See link to slide http://www.ftc.gov/bcp/creditscoring/present/sld036.htm Does this explain why the big bump in a FICO score when you get the last derogatory public record or previous serious delinquency off of your report? Itâ??s not that you have necessarily gotten XXX number of points through the deletion of the inquiryâ?¦. but according to comments below, it is that there are actually two different scoring models used, and whether you wind up being scored by model number one or number two depends upon whether or not the FICO analysis of the Credit Report answers â??yesâ? or â??noâ? to the question PRESENCE OF DEROGATORY PUBLIC RECORD OR PREVIOUS SERIOUS DELINQUENCY? The concept of a consumer falling into one of two scoring models was included in presentation by Pete McCorkell, Senior Vice President and General Counsel of Fair, Isaac and Company. Included in http://www.ftc.gov/bcp/creditscoring/creditscorexscript.pdf PUBLIC FORUM: THE CONSUMER AND CREDIT SCORING ,July 22, 1999, Matter No. P994810 Federal Trade Commission Comments by McCorkell about Credit Scoring: Begin quote [ â??One of the things we've done with the bureau scores is to actually use multiple scorecards rather than a one size fits all scorecard. And that will become relevant later in the afternoon when we talk about what ought to be disclosed. And I think the question that Jodie posed is, how can I raise my score. Because of the multiple scorecard design, it's not possible to tell somebody, if you do this, your score will go up by X, because in fact the credit bureau information is a moving target. There's always information coming into the credit bureau. Essentially on a daily basis credit bureaus are getting information from credit grantors. Also, our systems consider the age of certain types of information. A delinquency last week is a lot worse than a delinquency five years ago. A new account that was opened up last month is more significant than a new account that was opened up three years ago in terms of pursuit of new credit. And so even if you don't do anything with your credit. You don't use your credit card in a given period of time and you don't make a payment. And of course if you don't make a payment for too long, something will happen, because the credit grantor will now start reporting you as delinquent. But, you know, you don't miss a payment, but you don't make a payment. Even if you don't do anything with your credit history, just the passage of time is going to affect some of those things. And so I could sit there with somebody's credit report and say well, if you close this account, or if you paid off that account, here's what would happen to your score if nothing else changed. But something else will always change. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Following comments highlighted by creditnetter XXXXXXXXXXXXXXXX [ And then one of the things that may change, is that by doing something you may wind up on a different scorecard, because the way that the system is split, is first of all it looks for the presence of serious delinquency information, either in the trade lines or in the public record part of the credit file. And so we have sort of the goods and the bads -- the previous goods and bads now separated using different scorecards, because if we used a one size fits all scoring system, anybody with any delinquency would get a terrible score. But, in fact, not everybody with a prior delinquency presents the same degree of risk, so we can do a better job. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX end highlights by Creditnetter XXXXXXXXXXX Continued comments [ Quote: Now, the people with prior delinquencies as a group are riskier than the people with no delinquencies as a group. But we can do a better job by this split scorecard design of finding the folks with prior delinquencies that today pose a reasonable risk versus the ones with prior delinquencies who are still just terrible risks going forward. And then depending -- and then after we sort of make the split based on the existence of delinquency, then we also look at some other information: the â??thickness of the file,â?? in a sort of philosophical sense, how many trade lines, etc., there are, the age of the file, how long has this person had established credit. Again, somebody who is 50 years old and has trade lines, most of which are now closed, that may be a very typical pattern. Somebody who is 22 years old and has 50 trade lines, and they've only been in the file for 24 months and they've got 50 trade lines already, that's probably kind of a strange bird. And so we're using different scorecards to evaluate those different groups of people and the recency of new trade lines opened. Again, somebody who is kind of out there in a steady state mode who hasn't taken out a lot of credit recently versus somebody who is kind of out there shopping actively, we're using different scorecards to evaluate them. Now, the same score still means the same thing. If you get a 700 on any of those score cards, it still means the same degree of risk. But we get there by looking at different information and maybe weighing information differently, depending on which of those sub- populations somebody is in. ] End quote by McCorkell Comments by Creditnetters? did everyone else already realize this is what is happening when a score rises after the Bk drops off, or after a last derogatory tradeline is deleted? that the consumer has actually been bumped into a different scoring model?
really, I was asking if this information about two models for scoring of reports was already familiar to the "experts" ??? or does it even matter that there are two models and that we get divvied into the one model or the other? Just think, even when the 13BK falls off in 2003, I will still be in Model #2 with a public record posting or derogatory tradeline, depending on how it's being shown by EQ/TU/EXP. Remember, I am a Library felon unless I can get that one fixed... And I so much wanted to be in the same scoring model as George, the one with no negatives or public records please, please, I wanna be with George.
links do work i think that the the links above do work, plus you can arrow back on the slide #8 and go all the way back to slide 1 of 49. If that is not the case, please let me know and I'll get some help with them. I do think this presentation had some interesting information, even the mortgage information from a lender's perspective towards the end of the 300 or so pages. <<< just skim and roll forward, it really does go by pretty fast >>> Some of the commentary is somewhat outdated about the value of letting consumers know their score, since this forum was in '99. Equifax, through Creditwatch, now offers that service for the very reasons disussed by many panel members back in 99.
I thought about getting one of the "Experts" to post this. If it's got George, Breeze, Psychdoc, Lizard, LKH, Dave, others as the author, the thread certainly seems to command more attention and a broader reach. ( maybe one of y'all can capture the thread and post, since I'm not in the "reach out and see what's she got to say" category. Not whining, I'm just stating the obvious, and I would like as many people to see the document as it would benefit) I thought that the concept of having a decision making branch throw you off into one model or another was something that perhaps the average creditnetter hadn't seen before. I know it was news to me. I also didn't know the information in the forum that mortgage lenders may be required by their underwriter to pull all three major CRA reports, and then use the middle score for the application. That is also contained in the discussion. MHO, I think it would be worth the time for everyone to peruse the whole document. I gave the suggestion to post in the unofficial FAQ's section on credit scoring.
http://www.ftc.gov/bcp/creditscoring/ link to the complete transcript of the forum , 318 pages and the 49 slide presentation by FairIsaac VP
This stuff is great, take some time and look thru slide presentation. Gives insight as to when accounts will bump your score based on time account is open.
Slide show: Don't fall for it. http://consumers.creditnet.com/stra...tid=105686&highlight="red+herring"#post105686
"It mentions "Own/Rent," "Occupation," "Years on Job" and "Debt Ratio," too, but those aren't FICO factors." It is correct that these factors can't be used in a FICO score, but they are used in bankruptcy scoring. This is the type of scoring that comes into play when you apply for a mortgage. Fair Isaac sells other types of score than just FICO scores.
Please expound on "bankruptcy scoring" and your claim of its use in mortgage loan underwriting. Do those scores have names? Are they used in Fannie Mae's and Freddie Mac's automated underwriting systems? http://www.facredco.com/HTML files/CPD/HTML files/brochures/bankruptcy_scori/Anchors2.htm They tell me the FICO is used in 75% of mortgage transactions.
Actually, there are 12 scorecards (I think.) They fall into these categories (multiple cards in each category Public Record (liens, judgements or bankruptcy showing) Derogatory (Late payments showing) Thin File (not much credit history) Thick File (a lot of credit history) There isn't necessarily a jump when you go from one card to another. The model simply shifts emphasis when a different scorecard is chosen. Another interesting tidbit: the FICO score cannot tell the difference between a $50 judgement and a bankruptcy. All it sees is a dated text file. The score can't read the text file, it just knows that it's there. Where a bankruptcy really kills you is with all the "included in bankruptcy" items that show up under the tradeline section of the credit report.
Incidently whether you report rent or own actually is recorded in your credit file. So that info could be included in a fico scoring. I have a mortgage lenders copy of my credit report that has that info as well as dates associated with the addresses listed. Neither of these pieces of info show up in my regular report. Kind of makes me wonder if there is anything else they don't report...
There are different types of credit scoring models. Generally I call the big three FICO, Bankruptcy, and profit, but there are many types. The auto lenders use their own. My knowledge of credit scoring is from extensive research. This subject is so complex, I tend to thing that many reps truly do not know what scoring type their company uses. As I said Fair Isaac sells other types of score than just FICO scores. If a rep knows they get their scores from Fair Isaac they may assume that the score is a FICO score. This is not necessarily true. My understanding of going for a regular conforming loan is that the lender pulls all three credit reports and takes the middle FICO score and then plugs in additional information. Think of it this way. If they only used your FICO score, why would they care about how long you have lived at your current address or how long you have been on your job. These are definitely not FICO score factors. "They tell me the FICO is used in 75% of mortgage transactions." Yes that's what Equifax says. "The FICO score is used to make billions of credit decisions each year, including more than 75 percent of mortgage loan origination's." I don't think I want to believe a CRA on a statistical fact like this. In any case that would still leave 25% of mortgage lending decisions where FICO scores are not used. http://equifax.com/press_room/press_releases2001/2001_03_19.html Now, if you look at the graph on the first page of the printout you get from purchasing your credit score from http://www.myfico.com you will see that the bottom 25% of the US population has a FICO score under about 650. This could explain why if your middle FICO score is over 650 or so, you get a good loan and if not they use all the extra date to determine just how lousy a loan they want to offer you. I have herd from different sources that the break points for FICO scores are 661, 681, and 700. At around 700 you get the streamlined mortgage lending process where you don't have to do as much paperwork. Common types of credit scoring models would include the following: "Empirical models Behavioral models Industry-specific generic models Bankruptcy prediction models: Bankruptcy losses are the hardest to recover. Their also the hardest to predict using traditional credit scoring models! With today's high bankruptcy rates, you need to: 1: Estimate the customer's bankruptcy risk 2: React to changes in customer behavior 3: Know when to buy a credit report 4: Improve your focus with demographics and customer information 5: Update your policies as economic conditions and bankruptcy trends change Non Prime Auto Lending Small business scoring" http://www.nvo.com/lendersolutions/productsforusa Here is a list of FICO score factors: http://www.myfico.com/MyFICO/CreditCentral/ScoreConsiders/FICOFactors.htm Here is a list of what a FICO ignores: http://www.myfico.com/MyFICO/CreditCentral/ScoringWorks/FICOIgnores.htm "This banking bulletin is intended to inform national banks of the OCC's concerns about national banks' use of credit scoring models. If used properly, credit scoring models (also called score cards) can be effective portfolio and risk management tools. BACKGROUND Credit scoring models were first developed more than 50 years ago. Their use has increased tremendously as a tool for underwriting and administering all forms of retail credit, including credit cards, direct and indirect installment loans, residential mortgages, home equity loans, and small business credit. Credit scoring models can offer a fast, cost-efficient way to make sound decisions based on bank or industry experience. Different types of credit scoring models are used for various activities. Application scoring models apply the bank's definition of good and bad accounts to identify and rank applicants. Behavioral scoring models are used to manage accounts, including credit line increases and decreases, over limits, and renewals. Collection scoring models may help determine accounts that are more likely to be collectible, and profitability scoring models are used to identify the most profitable marketing segments. Fraud detection and bankruptcy scoring models help identify accounts with possible fraudulent activity or borrowers likely to go bankrupt." http://www.occ.treas.gov/ftp/bulletin/97-24.txt This slide show that Fair Isaac offers only talks about credit scoring in general terms. They don't specifically say what type of credit scoring they are talking about. http://www.ftc.gov/bcp/creditscoring/present/sld001.htm Now as for Freddie Mac, it looks live they use their own proprietary system "The new, web-based tools, which will leverage the success of Freddie Mac's Loan Prospector automated underwriting system" http://www.mortgagedaily.com/Prospector050701.html As of 2000 it looks like Fannie Mae's and Freddie Mac now use the same underwriting system: The old names for these systems were Fannie Mae's Desktop Underwriter and Freddie Mac's Loan Prospector. The new system is under a new format controlled by Mortgage Industry Standards Maintenance Organization (MISMO) http://www.mbaa.org/reft/stories/0128mism.htm If you want to see how complex thing can get check out this link to a 39 page PDF document on the new system. It has places to put in prior bankruptcies, your net worth, and your criminal record. http://www.mismo.org/mismo/docs/C-MISMO Originations Dictionary Exposure Draft1.pdf Have fun learning.
Just because some info was already calculated into your fico score doesn't mean a lender won't use that info again. For example some lenders have guidelines for how old a bankruptcy must be before they lend again-even though that info was already included in the fico score. Also even if you have a 700 score often you can't neccessarily get a loan because they want to see usually at least a two year history with at least so many tradelines--again even though those facts were already factored into the fico score. My question to you is why would they have the info in the credit file if they DIDN'T use it for scoring? I believe FICO has a certain amount of control over what the bureaus report, just look at how similar the data is reported from all three bureaus. I think the reason for this is to conform to the single scoring algorithm. The Only really different one is Experian which offers useful supplemental information on past balances which is probably really valuable to credit card issuers.
oh, and that list of things fico doesn't consider can be misleading...they may not directly use those factors, but they could easily use another factor that had a .9 correlation(say age for example correlating with length of time credit file has been open)
. What (they) are you referring to? 1 The lending institution that is taking your information and putting it into a proprietary credit scoring system? 2 Fair Isaac who creates the FICO scoring system. 3 The CRA's that hold you credit files. I still think you are confused about the difference between a FICO credit score and the types of scoring used to get a mortgage. The FICO score is supposed to be used primarily for bank card lending decisions.
I suggest you are a bit confused-- generally when people talk about FICO scores they are talking about the mortgage FICO(Although the name has become somewhat generic like asprin). By they I mean Fair Isaac. They sell many scoring algorithms for other things as well, though. For most people that is the only score they will probably ever see(besides the generic credit bureau scores). If you managed to get a credit card score I would greatly like to know how you got it, so I can do the same.
