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     | Friday, January 19, 2001 - 05:47 am  As most are aware, there is a site called worthknowing.com which gives you a free credit report generated from Trans Union. They also give you their own version of a credit score, they range from 1-100. Now I know I shouldn't be complaining because after all it is free, but this site is unbelieveable with their scoring. Example my husband;s score was a 32 and he paid dwon about 1000 of his debt, nothing else changed, no new negative added or tradelines etc. nothing more closed, you get the picture and now his score dropped to a 10 with their scoring sysytem. This makes absolutely no sense whatsoever. My score was a 32 and dropped to a 15, what did I do ?? Nothing either except pay down my debts. I did email them and will let you know their reply. But several others posters have said the very same thing, they redesigned their site and I think they made some errors in their scoring system. I realize we should only rely on "true' scores so to speak, but this seemed interesting when you weren't able to get your scores and like I said it was free, but I guess you get what you pay for??
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| | Friday, January 19, 2001 - 10:24 am I too found their page to be less than helpful. The report it generated (and still generates) for me was way out of date. And I couldn't tell you about my husband, because it won't "Authenticate" him. I guess it doesn't believe that a person can go 7 years without an auto loan or mortgage. It's definitely NOT worth the time it took to type in the information.
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| | Friday, January 19, 2001 - 02:57 pm Hello All: I've been extremely busy the last few weeks and wow have I had to do some reading! I read a number of different threads (one where even Christine became upset - don't shut down the site please!) There seems to be a new consensus on the boards that paying off a debt should some how increase ones credit score. "Pay down your debt!" Oh what a piece of B. S.! Sure we all want hamburger; quick fix messages and for the likes of the lending industry this works wells. Sell this Jonestown Kool-Aid to everyone for it sounds good. Folks this is a "one size fits all" statement and anyone that spouts it should be questioned seriously. For the vast majority it may be ok if you are over extended. Then it is good advice but for those that want credit it has little to do with it. This seems to be the latest thread for a series of individuals that are questioning why their score goes down when they pay off credit. You are looking at it from a disjointed view. Yes an askance view not one of a computer program. Do not look at it from a view of human logic but from a view of FICO logic. Please everyone read the congressional testimony from the CEO of Equifax (I believe.) Its link is on Greg Fisher's site and is well worth reading. Simply think of your "creditworthiness" as a silly factor that has no definitive boundaries. It is neither black nor white, but constantly moving. You have to remember the variables that factor into your score so heavily. It really scares me because I understand the abstractness of the concept (and the unfairness.) after all these years Here's Frank's attempt to make some sense. If your DTI (((debt to income))) is too high it is a negative. What is too high? That is one of the abstracts. It is not a % nor is it a fixed number. It is more complicated than a number or % whereas it goes to reflect the very kind of debt as well. Many have said that finance company debt is negative and while this may be true it may be better than other debt in certain circumstances. Many consider mortgage debt "good debt" but it too may also lower your score. Diversified debt is the only good debt but no one knows how to best diversify the debt. Is 3 Credit cards on 10 lines/types of credit too much or too little? Is one CC on 5 lines too little? Even the heads of the CRAs don't know so don't try. What is known is that for nearly all cases if you don't need credit you are ok. If you need it or want it you are probably a risk and expect some problems. So why in the world is my score lower when I pay off my loan on time and never late? How can a mortgage loan be a bad deal and score lowering? Well the second is easier so I will attempt that first. Let's say you have a new mortgage loan that you used to pay off an existing car loan and credit card. The car loan was a positive loan that you held for several years. Your balance was say 10K on a principle of 30K. Now you take out a second loan on your house for 10k to pay off the car and get a tax break. In most cases it makes perfect sense and most accountants would suggest you do so if you have the tax consideration. Now after you did this you pulled your credit and find your score dropped. WHY? Before you had a 2-3 year old loan that had a ratio of 33% (10K to 30K.) It had a track record of 24-36 positive months of payments. You had a 2-year-old (2k) credit card account that was never over the limit and never late. All this was good and goes to aid your score. Now since you refinanced you have two closed accounts and one new loan that is for 12K and you owe 12K (100%.) Furthermore you just got the loan and now you are looking again. I can not prove it but I am sure there is a "trigger" somewhere in the program to spot possible bankruptcies. Taking on a lot of new debt is a signal for one getting ready to file. So what you did for tax purposes and what makes perfect sense, the computer has just seriously lowered your score. So why is paying off a loan (without consolidating) also bad? Well the above example is one reason and here are others. If you had 3 lines of credit and now you pay off a loan (any loan.) You now have 2 lines of credit and may have "insufficient lines of credit" to get a good score. This is one of the reason codes used. You have plenty lines of credit but have 3-4 credit cards. You pay off the most expensive interest rate card, but now get a "insufficient history." The cc you paid off was one you got years ago when you were starting out. Now you are established and can get a lower interest rate card. You got one and after a while closed the other account - bingo you got it! You got 5 CCs, one mortgage and 2 car loans. You close the car loans and bingo you are not diversified. And it goes on and on. WITH CREDIT SCORING EQUTY IS IRRELEVANT (since a human does not look at it until after the score is out!) So folks don' be surprised when you pay off a loan that your score goes down. I speak from experience and while I can wait and I make all decisions based upon interest rates, and personal needs; I fully understand these facts. I believe, from the bottom of my heart, that the system is completely unfair. I do not like the very people that advocate the perpetuation of the system no more than I liked the folks (I did not know) who advocated the perpetuation of racial discrimination (actually I put these pro credit scoring people in the same boat as those other racists.) However, I must make the statements I did make. Now I am going to sound like Shylock in this statement. If you paid off existing loans for the simple reason to get new loans you might need to think again. I fully understand the advantages of refinancing a mortgage (I did myself) but did you pay off that loan for the purpose of refinancing? Did you pay off the loan because it made economic sense to you? Good! Did you pay off that loan because the loan was of no tax, social or personal benefit to you? Good! Did you pay off that loan because your broker told you that you needed to pay it off to increase your score so as to lower your interest rates on a refinance? Great! Did you pay off that loan because you could get a bigger loan? Watch out! Frank
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| | Monday, January 22, 2001 - 02:47 am Here's Frank's attempt to make some sense. If your DTI (((debt to income))) is too high it is a negative. This thread and, subsequently, your comments, addresses FICO scoring. Hence ... Your debt to income ratio has absolutely NO effect on your FICO scores. Your income information is not maintained at the CRA's and, therefore, can NOT be utilized to determine your risk score factor.
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| | Tuesday, January 23, 2001 - 01:09 am i had a long talk with my lawyer today, and about assembling a "class" for legal action against (un)fair isaac and this whole stinking heap of refuse called FICO scoring. what we need to move forward is victims-- people who have suffered actual damages as a result of their credit scores who can document and prove it in court. my situation would serve as an ideal model, as the $75,000 point is being rapidly approached, the cutoff where most attorneys will take this type of case on contingency. the other alternative is to simply do it on a fee basis, with each screwee contributing their share of a retainer-- with enough participants this should be an amount no more than $1000 a head, possibly much less depending upon how many victims we can find to step forward and take a stand against (un)fair isaac and their quack method of defining who is credit worthy and who isn't. it's a big country out there-- a couple hundred affected consumers could form the core of a very strong case to be presented in federal court. i can prove that: my FICO score is and has been the ONE and ONLY reason why i have been unable to refinance my primary redidence at 70% LTV. the 3-year lock on my LIBOR indexed adjustable loan just expired, and my interest rate is now 9.125%. sale of a property last summer and eliminating most of my consumer debt and one mortgage did not raise my scores to the magical 680 carte blanche to the best rates and programs most conventional lenders are offering. without 680, it's portfolio lender search time, low LTV, higher rates, more closing costs, and hassle up the FICO-shaft. that same software that writes B/C borrowers A loans sends A borrowers to B/C lenders. let's see how the secondary mortgage investors like it when the rate of default suddenly accelerates as B/C borrowers can't make their payment on properties FICO scores allow them to step into with little or no money down. I have had to undergo two superfluous refinaces, one in 1999 another in 2000 with portfolio lender who allowed only 70%-75% LTV, with funky programs tied to overseas indexes or short bonds with high margins. each time through the mill racks up many thousands in legal expenses, appraisal, mortgage broker fees, title insurance, recording fees, etc etc etc-- the mortgage broker i have been working with since 1995 will put in writing, on behalf of wells fargo and PNC national bank, that my FICO score ALONE is responsible this. my credit is flawless, and i mean not one single late payment, ever! recently bankrupt borrowers can often get rates and terms better than i can-- it all depends upon the number the computer spits out when you stick in name and social security #. equity is meaningless. in december 1999, one of my properties appriased for $740,000. the first mortgage was $453,000, and i could not refinance it with a conventional lender. this is because of FICO scoring. i had run up some consumer debt to finish some renovations-- following expiration of the promotional rates offered by many credit card companies, these balloon up to 16%-22%. i told my lenders that i intended to eliminate this debt with proceeds from the refinance. they tell me all well and good, but unless your FICO score is 680 or higher, the loan is unsaleable on the secondary market, and therfore no longer conforms to fannie mae/freddie/mac guidelines. my primary residence appraised for $654,000 in december, and i owe $440,000-- a 70% no cash-out refinance does the job on this one quite nicely. sorry, douggie boy; your middle score is under 680, go look for a portfolio lender. wells fargo denied me for their expanded solutions program, with my credit score cited specifically in writing as the reason why. they came back with an offer of 10.125% on a 30 year fixed, with one point. if enough people can be brought together, i can take this one in to my big-guns boston attorneys, for litigation in federal court. taking it all on by myself is not a viable option, and without the support of a large number of plaintiffs, the task of convincing a jury that i, and we all have been discriminated against, and not treated equitably by these thoroughly unreliable and arbitrary risk scoring hack-based computer models, becomes that much more onerous and difficult to prove. i'm not going to throw good money after bad, and it makes no sense to go in to court only to have the judge toss the entire class action based upon a motion by the defense that some little technicality has been overlooked, or flip-flop of finger pointing as to the determination of who is responsible for this mess, and to what extent if several parties may end up being involved. this board itself and all the gripes and complaints we see posted here every day bear witness that the application of a scoring system based upon computer modeling has a great many inherent flaws, and cannot possibly give each and every borrower equal and unbiased consideration when applying for home mortgages. there are too many variables invloved-- computer models can't even give accurate weather forecasts here in boston much more than 24-48 hours ahead, and even at that, they are frequently downright wrong with their predictions, at best little more reliable than flipping a coin. how then can such a technology in its present state be dictating policy to an entire industry, and one of the most important sectors upon which the american economy depends at that?!?--  . (un)fair issac has labeled me as an unacceptable risk for my loans to be underwritten for sale on the secondary mortgage markets. my lenders might tend to disagree-- they write the loans, and then find themselves unable to close because of FICO. it would be nice to make the california jackasses who now control the mortgage industry (sanctioned by the fed) answer in court, based upon spotless credit and very strong equity positions, what is wrong with the paper i give out my properties? no lates, $200,000-$300,000 equity or more, strong, stable economy, apartments beautifully renovated, a rent roll that carries all expenses, tenants in good standing, no lawsuits pending, insurance out the ears (often more than required), etc... i want isaac to tell me why my mortgages are at 8.5% on the low end and 11% on the high end- that one was a 100% LTV from my friendly neighborhood non-ficobound banker. FICO is preventing me from refinancing this and other consumer debt into one or two simple, low-interest, tax-deductible notes at LTV never higher than 80%; usually much lower. time to get the show on the road--- christine, sorry things are slow here-- i have a load of paperwork coming your way. my mortgage man is a bit snowed under, both with the blizzrd we had over the weekend, and a massive volume of refinance applications as the rates have improved notably since the year began. all others, join in if you feel you have been FICO-screwed too-- the best way to help ourselves is to help each other. in the end, this lunacy must inevitably go the way of da do-do boid, we hope sooner rather than later. as i have noted several times before, if computer modeling for prediction of actual risk as it applies in real life scenarios is so great, let (un)fair isaac turn their attention to the east, namely wall street, and put their money where their back-room computer hackware is. there are those who claim to be able to beat the casino at blackjack-- i have a program that can play and apply these so-called experts' strategies exactly as specified, and then run a simulation at a rate of 1,000,000 hands in about 20 minutes. have you ever heard of a casino that loses money? a casino is like a bank that gives their clients back $97 for every $100 they put on the table. they cannot lose, though an individual player may get lucky and come out ahead in the short term. let's see if (un)fair isaac can write a program that breaks the bank. they have far more to gain and far less to lose by applying their efforts to this type of problem, rather than creating a whole generation of new problems for the real estate and banking industries. credit score can serve as guidelines; when it gets to the point where nobody even looks at a borrower's credit report, and decisions are made based entirely upon an arbitrary score some mysterious computer program generates, i dare say it has gone a bit too far. the dog is walking the master directly toward the edge of a cliff, with no sign of slowing down- in fact they're breaking into a run, with the master blissfully keeping his eyes closed, and enjoying the warm breeze on his face. where do you think it's going to lead?? another night up all night--- please let's try to get something done here, before it's too late. thanks all---  * douglas pratt
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| | Wednesday, January 24, 2001 - 06:15 pm John Shimmer said Here's Frank's attempt to make some sense. If your DTI (((debt to income))) is too high it is a negative. This thread and, subsequently, your comments, addresses FICO scoring. Hence ... Your debt to income ratio has absolutely NO effect on your FICO scores. Your income information is not maintained at the CRA's and, therefore, can NOT be utilized to determine your risk score factor. Frank says: John I used the wrong acronym and for that I apologize to all; however, I believe if one read the remainder of my thread and followed my meaning it would have been clear that what I was talking about was the ratio of ones debt to ones limit. Or more precisely the remaining balance to ones original balances (or limit in the case of CCs.) While I definitely used the wrong phrase and term with regard to FICO, the point is the same. Paying off a loan is negative with regard to the total number of loans if that total number is low. Also for a person with a 6-figure income a ratio of $900 on a CC limit of $1000 is also negative. A loan with a balance of $5000 on a CC limit of $25000 is considered good only because of the ratio. And while carrying a balance of say $10K on a $50K car loan may seem worse than a balance of $0K on that same loan it is actually negative if the potential borrower has few (?) other loans. If one looks at the person with a $900 balance on a 1K line as negative and say he has a solid 6 figure income while the second person has a new income that has allowed this limit within the proper specified time (?) I submit that the first will get a lower score while being a much better risk (minus "risk score.") The first just doesn't need the limit for he will pay that balance in full every month but has it now appear because this is when it was reported. I know the latter statement has no bearing on FICO, but the point I was attempting to make was the ratio could be extremely important and negative. Reference links below Frank http://www.fairisaac.com/servlet/SiteDriver/Content/912 This is a comprehensive list of the information considered by Fair, Isaac scoring models in calculating a FICO score at one of the major credit reporting agencies. For more information, please see understanding Your Credit Score. Past payment history Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.) Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items) Severity of delinquency (how long past due) Amount past due on delinquent accounts or collection items Time since (recently of) past due items (delinquency), adverse public records (if any), or collection items (if any) Number of past due items on file Number of accounts paid as agreed Amount of credit owing Amount owing on accounts Amount owing on specific types of accounts Lack of a specific type of balance, in some cases Number of accounts with balances Proportion of credit lines used (proportion of balances to total Credit limits on certain types of revolving accounts) Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
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| | Thursday, January 25, 2001 - 09:11 am No biggie, Frank. I mentioned it only because there are many new and/or infrequent users on this board, and I didn't want someone going away thinking that their debt to income ratio affected their FICO score(s). Good information, though. Thanks.
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| | Thursday, January 25, 2001 - 04:31 am One final point I would like to present for thought for everyone. As I said above I used the wrong term and should have used the term "ratio" or "current balance to original balance." Ok! However, if one would like to argue with John one could easily do so. For argument sake I submit the following hypothesis: According to Fair Isaac two (of the many) items used in the risk score model are (URL above) "Amount of credit owing" and "Amount owing on accounts" Now how in the world can this be used in the model? If Bill Gates, Donald Trump, Frank Hardy and Ira Radinskaya each have one million dollars of personal "credit owing" and they each owe $200K on five accounts; how in the world can this be used without knowing the gross "INCOME" of these individuals? Remember this is not the proportion talked about in the FICO items "Proportion of credit lines used (proportion of balances to total Credit limits on certain types of revolving accounts.) Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans.)" These are raw numbers "amount of credit owing!" URL above. I suggest we all would agree a million dollars of credit owing is "pocket change" to Bill and Donald and is far too much for Frank, but what about Ira? Do you know her or her ability to either service $1 million or not? Well I submit that FICO would know! While I am sure they will publicly state they do not maintain your gross income, they definitely know about it. We all know they do maintain data on your job, your employer, your length of employment and your age. With this data (if they don't have it outright) they can do a statistical analysis and determine how much you make or earn. They are all about statistics remember? So, one could easily argue that DTI is a proper indicator also. Frank
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| | Thursday, January 25, 2001 - 09:40 am Frank, of course debt to income is the ONLY way to properly underwrite. That's why almost every application asks for the income. The problem is that loans are declined based on the FICO scores without any regard to the income. Also, I want to clarify from your first posting in this topic: "You pay off the most expensive interest rate card, but now get a "insufficient history." The cc you paid off was one you got years ago when you were starting out." This is again a matter of terminology, but extremely important because so many people read it. PAYING OFF a credit card will not lower the scores, most likely the scores will go up, and if the debt to credit limit ratio was high, scores WILL go up. CLOSING the account might well lower the Score.
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| | Thursday, January 25, 2001 - 10:51 am How do we know income is NOT taken into account in the FICO score? Credit reports show your employers names and addresses, which must have been obtained from credit applications (I sure don't call them and tell them who I work for). Why would they not also get that information from credit applications? Also, I recently pulled free credit reports online from two different sites (worthknowing.com and truecredit.com). At least one asked for a gross income range to pull the application (I can't remember on the other). How can we be SURE that that information is not used in computing the score, as we consumers don't have access to THE SECRET FORMULA used to produce FICO scores?
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| | Thursday, January 25, 2001 - 12:42 pm Why don't they report income? Why don't they report how much you have in your savings and checking accounts? And how much you investments are worth? I assume it's because if they can't even get the employers and addresses right there aren't many people who trust them with that other stuff. I'm guessing there is a law preventing them but I'm not sure. I think it's pretty unlikely that the CRAs and Fair Isaac are secretly storing incomes and using it in their formula.
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