LMA0 at TU FICO I just got my new fico report from TU and this is what it states as being a negative: The proportion of balances to credit limits on your revolving/charge accounts is too high The proportion of balances to credit limits on your revolving/charge accounts is 22%. The average proportion of balances to credit limits on revolving/charge accounts carried by U.S. consumers is around 36%. Click here to review your Accounts Summary. If my utilization percentage is below the avg, then why is this considered a bad thing? I think George is right! RNG!!
LMA0 at TU FICO They have to report something as being outta whack unless your score is 850,so don't be surprised when you see those reasons.
LMA0 at TU FICO Yeah, conincidentally, my revolving usage is also exactly 22%, and of course, that's in my *positive* factors
Re: LMA0 at TU FICO First off, we can all see that obviously the software algorythm(s) still needs more tweaking based on the langauge used. Second, while it may be worded poorly, what FICO is trying to express is that based on their statistical data/analysis, because your credit utilization is below some weighted national average, you are more of a credit risk than someone who falls within the average. Problem is, the statistical model seems to vcary for each and every person who posts these types of negative factor! At one point in time, I thought that in general, the magic ratio for credit utilization was between 15-30% . Above or below that and FICO would ding the consumer a certain number of points due to the fact that they were statistically considered a higher credit risk than someone who maintained the "magic" credit utilization ratio. Problem is that as time goes by and I see more and more posts with similar themes which would tend to indicate to me that the magic ratio is different and varies for each and every consumers credit history. What is good for me, is not necessarily good for my next door neighbor. I think that the bottom line is that in most instances, FICO tends to score people who carry moderate debt loads from a variety of credit sources as being of moderate risk but more likley to yield higher returns in terms of interest or finance charges than consumers who exercise sound money management skills, carrying little to no debt on revolving credit or installment contracts. So we might assume from this that if you have little or no debt with a reasonably good credit history, then clearly although you may pose a lower risk of incurring new debt or running up your credit balances to very high limits, you are not a very profitable consumer. Of course this is opposed to a consumer who maintains debt loads somewhere within "magic" debt load ratio and continually makes payments on time contributing to a solid and lengthy credit history. Alternatively, a consumer who maintains a debt load that is above the "magic" ratio, although less likely to take on new debt, is more likely to cost lenders more due to the risk of default due to the increased obligations the consumer is saddled with. As I mentioned before, none of this statistical analysis seems to take into condsideration factors that mitigate risk such as the conservatism that a sound money manager would exhibit by refusing to carrry high debt loads, living within ones means and/or on a cash basis. Nor does it consider such factors as the intensity a consumer might exhibit in meeting and paying off/down financial obligations ahead of schedule in order to better utilize their money by saving on interest and finance charges. To me at least, this last type of consumer - among whose numbers I consider my wife and I - while posing the least type of risk, consumers like us are also the least profitable for banks and credit card companies. So herein lies the problem, we are all here posting about various problems or solutions for managing credit and to some extent debt, but for the most part it is ultimately so that we can strive to maintain the highest FICO score possible. The majority of us still look at FICO as an indicator of credit worthiness, and are suitably disaponinted when our actions, which we anticpate to produce a gain in FICO score, actually result in a loss! You know what, I for one will no longer be surprised because I have finally decided to stop playing the game. It is time we all accept the fact that just because we have access to our FICO scores, that does not mean that Fair Issacs is in business to help consumers - no, they are in the business to sell software/data that predicts risk/profit for lenders at financial institutions! Thats it, end of story! The company makes untold amounts of money and continually sees growth in its businesses every year based on sales of proprietary software that returns a relative risk weighting (FICO score) based on the statistical analysis of historical credit data from millions of consumers. As I have already stated, this data is not used to determine a consumers credit worthiness, no, it is used to determine which consumers will pose the best (not least) ratio of risk while yielding the highest rate of return on investment to lenders! Michael
Re: Re: LMA0 at TU FICO The one hole in your analysis is that the MOST profitable debtor isn't the one who is at 10% or 25% or 50% utilization, but one who is at 101% but pays the minimum payment each month, because that consumer pays maximum interest PLUS overlimit fees every month without being delinquent. TRUE, that consumer is on the steps of the bankruptcy court, but by your analysis FICO is predicting profits, not default. And if the consumer is just treading water, he won't be filing a BK, just spend the rest of his life treading water and the bill will get paid out of his estate.
Re: Re: LMA0 at TU FICO Don't forget this comes from a CRA...another CRA (EQUIFAX) "THINKS" that ONE INQUIRY is better than ZERO!!!!! THEY (CRA'S) ARE CLUELESS!!!
Re: Re: Re: LMA0 at TU FICO Very good point, but statistically, I think that this type of consumer is going to be in the minority and because of such a debt load/utilization, would not likley be considered by prime lenders. Also, since statistically the majority of consumers who find themselves in this type of predicament got there because the ship is sinking and they are probably no longer able to continue to tread water - so to speak - meaning that the consumer will begin to be late or default on obligations. Michael
Re: Re: Re: LMA0 at TU FICO Victims of Credit Reporting - Credit Scores http://members.aol.com/victcrdrpt/Score.html http://members.aol.com/victcrdrpt/Score.html
Re: Re: Re: LMA0 at TU FICO First off, we can all see that obviously the software algorythm(s) still needs more |weaking tms6073 ================ YEP:Needs tweeked right out of existance! THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
Re: LMA0 at TU FICO A few points: It could be that both 22% utilization and the average 36% utilization are above what FICO considers the lowest-risk utilization ratio. We shouldn't exaggerate the effects of expected profitibility on credit scores. If FICO determines that you are a potentially profitable customer, i.e. that you actually carry balances, they want to decrease your score most of all. Then their subscribers can charge high interest rates to people who are willing and able to pay them. High return with low risk is every bank's fantasy, and FICO is in the business of turning fantasy into reality. Or could we say that FICO turns paranoid delusions into reality? FICO is in the business of finding problems where none exist, so as to excuse the exorbitant interest rates imposed by the credit cartel.
Re: LMA0 at TU FICO I consider my wife and I - while posing the least type of risk, consumers like us are also the least profitable for banks and credit card companies. ms6073 ============== Fico is a fleecing milking machine that has nothing to do with risk or credit worth. THE END ** *** ** LB 59
Re: LMA0 at TU FICO ? FICO is in the business of finding problems where none exist, so as to excuse the exorbitant interest rates imposed by the credit cartel. +++++++++++++++++++++++ IE a shell game. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
