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FICO predictor accuracy


matt2402
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<blockquote>Originally posted by matt2402

Does anyone have experience in evaluating the accuracy of the fico simulators on myfico.com? It's saying if I apply for and get a credit card...my fico will jump 5-20 points. But...will the inquiry to get the card hurt? Any thoughts?

</blockquote>

Yes, I do, and I thought I was doing the right thing also by getting a credit card, they told me my SCORE would go up by 30 pts. But, I got ... the wrong kind of card. ... let me explain.

Read my posts under Got, credit card , FICO WENT DOWN, they got very silly and immature torward the end and it is entertaining reading, I apoligize for that

Anyhow, what appears to be happening in my opinion is that there are some cards out there that are what I'm going to start phrasing as "NON FICO COMPATIBLE"

According to fico a credit card account (or one of its type)

is a major part of your score, How ever some credit card companies do not report ALL THE NECESSARY information so that the FICO calculator calculates the positive benefits of having a "CREDIT CARD WITH A BALANCE UNDER 20%".

Well it turns out that CAPITOL-ONE is a company that doesn't report your credit limit and many people have ruined there fico SCORE by getting a CAPITOL ONE ; Becuase it doesn't supply the necassary information. Getting them to report it is a major battle that is presently being fought by some very big players in the credit industry.

To make a long story short( You can read the thread), if you are going get a credit card make sure that you get one that will

be "FICO COMPATIBLE" as well as meeting all the other figures of merit of an acceptable credit card:

1. Apr.

2. Customer service

3. Yearly fee.

I was very close to getting the score that I wanted and now I have to fix this problem.

What I'm trying to do is to determine what credit cards fit this

"FICO COMPATABILITY" factor so I can close my account.

Be very careful if you want to use a credit card to enhance your FICO, it can turn out to be a step, actually a leap in the wrong direction.

If you do find such a card let me know.

For now whatever you do stay away from Capitol-One.

...also if you find the thread that dicusses what the people that were here before me concluded, let me know.

Good luck, I hope this answers your question

[Edit by ADSOFT on Monday, May 12, 2003 @ 05:18 PM]

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You apply for a credit card.

You get hard inq on your report.

Your score will go down anywhere from 2-4 points.

You receive your credit card.

The credit card company reports that you have card with them to all 3CRAs

Your credit score goes down.

You buy something.

You make payments on time for 3-6 months

Your credit score goes up.

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<blockquote>Originally posted by creditmess

You apply for a credit card.

You get hard inq on your report.

Your score will go down anywhere from 2-4 points.

You receive your credit card.

The credit card company reports that you have card with them to all 3CRAs

Your credit score goes down.

You buy something.

You make payments on time for 3-6 months

Your credit score goes up.

</blockquote>

Thank you, someone who understands.

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<blockquote>Originally posted by cookiemnster

<blockquote>Originally posted by creditmess

You apply for a credit card.

You get hard inq on your report.

Your score will go down anywhere from 2-4 points.

You receive your credit card.

The credit card company reports that you have card with them to all 3CRAs

Your credit score goes down.

You buy something.

You make payments on time for 3-6 months

Your credit score goes up.

</blockquote>

Thank you, someone who understands.

</blockquote>

No, both of you don't understand, read what I said, If thats what happens then why did my score go down; there are other factors involved, just picking a card that has traditional good standards is not the answer.

....

Hey are you going to respond to my other question on the "procedural investiation" or am I going to have to start an new thread?

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I don't know why your score went down...maybe because credit company didn't report your limit? maybe something else.

The reply I wrote was for "typical" situation on how credit card will impact your credit score. It's simple as that...there is no magic to it. You get a hard inq when you apply, your score goes down, your new card is reported on your credit report, your score dips even more, until you start making some payments over time.

Your situation might be different...maybe some other things came off your credit report in the same time and thats why your score went down.

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You know I see a trend here and I hope I dont sound like a broken record but the trend seems to be that everyone continually thinks that FICO is an indicator of credit worthiness. Sure in the broadest since it can be considered an indicator of a consumers credit worthiness but that is not what it was designed for. It is designed to produce a statistical model of a consumers credit risks on which a lender/creditor may depend upon to make lending decisions! As soon as we start looking at in terms of statistical risk, rather than credit worthiness, then the drops/rises that everyone is constantly asking about may start to make sense.

Thinking of FICO in terms of risk factors, doesn't it make more sense that when a consumer applies for credit, which generates a hard inquiry, the risk factor to successive lenders is slightly increased. For all the next lender knows, a consumer might have spent the whole day surfing/applying/recieving new credit accounts. Sorry to say, even though the Fair Issacs model considers multiple inquiries to be a negative risk factor, for the most part I tend to agree. Sure you take a short term hit when shopping for the best interest rate for an auto or home loan, but in the long run FICO and lenders evaluate multiple inquiries, for the same type of loan product, over a specified period, as one enquiry (for the most part).

So now if we consider a consumer who has shopped for a competitive rate and has been approved and has a new line of credit at their disposal - once again statistically, consumers habits weigh against them. The reason is because consumers are historically more prone to default on newer accounts than those with a longer, stable payment history. Result, FICO again drops.

Futhermore, if the consumer wisely charges/pays on the account for 3-6 months, then obviously the consumer should see improvement in their FICO score since the risk factors previously weighing against them have decreased.

Of course there are always exceptions to every rule and obviously FICO is far from perfect. I have read numerous posts by people who have either dramatically improved their scores, even those who are nearing the 800 club, and post about how FICO reports bizare, sometimes non-existent items as factors that have negatively influenced/impacted their score. Like a person who reported seeing a FICO score of 796, 15% credit utiliztion, and no inquries for the last 24-months, yet FICO reported that the "0 inquiries in the past 12-months to be a negative factor!"

Michael

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A applied for a GM Card and appled to re-finance my car loan. I received 2 hard inquiries on my Equifax report. My score did not move at all. Of course the reason may be that these were only the 2nd and 3rd hard inquiries on that report in over 12 months.

I think that an inquiry could hurt your score if you already have multple inquiries. Moderation is the key.....

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Well what I'm trying to say is that not all situations are typical, there are some situations where your FICO can go down

significantly. So, know where you stand!

I think anybody taking on new credit should be aware how the CREDITOR reports information to the CRA'S (Read the article by Calawyer on reporting CRA, article of the week section). I think consumers should also "lookout" to see if all the proper information that FICO needs to calculate a CREDIT WORTHINESS number according to their calculations, should be serously taken into consideration, because it is used so widely in the CREDIT WORLD.

For the person trying to get a quick boost on their FICO, by getting a credit card, well it seems that that's not the way to go, I guess some of the readers, who didn't fall into the trap that I did, have pointed out that in normal conditions it takes 3 months to get a significant(if that,boost in your FICO),and I appreciate that input!!!!

So, Basically, if your are going to take the time to clean your credit, and you plan going around town taking on more credit, do your homework, see if they report the proper information to your CRA'S properly and it will save you a lot of headache in the future.

Also, look at if every time you get a credit increase is it going to show as overdrawn, and bring your FICO down.

.... FICO compatability credit, and proper CRA reporting is something to look at if you are taking on credit, I guess is where this leads to.......

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<blockquote>Originally posted by ms6073

Sure you take a short term hit when shopping for the best interest rate for an auto or home loan, but in the long run FICO and lenders evaluate multiple inquiries, for the same type of loan product, over a specified period, as one enquiry (for the most part).

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<blockquote>Originally posted by hotdami812

Brass fan, in response to your reply, I found vehicle and mortgage shopping although the hits should be minimal they are not. I have spoke to so many people who stated they were hit everysingle pull. reducing their score substantialy.

</blockquote>

Was it a true FICO score? Or one of the estimated ones from PrivacyGuard or the like? The reason I ask is that I know that FICO claims that they don't count them as more than one hit...so, now I'm interested in knowing.

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Well, I think we are getting off the point,here, I'm not trying to be negative but I was hoping the discusion would go in the direction of what happens to your fico when you get a card and posts after the first billing cycle.

Fico says that a credit card TL, is a signifacant part of your score.

I'm saying that if you try to take advantage of that then make sure that the Credit card company is going to report all the items correctly so you don't nailed on the FICO after 30 days.

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<blockquote>Originally posted by ADSOFT

Well, I think we are getting off the point,here, I'm not trying to be negative but I was hoping the discusion would go in the direction of what happens to your fico when you get a card and posts after the first billing cycle. </blockquote>

Personally, I think that although you may be a bit discouraged by short term FICO drop, in the long run it sounds like you are on the right track. I think that until such time as there is put in place a definitive and enforcible standard to which all companies that report credit information to a CRA are held, we are going to continue to have these types of discussions about FICO.

As far as what happens - again it is about risk factors and statistical data which I think indicates a historical trend towards cyclic impulsiveness. I read not too long ago that consumers are much less likley to pay/settle on delinquent debts once teh debt has reached a certain age or amount of time past due. The longer the debt is delinquent, the less likley consumers are to pay and the more likely that a collector is going to use aggressive collections tactics to try to spur the debtor into an impulse to pay.

Not trying to get too much into psyco-dribble, I imagine it is this "impulse" that collectors try to capitalize on during their initial collection efforts. If you apply my "cyclic impulse" concept to FICO, maybe this will help us better understand why consumers with new accounts, or even those consumers who maintain low or no balance on older accounts tend to see lower FICO scores since FICO considers these instances to be higher risk factors.

Lets consider the following in terms of risk to a lender:

1) A consumer is able to payoff the entire $2,500 balance on a revolving account due to a windfall or possibly even good, sound money management skills.

2) A consumer opens a new credit account and recieves a $2,500 credit limit.

3) A consumer with a long standing history of continually making on-time payments for a revolving account while maintaining the balance at around 15-25% of the available credit limit.

So lets ask ourselves, statistically speaking, of all of the previous examples which consumer is more likely to make an impulsive spending decission with regards to credit? It may not seem cut and dired, but under FICOs statistical models, the consumers illustrated in the first two examples represent much higher risk factors than the consumer in the third example.

Maybe now we can see why a frugal consumer, one who pays off account balances in full each month and enjoys an otherwise excellent credit history, might observe a lower FICO score due to the low % (< 10%) credit utilization when compared to a similar consumer who maintains a 15-25% credit utilization ratio. FICO looks at consumers in terms of risk and in these examples, if you dont carry a balance on revolving accounts month in and month out, then obviously rather than considering that consumer to be a sound money manager, FICO instead presents this as being a higher risk factor to lenders!

Michael

[Edit by ms6073 on Tuesday, May 13, 2003 @ 11:46 AM]

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Brass fan,

Doing comparison shopping and having those inquiries combined only happens if the boneheads at the creditors apply the right codes and in the right time frame. I have TEN hard inquiries from my mortgager that used a bonehead credit check place. And there were other hard inquiries from other outfits that the same mortgager used. All together, there were like 16 hard inquiries spread out on three credit reports.

Creditors can be just as ignorant as consumers when it comes to the CRAs.

The outfits that do know what they are doing make life for the consumer a heck of a lot easier.

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<blockquote>Originally posted by ms6073

<blockquote>Originally posted by ADSOFT

Well, I think we are getting off the point,here, I'm not trying to be negative but I was hoping the discusion would go in the direction of what happens to your fico when you get a card and posts after the first billing cycle. </blockquote>

Personally, I think that although you may be a bit discouraged by short term FICO drop, in the long run it sounds like you are on the right track. I think that until such time as there is put in place a definitive and enforcible standard to which all companies that report credit information to a CRA are held, we are going to continue to have these types of discussions about FICO.

</blockquote>

I totally, agree with you on that, I'm bummed that I got blindsided,bad, by Capitol-One and taking it as a personal crusade to let people know what is going on.

Also, comming from a Computer Industry background when a new propular technology comes out, MANUFACTURES, push the compatibility issue to try to make their products more competitive and to force other MANUFACTURES to comply.

I think this is the best TECHNIQUE to get creditors to make a better effort to report the proper information to the CRA'S

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ADSOFT, I know how it feels to get the chorizo. I have a degree in accounting and I have worked for a couple of banks and I tell you it sucks big green donkey [EXPLETIVE DELETED] to be given the chorizo because I feel that I should have known better.

Just like that security monitoring place (and a few others), I am taking on a couple of personal crusades myself.

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<blockquote>Originally posted by Ravenous Wolf

ADSOFT, I know how it feels to get the chorizo. I have a degree in accounting and I have worked for a couple of banks and I tell you it sucks big green donkey [EXPLETIVE DELETED] to be given the chorizo because I feel that I should have known better.

Just like that security monitoring place (and a few others), I am taking on a couple of personal crusades myself.

</blockquote>

Right on!!!!!!!!

I got hit hard, 70 points on EQUIFAX (606 to 535), thats gotta hurt.!!!!!!

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ADSOFT - will it make you feel better to know that my FICO dropped in the past couple of days because a new card reported?

Interestingly enough, it was also a card that doesn't report credit limit, so it looks like my utilization on that one card is 100% (until I call and bitch, luckily Chevron is one that will report the CL when asked to.)

The thing is - that my reports are 99% clean now, and so although my utilization on that one card looks to be 100%, overall my utilization is still under 25%.

I have three more cards getting ready to hit EQ, and fully expect my score to dip temporarily. Why? because my average age of accounts just took a nosedive. As these accounts age, they will increase my score.

That's what you're not getting - it's not just Capital One's lack of reporting the CL that dropped your score. There's other stuff that contributed it. Maxing the card out and then returning the stuff or paying the balance back down to $0 will help bring your score up, but balance-to-limit ratio is not the only factor in your FICO.

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<blockquote>Originally posted by cookiemnster

ADSOFT - will it make you feel better to know that my FICO dropped in the past couple of days because a new card reported?

Interestingly enough, it was also a card that doesn't report credit limit, so it looks like my utilization on that one card is 100% (until I call and bitch, luckily Chevron is one that will report the CL when asked to.)

The thing is - that my reports are 99% clean now, and so although my utilization on that one card looks to be 100%, overall my utilization is still under 25%.

I have three more cards getting ready to hit EQ, and fully expect my score to dip temporarily. Why? because my average age of accounts just took a nosedive. As these accounts age, they will increase my score.

That's what you're not getting - it's not just Capital One's lack of reporting the CL that dropped your score. There's other stuff that contributed it. Maxing the card out and then returning the stuff or paying the balance back down to $0 will help bring your score up, but balance-to-limit ratio is not the only factor in your FICO.

</blockquote>

Yes, thanks, I understand, It that I was so close to getting to the FICO that I wanted and now this.

I definatly, got blindsided, I understand that maxing out the card

will solve my problem, and that's what I'm going to have to do.

I do appreciate the advice that you guys have tried to drill into my head, ... "MAX OUT YOUR CARD, PAY IT DOWN, KEEP MOVING"

I just thought I might be able to get CAP-ONE to comply if we told them the right thing and presented our selves as a group. Sorry, I'll drop the CAP-ONE issue for now! If I find something I'll let everybody know. Mean while I will keep it to myself.

Thanks for all your help, I really do appreciate it, and I do appreciate your opinion.

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You know I would be very careful with that advice. It seems to me that maxing out a credit card with the intent of immediately paying it down simply to try an effect an increase in FICO is rather drastic under present economic conditions. :eek:

Carefully consider this option keeping in mind the fact that nearly all of the credit card issuers (including Cap One) have issued addendums to card holders agreements that outline how the acocunt APR will increase to some inane amount if the consumer is over the limit or delinquent on any other credit obligation!

Michael

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<blockquote>Originally posted by ms6073

You know I would be very careful with that advice. It seems to me that maxing out a credit card with the intent of immediately paying it down simply to try an effect an increase in FICO is rather drastic under present economic conditions. :eek:

Carefully consider this option keeping in mind the fact that nearly all of the credit card issuers (including Cap One) have issued addendums to card holders agreements that outline how the acocunt APR will increase to some inane amount if the consumer is over the limit or delinquent on any other credit obligation!

Michael

</blockquote>

Thanks for pointing that out, I think the COOKIEMONSTER, ment to take it to 80%,

Thank Michel, Thanks CookieMonster.

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