Credit scores are bullshit: part 2

So we've had a lively discussion about my previous post on credit scores, and an industry expert on credit scoring showed up to argue with many here. The New York Times noticed and published his side of the story as well. He urged me on Twitter to try out MyFICO.com which is supposed to be more accurate. Well, I ended up trying it tonight and got a whopping 2 point difference on my credit score, with it still below 700 (690 vs. 692).

The best part is when it is being explained to me what my problems are, as this image captures:

MyFICObullshit
Gee, I guess 16 years, 3 months just isn't a very long revolving credit history. Heck it is a few years shy of half of my entire life and "FICO High Achievers" average a whopping 2 years and 9 months more than me, which is such an incredible drastic difference that I can see your justification for docking me points on that one. /sarcasm

Like I said before, I understand the need for credit scores and how they are used, but much of the advice the credit reporting agencies have given me turns out to be conflicting bullshit.

They tell me to get a credit card to increase my score, and it ends up reducing my score (because I didn't know about the unwritten rules on how much of your credit line you are actually allowed to safely use). Now they say it's because I haven't had credit long enough when my oldest account is only 14% less than their suggested stellar achievement rankings. 

In summary: still bullshit.

8 Comments

  • We should create a website where we assign ratings to companies and to agencies that serve as industry lapdogs. Inefficient organizations that mislead and confuse citizens get low ratings.
    Naturally, as the rating body, we’ll advise orgs on how they can up their scores. By whatever means serve our interests.

  • Yeah, my credit report (which I got recently in order to refinance my mortgage) says that I have a score around 790, but it has a ‘black mark’ of having ‘too much revolving credit available’ or something similarly ridiculous. I never ASKED Chase and Capital One to keep on raising my credit limits!

  • What most of the credit-loving idiots can’t fathom is that people would want to pay cash for something rather than take out a loan. When you don’t have to use credit, you are in the best financial shape of your life. I agree with you that credit scores are BS, and thanks for using logic to prove it rather than the financial industries’s usual smoke and mirror tricks to make themselves looked puffed up and important.

  • I’d love to see some one develop a new formula that we can apply to ourselves. I wonder if anyone could come up with something most people could agree on.

  • As a thought experiment: given that gaming one’s credit score has emerged as one of those classic American side-industries, what happens when a sufficient volume of people start contorting their credit as recommended by those interminable segments on daytime TV? Surely then, the algorithms start to crap out?

  • It just proves that algorithms are not a good predictor of human behavior. People in old-fashioned relationship with one another seem to do a much better job at assessing the risk of giving credit. Isn’t that the origin of the credit system? “You’re my neighbor, I know you’re good for it, here’s my terms”? Maybe we need to get back to basics, instead of perpetuating or reinventing an impersonal system.

  • I just looked at my myFICO stuff from earlier this year and I noticed that one says 24% is “heavy utilization” and bad, while the other says 24% is “limited utilization” and good. It seems like FairIssac–who, incidentally, runs myFico– doesn’t much want its banking and consumer customers to understand the system very much. And apparently, they were just granted a patent for that bullshit website.

  • jeremy.nash@gmail.com

    i was listening to npr and heard the story you spoke on. it seems to me you stopped using your credit card. i would think to have good credit you would need to maintain the use of your credit. granted i know almost nothing about your credit usage.

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