FICO score Credit utilization, Wall Street Journal, 2012-12-01

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Sunday, December 02, 2012 11:29 AM
To: Rupert Murdoch, chairman and CEO, News Corporation (via Julie Henderson)
Cc: Karen Blumenthal, columnist, Getting Going, Wall Street Journal, News Corporation; Karen Blumenthal (2)
Subject: credit score, Credit utilization, Wall Street Journal, 2012-12-01

You published:

Apart from what you actually owe, it especially helps to have unused credit available. “Credit utilization“—how much of your credit you actually use—accounts for 30% of the credit-score calculation. While the rule of thumb is to keep your credit use to no more than a third of your available credit, FICO high achievers use, on average, a skimpy 7% of the credit available to them.

However, according to Fair Isaac, 30% is a number referring to the importance of a category in calculating a FICO score called “Amounts Owed,” not “Credit utilization.”  And, Amounts owed is driven by half a dozen factors, not just utilization.  Fair Isaac explains that one of the items in the category is, indeed, “How much of the total credit line is being used and other ‘revolving’ credit accounts,” but it is only one of 6 items in that segment, and, in fact, is listed fifth.

One of the other items (one that you failed to mention) is “The amount owed on different types of accounts.”  That introduces the idea of scoring based on specific types of loans—credit cards and installment accounts, for example.  Another is, merely, “How many accounts have balances,” which has nothing to do with how much credit is actually used.

In 2009, a Fair Isaac spokesman told me: “When my company explains FICO scoring to a general audience, we apply general weights to major data categories such as, ‘Amounts Owed is 30 percent of a typical consumer’s score.’ We don’t break that weighting into finer parts for individual factors, both to avoid unintentionally misleading the public and to protect the model’s proprietary information. “

But if all of that is not overt enough for you, try this.  Using the same words (apparently finally giving in, using the same, popular, over-simplifying street term) you use, Fair Isaac mentions this about the 30% category:  “Credit utilization, one of the factors evaluated in this category, considers the amount you owe compared to how much credit you have available.”

So, now we finally know—in words straight from the horse’s mouth—that “Credit utilization” (despite wacky Wikipedia‘s inaccurate information) does not account for 30 percent of the score calculation; it is only one of the factors in the 30% category (and we have only a vague idea of its weight).  What is not clear about that?  You used quotation marks around the term credit utilization.  Who are you quoting?

And, whose rule of thumb is it to use no more than a third of available credit?  Is there some plateau at 33 percent?  Are there only diminishing returns below that?

The state of the fourth estate is pathetic, so I created a website to deal with your industry’s poor attitude regarding accuracy.  Corrections are published on Page A2.

Finally, what are you doing about my comments that you removed?


Greg Fisher
The Credit Scoring Site
creditscoring.com
Page A2
pagea2.com
PO Box 342
Dayton, Ohio  45409-0342

[UPDATE, 2012-12-03 5:30 PM EST: Continued on Page A2]

Forbes’ attempt at hipness; Forbes’ correction policy

Ah, youth, and fabulous New York.

The “journalist,” “Interactive Editor,” and “web editor” now works for Reuters, who has it all figured out.

And if you think that’s rich

 

[ORIGINAL MESSAGE]

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, July 20, 2011 11:43 PM
To: Heather Struck, reporter, Forbes; Heather Struck, reporter, Forbes
Subject: credit score, employers, Forbes, 2011-07-20

See this message and your response at http://blog.creditscoring.com/?p=2274, http://blog.creditscoring.com/?cat=134 and http://blog.creditscoring.com/?tag=forbes.

You wrote

But one’s creditworthiness, as reflected in a FICO score or a credit report, now affects a lot more than the ability to borrow money or buy something on credit. It can affect whether you get a job, what you pay for insurance, and even how your personal relationships work out.

and

Employment consultants say a troubling credit score may cause hiring officers to more closely question an applicant. Vic Tanon, chief simplicity officer at Emplicity, an organization that consults in hiring practices across the U.S., says a bad credit rating is likely to be more of a factor in certain industries like financial services.

Who is your source regarding credit score use by employers?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

 

 

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Monday, July 25, 2011 3:10 PM
To: Vic Tannon, chief simplicity officer, CEO, founder and president, Emplicity
Cc: Heather Struck, reporter, Forbes; Heather Struck, reporter, Forbes; Monie Begley, Forbes
Subject: RE: credit score, employers, Forbes, 2011-07-20, Emplicity

Did you discuss the topic of credit scores with Forbes?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

 

 

From: Struck, Heather
Sent: Monday, July 25, 2011 3:09 PM
To: Greg Fisher
Subject: Out of Office: credit score, employers, Forbes, 2011-07-20, Emplicity

I am out of the office at a Fellowship orientation until July 31. Please excuse my late replies to emails. If you need immediate assistance, please contact Tina Russo. [Russo’s email].

 

 

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Monday, July 25, 2011 9:28 PM
To: Tina Russo, senior editor, Forbes
Subject: FW: credit score, employers, Forbes, 2011-07-20, Emplicity

—–Original Message—–
From: Struck, Heather
Sent: Monday, July 25, 2011 3:09 PM
To: Greg Fisher
Subject: Out of Office: credit score, employers, Forbes, 2011-07-20, Emplicity

I am out of the office at a Fellowship orientation until July 31. Please excuse my late replies to emails. If you need immediate assistance, please contact Tina Russo. [Russo’s email].

 

 

From: Struck, Heather
Sent: Wednesday, August 31, 2011 5:56 AM
To: greg@creditscoring.com
Subject: RE: credit score, employers, Forbes, 2011-07-20, Emplicity

Dear Greg,

My apologies for not responding to this until now. I am unsure if you spoke directly with him, but Vic Tannon was my source for that statement. Perhaps there is something you can add?

Heather Struck
Forbes
Markets, New York
[phone]
Follow me: http://blogs.forbes.com/people/hstruck/

 

 

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, August 31, 2011 7:43 AM
To: Heather Struck, reporter, Forbes
Cc: Monie Begley, Forbes; Tina Russo, senior editor, Forbes; Vic Tannon, chief simplicity officer, CEO, founder and president, Emplicity
Subject: RE: credit score, employers, Forbes, 2011-07-20, CRAs

The consumer reporting agencies do not provide credit scores for employment purposes.

What correction will you make?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

 

 

From: Struck, Heather [mailto:HStruck@forbes.com]
Sent: Wednesday, August 31, 2011 8:01 AM
To: greg@creditscoring.com
Cc: Begley, Monie; Russo, Tina; Vic Tannon, chief simplicity officer, CEO, founder and president, Emplicity
Subject: RE: credit score, employers, Forbes, 2011-07-20, CRAs

I understand your point, but it is very clearly sourced. The point there is some occupations have been known to look at credit scores in an evaluation, according to this source. I agree this point needs clarification, and you are very welcome to post a comment on the story.

http://www.forbes.com/sites/heatherstruck/2011/07/20/credit-score-fico-can-hurt-you/

Thanks for the note,

Heather Struck
Forbes
Markets, New York
[phone]
Follow me: http://blogs.forbes.com/people/hstruck/

 

 

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, August 31, 2011 1:12 PM
To: Heather Struck, reporter, Forbes
Cc: Monie Begley, Forbes; Tina Russo, senior editor, Forbes; Vic Tannon, chief simplicity officer, CEO, founder and president, Emplicity
Subject: RE: credit score, employers, Forbes, 2011-07-20, clarity

Only you mentioned clarification so there is nothing to agree upon.

According to consumer reporting agency TransUnion, a “rating” is the manner of payment of an individual account.

Who are your other sources?

What authority do you, as the writer, have in making corrections of errors of fact, or clarifications of unclear stories or attribution published by Forbes?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

 

 

From: Struck, Heather
Sent: Wednesday, August 31, 2011 2:00 PM
To: greg@creditscoring.com
Subject: RE: credit score, employers, Forbes, 2011-07-20, clarity

My editor has authority to make corrections. You can be in touch with him if you like.

Matthew Schifrin – [email address]

Thanks –

Heather Struck
Forbes
Markets, New York
[phone]
Follow me: http://blogs.forbes.com/people/hstruck/

 

The Matrix: NBC, Reuters, Suze Orman, FICO and American Public Media

They did the dirty deed, spreading the big credit score urban legend.

Hardy har har.  There’s a tongue in cheek campaign to replace Suze Orman with Reuters’ tough Lauren “I demand a lot of answers” Young. But, in reality, it’s a perfect match.  That is, they both believe the same myth: that employers use credit scores.

Oh, those British and their dry wit.

 

credit score, employers, LSU, Freakonomics

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, January 04, 2012 12:07 AM
To: Steven D. Levitt, William B. Ogden distinguished service professor of economics, University of Chicago; Stephen J. Dubner, award-winning author, journalist, and radio and TV personality
Cc: Jeremy Bernerth, assistant professor, Robert H. & Patricia Hines Professorship in Management, Rucks Department of Management, E. J. Ourso College of Business, Louisiana State University
Subject: credit score, employers, LSU, Freakonomics

I study the corrections made by powerful people when they discover that they published as the truth the urban legend that employers use credit scores.


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

 

Much ado about A Whole Lotta Nothing

It’s high drama at high noon at American Public Media and the demure New York Times.

JohnUlzheimer.com takes on A.WholeLottaNothing.org later today on APM‘s Marketplace Money.  Pay close attention to another example of the type of report in question, and compare it to the one in part 2.

So, in “What’s hurting your FICO score,” if that is number three in order of impact, then what is number one?

Make some popcorn and listen in.

9/30 update:  http://marketplace.publicradio.org/display/web/2011/09/23/mm-are-credit-scores-fair/

credit score, employers, HubPages

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, August 24, 2011 12:46 PM
To: Pia Chatterjee, public relations manager, HubPages
Subject: credit score, employers, HubPages

See this message and your response at http://blog.creditscoring.com/?p=2417.  

You published, “Being denied a job based on a credit score is not uncommon, especially if the position requires employees to handle customer personal information such as credit card numbers.”

Asked for your source, your writer said: “Wow. Are you actually getting feisty over this? Ask Carol Biaggi, she says it in the youtube video. My company does check.”

However, in the video, Ms. Biaggi says, merely, “Your credit can be the difference between getting or not getting that mortgage, car loan, credit card, or even that job you want as even employers are looking more and more at credit history.”

Your writer does not name her company.

The consumer reporting agencies do not provide credit scores for employment purposes.  Indeed, elsewhere, one of the people in the video on your page even calls it horribly false, and the myth of the decade.

What correction will you make?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342

credit score employers myth, Advance Publications, Inc.

From: Greg Fisher
Sent: Thursday, April 07, 2011
To: S. I. Newhouse Jr., chairman and CEO, Advance Publications, Inc.
Cc: John P. Hiner, executive editor, Bay City Times (Advance Publications, Inc.); Matt Sharp, publisher, Bay City Times (Advance Publications, Inc.); Shannon Murphy, reporter, Bay City Times (Advance Publications, Inc.); Karen Rowlader, assistant director of Professionalism, Thomas M. Cooley Law School; Jon Switalski, Michigan state Representative
Subject: credit score employers myth, Advance Publications, Inc.

See this message and your response at http://blog.creditscoring.com/?p=1951.  

In an editorial, you published, “Checking credit scores is no longer a reliable or even fair way to rate job candidates.”

What evidence suggests that employers use credit scores in hiring decisions?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio  45409-0342


From: creditscoring.com
To: The Honorable Jon Switalski
Cc: Andy Dillon; Todd Heywood, Michigan Messenger
Date: 3/17/09
Subject: credit score, employer

You said, “If employers are allowed to continue using credit scores in hiring decisions, many hard-working people will be unfairly penalized.”

What evidence suggests that employers use credit scores in hiring decisions?

credit score employers myth, Consumerism Commentary

From: Greg Fisher
Sent: Tuesday, April 05, 2011
To: Luke Landes, founder, author, and CEO, Consumerism Commentary
Subject: credit score employers myth, Consumerism Commentary

See this message and your reply at http://blog.creditscoring.com/?p=1948.

You wrote, “FICO and FICO 08 are the most popular credit scores, but when lenders, landlords, employers, and anyone else checking your credit researches your score, they could be looking at any one of a number of scores.”

Who is your source regarding credit score use by employers?


Greg Fisher
The Credit Scoring Site
creditscoring.com
PO Box 342
Dayton, Ohio 45409-0342

Paying judgments: Lew Sichelman, 2002 and 2010

With the Memorial Day weekend fast approaching, syndicated columnist Lew Sichelman took a shortcut.

Lew Sichelman, 2002: 

Beyond that, though, proceed cautiously. One thing you don’t want to do is pay off any judgments or collections that are at least 24 months old.

Not only is this “unlikely to get you where you want to go,” [mortgage broker Ginny] Ferguson warns, it could turn an old problem the scoring software views as insignificant into a new one the program sees as much more serious.

Why? Because scores are based on the last day of activity. So if you pay off a 5-year-old credit problem, it becomes a “yesterday event” that will have a much more profound — read that “negative” — impact on your score.

Lew Sichelman, 2010:

Beyond that, though, proceed cautiously. One thing you want to be careful about is paying off any judgments or collections that are at least 24 months old. Not only is this “unlikely to get you where you want to go,” Ferguson says, it could turn an old problem the scoring software views as insignificant into a new one the program sees as much more serious.

Since scores are based on the last day of activity, paying off a five-year-old credit problem could become a “yesterday event” that will have a much more profound — read that as “negative” — impact on your score.

2002:

In a misguided attempt to improve their credit scores, too many mortgage borrowers are taking steps that end up doing more harm than good.

2010: 

In a misguided attempt to improve their credit scores, too many mortgage borrowers are taking steps that end up doing more harm than good.

2002:

Among other blunders, they are paying off judgments when they don’t have to, closing out old accounts they shouldn’t and opening up new ones and unnecessarily consolidating their credit cards.

2010: 

Among other blunders, they are paying off judgments when they don’t have to, closing out old accounts and opening up new ones when they shouldn’t, and unnecessarily consolidating their credit cards.

Etc., etc.

 

From: Greg Fisher 
Sent: Friday, May 28, 2010 1:10 PM
To: Watts, Craig H
Subject: credit score, FICO, effect of paying judgment

 

See http://blog.creditscoring.com/?p=1257

 

Does paying a judgment decrease the FICO score?