[apexcrsrvc]

FICO 08′ REFUSED BY EQUIFAX!

Fair Isaac Tweaks the FICO Formula?

" . . . The third major credit reporting agency, Equifax, is in the midst of a lawsuit with Fair Isaac about competition from a new system, VantageScore, and plans not to move forward with FICO 08 according to the Wall Street Journal."

Published on:
Friday, March 07, 2008

Written by:
Brad Zimmerman

[Pale Rider]

http://www.dallasnews.com/sharedcontent/dws/bus/columnists/pyip/stories/DN-moneytalk_07bus.ART.State.Edition1.2baf4a4.html

"We will do whatever it takes to protect the reliability and accuracy of FICO credit scores for lenders, and to ensure lenders can continue to use FICO scores with confidence when making their most important customer decisions," Mark Greene, Fair Isaac chief executive said in an announcement last June. "We will continue working with lenders, regulators and others in the credit reporting industry to end deceptive practices that fraudulently misrepresent consumer credit histories for profit."

Translation to English:

"We will do whatever is necessary to protect the profits of lenders and ourselves, no matter how flawed our system is. We will continue to ignore previous flaws in our system, and continue to look for new ways to harm consumers, and misrepresent the legal status of consumers who attempt to legally even the playing field in order to have a fair chance at obtaining the "American Dream" at a reasonable price. We will protect the mortgage industry at all costs even though it has been proven time and again they are the reponsible party for the current "credit crisis"."

Equifax - not using FICO 08
TU - starts 2nd quarter of 08
Experian - No date set and working on "technical issues".

[apexcrsrvc]

Your translation is apt.

Where are you getting information that TU is going to allow this model to be applied to their data in the second quarter? My information is contrary to this given the recent rumblings regarding the ECOA.

[jlynn]

Click on Mr. Zimmerman's previous article Credit Boom Turned Credit Bust

A few companies are violating the Credit Repair Organizations Act by charging hundreds to thousands of dollars to make individuals with poor credit authorized users on accounts with good credit lines, according to Credit.com.

OK, how does that violate CROA if you follow all parts of the statute? What is it violating?

Consumers…stand to lose with the change, namely those for whom authorized user accounts were designed: college students on their parents' cards and spouses with little to no credit of their own," according to MSN Money. "There's no way to distinguish these from…strangers trying to augment their scores. Lenders who want to find out more information about others on credit card accounts are hindered by the Fair Credit Reporting Act and privacy laws."

And therein will lie the problem for those using FICO 08 for credit decisions.

[Pale Rider]

Originally Posted by apexcrsrvc

Where are you getting information that TU is going to allow this model to be applied to their data in the second quarter? My information is contrary to this given the recent rumblings regarding the ECOA.

It came from the article in the link I posted above. I'll see if I can find anything that supports that info.

[apexcrsrvc]

Yes, I'd like to see it because it's the first I've heard of it. I'm just a bit reluctant to believe that any of the cra's are going to allow the model to be applied. One, they could be liable in a contribution action from a creditor under the ECOA and two, they want to push this Vantage score. Why help them any?

The cra's own the data. They can refuse a model if they wish.

Moreover, it doesn't mean that any lender will use FICO 08' even if it does come down the line. Lenders have the choice of what model to use.

I'm just making general statements here. I'm not directing this at you Pale.

I just can't get my head around the delays if they're going to actually do it. Maybe they will but, legally speaking, there is going to be subsequent fallout.

[apexcrsrvc]

Originally Posted by jlynn

Click on Mr. Zimmerman's previous article Credit Boom Turned Credit Bust

OK, how does that violate CROA if you follow all parts of the statute? What is it violating?



And therein will lie the problem for those using FICO 08 for credit decisions.

You and I know there is no violation. The FTC has already said it's legal. That's enough for me.

Let's wait for some blogs . . .

[Pale Rider]

I couldn't find anything that backs up the article on the TU date. I do believe if any CRA is stupid enough to sign up, it would be TU.

I agree with what you are saying. I think it will be a big problem for any lender that tries to use the model. I have said all along that FICO did not have to, and should not have been involved in the process. There were better, cheaper, and much easier solutions that would not have had any issue with the ECOA.

The real fraud in the credit crisis is being investigated by the FBI as we speak. When they are through, the lenders will wish there had been some illegal activity by consumers. But, I think they really know the lenders are the ones that committed the crimes and will pay for it.

[NeedDebtHelp]

Does anyone mind telling me which is better for me, the general consumer?

[centex]

The reality is that there were abuses of the authorized user process. I doubt that anyone involved in drafting the ECOA ever contemplated that AU protections and benefits could ever be conferred to someone by the sister of Aunt Sally's next-door neighbor's third-cousin twice-removed in the same manner as a spouse would be able to obtain the benefit from being an AU on their husband or wife's account.

As a result of the perversion of the process, too many people were able to artificially inflate their scores and get into houses that they subsequently defaulted on. And while the AU process was not the only contributing cause to the mortgage meltdowns, they played enough of a role that SOMEONE has to get a handle on the scams that run/ran rampant.

[Pale Rider]

But, it wasn't illegal.

I'd like to see the numbers, but my bet is the AU's had a very, very small part in the meltdown. General stupidity and greed by the lenders had a much bigger part. The FBI didn't mention any consumer "scams" in their many ongoing investigations. Probably because it is not illegal, as we showed here long ago. Yeah, there was some manipulation, but I doubt it was in the trillion dollar range.

[Pale Rider]

Originally Posted by NeedDebtHelp

Does anyone mind telling me which is better for me, the general consumer?

Which what?

[NeedDebtHelp]

Originally Posted by Pale Rider

Which what?

FICO08, or what they use now?

[Pale Rider]

Depends on your situation. It is rumored that there were other tweaks in FICO 08 that were good for consumers. Since it is not being used, it is best to know if your lender is using FICO or one of the CRA generated scores. Ask the lender and they may tell you. I have a local bank that uses the score from Equifax. Lucky for me, that is my best report, and the EQ score is generally higher than FICO.

[jlynn]

Originally Posted by centex

As a result of the perversion of the process, too many people were able to artificially inflate their scores and get into houses that they subsequently defaulted on. And while the AU process was not the only contributing cause to the mortgage meltdowns, they played enough of a role that SOMEONE has to get a handle on the scams that run/ran rampant.

The reality while all the finger pointing is going on is that debt to income ratio should be the MAJOR factor in determining an ability to repay a mortgage. All the bastardized AU accounts in the world will not change that number. They only increased scores - those 3 digit little numbers that drive our world today. If purchased AU accounts were the evil incarnate that drove the lending industry into the toilet then someone is not thinking logically. Scores would be increased LOWERING the likely interest rates. One could argue those in the sub-prime market took little or no advantage of the AU loophole, and thus find themselves on the wrong end of foreclosure proceedings today.

[Pale Rider]

Very well put, Jlynn Sr.

[spinn]

There is no reason in the world for lenders and the brokerages that bought these loans in the form of mortgage backed securities to NOT make these loans.

There is no culpability for the most senior execs and the GOVT will bail them out anyway.

If they do lose their jobs, like Chuck Prince at Citi, they will get $30 million golden parachutes.

They bought these securities without a predetermined exit point id they went bad because ultimately, there was no risk to them personally.

If I buy INTC stock at $30 and it goes against me to $27 I get out and take a small loss. If I hold until $10 I deserve to get hammered. The GOVT isnt standing behind me waiting to reimburse me that $20, however.

This is the perfect example of why buy and hold, with no exit strategy, fails on all levels.

[hannah]

Yep. Terms for mortgages are laid out in advance and are supposed to be fully disclosed prior to signing the documents. If you cannot afford (after paying only interest payments for two years or so) to pay a legitimate principal plus interest payment then there's no way you should have been loaned money for a house to begin no matter what your so called FICO score was at the time of the mortgage.

I've read so many mortgage stories on the net and watched so many sob stories about it on TV, the thing I question is not the FICO score that said someone was capable FICO-wise to pay a mortgage, but the income the lenders knew the mortgagee had when they applied. So many mortagees knew that at their current income they could not afford more than the interest-only payments they were making the first few years. They were deluded into buying a house that they should never have been able to buy to begin with based on their incomes not on their FICO scores. This had nothing to do with whether or not they purchased AU trade lines to increase their FICO scores. These people simply could not afford to buy a house with a real mortgage to begin with. They were enticed, told they could, and fleeced IMHO. Should they be bailed out. No. Not on my tax dollars...but put the blame where it belongs and it has nothing to do with purchased AU trade lines.

If all these bad mortgage loans were based strictly on FICO scores, perhaps Fair Issac should be sued class action for incompetence.