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.

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.”

Yikes.

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.

credit score, employers, Chicago Tribune, 2012-01-13

[for background, see Two and Two: Credit scores fall, AP] 

From: Greg Fisher
Sent: Wednesday, July 21, 2010 8:08 AM
To: Marksjarvis, Gail
Subject: credit scores fall story, 15 to 25.5 percent

You wrote: “According to research released this month by Fair Isaac Corp., which produces FICO credit scores, about 25.5 percent of Americans have credit scores below 599 — a poor score that often interferes with their ability to get a car loan or even other credit cards. That’s far below the long-term average of 15 percent.”

From whom did you learn the 15 percent figure?

 

From: Marksjarvis, Gail
Sent: Wednesday, July 21, 2010 2:04 PM
To: greg@creditscoring.com
Subject: RE: credit scores fall story, 15 to 25.5 percent

Fair Isaac released a study about two weeks ago.

 

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, July 21, 2010 1:51 PM
To: Marksjarvis, Gail
Subject: RE: credit scores fall story, not from news release

FICO’s news release does not mention the 15 percent figure.

You make the same error as the Associated Press story regarding the 25.5% number. Actually, 25.5% are under 600, not 599.

Did you take your information from AP?

 

From: Marksjarvis, Gail
Sent: Wednesday, July 21, 2010 4:17 PM
To: ‘greg@creditscoring.com’
Subject: RE: credit scores fall story, not from news release

Is 15 percent wrong?

 

From: Greg Fisher
Sent: Wednesday, July 21, 2010 4:43 PM
To: Marksjarvis, Gail
Cc: Michael Lev, associate managing editor, business, Chicago Tribune
Subject: RE: credit scores fall story, unnamed sources

I don’t know; I didn’t do the research for the story.

This is the third request. Do you refuse to name your source? Or, did you just make up the number, yourself?

 

From: Greg Fisher
Sent: Thursday, July 22, 2010 1:13 PM
To: Marksjarvis, Gail
Cc: Michael Lev, associate managing editor, business, Chicago Tribune; Jane Hirt, managing editor, Chicago Tribune
Subject: RE: credit scores fall story, propagation

Your story just appeared on the Fresno Bee’s website.

Who is your source?


From: Greg Fisher
Sent: Friday, January 20, 2012 1:51 PM
To: Gail MarksJarvis, personal finance columnist, Chicago Tribune
Subject: credit score, employers, Chicago Tribune

You wrote, “Because employers and landlords have access to the scores, it can determine who gets an apartment or even a job.”

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

 

Tribune report vs. claim from FICO

FICO scores have been around since the 1950s, but they didn’t become a major factor in mortgage lending until 1995, when Fannie Mae and Freddie Mac began recommending their use to help determine a mortgage borrower’s creditworthiness.” – Chicago Tribune

“First general-purpose FICO score debuts–BEACON at Equifax. (1989)” – FICO score company Fair Isaac

Other myths, urban legends and misinformation

influence > media > newspapers > tribune

Employers credit score Catch-22 myth, Tribune Co. IV

[previous post]

It has been a contentious and rocky road, but Maryland media may finally be getting it (it’s a start, anyway) right.

After publishing

[Vangel Paper co-owner Valerie S.] Androutsopoulos said she doesn’t have blanket rules about using the reports and tends to ignore bad credit scores if they involve medical or education debts or mortgage issues,

the Baltimore Sun (“Light for All”) publshed a follow-up: 

Employers already are barred from seeing a person’s credit score, but the Assembly wants to limit their ability to access the entire report.

Regarding the first piece, the paper’s politics and government editor wrote:

Mr. Fisher:

Thank you for calling this issue to our attention. We have run a correction in our print and online editions.

However, the correction does not appear on the paper’s errors and corrections (named “Corrections and Clarifications”) web page.  Further, other items from the same fold are still wrong

It does not stop with media.

Employers credit score Catch-22 myth, Tribune Co. III

[previous message]

From: Valerie Androutsopoulos 
Sent: Wednesday, March 23, 2011
To: ‘greg@creditscoring.com’
Subject: RE: credit score, employers, Baltimore Sun, Tribune Company, 2011-03-20

This was in spam.  That’s the part that everyone’s missing.  The credit histories DO NOT CONTAIN SCORES.

Valerie



From: Greg Fisher
Sent: Thursday, March 24, 2011 5:23 PM
To: Jane Hirt, managing editor, Chicago Tribune; Allison T. Davis, vice president, communications, Equity International; Jennifer Moralis, vice president, operations, Equity International
Cc: United Press International; Valerie S. Androutsopoulos, principal, Vangel Paper Inc.; Julie Bykowicz, reporter, Baltimore Sun, Tribune Co.; Mary Corey, director of content and senior vice president, Baltimore Sun, Tribune Co.; Talk Back, editor, Baltimore Sun, Tribune Co.; Timothy E. Ryan, publisher, president and chief executive officer, Baltimore Sun, Tribune Co.
Subject: RE: credit score, employers, Baltimore Sun, Tribune Company, Equity International, 2011-03-20, terms

[FORWARD THIS MESSAGE TO SAM ZELL]

Sam Zell, chairman
Equity International
Chicago 

The result of the attached correspondence regarding the employers and credit scores myth must convince you of the irresponsibility of continuing to maintain inaccurate information on the websites of the Los Angeles Times, Hartford Courant, Orlando Sentinel, South Florida Sun Sentinel, Newport News Daily Press, Allentown Morning Call, Chicago Tribune and any other property you control.  I feel it is so, and regard it as my duty to shift from myself to you the responsibility of any further dishonor and embarrassment to you and your colleagues.  I do so by asking for your discontinuation of spreading the myth and of your attempts at enriching yourself through advertising placed on those pages containing the misinformation that harms the public.

Through what email address do you wish to discuss the terms under which you will make your corrections?

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

[next post]

Employers credit score Catch-22 myth, Tribune Co. II

[previous message]

From: Greg Fisher
Sent: Wednesday, March 23, 2011 1:56 PM
To: Timothy E. Ryan, publisher, president and chief executive officer, Baltimore Sun, Tribune Co.
Cc: United Press International; Valerie S. Androutsopoulos, principal, Vangel Paper Inc.; Angelos Androutsopoulos, president, Vangel Paper; Julie Bykowicz, reporter, Baltimore Sun, Tribune Co.; Mary Corey, director of content and senior vice president, Baltimore Sun, Tribune Co.; Talk Back, editor, Baltimore Sun, Tribune Co.; Jane Hirt, managing editor, Chicago Tribune; Allison T. Davis, vice president, communications, Equity International
Subject: RE: credit score, employers, Baltimore Sun, Tribune Company, 2011-03-20 II

On your website, ConservativeAmerican writes, “Unless one’s credit score/history is relevant to the job, such as a bank teller or accounting department A/P, employers should be prohibited from checking on one’s credit rating prior to and after hiring.

And, MikeCalo said, “Am I to understand that Ms. Androutsopoulos denied a job to one guy because his credit score was low and she was afraid that he was a security risk, yet she hired a person, who had to declare BANKRUPTCY because of a mortgage, as an administrator??“

Politics R Dumb commented, “A qualified, hard worker should not be denied a job because their spouse was laid off, suffered a debilitating illness or accident or otherwise emergency situations that lowered credit scores.”

Brian writes, “People aren’t being hired because of credit score, age and, because they are already jobless.”

They believe what you published.  However, the national consumer reporting agencies all state that they do not provide credit scores for employment purposes.  The unique and, indeed, startling thing about your story is that you actually seem to have actually uncovered an actual employer who actually uses actual credit scores for actual employment purposes!

But, I’m betting that you actually didn’t.  That is because it would be a violation of the employer’s contract with the consumer reporting agency.  And, the reports that employers get do not even include credit scores.

This is not the first time that your company furthered this myth.  Last year, Jane Hirt of the Chicago Tribune replied: “Thank you for bringing this to my attention. I had not seen previous emails. I will ask that we look into this further and publish a correction if warranted.”

Is it warranted, yet?

[next message]

Employers credit score Catch-22 myth, Tribune Co.

From: Greg Fisher
Sent: Monday, March 21, 2011
To: Valerie S. Androutsopoulos, principal, Vangel Paper Inc.
Cc: Julie Bykowicz, reporter, Baltimore Sun, Tribune Co.
Subject: credit score, employers, Baltimore Sun, Tribune Company, 2011-03-20

See this message and your reply at http://blog.creditscoring.com/?tag=tribune-company.

The Baltimore Sun reported, “[Vangel Paper co-owner Valerie S.] Androutsopoulos said she doesn’t have blanket rules about using the reports and tends to ignore bad credit scores if they involve medical or education debts or mortgage issues.”

What is the name of the party who provides you with credit scores for employment purposes?


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

[next message]