- Part 25

credit score, utilization ratio, Wikipedia reference to USA TODAY, unverified

SEE ORIGINAL EMAIL TO USA TODAY

From: Block, Sandra
Sent: Friday, February 04, 2011 11:47 AM
To: ‘greg@creditscoring.com’
Subject: RE: credit score, utilization ratio, Wikipedia reference to USA TODAY

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Sandra Block
Personal Finance Reporter
USA TODAY
You can find my stories and columns at: http://www.usatoday.com/community/tags/reporter.aspx?id=561
Follow me at:
http://twitter.com/sandyblock

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Friday, February 04, 2011 12:51 PM
To: Sandra Block, reporter, personal finance, USA TODAY
Subject: RE: credit score, utilization ratio, Wikipedia reference to USA TODAY, unverified

SEE https://blog.creditscoring.com/?tag=usa-today-ratio.

That document does not verify your statement. In it, 30% is a number assigned to an entire category called “Amounts Owed.” 6 items comprise the category. For instance, one is “Number of Accounts with Balances,” and has nothing to do with the ratio of debt to available credit. “Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)” is only one item in the category and is listed fifth.

What correction will you make?

credit score, utilization ratio, Wikipedia reference to USA TODAY

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Friday, February 04, 2011 11:25 AM
To: Sandra Block, reporter, personal finance, USA TODAY
Subject: credit score, utilization ratio, Wikipedia reference to USA TODAY

THIS MESSAGE IS PUBLISHED AT https://blog.creditscoring.com/?p=1727.

You wrote, “The amount of debt you have outstanding, as a percentage of your available credit limit, accounts for 30% of your score.”

However, Fair Isaac explains that, to avoid misleading the public, it does not make such a claim.

Wikipedia uses your story containing that sentence as a reference regarding “30% — Credit utilization.”

Who is your source?

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

Fun with Numbers: Washington Times on FICO score range

In a cover story, the Washington Times states, “While debt-to-income ratios and the availability of funds for a down payment and closing costs also have an impact on a loan decision, lenders use an automated underwriting system that depends heavily on consumer credit scores, which range from 350 to 850.”

Later in the article, the Times reports again: “According to www.fico.com, the FICO 8 Mortgage Score provides lenders with a better prediction of the possibility of a mortgage default. Scores are in the same range (350 to 850) as traditional FICO scores, but the score is weighted more heavily by payments that are 90 days late or longer and mortgage and/or rental payment performance.”

FICO score company Fair Isaac claims that the scale starts at 300.

FICO credit scores: 368-839, 407-829, 397-871 & “300-850”

TransUnion: “FICO scores range between 300 and 850.”

Equifax: “FICO scores range between 300 and 850.”

Fair Isaac: “FICO® Scores range between 300 and 850”

“Fair Isaac argues in response that the term 300-850 is not the ‘actual scoring range for any of [Fair Isaac’s] classic FICO credit scores. The actual scoring range for the first FICO score developed for Trans Union is 397-871, for Experian is 368-839, and for Equifax is 407-829. Every version of these scores has a different range—none of which is 300-850.'”

MEMORANDUM OPINION AND ORDER, Fair Isaac v. Experian et al., July, 2009

“Second, the argument that ‘300-850’ is suggestive rather than descriptive because the actual scoring range for some Fair Isaac products goes beyond 300-850 is equally unpersuasive.”

MEMORANDUM OPINION AND ORDER, Fair Isaac v. Experian et al., May, 2010

credit score, employers, undersecretary, Office of Consumer Affairs and Business Regulation, Commonwealth of Massachusetts

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Tuesday, January 25, 2011 11:12 AM
To: Barbara Anthony, undersecretary, Office of Consumer Affairs and Business Regulation, Commonwealth of Massachusetts
Cc: Jason Lefferts, director of communications, Office of Consumer Affairs and Business Regulation, Commonwealth of Massachusetts
Subject: credit score, employers, undersecretary, Office of Consumer Affairs and Business Regulation, Commonwealth of Massachusetts

You wrote: “A credit score is a vital tool that goes beyond whether or not a bank or retailer will hand you a credit card. It affects your interest rate when applying for a mortgage or getting a car loan, and in some cases can be checked by a prospective employer.”

What indicates that employers use credit scores?

creditscoring.com question invalidates Wikipedia

On July 19, 2010, Fair Isaac responded to an inquiry by creditscoring.com regarding odd, inconsistent claims about the FICO credit score distribution. Fair Isaac responded that its distribution chart was out of date and would be replaced. The Associated Press did not reply.

The FICO score company removed the chart, but has not replaced it, and that has made Wikipedia’s article Credit score (United States) unverified for months. In fact, it still states, “A FICO score is between 300 and 850, exhibiting a left-skewed distribution with 60% of scores near the right between 650 and799.^[12]”

Wikipedia’s footnote #12 is a link to a page that supported the statement with a chart illustrating a bell curve distribution. However, there is no longer anything about 650 or 799 on the Fair Isaac page, so that eliminates Wikipedia’s verification of its claim about the distribution.

Meanwhile, the Wikipedians argue over crucial issues like cheap vs. inexpensive, and, of course, the lots/a lot controversy that was infinitely more important than correcting the distribution reference.

A previous error by Wikipedia regarding credit scores lasted for 654 days.

Wikipedia looks like an encyclopedia, but is really just a message board. Just ask Tyler.

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.”

Rumor thread 1 – Rupert Murdoch does not know how to use the internet

Wading through the muck, yesterday we learned that pressreleasemag.com published–

“Unfortunately, for people who are unemployed, this can easily become a catch-22: If their credit score dips because of the financial straits caused by unemployment, they may have increasing trouble finding a new job, because their credit score is low.”

— which are exactly the same words that CreditCardGuide.com published.

The CreditCardGuide.com author said that one of her sources is–

http://www.moolanomy.com/3770/why-a-good-credit-rating-is-important-even-if-you-dont-use-credit-mmarquit01/ .

The Moolanomy author said that one of her sources is–

http://blogs.wsj.com/wallet/2009/03/11/one-in-six-employers-looking-at-your-credit-report-study-finds/ .

The Wall Street Journal item, because of its original claim and whose page contains a comment questioning the story’s accuracy (Lester Rosen, an expert who calls it an urban myth also commented), still states that employers use credit scores in its source code. It says, “<meta content=”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?” />” (in Internet Explorer 8, on the menu bar, click on View, then Source (or use Alt+V, C) to see it; in Firefox, click on View, then Page Source (or use Ctrl+U)).

So, for instance, in Yahoo!, if you search for the term credit scores employers, the results page shows this for the Wall Street Journal page:

One in Six Employers Look at Your Credit Report – The Wallet …
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?
blogs.wsj.com/wallet/2009/03/11/one-in-six-employers… – Cached

Despite even the comment right on his page, Rupert Murdoch has still not made a correction to that meta description tag. He does not know how to use the internet.

So, Moolanomy is a source for Bankrate. Martin Halusa has not made an “update.”

Trail of a rumor: Credit scores, employers and media

Consumer reporting agencies TransUnion, Equifax and Experian all state that they do not provide credit scores for employment purposes. Author and SmartCredit.com writer John Ulzheimer calls the notion that employers use credit scores the myth of the decade. Lester Rosen, president of Employment Screening Resources (ESR) and a qualified employment screening expert calls it an urban myth.

Here’s how the rumor spreads. This is seedy, so wear your boots.

Today, the headline “Government and Private Employers Check Credit Scores” appears on a popular news search website. The headline comes from pressreleasemag.com, a domain created only two months ago. ‎The January 12 story begins with this paragraph: “More and more employers especially in the government sector… finding a new job, because their credit score is low.”

Those are the same, exact 93 words, found on CreditCardGuide.com in a story dated January 9.

CreditCardguide.com has not responded.

The following is unrelated to employers and credit scores, but is too intriguing to pass up. The pressreleasemag.com story continues in the second paragraph: “On account that credit is a nebulous number… free annual credit reports I could keep up.”

So, there are 92 more words that are exactly the same as another press release on another website.

Next paragraph: “However, cards with a flexible spending limit, while convenient, can present… preferably under 30 percent and ideally at 10 percent to 20 percent.”

That’s a new twist. 85 of the words in that paragraph are exactly the same as an 87-word paragraph in a December 27 story on CreditCardGuide.com. But whoever is doing the deed at pressreleasemag.com changed the last two words. They actually did some real work— such as it is.

Next paragraph: “That rankles a lot of people, but what really annoys … will use when you apply for a loan.”

Ouch. The big Kahuna. Gannett’s USA TODAY was the victim this time; 81 words.

Finally: “The Equifax website has a lot of information about not only free, but discounted… prices vary but all are less than the $10.50 the bureau normally charges for a single report.)”

75 words. Victim: AOL.