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Are the scores you pull on myfico.com the sames scores as a mortgage lender would see. My myfico.com scores are way higher(50 pts) than my privacyguard scores. Wasn't sure which one I should go by.


That is a very general question since there are thousands and thousands of originators. Nobody is required to use FICO directly and there are plenty of add-ons that the CRAs try to sell to their customers as well as third party vendors trying to hawk their own mortgage scores.

The best approach is to simply ask the lender.

My mortgager used a third party vendor that combined all three reports to give a composite analysis for my mortgage.

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Ravenous Wolf,

There never will be an absolute substitute for the credit score the lender uses. Myfico has proved time and time again the most accurate credit score to what the lender sees. Nobody is pushing their product, and truthfully, I think it is rather expensive to have to spend $39.00 or whatever to find out credit scores, and would save the consumer that money if at all possible.

I am not much into surprises when it comes to general credit scores coming from different sources, and it is a total waste of time to take someones credit scores that they pull from some of the other offers, prequalify according to a "heresay" "My Credit is real Good", and then have to break the disappointing news to them that the real score is fifty or seventy points different, and the interest rate is going to be X% higher, and "Oh, by the way, now you need to come up with a ten percent down payment." Although in many instances we do look at these scenarios, nothing is ever final until the actual credit report is pulled from the lender. Let that be known, and I agree with you 100%.

With MyFico, Charles and I both agree that these are the closest (if not exact), credit scores available to the consumer, meaning they must be using the same scoring models as those that are accepted by FNMA, and other lenders as well. For credit repair and monitoring services while in credit rehab, there are better products available than what MyFico has to offer, but when it comes down to the mortgage process, MyFico wins. Is it worth it to spend an extra $40.00 or so?????? Are there other products available to the consumer that closely resemble the mortgage scores??? I really do not like tooting MyFico's horn either, but short of an actual broker credit pull (which is usually free to the consumer until they close the loan), I have not experienced other products like it.

How did you monitor your credit scores on your own mortgage? Were they accurate to what your lender pulled? Any surprises? I would be all for a credit score that was conservative to what we pull, so consumers would be delighted to hear the good news that ""Your credit score is higher than you thought."

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In no way am I saying that FICO is inaccurate.

FICO is the source of the credit scores which is something I have always stated before in the past.

However, what my post was about is that not everyone uses FICO. The three CRAs hawk a multitude of products in an attempt to grease sales and these add-ons produce variations that are different that what you see as your credit score.

And the CRAs even tell you that an “insurance score” or mortgages, auto, etc is different from their own score.

Aside from the CRAs, there are plenty of other third-party vendors who hawk their own products to creditors, which will produce variations because other factors are weighted differently.

Not everybody uses FICO and that there may be variations if other products or add-ons are used. And there is no harm in asking up front to any creditor on which CRA they use or what type of credit score is part of their decision making process.

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Even Fair Isaac surprises themselves at how munch money they make!

Fair Isaac Announces First Quarter Fiscal 2005 Results

Year over year revenue growth of 15% for first quarter; net income exceeds company guidance by 8%

1/26/2005 4:05:00 PM

MINNEAPOLIS, Jan 26, 2005 (BUSINESS WIRE) -- Fair Isaac Corporation (FIC), a leader in customer analytics and decision technology, today announced financial results for its first fiscal quarter ended December 31, 2004.

GAAP Results

The company reported first quarter revenues of $195.5 million in fiscal 2005 versus $169.3 million reported in the first quarter of fiscal 2004. Net income for the first quarter of fiscal 2005 totaled $27.9 million, or $0.36 per diluted share, compared with net income of $28.8 million, or $0.36 per diluted share, reported in the same quarter last year. During the first quarter, the company adopted EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share, related to its Senior Convertible Notes. The adoption of this standard only impacts the computation of diluted earnings per share, and reduced the first quarter diluted earnings per share by $0.03 in fiscal 2005 and $0.03 in fiscal 2004.

Pro Forma Results

The company reported pro forma net income for the first quarter of fiscal 2005 of $33.5 million, compared to pro forma net income of $31.3 million reported in the same quarter last year. Pro forma diluted earnings per share for the first quarter of fiscal 2005 was $0.43, compared to pro forma diluted earnings per share of $0.39 reported in the same quarter last year.

"We are pleased with our first quarter revenues and bookings, and are off to a great start in achieving our 2005 objectives," said Thomas Grudnowski, Fair Isaac's Chief Executive Officer. "In addition, we continue to deliver strong cash flow performance."

Non-GAAP Financial Measures

The company uses pro forma non-GAAP financial measures because they provide meaningful information regarding the company's operational performance and facilitate management's internal comparisons to the company's historical operating results and comparisons to the operating results of other companies. The company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency of the company's operating performance. Wherever non-GAAP financial measures have been included in this news release, the company has reconciled them in the tables below to their GAAP counterparts. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

The following table reconciles the non-GAAP financial measures to GAAP:

Quarter Ended Quarter Ended

December 31, 2004 December 31, 2003

----------------- -----------------

Net Diluted Net Diluted

Income EPS Income EPS

-------- -------- -------- --------

(In thousands, except per share data)

Non-GAAP (pro forma).............$33,480 $0.43 $31,293 $0.39

Impact of deferred revenue

write-down................... 1,396 0.02 -- --

Amortization of acquired

intangible assets............ 4,223 0.05 2,532 0.03

-------- -------- -------- --------

GAAP.............................$27,861 $0.36 $28,761 $0.36

======== ======== ======== ========

Revenues and Bookings Highlights

Revenues increased across each of the company's four operating segments. Strategy Machine Solutions revenues increased to $117.8 million in 2005 from $103.3 million in 2004, or by 14%, primarily due to revenues generated by our collections and recovery solutions and mortgage banking solutions associated with the acquisition of London Bridge and increased revenues from our fraud solutions products, partially offset by a decline in revenues associated with insurance and healthcare solutions. Scoring Solutions revenues increased to $39.4 million in 2005 from $35.3 million in 2004, or by 12%, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies. Professional Services revenues increased to $29.5 million in 2005 from $22.5 million in 2004, or by 31%, due to our acquisition of London Bridge and Braun Consulting, Inc. Analytic Software Tools revenues increased to $8.8 million in 2005 from $8.3 million in 2004, or by 7%, due to revenues generated by sales from the Enterprise Decision Management suite of products.

The company achieved new bookings of $115.4 million in the first quarter of 2005, as compared to its previous guidance of $120.0 million. The company defines a "new booking" as estimated future contractual revenues, including agreements with perpetual, multi-year and annual terms. Management regards the volume of new bookings achieved, among other factors, as an important indicator of future revenues, but they are not comparable to, nor should they be substituted for, an analysis of the company's revenues.

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents, and marketable security investments were $344.3 million at December 31, 2004 as compared to $364.3 million at September 30, 2004. Significant changes in cash and cash equivalents include cash provided by operations of $79.9 million for the first quarter of 2005. Cash used during the first quarter of 2005 includes $3.1 million related to purchases of property and equipment, $33.8 million (net of cash acquired) related to the November 10, 2004 acquisition of Braun Consulting, Inc., and $109.9 million to repurchase company stock under its share repurchase plan. Cash was generated from the November 12, 2004 sale of the company's subsidiary, London Bridge Phoenix Software, Inc., for $23.0 million and $17.9 million received from the exercise of stock options and stock issued.

"We believe our first quarter performance is another strong indicator of the appreciation and demand for our analytic solutions and tools," said Grudnowski. "We expect demand will accelerate as more businesses seek answers to critical decision management challenges."

Company to Host Conference Call

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  • 2 weeks later...

Is there any statistical data support a CREDIT SCORE formula as a means to PREDICT if an individual will pay thier debts in an acceptable fashion? I can see how a CREDIT HISTORY is valuable as far as someone having current vs. past problems, but I think the lendors look at the score and don't bother to look at the history to determine why the score is what it is (yeah I know that's OUR responsibility). But now that we have a little insight into how to improve our scores, doesn't that make the process worthless (I can boost my score simply by requesting a CLI....does that make me a better risk?)

It's ironic to me that 4 yrs ago when we bought our home, the lender had to whisper my credit score under his breath to me because it was against policy for him to tell me, but we are re-financing now and the lenders are apparently required to disclose the scores obtained when the pulled our file?

At least the mortgage company can see the whole picture as they have not only debt and payment info, but income and asset info as well. The non-mortgage lenders are making judgements without even asking about your assets.

So.......is there really anything to validate credit scoring, or is it just a means to resell all that data the CA's have in thier databases?

The CA's used to only sell the data to lenders, but now they sell to lenders and consumers and the more mistakes they make, the more demand it generates for updated reports...whattacountry!!!

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Statistical data is used to predict the liklihood of certain events occurring. Geez, they even have a new television show called NUMB3RS, with that goofy , stuttering lawyer from Ally McBeal solving unsolved murders :shock:

Lenders use credit scores to predict the liklihood of default on payment obligations. There is substantial information that has predicted that liklihood of default MAY occur within a certain range of credit scores. Is it accurate beyond a shadow of doubt, no. A credit score takes a range of scores and relates that information on a bell shaped curve to predict the liklihood of default. Within these bell shaped curves, there are layers of risk assigned, and when the total picture is analyzed, the results show a greater liklihood of default with lower credit scores.

With credit scores over 700, the foreclosure rate is less than 1/4 of 1%, or .0025, if you are counting. This makes a relatvely safe bet that the mortgage will get repaid. Lenders do not need to charge as high an interest rate for those individuals, and can even be more lenient to what documents they want to see when applying for a mortgage.

When you get down to the 560 to 580 range, the liklihood of default rises to around 4%. Lenders will still loan money, but charge a premium for this money because 4 out of every 100 mortgages will default. Lenders never want a default (subjective), so they may not approve a full 100% exposure, because they want some room to settle the default. Investors also want a greater retun for the risk they are taking in extending a loan committment.

Great mathematicians have gathered this information for lenders and in the overall big picture, it all makes sense. LOL

For that matter insurance companies think this is a solution to predicting the liklihood of insurance claims. Some bored mathematician aligned the credit scores of individuals and then pulled an insurance report that showed the claims versus credit score, and found a correlation there. (Notice corrllation is used and hs no effect on cause. This does not mean that because someone has low credit scores means they are going to have a wreck in their automobile. It only shows that individuals with a lower credit score are more likely to have an insurance claim. Without going into much detail in this thread, I will reference you to a letter I submitted to the FTC regarding insurance/credit scoring.


There is also another link posted by Breathing Easier which goes into detail about insurance scoring.


Does the result of a credit score show the liklihood of repaying a mortgage? In some instances, yes, very much so. Unfortunately a credit score does not stop with that information, and has been enhanced to factor in other But this area should be limited to actual repayment of debt obligations. This is a direct reflection of how someone pays their bills. It should stop there.

If you look into some lenders financial reports (in the investing sections), they have breakdowns of default rates by various situations. Here is one that you can view:




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  • 4 weeks later...

Many thanks for the detailed response..........I am still reviewing some of the links you posted. Apparently, there is good math relating high scores to low default rate.

I see that Fair Isaac contends that the overall approval rate is higher using a "score", versus "judgement". One of thier charts shows two-overlapping bell-shaped curves of good loans and bad loans and it indicates that the cutoff for approval rejects many 'good loans" in favor of an overall higher approval rate with less "risk" to the lender.

In reviewing the methods used by FICO, I am more convinced that the credit scoring process primarily a means to make money for Fico, and the CRA's. I do believe payment history is a logical thing to look at, but many of the other key factors are beyond the consumers control.....especially if you don't factor net worth into the credit score, you are giving a score based on liabilities with no idea of assets.

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I do believe payment history is a logical thing to look at, but many of the other key factors are beyond the consumers control.....especially if you don't factor net worth into the credit score, you are giving a score based on liabilities with no idea of assets.

I agree 100%. Did you know that the founder of MyFICO (probably has a decent net worth??) could not qualify for a mortgage. He had so many highly leveraged accounts from business endeavors that his credit score was tanked, and had to use "relationship banking" for a manual underwriting of his mortgage. The mortgage could not be sold in the normal pool of FNMA mortgages. Come to think of it, it was probably a super jumbo mortgage that would not qualify anyway.

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