, such as lower minimum payments, reduced interest rates or the removal of late penalty fees to those consumers who are most in need."
    • Experian: "It's easy to determine who has already filed for bankruptcy, but did you know the likelihood of bankruptcy can also be detected?"
  • FTC: Search for "bankruptcy"
• Jeanne Sahadi, MONEY Magazine: "The right way to be good about credit" - "But as it turns out, practitioners of the dark and complex art of credit scoring don't necessarily give me -- or anyone else who handles their credit simply but responsibly -- too many props for prudence."
• The Bar
  • Standard and Poors: "Average FICO for Prime Deals (30 Year Fixed): 733 (2002)" (1998: 718)
  • E-Loan: 730

  Fair Isaac: "However, if you already have a high FICO score (for example, in the mid 700s or higher)... "

• “'It’s really complex. We’re talking about advanced math,' Fair Isaac spokesman Craig Watts said."

  Why, yes, it is so complicated, they couldn't even make it fit into some logical scale-- like 0 to 1,000. Instead, it's 300-850.

• "Fair Isaac CEO made $3.1M in '05" - "Grudnowski ranked ninth on the Minneapolis-St. Paul Business Journal's 2005 CEO Compensation list with combined direct compensation and stock options of more than $10 million."