Canada Day: Reuters falls for math myth, moth-to-flame

In this bicentennial year, with apologies to a gracious nation of people of warm hospitality, here is the belated Canada Day update.  Try the wines of Niagara-on-the-Lake, and the mussels and ice cream found there, originating at P.E.I.

And, now, on with the show.  It’s a doozy.

On his little Reuters website, a real media baron published this quote from a Fair Isaac spokesman, “‘Credit utilization (amounts owed as a percentage of available credit) counts for 30 percent of a person’s credit score.'”

It must have been given in writing (unless the dude can inflect parentheses).

The Fair Isaac statement is false because it is mathematically impossible.  Here’s the doozy part– a mind-blower:  The credit score company’s spokesman in the Reuters item even replied, “I understand well that ‘amounts owed’ is driven by half a dozen factors not just utilization.”


Credit score expert John Ulzheimer calls this nonsense a myth.

Win column:

Losers column:

and more.

But, consider the source– not the one in the journalistic sense, but the source of the reach of the repeated rumor: Reuters.  For another eyeful, see Canada Day, 2011: Reuters on employers and credit scores.

This monkey business about the so-called “credit utilization” is all Dr. Veghead‘s fault. A Kat Malone he is not.

A message to the really wrong Reuters rumor repeating rookie writer: Let me know when you have completed Poynter’s Math for Journalists: Help With Numbers.

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.


Academia’s credit score urban legend goes mainstream

The consumer reporting agencies all state that they do not provide credit scores for employment purposes (ok, well, sometimes they say they do).  It’s a big urban legend.

But, watch this trail of rumor.

Most companies attempt to justify the use of credit scores because they think such employees will end up stealing, but our research suggests that might not be the case.” – Louisiana State University

“An emerging trend is for companies to use credit scores as an employment screening tool.” – Psych Central

“’An emerging trend is for companies to use credit scores as an employment screening tool,’ says Psych Central, but a new study to appear in the Journal of Applied Psychology “shows no connection between poor credit scores and theft – although some interesting connections were discovered.” – Globe and Mail

But that’s nothing new for the 3rd Baron Thomson of Fleet.

credit score, employers, Reuters, 2011-05-23

From: Greg Fisher []
Sent: Monday, May 23, 2011
To: John Wasik, columnist, Reuters
Subject: credit score, employers, Reuters, 2011-05-23

See this message and your response at and

You wrote, “Potential employers and insurance companies also check credit scores, so your FICO is a keystone to your future security as well.”

Who is your source regarding credit score use by employers?

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

[UPDATE 2011-12-02: See Canada Day]

What is THE average credit score?

Last month, in what seemed like a big scoop over its rival news agencies, the Associated Press reported that, now, 25.5% of Americans have FICO scores below 600.  But, the score model in that report is a new score, FICO 8 (BEACON 09), which is not sanctioned by the two big housing finance agencies, nor even the one sold to consumers by the main scoring company.  The story stuck.  Following questioning by, FICO (the company) removed FICO (the score) distribution charts from its website.

This month, rival news agency Reuters struck back.  On Friday, in her story “Scorning debt, consumers’ credit scores soar,” Helen Chernikoff wrote, “The average credit score rose to 704 in July, a level not seen since the first quarter of 1998, according to data that Equifax Inc (EFX.N), one of the largest U.S. credit bureaus, provided exclusively to Reuters.”

To what score model she refers is unclear.  In the article, 850 is the highest score on the scale, but there is no mention of the lowest.  So, to the average person, the model might look like the broad-based risk FICO credit bureau score BEACON 5.0 available to consumers at myFICO and required by Fannie Mae and Freddie Mac.

Or, it could be something else.

That is because the consumer reporting agencies play a childish game with numbers, creating credit scores with scales similar to that of the well-known FICO score, 300-850.  TransUnion even makes one, called Transrisk, that has exactly the same scale as the FICO–300 to 850.  There’s PLUS at Experian (330-830).  And, in the case of the company that is subject of the fabulous exclusive Reuters story, there is the Equifax Risk Score 3.0 (280-850).

Reuters blogger: FICO says employers use credit scores

Fun feedback loop

Selling its score, FICO cheerfully says that employers use credit scores (occurs at :47 in the video).

Consumer reporting agencies claim that they do not sell credit scores to employers.

Ben Stein says that employers use credit scores.

Felix writes about Ben Stein. writes about Felix writing about Ben Stein. blog comments trackback to Felix’s blog (July 28 comment: “simmers“).

Felix writes that FICO told him that employers use credit scores. writes about Felix writing about FICO telling Felix that employers using credit scores (this page).