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.

CNBC draws USA TODAY into the fray

A story on CNBC’s website stated:

But how possible is it really to achieve an 850, and is it worth the effort? MyFICO.com says that only .5 – 1 percent of consumers have achieved this golden number.

creditscoring.com asked CNBC for the name a person who, or the address of a document that, is the source of that statistic.  Rather than naming its source, CNBC replied that a myFICO representative said that 13 percent have a score over 800.  CNBC changed its story so that it said this:

But how possible is it really to achieve a perfect score, and is it worth the effort? MyFICO.com reports that only 13% percent[SIC] of consumers have achieved scores over 800.

USA TODAY republished the CNBC article.

However, in July, USA TODAY published an Associated Press report that said:

On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9%, which is notably above the historical average of 13%, though down from 18.7% in April 2008 before the market meltdown.

In July, Fair Isaac said that it would replace its distribution chart.  It has not done so.

ScoreInfo website launched by Fair Isaac

Fair Isaac introduced another website today:  ScoreInfo.  In a press release, Jordan Graham, president of FICO Consumer Services said, “FICO launched ScoreInfo.org to help consumers better understand their disclosure notices and how to use that new knowledge to their benefit.”

On January 1, 2011, federal Fair Credit Reporting Act risk-based pricing notice rules went into effect.  The Federal Trade Commission and the Federal Reserve Board issued joint press releases, but there is no link to the Fed’s version here because its chairman, Ben Bernanke, has still not responded to the question about its statement about employers using credit scores.

The website joins Fair Isaac’s other websites FICO.com and myFICO.

The enigmatic realm of credit scores at CNBC

Following a question from creditscoring.com regarding a CNBC claim that “only .5 – 1 percent of consumers” have achieved an 850 credit score, CNBC amended a January 4th story on its website.  The error and its correction is not documented.

The original statement was, “MyFICO.com says that only .5 – 1 percent of consumers have achieved this golden number.

The corrected statement is, “MyFICO.com reports that only 13% percent[SIC] of consumers have achieved scores over 800.”

However, in July, (after questions from creditscoring.com about an Associated Press report) Fair Isaac, the company who owns myFICO, removed the distribution chart that included the 13 percent statistic, and said that it would replace it.  The credit score company, still, has not provided the replacement.

Despite that, in October, the U.S. Equal Employment Opportunity Commission heard remarks from the National Consumer Law Center regarding a conclusion cobbled together about the credit score national distribution.  The NCLC’s notion that one-quarter of consumers have a credit score under 600 was attributed to Fair Isaac, and the notion that those under 600 comprised only 15 percent before “the Great Recession” was attributed to the Associated Press. 

A FICO spokesman said that the AP used the 15 percent statistic “as a proxy for a pre-recession distribution curve.”

On April 13, introducing a segment titled “Credit Check: Career Killer?,” a CNBC anchor asked, “Does a credit score– especially a high one– indicate a better applicant?”

The consumer reporting agencies all claim that they do not provide credit scores for employment purposes.

Credit scores in old and new media

A CBS News correspondent said:

“(Your credit score) is what almost every company in your life uses to determine whether you are a credible, trustworthy borrowing candidate. From your prospective employers to your prospective landlords, most companies will check your credit score in order to gauge their risk. No one likes a deadbeat!”

An anonymous writer for Investopedia had the (exact) same thought: 

“Well, it’s what almost every company in your life uses to determine whether you are a credible, trustworthy borrowing candidate. From your prospective employers to your prospective landlords, most companies will check your credit score in order to gauge their risk. No one likes a deadbeat!”  [update, 4/24/2011]

But, even funnier, is that the chain goes one more step:  The anonymous writer thinks a lot like another writer.

The Counter-Plagiarism Handbook : CJR
Copy, Shake, and Paste
University of Chicago Plagiarism Guidelines

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Update 12/23/2010:  Part Two

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.

Zillow and SF Chronicle believe Fed credit score info

Consumer reporting agencies TransUnion, Equifax and Experian all emphatically state that they do not provide credit scores for employment purposes.

Despite that, again, the Federal Reserve claims that credit scores are, indeed, used in employment.  Zillow and the San Francisco Chronicle believe it.

The first sentence of a Federal Reserve Bank of Cleveland commentary states, “Credit scores are used in nearly every part of our lives, from applications for car loans, mortgages, credit cards, and car insurance to even some hiring decisions.”