Senior Vice President

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Friday, April 19, 2013 9:52 AM
To: Jerry Healey, owner and publisher, Colorado Community Media
Cc: Todd Hauer, senior vice president, wealth advisor, Morgan Stanley
Subject: credit score, credit utilization definition

You published this about one of the five categories of data in the FICO credit score formula:

Credit utilization. Credit utilization is defined as the total debt you have divided by the total available credit that is available to you. High credit utilization can be a warning sign of credit risk.

Fair Isaac does not title the second category with those words.  It uses “Amounts owed,” and that category contains factors that have nothing to do with the proportion of balances to credit limits.

I noticed your article in a news search.  It is in the top ten results, alongside articles from Yahoo! News and Fox Business.

Who “defined” credit utilization?

What is your correction policy?


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

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

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.

Not almost 30 percent

“Keeping revolving credit low can have a positive impact on an individual’s credit score, since this accounts for almost 30 percent of a typical score.”  – A Fair Isaac press release, December, 2012

Let’s say we have 100 loaves of bread. There are two categories: Baked, and not yet baked (still dough).

There are 30 loaves in the baked category, and there are 6 types of loaves within that 30:

1   white
1   wheat
1   sourdough
1   French
25  rye
1   multigrain
------------
30  TOTAL

If we add the 70 loaves that are not yet baked, the total is 100.

1   white
1   wheat
1   sourdough
1   French
25  rye
1   multigrain
70  not yet baked
----------
100 TOTAL

Is it honest to say that almost 30 percent of the loaves are rye?

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]

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, utilization ratio, Moneyland, Time Magazine, Time Warner Inc.

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Monday, December 19, 2011 2:54 PM
To: Jeffrey L. Bewkes, chairman of the board and CEO, Time Warner Inc.
Cc: Scott Medintz, editor, MoneyLand, Time Magazine; Scott Medintz, editor, MoneyLand, Time Magazine; Chris Farrell, economics editor, Marketplace Money, American Public Media; Ian R. Friendly, chair, Board of Trustees, Minnesota public Radio and executive vice president, chief operating officer, U.S. Retail, General Mills
Subject: RE: credit score, myth, proportion of balances, Time Warner Inc.

See this message and your response at http://blog.creditscoring.com/?p=3051, http://blog.creditscoring.com/?cat=134 and http://blog.creditscoring.com/?tag=time-warner.

You published, “When it comes to your score, 30% consists of the amounts you owe in relation to your available credit — an equation called your utilization ratio.”

Either your source misled you or your math is off.  Who is your source regarding your claim of the 30 percent importance of the so-called “utilization ratio”?  It is, indeed, a myth.

Earlier this month, another journalist made a correction about the same issue.  However, he failed to provide the source for his original claim.  Peculiarly, even the article to which his story links calls it a myth.

And, who calls it “utilization ratio,” anyway?


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

[previous email attached]

The Wall Street Journal Sunday, Final response

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Thursday, December 08, 2011 3:25 PM
To: Alexa von Tobel, CEO & founder, LearnVest; Maria Lin, editor in chief, Learnvest, Inc.; Dani Dalesandro, Sunshine Sachs, press inquiries contact for LearnVest, Inc.
Cc: Ann Kaplan, chair of the board, LearnVest; Teri Everett, senior vice president, Corporate Affairs & Communications, News Corporation; Emily Glazer, reporter, Wall Street Journal, News Corporation
Subject: RE: credit score, utilization ratio, closing accounts, LearnVest, fabulous New York bunk

[FORWARD THIS MESSAGE TO LIBBY KANE]

Libby Kane, staff writer, LearnVest
740 Broadway, Suite 1002
New York, NY 10012

You wrote, “This ratio of how much credit you’re using to how much credit you could use accounts for about 30% of your credit score.”

That is a bunch of balderdash.

You also wrote, “When you close a card, you lose the credit history that went with it.”

That is pure poppycock.

Who are your sources?


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

[MESSAGES BELOW, AND PRIOR EMAIL, WERE ATTACHED] 


From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Thursday, June 23, 2011 5:49 PM
To: Emily Glazer, reporter, Wall Street Journal
Cc: Ann Kaplan, chair of the board, LearnVest; Maria Lin, editor in chief, Learnvest, Inc.; Alexa von Tobel, CEO & founder, LearnVest; Melissa Rudy; Jennifer Waters, columnist, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation; John Ulzheimer, The Ulzheimer Group; Teri Everett, senior vice president, Corporate Affairs & Communications, News Corporation
Subject: RE: credit score, employers, Wall Street Journal, LearnVest II

What is your editor’s name?


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


From: Glazer, Emily
Sent: Thursday, June 23, 2011 4:59 PM
To: ‘greg@creditscoring.com’
Subject: Final response

Hi Greg,

I spoke with my editor and there will be no correction as I have confirmation from my source (who has also emailed you) about the accuracy of the information in the article. I believe I wrote this back to you, as did Alexa and people from LearnVest.

Thank you,

Emily

Emily Glazer | The Wall Street Journal Sunday
[address]
[phone] | [email address] | @emilyglazerwsj

The Wall Street Journal Sunday teams leading metropolitan newspapers with The Wall Street Journal in an authoritative and useful package of original investment news, personal-finance articles and career advice. (For recent stories check out: wsj.com/Sunday)


From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Friday, June 10, 2011 12:51 PM
To: Alexa von Tobel, CEO & founder, LearnVest
Cc: Ann Kaplan, chair of the board, LearnVest; Maria Lin, editor in chief, Learnvest, Inc.; Emily Glazer, reporter, Wall Street Journal
Subject: RE: credit score, employers, Wall Street Journal, LearnVest II

When do you return?


[PRIOR EMAIL

 

credit score, utilization ratio, MarketWatch, Wall Street Journal, News Corporation

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Tuesday, June 21, 2011 12:09 AM
To: Jennifer Waters, columnist, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation
Subject: credit score, utilization ratio, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation

 See this message and your response at http://blog.creditscoring.com/?p=2190, http://blog.creditscoring.com/?tag=wall-street-journal, and http://blog.creditscoring.com/?tag=news-corporation.

You wrote, “It’s a fussier method than that, but your utilization rate is worth some 30% of your score.”

Who is your source for the worth of the utilization rate?


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

UPDATE, 6/21/2011

From: Waters, Jennifer 
Sent: Tuesday, June 21, 2011 12:21 AM
To: ‘greg@creditscoring.com’
Subject: RE: credit score, utilization ratio, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation

Experian and TransUnion and FICO.

From: Greg Fisher
Sent: Tuesday, June 21, 2011 12:59 AM
To: Waters, Jennifer
Subject: RE: credit score, utilization ratio, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation, correction

Fair Isaac indicates that the proportion of credit lines used is only one of six items in an entire category which comprises 30%, “Amounts Owed.”

When will you make a correction?

Where do Experian and TransUnion make the statements you refer to?


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

UPDATE, 6/22/2011
Social media

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Wednesday, June 22, 2011 10:15 AM
To: Jennifer Waters, columnist, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation
Cc: Melissa Rudy; Emily Glazer, reporter, Wall Street Journal, News Corporation; Teri Everett, senior vice president, Corporate Affairs & Communications, News Corporation
Subject: RE: credit score, utilization ratio, Consumer Confidential, MarketWatch, Wall Street Journal, News Corporation, correction II

If

a + b + c + d + .30 + f = .30

then the sum of

a, b, c, d, and f must be zero.

But that must not be true since Fair Isaac said, for instance, regarding the 4th item in the category, “Your FICO Score considers the number of accounts you have with balances” (also, see Equifax, 1997).  Are we both talking about the same Fair Isaac?

What is your equation?

Also, could you find somebody to clean up the page titled, “One in Six Employers Looking At Your Credit Report, Study Finds”?  On the menu bar in Internet Explorer, click on View, then Source (Ctrl+U in Firefox and Chrome) to see the page’s HTML source code.  It still says, “Many employers are checking job candidates’ credit scores, but how big of a factor are credit scores in a company’s eventual decision to hire?”

And, another thing:  Please have Rupert Murdoch review the page titled, “How to Score a Free Credit Score.”  It says that employers use credit scores, and that is a myth.

And, one more thing:  Have Mr. Murdoch review the page titled, “Protect Credit Score.”  It has been a month.

See an example of an honorable correction by Gannett on its page titled, “Our view: Credit reports stacked against consumers.”


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

credit score, FICO availability, Associated Press

From: Greg Fisher
Sent: Friday, April 08, 2011
To: William Dean Singleton, chairman, Associated Press; William Dean Singleton (via Bernie Fischer, MediaNews Group), chairman & CEO, MediaNews Group
Cc: MSNBC.com; Candice Choi, personal finance writer, Associated Press
Subject: credit score, FICO availability, Associated Press

See this message and your response at http://blog.creditscoring.com/?p=1956.  

Your reporter wrote:

As background, lenders rely on two types of scores to gauge a borrower’s risk. FICO scores, which range from 300 to 850, are still the predominantly used scores. But VantageScores, which were developed by the three credit bureaus and range from 501 to 990, have gained popularity in recent years too.

The type of score you’ll get depends on where you buy it.

TransUnion sells both versions to consumers. Equifax only sells FICO scores and Experian markets the PLUS score on its homepage.

Where does TransUnion sell FICO scores?

If Equifax only sells FICO scores, then what is the Equifax Credit Score?


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