creditscoring.com vs. The Fed – The 2007 employers incident

The Federal Reserve continues to gain on creditscoring.com.  There is 2010 (twice), 2008, and here is a 2007 incident. 

In “Impatience and Credit Behavior: Evidence from a Field Experiment” Federal Reserve researchers state, “Additionally, credit scores can be used by potential employers and landlords in employment and tenancy decisions.” 

Federal Reserve Bank of Boston Working Paper No. 07-3 is published on the Fed’s website.

Referring to the paper, the Federal Reserve Bank of Boston publication “Research Review” states, “FICO scores, which reflect an individual’s creditworthiness and are widely used to determine loan interest rates, insurance rates, employment offers, and tenancy decisions, are associated with long-run discount factors.” 

The hifalutin research document also states, “For scored individuals, the mean FICO score was 623 (s.d 83), which is below the U.S. average of 67816. ”

However, in August 2007, Fair Isaac said, “The average FICO score is not 678.”

Footnote 16 refers to– you guessed it– Experian.

But, all may not be lost, truthseekers– there could be a revision.  Page 1 states, “This paper, which may be revised, is available on the web site of the Federal Reserve Bank of Boston at http://www.bos.frb.org/economic/wp/index.htm.”

Canada – Pointage de crédit junk journalism from ValueClick

In an item on the Globe and Mail website, an Investopedia article contends, “Credit scores range from 300 to 850.”  However, in Canada the “pointages FICO vont de 300 à 900.”

In the U.S., the FICO credit score scale is 300 to 850.

Investopedia (who is actually based in Canada), a division of ValueClick, provides junk journalism articles to Hearst and Forbes, too.  Martin T. Hart is the chairman of ValueClick according to Forbes.  Whether you choose to believe Forbes about that is entirely up to you.

FHA average FICO score surpasses 700

FHA (the Federal Housing Administration) reports, “For the first time the average FICO score for insured cases reached the 700 level — actually 702.”

But, somebody thinks that’s not necessarily such a great thing.  The U.S. Department of Housing and Urban Development (HUD (FHA is part of HUD)) has just opened investigations resulting from complaints filed by the National Community Reinvestment Coalition (NCRC).  NCRC states that its investigation “reveals that too many of the country’s largest financial institutions are refusing to lend under the FHA loan program to consumers with credit scores between 580 and 640, despite the fact that FHA policy establishes a 100% guarantee for refinance.”

However, lenders are judged by their default and claim rates, and their underwriting authority can be termintated if those rates are too high.

Also, see:  Average credit score chart, FHA loans.