Okay, don't shoot the messenger. A gentleman from Fair Isaac & Co came to my office at Toyota today. He actually spoke to customers who were planning on financing a car. I had a customer who had great credit. He had a 630 FICO with no lates. He had 4 credit lines, with a 45K limit, and NO UTILIZATION. He owed nothing. This Fair Isaac & Co gentleman said to close all 4 accounts. He said, "Credit lines that are open, lower your FICO, regardless of use. If you have 40k in available credit, you are a high risk. Fair Isaac & Co is worried that you will get depressed and utilize every dollar you have been offered, therefore your FICO suffers, as you are a risk." My customer asked him why his available credit was bad and he said, "If you go crazy or decide to get impulsive, you can do more damage that that of a person who has no credit lines at all." This reasoning contradicts what I previously thought, but it is certainly something to think about.
The "source" is an idiot. Plan on giving him a Christmas gift: FICO for Dummies. Separately, 630 FICO is not great credit. The statistical rate of credit delinquencies for this score is 31%.
Yes ... 630 is not great credit. I printed out a report from FairIsaac on "Understanding Your Credit Score" and it states where people score: below 620: 20% of the population 620-690: 20% of the population 690-740: 20% of the population 740-780: 20% of the population Above-780: 20% of the population This would place this customer in the bottom 40% and corresponds to what another poster indicated.
FICO has for years hid behind the story taht their mathematical algorithm is so complex no-one can explain it. This guy may be their attempt to prove that. FIRST, as of January 1 this year FICO started counting CLOSED credit lines just the same as open lines, so closing them will not raise the score. IN FACT, SECOND, it will probably lower the score because a zero credit lne witha zero balance is 100% utilization. Now, go play with your FICO SCORE simulator and with ANY credit line, dragh the line to 100% utilization and see what happens to the score - it plummets. THIRD - I suspect this guy is a mole - sent not by FICO but by a lender to help people sabotage their own FICO scores. Why? the lower the FICO the higher the interest rate. If you have a FICO of 750 but I can get you to do something stupid like nuking your credit lines to 100% utilization, I can jack up your interest rate. You are the same person with the 600 FICO score you were with the 750 FICO score, but you will pay a much higher interest rate. Do you REALLY think FICO gives a rat's a$$ about us? I don't.
I think the guy is a loon. $45K in limits may be seen as too much depending on income by some lenders. But close all accounts is crazy. I would keep 2 open with a CL of $15000 or so.
Alright I have to reply. I make about 112000 a year have well over 160000 in revolving cls an my fico is usually 760ish I have about 31% utilization at any given time your fico boy is full of shetttttttttttt
Hi Chipper, are you sure that guy's business card said FICO and not FAKO? ...did you find out the bottom line price on a Corolla S auto w/sunroof, and also, are side impact air bags available as a special order only, or are they ever just shipped that way automatically.
Another dangerous aspect of listening to this advice is that if you do it, it will take years to recover. Most platinum cards require at least 2 accounts open for 2 years or more as proof of payment history.
Why is that so hard to believe? Our sales manager at our location has a friend who works for Fair Isaac. When you work in a credit related industry for so many years, like car sales, you are bound to meet people from banks, CRAs and even Fair Isaac. I see no reason for me to fabricate an otherwise boring event.
Fair Isaac depresses me! LOL!!!! Almost like whatever I do I will have a low score! Forget the score for now, I just want all the negatives off my report.
WITH RNG NO MATTER WHAT YOU DO...YOU SUFFER!!! I PAID $30,000 IN CREDIT CARD BILLS IN ONE MONTH AND TOOK A BIG "HIT" I OWE WAY LESS NOW WITH 706 THAN I DID WITH 739 (HIGH F.I.C.O. EQUIFAX)
Re: Re: Fico Advice From The Source Well, what does he do for Fair-Isaac? I know people that work for Coca-Cola, but they don't know what the secret formula is. His information directly contradicts information found on the Fair-Isaac website. I don't know why this person has a FICO score that's so low, but it wasn't because he had these open accounts with high limits.
Re: Re: Fico Advice From The Source Don't forget ...this is the company that "THINKS" ONE INQUIRY IS BETTER THAN ZERO!!!
Re: Re: Re: Fico Advice From The Source He's a project manager. I don't know what he does, exactly. I realize that the people you know don't know the secret to Coca-Cola, but I would assume that someone at Coke does, or else it would be impossible to produce. So it's safe to say that there is someone at Fair Isaac that knows how the formula works, and I am under the assumption that through his years of experience and his position in management that this gentleman is one of those who knows, or the sales manager wouldn't have allowed him to dispense advice to a consumer.
I didn't see his business card, he didn't tell anyone he was from Fair Isaac. It was only after he left did I find out. Look for the car at about 15,700. That's a good deal. I haven't seen an S with side air bags, so you would want to order them.
It's quite possible that this guy was correct. High available credit itself could lower your score. But it could have a minimal effect, like 10 points or so. On the other hand, following his advice could absolutely destroy your score by distorting utilization, age of accounts, etc. You could lose 100 points there. My interpretation? That FICO is obsessed with facts, but always views them out of context, with absolutely no conception of logical cause and effect. No one there cares about what happens when they pretend to represent many different risk factors with a single credit score. Or in this case, what happens when someone is dumb enough to follow their ridiculously oversimplified advice. Another interpretation: offering advice is often an attempt to blame a victim for his/her own condition. If you had just followed my advice...closed all your accounts...etc., then you wouldn't be in this condition. But since you didn't, it's all your fault, and I'm not responsible for what I do to you. Psychologically, I think that explains this guy's motivation better than anything. I'm sure that anyone who works for Fair,Isaac has to develop some very powerful defense mechanisms just to get to sleep at night.
BTW, if anyone at Fair, Isaac ever decided to use some elementary logic, they would realize that the best evidence that you won't go crazy and max out your credit lines in the future is low utilization, which means that you haven't gone crazy and maxed out your credit lines in the past. Great post, Chipper. You're an excellent messenger.
Re: Re: Fico Advice From The Source Good example. It's like my auto insurer saying to me last year "I know you haven't had an accident or ticket in 30 years, but your Mastercard payment was 30 days late last month, so statistically you're due to run your car at high speed through a day care center operated by a dozen nuns. That's why we are cancelling your policy - you are now a bad risk." Makes as much sense as the assumptions behind the FICO algorithm.
