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Fair Isaac article...


Ravenous Wolf
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Below is an excerpt from an article in MSN Money.

http://moneycentral.msn.com/content/Banking/Yourcreditrating/P38053.asp

* * * * * * * * * * * *

The scores that companies like Fair, Isaac compile are sent to the credit reporting agencies as composite numbers. In addition to your salary and other factors mentioned above, here are some of the things that scoring agencies consider:

Your education level. It sounds arbitrary, but it’s true. A college-educated person is given more “points” than a high school graduate, for example.

The number of years you’ve lived in a single location. If you’ve moved around a lot, you lose precious points. If you’ve moved because of a better-paying job, you can recoup some of those points if your salary has increased, for example.

The number of years you’ve worked for a single employer. Scoring agencies like people who are stable. That’s why they assign more points to people who’ve lived in a particular place for several years or who’ve worked for a single employer for many years.

Are you a homeowner? If you are, you get additional points. Renters are considered more transient and less reliable to repay their loans.

* * * * * * * * * * * *

Here are some questions that I have (maybe kb9tbq can shed some light on this):

How does Fair Isaac or the CRAs know that you have a college degree? Furthermore, how does Fair Isaac differentiate between attending Harvard and going to Bonehead U. in giving someone “extra” points. Or even if someone majors in Quantum physics as opposed to the Comic Book as Literature?

How do the CRAs “accurately” know if someone has truly lived at a certain place for certain number of years?

How do the CRAs “accurately” know if someone has truly worked at a certain place for certain number of years?

One time I tried to update my employment history and the CRAs did actually put my updates down on my credit report but they refused to put down the years that I said that I worked at. Each work place merely had the same current year on it.

Where did Fair Isaac gather its research from to suggest that homeowners are less reliable than renters?

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I don't mean to sound cranky but did you not see the thread where we JUST went over all of this?

These things are not used in FICO calculations.

They may factors that are considered by individual lenders, but again, I repeat, they are not used to calculate your FICO scores.

Whomever wrote that SmartMoney article is a bonehead and needs to not write articles about thing they obviously have no knowledge about.

Swede will be along shortly with the link to the post where we discussed this. ;)

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<blockquote>Originally posted by cookiemnster

I don't mean to sound cranky but did you not see the thread where we JUST went over all of this?

These things are not used in FICO calculations.

They may factors that are considered by individual lenders, but again, I repeat, they are not used to calculate your FICO scores.

Whomever wrote that SmartMoney article is a bonehead and needs to not write articles about thing they obviously have no knowledge about.

Swede will be along shortly with the link to the post where we discussed this. ;)

</blockquote>

Here ya go http://www.debt-consolidation-credit-repair-service.com/cgi-local/cutecast/cutecast.pl?forum=1&thread=5708

This article is COMPLETE MISINFORMATION and this idiot needs to be supplied with his pink slip from SmartMoney ASAP

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It seems like many of the credit repair veterans really have something against the authors from Bankrate.com and MSN MoneyCentral. Those are pretty big outfits with highly paid authors (although those authors can be just as misinformed). But then again, until Fair Isaac discloses what is inside their mathematical model and what their research sources really are, many of the calculations that make up the FICO score will continue to remain a mystery.

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How to Gain Points:

Own your own home.

Your income is over $3000 a month.

Your debts are with Credit Unions and Banks.

Your employment is more than 6 years on the job.

Your occupation is skilled or professional.

You are married.

Your age is between 25-65.

Your dependents are 3 or less.

You hold 2-4 credit cards and no more.

Lose Points:

You rent

Your income is $1000 a month or less.

Your debts are with Finance Companies.

Your employment is less than one year on the job.

Your occupation is unskilled.

You are single.

You age is under 25 or over 65.

Your dependents are 4 or more.

Credit card balances is near your credit limit.

Have no bank cards.

Have more than 5 credit cards.

Have open credit cards with zero balance.

Debt load is more than 75% or your credit limit.

Late payments or black marks (late pays).

Defaulted student loans.

Too many inquiries.

Balance transfers.

This is a list I come across some months ago searching the internet on the subject. I think the issues are mixed between what the CRAs contribute to the data & what Fair Isaac contributes.

Fair Isaac I know for a fact is not included like businesses from discrimination in what they have in the raw score data they provide & as much as I keep seeing information surface; there will always remain just the right amount of curiosity no matter what is said on the subject.

Myself I do believe that if they wanted to; they can and would have the resources to possibly pull this off. Just have to dig some more to get to the bottom of the matter.

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How do the CRAs gather information about dependents? I thought that information was stashed only in like the IRS? I wonder how does Fair Isaac makes a calculation that having the right number of kids is good or bad?

What determines if an occupation is skilled or professional? I realize that brain surgeon would qualify, but is there a list somewhere of all the occupations that categorizes them as skilled and professional? And how would I know if the CRAs are reporting me as skilled professional? And how would they really know?

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Employment is another subject I could never figure out. Like Experian wanted to see my W-2s before they would correct a time of employment and the date of that employment.

Almost each job I have held the past seven years has only been for like 12 or 18 months because the next job offered more money and better benefits. In fact, from almost seven years ago to today, I have almost tripled my salary but how does Fair Isaac determine that I should be penalized?

Just like having everything else deleted in credit repair, how feasible is it to get the CRA’s have my credit report state that I was at my prior job for six years instead of 14 months?

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The dependents are easy - on the mortgage side. When entering in information for pulling credit report. They specifically have a field asking for the number of dependents.

Also on the employment - there is a field on the regular credit reports to add the name & address of the employer. Your guess is as good as mine as to them figuring out from there what your job is exactly. But they only report from the time they are told you worked there. I don't know how they would figure out when you actually started. Because my employment all these years has been reported. I update them directly myself; but some over the years have been off on the dates.

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How do the CRAs know what your income is?

Is that also on a field visible only to the CRAs? Or is that a number that has to be crunched using a Fair Isaac product? Do the CRAs keep track of your salary? If so, where do they get that number from because the only source with “accurate” information would the employer?

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There is something that gets to me though; in the FCRA:

Section 605 Requirements Relating to Information Contained in Consumer Reports:

(B) The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with -

(1) credit transaction involving; or which may reasonably be expected to involve, a principal amount of $150,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $140,000 or more;

(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000 or more.

This means that old information that normally would expire off of the credit report could be pulled back in when connected to these 3 reasons.

To this point I have not seen any creditors using the field which allows this amount to be entered. But if they do; this would answer your question.

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I pull credit reports here on a regular basis for various businesses including mortgage - but I have never had a loan officer use this option to report amounts in regards to employment or amount of loans applied for.

I don't see the insurance side; these companies go a different direction (so I have no way of knowing what the format is for their system).

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What is information that an individual can supply to the CRAs?

Like, what would happen if I called them up and told them that I am in a skilled professional occupation? Or, here is my annual income although Experian wanted my W-2s.

Or if I told them that I have x number of dependants.

Are those things that a CRA rep has available on their screen when someone calls them up?

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We sell software to USED car dealers, I actually am in charge for maintaining the program that pulls the report, I'm going to find out once and for all!

The CRA's supply software programmers all the information that a client can report. I also have a software program that was pulls credit reports.

Actually, all you have to do is search the net and see what software is out there that pulls credit. If it has the fields for the info we are asking about: Employment, Proffession, homeowner,

that would answer the question and all you have to do is ask the software sales rep or technician !!!!

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I don't specifically know on the consumer side; but when I pull a credit report the fields include:

Full Name

Social Security Number

Date of Birth / Age

Drivers License Number / State

Up to 3 Addresses

Name & Address of Employer

Type of Loan (or permissible purpose) terms & amount of loan.

2nd system we use has entry for

Type of Mortgage Loan

Dependents

Refinance Number

But there is still question as to what the data tapes can include that each individual lender turns in to the CRAs (what else they may be able to add from their side) this I can not see myself.

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<blockquote>Originally posted by kb9tbq

How to Gain Points:

Own your own home.

Your income is over $3000 a month.

Your debts are with Credit Unions and Banks.

Your employment is more than 6 years on the job.

Your occupation is skilled or professional.

You are married.

Your age is between 25-65.

Your dependents are 3 or less.

You hold 2-4 credit cards and no more.

Lose Points:

You rent

Your income is $1000 a month or less.

Your debts are with Finance Companies.

Your employment is less than one year on the job.

Your occupation is unskilled.

You are single.

You age is under 25 or over 65.

Your dependents are 4 or more.

Credit card balances is near your credit limit.

Have no bank cards.

Have more than 5 credit cards.

Have open credit cards with zero balance.

Debt load is more than 75% or your credit limit.

Late payments or black marks (late pays).

Defaulted student loans.

Too many inquiries.

Balance transfers.

This is a list I come across some months ago searching the internet on the subject. I think the issues are mixed between what the CRAs contribute to the data & what Fair Isaac contributes.

Fair Isaac I know for a fact is not included like businesses from discrimination in what they have in the raw score data they provide & as much as I keep seeing information surface; there will always remain just the right amount of curiosity no matter what is said on the subject.

Myself I do believe that if they wanted to; they can and would have the resources to possibly pull this off. Just have to dig some more to get to the bottom of the matter.

</blockquote>

I'd love to know where you got this from, KB, can you supply a link?

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Yes; lenders will add payments on their side to the data tapes sent in; was told on this part there is about 35 fields to complete for their side.

Employment is only added on the initial pull of the credit reports; data tapes won't have a field for this.

The tapes will take personal information; like updating names; address - and all the related data to the accounts the lender holds.

Consumers can update addresses & names at any time; I have even submitted for them to add my employment.

I just don't know how they get their data for anything further regarding profession & salery.

I do know that pulling credit reports are like a snowball affect; the CRAs suck up every peice of information submitted - for the next time someone pulls a credit report.

I know that by entering in a persons name wrong - the next pull will immediately show this incorrect spelling - it is this fast on incorperating the new information added.

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<blockquote>Originally posted by Gadgetguy

Can anyone tell me why a balance transfer is considered negative? These days the CC companies are getting more and more aggressive and you can get better and better deals...

So what's the logic?

</blockquote>

The logic to this part; if they see balance transfer - they are not going to trust that you will be a long term customer with them. That the next time a good deal pops up; you will be quick to jump lenders again. So if you fix it for them to not know the difference all the better.

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This is going to take some searching - since I had already combed though considerable sites for quite a bit of information already collected. I do have more to the original artical which I had copyed at the time. Will keep looking though.

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