WOW... look what a little surfing the web will turn up. Amazing detail on how inquries count in your fico score..... Find the orginial here... http://nt.mortgage101.com/partner-scripts/1213.asp?p=mtg101 good luck, bkev ---------------------------------------------------------- FICO Scores FICO® scores were developed by Fair Isaac & Company, Inc. for each of the credit repositories. The scores are: (Equifax) Beacon®, (Experian formerly TRW) Experian/FICO and (TransUnion) Empirica®. They are simply repository scores meaning they only consider the information contained in a person's credit file; they do not consider a persons income, savings or amount of a down payment for a mortgage. The scores were designed to assess risk. They are useful in directing applications to specific loan programs and to set levels of underwriting, i.e. streamline, traditional or second review. The scores are objective, consistent, accurate and fast. Many people in the mortgage business are skeptical about the accuracy of FICO scores. Scoring has only been an integral part of the mortgage process in the past few years; however, the scores have been in use since the 1950's by retail merchants, credit card companies, insurance companies and banks for consumer lending. The data from large scoring projects emphasizes the accuracy, the predictive quality of the scores. Large portfolios have been scored for mortgage servicing and investment groups, and again, they demonstrate that FICO scores work. The scores were developed from each repository's database using actual loan performance. A sample of over 750,000 consumers per repository was used. The repositories have each made great strides to increase the accuracy of their respective database through computer technology and internal monitoring. There is a new standard reporting format for credit grantors to use when sending electronic information to the repositories; this is the critical first step to providing accurate data. The scores use a multiple scorecard design. Each repository uses 10 individual scorecards, and the models at each repository are the same. This increases accuracy and optimizes the predictive variables for each subpopulation. (For example, a borrower with two 30-day late payments will be scored against a population with some minor delinquencies.) This feature may cause a borrower with delinquencies to score in the same range as a borrower without delinquencies. Scorecards are reviewed and updated every twenty-four months. The actual scoring process is proprietary, and the algorithms are copyrighted. We can share the predictive variables, the portion of the credit file considered and the weight as provided by Fair Isaac. They are: Previous credit performance (35%) Trade line information specific to payment history Current level of indebtedness (30%) Current balance compared to the high credit Time credit has been in use (15%) Opening date Types of credit available (15%) Installment loans, revolving accounts, debit accounts Pursuit of new credit (less than 5%) Inquiries FICO has changed the way it factors credit checks, inquiries. These changes should minimize the "negative" effects that aggressive rate shopping or the normal mortgage process can have on a mortgage applicant. In the new Beacon version, the deduping process has been expanded beyond seven days. One variable counts the number of days within 365 days of scoring. If there has not been an inquiry, the deduping mechanism is not activated. If there is a consumer originated inquiry within the past 365 days from mortgage or auto related industries, these inquiries are ignored for the first 30 calendar days from scoring; then, multiple inquiries within the next 14 days are counted as one. Each inquiry will still appear on the credit report. Scores should not change significantly because the variable in the model using inquiries contributes less than 5% of the predictive power of the model. According to Equifax statisticians, an average of 5% of the credit reports in the Equifax consumer credit reporting database (over 200 million consumer files) will see a change in score due to this. Fewer than 5% of those will see a change significant enough to effect a loan decision. In order to get a score a borrower must have the following conditions in his/her file: No "Deceased" indicator on the credit file At least one undisputed trade line that has been updated in the last six months One trade line open at least six months Scores range from 350 (high risk) to 950 (low risk). A scorecard of 660 will be 660 on Beacon 96, Empirica and Experian/FICO if the data on each file is the same. However, each repository is likely to contain different data. Every score is accompanied by a maximum of four reason codes. Reason codes identify the most significant reason that a consumer did not score higher. They are not red flags. Consumers with scores in the 800 range get reason codes just as consumers with scores in the 500 range. The reason codes may be used in describing to the consumer the reason for adverse action. Scores are not part of the credit file and are not covered by the Fair Credit Reporting Act. Scores, if disclosed to the consumer, must be related to the credit file - using the reason codes - since the score has no meaning in itself; the meaning or risk level is assigned by the lender and the investor. When applicants have erroneous information reported, document the inaccuracies. The easiest way to do that is to have your credit-reporting agency upgrade the merged in-file to an edited mid-range report or to a Residential Mortgage Credit Report. With the upgraded report, you can ignore the score! The file will have to be handled in a traditional manner for underwriting and investment purposes. The developed report will provide the paper trail that investors want.
I just thought about this.... 5% is not 5%..... Think about it.... 5% of 350 is 17.5 which would lower the score to 333 if the scale was lower than 350. 5% of 950 is 47.5 which would lower the score to 903 but who knows anyone with a 900+ score? More likely? 720 score reduced 36 points to 684. From prime credit to average... just not fair (no pun) is it??? good luck, bkev
"Scores range from 350 (high risk) to 950 (low risk)." Fair, Isaac: "Most U.S. consumers score between 300 and 850." -- http://www.myfico.com/asp/ScorePowerSample.asp "The scores are objective, consistent, accurate and fast." But, the "actual scoring process is proprietary, and the algorithms are copyrighted." So, how do they know the scores have those characteristics? It sounds like a commercial. "Scoring has only been an integral part of the mortgage process in the past few years; however, the scores have been in use since the 1950's by retail merchants, credit card companies, insurance companies and banks for consumer lending." Fair, Isaac: "Developed first credit bureau risk scores" in the "1980s" -- http://168.230.129.57/servlet/SiteDriver/Content/353 Don't believe everything you read.
Re: Fun with numbers We are. Maybe I'm reading your post wrong, but I'm taking it as a point- counter point. You pull the quote about all three score ranges but then cite a reference of only the FICO Beacon (Equifax) range. Did I miss something?
A puzzle Yes. We weren't talking about the Trans Union score, but we are now. 1. Where did I "pull the quote about all three score ranges."? Please copy and paste the words. 2. "...but then cite a reference of only the FICO Beacon (Equifax) range." What's the title of the article? 3. What major (or any) lenders use the Trans Union score?
Re: A puzzle As for Question #3, from the information shared on this board it would seem every mortgage company pulls it (even if they discard the low and the high of the three) and many credit card companies pull it for online approvals. You could find out more about that at http://www.millcbs.com/search.asp. But going back to the spirit of the original post.... I was sharing information with the members about INQUIRIES and how they effect your scores. I know many people had been asking the question of what weight they played in the process.
I have read on a few sites that state one score is the same regardless of the CRA. In reality, you are unlikely to have the exact information on each CRA anyway. And since each scoring model from each CRA is secret and proprietary, I find it very unlikely that the exact information on each CRA would produce the same score especially since one CRA has a different score scale. In other words, don't try to use logic when analyzing credit scores, logic was not implemented into the model. Me thinks they added a random number generator into the scoring models to confuse everyone. Haha.
Re: A puzzle MikeB, your stuff is funny. Thanks for the laugh. I've always thought credit scoring is good conversation fodder for cocktil parties... nobody really knows how it works, so speculation runs wild and you can start your own rumors. And it isn't politics or religion. And if you don't go to cocktail parties, start looking into credit scoring-- it'll make you start drinking. Bkev, I think I see the confusion. The point is that only as of a few months ago, Trans Union is distributing the "TransUnion" score-- as opposed to the Trans Union FICO score (called Emperica). One is the FICO and one is the fake-O. The California score disclosure law spawned the latter-- and it's a big joke they're trying to play on an unsuspecting public. Following these guys around is like watching the Keystone Kops. What lenders are using the TransUnion score? Nobody I know. Why should they?
Re: A puzzle MikeB Me thinks they added a random number generator into the scoring models to confuse everyone. -------------------------------------------------------------------------------------- Maybe that is NOT far fetched...I took out NO new credit, PAID OFF $1,000's of dollars and F.I.C.O. SCORE DROPPED...
Re: A puzzle I called Sir Issac himself, and here is his reply regarding FICO scores and how they are derived: "Mike, remember those numbers in Algebra class that had everyone saying what the hell will we ever use that crap for?" You mean imaginary numbers? <cough> "You didn't hear it from me!" <cough> No way! "WAY!" HAHA. Figures......
