Posted by Sean on June 10, 1999 at 10:48:38:
In Reply to: That's proof of something (but not of your statement). posted by Greg Fisher on June 09, 1999 at 22:23:13:
I like this site, the opportunity to discuss things and I am grateful to Christine for providing it for us. That does NOT mean that I march lock-step with her on every issue. Do I believe that credit scoring discriminates against people on the basis of race, gender, etc.? No, I do not. Do I believe that inquiries result in statistically significant lowering of your score? No, I do not. Do I believe that shopping for credit lowers your score? No, I do not.
If a person goes out to three car dealership over the weekend and lets all three pull her credit to determine what rate they would give her on an automobile loan. The chances of these three inquiries showing up on the same report is about 3.7% or 1 in 27. Even if she should REALLY go overboard and let 40 people pull her credit report it isn't likely to hurt her on this purchase, because:
1. Back-to-back autoloan and mortgage inquiries and/or duplicates are compressed.
2. Regardless HOW many people pull her report, there are still going to be three people that will be first. One will be the first to pull Experian, one will be the first to pull Trans Union and one will be the first to pull Equifax. Accordingly she has AT LEAST three choices right there.
Similarly a person that applies for new credit every two months is likely to end up with a new inquiry on each credit bureau every 6 months, or basically one inquiry on their report because inquiries only count for 12 months.
http://www.fairisaac.com/servlet/SiteDriver/Content/785
"By analyzing a large sample of credit file information on people who recently obtained new credit, Fair, Isaac was able to survey the panorama of credit activity across the U.S."
Fair, Isaac research indicates that the majority of people who receive new credit have an inquiry on their credit report. In fact, if you hit the above link, you'll get all the right answers to the credit questions and you can read in, as a practical matter, the likelihood of a person getting credit.
"On average, [the people surveyed] are paying their bills on time. Fewer than 4 out of 10 have ever been reported as 30 or more days late on a payment. Only 2 out of 10 have ever been 60 or more days overdue on any credit obligation. 85% of all consumers have never had a loan or account that was 90+ days overdue, and less than 10% have ever had a loan or account closed by the lender due to default."
A little thought should tell you that if you've been 30 days late on a payment your chances are still 40 percent of getting new credit. Sixty days late drops your chances to 20 percent. A charge-off or other delinquency-related closing of an account gives you less than 10 percent chance of getting an extension of credit. Furthermore we should note that those "less than 10 percent" may be receiving credit as a result of applying for secured credit cards, high-risk credit cards, or co-signed loans.
As you can also see from the research having 11 open trade lines is not abnormal at all, rather that merely makes you average. Having two closed collection accounts, 9 closed positive accounts, and 11 open and positive accounts would make your ratio of good accounts to bad accounts 10-1 without adversely affecting your score based on number of open accounts.
Here's a quote from the creditscoring.com website:
Will you please give me the formula used to arrive at my FannieMae qualified mortgage loan risk score so I know exactly: the impact of recent inquiries, how many inquiries are excessive, the right number of revolving bank accounts to have, the age my accounts should be, the degree of impact of existing balances have on retail accounts, the degree of impact on my score for my lack of open revolving accounts, and, specifically, the way to achieve a perfect score (the one you provide to mortgage lenders for FannieMae qualified mortgage loans)?
--
Greg Fisher
Cadillac Owner (1978 Eldo)(Red)
I would recommend to any Cadillac Owner (1978 Eldo) (Red) that he carefully review the Fair, Isaac research. A person who wants to achieve good credit should have the following:
11 credit obligations. 7 revolving, 4 installment.
No late pays. Zero, none, zilch, none, not one, none, not any, none. None. (Did I mention none?)
Less than $1,000 owed on all credit cards.
$12,190 total revolving credit. Less than 30 percent total utilization (won't be a problem, if you carry less than $1,000 total owed, see above).
13 years of credit history.
Less than 2 inquiries (0-1).
Once a person has achieved this state of enlightenment they can use the handy adverse reason codes (see http://www.advantagecredit.com/creditreporting/adverse_reason_codes.htm) to further optimize their credit score.
And finally I finish with a quote from the creditscoring.com website:
My primary point: get a life.
You must be seriously retired or unemployed, because you have WAY too much time on your hands. Do you really, honestly think people want to sift through your pathetic pschodrivel? Do we care that you can't take a simple answer? [You need expensive software and half a brain to calculate your score.]
What's your major malfunction? Did a credit agency person run over your dog or something? What's with the vendetta? I think you owe that Experian secretary a major apology for wasting so much of her time and just generally for being an ass.
WHO CARES WHAT KIND OF CAR YOU HAVE. Did I miss something? Did you think you ought to get preferential treatment because you own a Cadillac?
If I were those poor Experian employees, I would have at least blocked your e-mail, at most, mail-bombed you; you're really annoying.
I really feel bad for people like you, who cannot find anything semiproductive to do with their lives.
Lots of Luck in Finding a Life
Subject: Re:
Date: Sun, 09 May 1999 11:55:02 -0400
From: Greg Fisher
To: why do you want to know
I shall not be daunted! I resolve to redouble my efforts.
p.s.: You forgot the question mark after "WHO CARES WHAT KIND OF CAR YOU HAVE."
I would say that the guy who runs creditscoring.com has an amazing knack for being irritating; A true gift. There were "several" things he said that I thought were downright rude, especially considering that he is talking to someone who doesn't know the right answers and probably has no ability to figure them out. His "let's-elevate-it-to-your-supervisor-by-the-way-who-are-they" attitude is especially grating to some poor grunt who is just trying to blissfully live paycheck-to-paycheck and watching the clock waiting for 5:00 P.M. to roll around.
I don't think the CRA's have any clue how to improve a person's score. I got my credit score from Experian with marks next to some lost/stolen credit cards indicating that these items would "...have a potentially negative effect on ...future credit extension[s]..." A quick call to Fair, Isaac confirmed that my risk score would not be affected.
I can personally think of a few changes to the system I'd like to see (and included these comments in my response to the Fair, Isaac survey), namely:
1. I think if a person is approved for credit but not for the best interest rate (risk-based pricing) should automatically receive the top 4 reasons they didn't score better, even though they were approved for new credit. It is, in essence, a partial denial.
2. I think when a person pays the $8.00 to a CRA and gets their credit file it should CLEARLY show what is REALLY wrong with it. Not marks indicating something is derogatory, only to find out later it's not and no marks next to maxed-out credit cards, which are VERY negative. I mean, the person should get the credit report and the top 4 reasons why they might be turned down if they applied for credit. I can completely understand why they'd want to withhold the score, but what is the rationale behind witholding the adverse-action codes?
3. I think that agencies that don't report anyone positive shouldn't be permitted to report you negative. Have you ever had an account where as long as you paid there was nothing on your credit file, but if you stopped it showed up very quickly as a collection account? The same thing with landlords who don't say anything about you when you're paying rent, but if you move out and don't pay you end up with a big charge-off on your credit.
4. I think credit card applications should HAVE to say on it what CRA they query or at least know the information when you call. I have called up credit card issuers to ask them which of my credit reports they will pull and they don't know. I know they use zipcode look-up tables, and I'm always standing by with my zipcode, but it doesn't help.
5. I think double-scoring applications are an easy cop-out for credit card companies. That's where they run your application through a scoring process and determine that since you only scored 32 out of 100 on their APPLICATION SCORE that they want you to have 790 on your FICO score. Then when you don't pull it, they say, "Sorry, but you got turned down in part because of what Trans Union said about you, and these are the adverse reasons:" That's bull. If I'd have scored an 80 out of 100 on their application, they'd have let me in with a 620+ FICO, which I have, so I want to know the top 4 reasons I didn't do better on the application but that would be too much work for the credit issuer, wouldn't it?
That's "several" of my suggested improvements in the credit issuing and scoring industry.
Sean
Mazda Owner (1984 RX-7) (Black)