I hope no one has already posted this and I missed it. I apologize if this is the case. It is from a couple of weeks ago. I just have not had time to look it up. I found this interesting: The nation's largest mortgage insurer, MGIC Investment Corp., has just completed extensive research that should give lenders and home buyers pause. Based on a study of thousands of home loans MGIC insured during the last recession, from 1989 to 1991, the corporation concluded that some borrowers with the highest FICO scores, named for originator Fair, Isaac & Co., face much more serious risks of delinquency and foreclosure than borrowers with low scores. The key to the surprising differences in risk? Location. If a high-score, cream-puff borrower owns a home in a "volatile" market, hard hit by local economic problems, that person is far more likely to lose his or her home to foreclosure than a low-score, credit-impaired borrower in a more stable local economy, according to MGIC. Here is the link to the entire article if anyone is interested: http://www.washingtonpost.com/wp-dyn/articles/A3306-2001Nov9.html
I'm not sure how anyone deduces FICO is a farce if they read the entire article. In the article, the lenders talk about the amazing accuracy of FICO scores under normal circumstances. When something unforeseen enters the mix, then the accuracy diminishes. Makes sense.
Re: Study Produces Surprises on Cre keepmine, lbrown59 doesn't care anything about context, LOL. Rather, he just wants to hawk and squawk about FICO all the time. Don't spoil his fun. Please continue, lbrown59. Doc
Re: Study Produces Surprises on Cre You yourself say it is very very flawed so why do you keep supporting it.
Yeah so they say.Don't let them fool you!They are petting their own Donkey. Look who is defending it. Do you really think they are going to whip their own horse?
I HAVE KNOWN F.I.C.O. IS FLAWED...because I (WE) can't get CITIBANK, JUNIPER, CAPITAL ONE, GETSMART with F.I.C.O. of 685-704... Wife F.I.C.O. of 725-741... MANY people have got the above with F.I.C.O. 650 and below...
Right you are George,but whenever I suggest outlawing it a certain poster advocates keeping it until something better comes along while at the same time admits it has serious flaws. George Picture This . You're standing there holding a stick of dynamite. The fuse is lit. I say George get rid of it.Toss the Dang thing. Some Body else tells you George I realize the dynamite has a serious flaw-but just hang onto it until something better comes along. Whose advice are you going to take?
Re: Study Produces Surprises on Cre This is hilarious!! I'm gonna outlaw it. how about you guys? <grabbing the handcuffs, headed for Atlanta>
Re: Study Produces Surprises on Cre So you think that George shouldn't pitch that stick of dynamite with the lighted fuse Right?
Re: Study Produces Surprises on Cre Should George hang on to the lighted dynamite or should he get rid of it ?
Re: Study Produces Surprises on Cre I don't know about dynamite, but I'll comment (once again) regarding your FICOphobia. Before 1971, there was no Fair Credit Reporting Act. In those days, lenders didn't even pretend to quantify factors that would assess a potential debtor's risk. Instead, they pulled your credit "report" maintained by the Retail Credit Company. (In 1975, the Retail Credit Company was renamed "Equifax" as part of their corporate efforts to put their past squarely behind them and begin fresh.) Credit files maintained by the Retail Credit Company were filled with subjective information like whether or not you smelled like alcohol when the Welcome Wagon ladies paid a visit (Welcome Wagon was largely funded by RCC in those days), what year and make of car you drove, and whether you were "White," "Negro," or "Oriental." There were no credit scores, only the subjective judgment of the banker who was almost always Anglo-Saxon, Protestant, and male. Women were often summarily denied credit. (Women were singled out for special scrutiny if they were "unmarried Spinsters" because there was no man in the picture to repay the credit. There was a time women were banished for being unmarried at any age.) African-Americans were so used to being denied credit that they often went generations without even attempting the feat. When Congress enacted the Fair Credit Reporting Act, they changed the face of credit-related recordkeeping. Only quantifiable information related to payment history, credit mix, and related factors could be used in determining creditworthiness. The principals of Fair, Isaac (the FICO company) had been in the statistical consulting business for many years and quickly noticed a demonstrable and sizeable correlation between certain quantifiable factors and tendency to default. The FICO score was born. Yes, there are flaws, and Greg Fisher and others have done a great job in enumerating them. These problems need to be addressed without question. However, the system that was replaced through the widespread use of scoring was far more flawed in a sociological sense. Without scoring, we are simply left with the individual subjective judgments of one credit analyst or another. Scoring at least gives us an opportunity to seek a level playing field for all credit applicants. (George, FICO has nothing to do with your credit denials, LOL, and you know it -- Mr. $100,000 In Revolving Credit you.) lbrown59 often proclaims the need to "make FICO illegal." He offers nothing, though, that would answer the problems that gave rise to the reforms of the early 1970s. If lbrown59 can rid us of FICO and still meet the aims of objectivity, then more power to him! I'd like to see his proposal. Again, FICO certainly has flaws as it aims for objectivity, and I enjoy discussions which aim to uncover and address those flaws. Finally, I confess that lbrown59's intellectually shallow arguments ("what should George do with his dynamite stick?") drive me up the freaking wall. I'll try to contain my irritation, LOL. He reminds me of my Uncle Abe, now deceased, who would argue anything, except he wasn't the brightest flashlight on the shelf. Favorite topic: whether Communists had infiltrated the military-industrial complex or not. For fifty years he opined the same argument with anyone who'd bite. Maybe Uncle Abe and lbrown59 are related. Doc
Re: Study Produces Surprises on Cre Excellent post, PsychDoc!!!!! Excellent summary! I, for one, am very happy that credit scoring is here. They simply need to disclose the score to consumers and the process (i.e. formula) by which it is generated.
Re: Study Produces Surprises on Cre I started in retail banking in 1974. AT the time, unsecured credit was tough to get period because credit cards were really in their infancy. Most baks offered 6 or 12 month single pay notes to people who wanted unsecured credit. A friend had introduced me to a young, single lady who had just started her 2nd year as a school teacher and needed some cash. I wrote her a 6 month single pay note and got my a** chewed by my boss. "Never give a single woman an unsecured loan. You neevr know when they'll decide to run off and get married or get themselves pregant". You're right Doc. The good old days of credit decisions weren't all that good for a large class of people. BTW the lady paid the note 2 weeks early!
Re: Study Produces Surprises on Cre LOL, keepmine, I remember those "good old days" also!! My hubby bought a boat on a 90 day note, and just renewed it a couple of times.
