Optimal credit utilization ratio

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Monday, January 28, 2013 2:15 PM
To: Charles J. Phelan, Credit.com
Subject: Optimal credit utilization ratio

See this message and your response at http://blog.creditscoring.com/?p=4627 and http://blog.creditscoring.com/?tag=utilization-ratio.

You wrote, “The hidden problem with carrying credit card debt balances is that as the balances climb, you will eventually exceed the optimum credit utilization ratio, and this in turn will lower your overall credit score.”

What is the optimal credit utilization ratio?


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

Out of 850

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Thursday, January 24, 2013 9:22 PM
To: Blake Ellis, personal finance writer, CNNMoney.com
Subject: credit score, myth, out of 850

See this message and your response at http://blog.creditscoring.com/?p=4607.

You wrote, “For example, while a FICO score of 790 out of 850 is considered excellent, it’s merely mediocre on the VantageScore model — which tops out at 990.”

So, would you refer to a FICO credit score of 301 as 301 out of 850?

What is your correction policy?


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

Myth within myths lists

“It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key.” – Winston Chrchill

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, January 23, 2013 11:30 AM
To: Jeanette Tucker, professor, Louisiana State University
Subject: RE: credit score, employers, Fox Business, Act II, NIH; closing accounts shortens, LSU AgCenter

See this message and your response at http://blog.creditscoring.com/?p=4592, http://blog.creditscoring.com/?cat=335 and http://blog.creditscoring.com/?tag=lsu.

You wrote, “The length of your credit history, however, is important, and closing older accounts could reduce your credit score.”

However, consumer reporting agency Experian explains, “Contrary to popular reports, you don’t lose the positive credit history when you close an account.”

I was wondering if you’d like to comment on this confusion.


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

[another email thread was attached to that message]

Discover Bank Discover Card

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Tuesday, January 22, 2013 12:38 PM
To: David W. Nelms, chairman & CEO, Discover Bank
Subject: Your Credit Score and the Price You Pay for Credit disclosure, Discover Bank, distribution

See this message and your response at http://blog.creditscoring.com/?p=4587.

Your disclosure titled, “Your Credit Score and the Price You Pay for Credit” states, “Scores range from a low of 300 to a high of 850.”

However, the next section of the document indicates that the scale is 341 to 850 (the bar graph of the distribution is captioned “FICO® Credit Score Range”).

That is illogical, but begs an illogical question.  What percentage of the credit scores in the population range from 300 to 340?


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

Myth in myths article

With regard to the so-called “utilization ratio,” common sense says More = Bad, and Less = Good, and the scoring model conforms to that intuitive notion.  But, here is another unfortunate case of misinformation; a syndicated error.

Recently, the bankrupt Tribune Company announced a new leader.  Perhaps this is a new beginning for errors and corrections.

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Sunday, January 20, 2013 11:53 AM
To: Gregory Karp, Tribune Newspapers (2) Cc: Beverly Harzog, credit card expert, author, and consumer advocate; Adam Levin, chairman, cofounder and expert, Credit.com
Subject: Myth in myths article

See this message and your response at http://blog.creditscoring.com/?p=4582.

In “Credit scoring myths — and the facts,” You wrote: “Instead of looking at how much credit you have, scoring systems look at your ‘credit utilization,’ how much of your available credit you’re actually using at any given time. Credit experts are usually reluctant to say exactly what the ideal credit use is, but when pressed, [Credit.com chairman and co-founder Adam] Levin said it’s 10 percent, as ridiculous as that sounds.”

That statement is inaccurate.  According to Fair Isaac, the FICO score company, “Generally speaking, the higher your utilization rate is, the greater is the risk that you will default on a credit account within the next two years… That’s why it’s always good advice to keep your credit card balances low – the lower the better.”

Adam Levin’s own website even states (comprehensively, and with near-perfect symmetry), “The lower your ratio, the higher your score will be,” and “The higher the ratio, the lower your score will likely be.”

Avoid errors in your reporting by referring to “Credit score tips, information and guidelines for journalists/reporters.” See #3.

What is your editor’s name?


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

6/6/15 update: His response.

Lifehacker

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Friday, January 18, 2013 1:20 PM
To: Whitson Gordon, editor-in-chief, Lifehacker
Cc: Dan Gilbert
Subject: credit score, inquiries, one additional inquiry may not affect a score

See this message and your response at http://blog.creditscoring.com/?p=4578.  This is a question about misinformation and the speed of its reproduction and at which it is eliminated.

You published, “Another conundrum in the credit world is that each time you apply for a credit card or a loan, you credit score takes a small hit.”

However, contradicting that claim, Fair Isaac, the FICO score company states, “For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all.”

Your article is the first and most prominent one on your home page.  It is also near the top of a news search for the term credit score.

What indicates that each inquiry lowers a person’s credit score?


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

 

Florida Senate Committee on Commerce and Tourism

In Florida, the state legislature session is underway, and members are discussing the use of credit reports in employment.  Senator Nancy Detert is the introducer of Senate Bill 100, which was given 8 yeas and no nays this week.  The myth continues as the senator and media unknowingly push it.
Florida Poly

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Thursday, January 17, 2013 1:07 PM
To: Regan McCarthy, senior producer/assignment editor, WFSU-FM/ Florida Public Radio
Cc: Nancy C. Detert, chair, Committee on Commerce and Tourism, Florida Senate
Subject: Florida Senate Committee on Commerce and Tourism

See this message and your response at http://blog.creditscoring.com/?p=4559.

You wrote: “‘ As we turn the corner on the economy and try to get people back to work, one of the stumbling blocks is that we have employers pulling credit reports and not hiring you because you have a bad credit score. And I think that’s frankly, kind of dirty pool, unless you’re dealing with money or trade secrets or a whole list of exceptions,’ Detert said.”

Employers do not use credit scores.

What is your clarification policy?


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

Florida SB 100, 2013

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, January 16, 2013 12:35 PM
To: Jim Turner, reporter, Sunshine State News
Subject: credit score, employers, Florida, SB 100

See this message and your response at http://blog.creditscoring.com/?p=4554.

The Connecticut legislature was misinformed by its witnesses.  Employers do not use credit scores.

However, you wrote, “Proponents see the effort as a means to eliminate a Catch 22: You can’t improve your credit score because you don’t have a job, yet you can’t get a job because of your bad credit score.”

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

 

Prediction: Dan Gilbert will make a correction.

Dan Gilbert will make a correction.  That is a prediciton that you can believe, sports fans.  Here’s why.

Gilbert is famous.  He’s a mortgage company, NBA basketball and casino squillionaire.  He is also infamous for a certain prediction about his basketball team.  And, unfortunately, his website, Quizzle.com, states, inaccurately, “Employers are Checking Credit Scores – Are You Ready?”

Employers do not use credit scores.  The credit bureaus state that they do not provide scores for employment purposes.

So, there are three things that @cavsdan can do:

  1. Name at least two employers who use credit scores, exposing them, so that the credit bureaus take serious action, and thus solving one of the greatest mass-media mysteries of the past decade: Just who these mystery employers are.  There are none, of course, so he is not going to do that.
  2. Sell his company before the pressure to make the correction is too great to ignore.
  3. Take his lumps and make a correction to the statement.

Follow the message to Dan Gilbert requesting the truth.

Adams Media, F+W Media book

Last Christmas, a broadsheet named the New York Times published an item about people using credit scores in dating.  In it was the claim, “The credit score, once a little-known metric derived from a complex formula that incorporates outstanding debt and payment histories, has become an increasingly important number used to bestow credit, determine housing and even distinguish between job candidates.”

The story quoted the book author (on something other than scores in employment) below.  But, even though the scary baloney that employers use credit scores has been “increasingly” rebuffed, it is obvious that it has not been countered enough.

Employers do not use credit scores.  Say that they do and you will end up here.  If you’re already here, you are hardly alone.

So, get over it. Just make a correction, and move on.

From: Greg Fisher
Sent: Saturday, January 12, 2013 11:44 AM
To: Manisha Thakor
Subject: Adams Media, F+W Media

See this message and your response at http://blog.creditscoring.com/?p=4523.

In your book “On My Own Two Feet” (2007), you wrote, “Increasingly, prospective employers are also looking at this three-digit number, under the assumption that people who are financially responsible make better employees.”

What indicates that, increasingly, employers use credit scores?


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

[THE RESPONSE]