Seeing Through the Spin

Posted by Sean on June 11, 1999 at 09:11:57:

In Reply to: Re: Credit Scoring posted by Greg Fisher on June 11, 1999 at 08:33:06:

Who are you trying to unspin, me or Fair, Isaac?

Check out that research page again and you'll see that Fair, Isaac says they are talking about the "average consumer." Sure they are, but how did they determine the stats on that "average consumer?"

See http://www.fairisaac.com/servlet/SiteDriver/Content/785

"By analyzing a large sample of credit file information on people WHO RECENTLY OBTAINED NEW CREDIT..." (emphasis added).

So the people Fair, Isaac are discussing are not your average Joe off the street, nor just any 500,000 credit reports pulled at random. They are discussing people who applied for and successfully obtained new credit.

That means anyone who got turned down or didn't apply for credit didn't have their information thrown into Fair, Isaac's research. Wouldn't you agree that can skew the results of the report?

Would you like to be the average person who successfully obtains new credit? If so, check out the research. If you seriously believe that more than 90 percent of the American population has never had a collection show up on their report then you are letting Fair, Isaac snow you.

A final quote (from http://creditscoring.com/letters/tu.htm#no response):

To attain the highest credit score (in the score Trans Union produces for conventional mortgage loan underwriting, the "Emperica"), how can I tell what is the right "number of bank revolving accounts"?

CAN YOU, AT LEAST, TELL ME HOW I CAN TELL HOW MANY TO ADD OR SUBTRACT TO AVOID THE EMPERICA SCORE GIVING THAT AS A REASON THE
SCORE IS NOT HIGHER? (emphasis added)

Don't be facetious. First of all, if you have 1 revolving account and the adverse code report tells you you need more and you figure out from Fair, Isaac's research that you need 7 don't run out and apply for 6 new credit cards to try to obtain the magic number of 7.

Yes, that may let you score higher on one segment of the score, but your score in other areas will drop. You'll have too many accounts opened in the past 12 months, length of revolving credit history too short, too many recent inquiries in last 12 months, etc., etc.

Finally, I will tell you that I know of a person who obtained a FICO score of 805 about 9 months ago. She has 8 credit cards, a home equity line of credit, two mortgages on apartments, one mortgage on her house, and two car loans. She hasn't applied for any credit in the past 9 months. There are obviously some defects in her credit because she didn't get the magic 900 FICO (or is it 850, no one seems to know) score, but as for me, I'll be happy if I just obtain 750+

Follow Ups:

• I can see I'm going to have to break this down even more for you. Greg Fisher 09:37:24 6/12/99 (2)
  • Your Questions are Disingenious Sean 09:49:14 6/14/99 (1)
    • Your answers are guesses, and you are losing track of what you said. Greg Fisher 02:33:46 6/19/99 (0)

Post a Followup

Name    : 
E-Mail  : 
Subject : 

Comments:
: Who are you trying to unspin, me or Fair, Isaac?

: Check out that research page again and you'll see that Fair, Isaac says they are talking about the "average consumer."  Sure they are, but how did they determine the stats on that "average consumer?"

: See http://www.fairisaac.com/servlet/SiteDriver/Content/785

: "By analyzing a large sample of credit file information on people WHO RECENTLY OBTAINED NEW CREDIT..." (emphasis added).

: So the people Fair, Isaac are discussing are not your average Joe off the street, nor just any 500,000 credit reports pulled at random.  They are discussing people who applied for and successfully obtained new credit.

: That means anyone who got turned down or didn't apply for credit didn't have their information thrown into Fair, Isaac's research.  Wouldn't you agree that can skew the results of the report?

: Would you like to be the average person who successfully obtains new credit?  If so, check out the research.  If you seriously believe that more than 90 percent of the American population has never had a collection show up on their report then you are letting Fair, Isaac snow you.

: A final quote (from http://creditscoring.com/letters/tu.htm#no response):

: To attain the highest credit score (in the score Trans Union produces for conventional mortgage loan underwriting, the "Emperica"), how can I tell what is the right "number of bank revolving accounts"? 

: CAN YOU, AT LEAST, TELL ME HOW I CAN TELL HOW MANY TO ADD OR SUBTRACT TO AVOID THE EMPERICA SCORE GIVING THAT AS A REASON THE
: SCORE IS NOT HIGHER?  (emphasis added)

: 
: Don't be facetious.  First of all, if you have 1 revolving account and the adverse code report tells you you need more and you figure out from Fair, Isaac's research that you need 7 don't run out and apply for 6 new credit cards to try to obtain the magic number of 7.

: Yes, that may let you score higher on one segment of the score, but your score in other areas will drop.  You'll have too many accounts opened in the past 12 months, length of revolving credit history too short, too many recent inquiries in last 12 months, etc., etc.

: Finally, I will tell you that I know of a person who obtained a FICO score of 805 about 9 months ago.  She has 8 credit cards, a home equity line of credit, two mortgages on apartments, one mortgage on her house, and two car loans.  She hasn't applied for any credit in the past 9 months.  There are obviously some defects in her credit because she didn't get the magic 900 FICO (or is it 850, no one seems to know) score, but as for me, I'll be happy if I just obtain 750+


Optional Link URL:  
Link Title:         
Optional Image URL: