criticism | The Credit Score Blog

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.”

Experian – Contradictory statements about credit scores and employers

Experian states, “More employers than ever are checking the credit scores of potential applicants, and that could create a vicious cycle, according to a report from the Minneapolis Examiner.”

The title and headline accompanying the statement is “More Employers Check Applicants’ Credit Scores.”

However, Experian claims that it does not provide credit scores for employment purposes.

Influence: Equifax botches credit score distribution

On the heels of this week’s other fun with Equifax (“INFORM > ENRICH > EMPOWER“), top consumer finance expert” and Equifax blogger Ilyce Glink cross-promotes another of her myriad projects by linking to a video featuring some muckety-muck identified as an Equifax executive. And it is a hoot.

On CBS MoneyWatch.com, Glink writes: “According to FICO’s credit blog, about 18 percent of the population has a FICO credit score between 800 to 850, but the highest credit score I’ve heard of is 830 (feel free to post yours below). A little over 25 percent of the population has a credit score below 600.” [an aside: See creditscoring.com’s “Two and Two: Credit scores fall, AP, Part II”]

However, there is a kink as her hijinx sinks with a link that slinks into a rinky-dink Think Glink video. ;) The executive, some dude named Steve, identified as “President, Equifax Personal Information Solutions” states, “I think less than one percent of the population has more than 800.” Turn on the camera and watch him go (away).

It is more than a flub: The startling misinformation is accompanied by the actual words, on-screen, in writing, in your face: “Less than 1% have 800 or higher.”

Get more Equi-Facts with Steveorino here on the Wild, Wild Web. And, don’t miss one of the most hilarious moments in live radio.

credit scores, employers, Forum of Fargo-Moorhead

From: Greg Fisher [mailto:greg@creditscoring.com]
Sent: Thursday, September 16, 2010 1:21 PM
To: Matt Von Pinnon, editor, The Forum of Fargo-Moorhead
Cc: John Lamb. features writer, The Forum of Fargo-Moorhead; Robert Morast, features editor, The Forum of Fargo-Moorhead; Nicole Dewey, director of publicity, Henry Holt/Metropolitan Books; Ann Burnett, professor, Women and Gender Studies, North Dakota State University; Barbara Ehrenreich
Subject: RE: credit score, employers, the Forum of Fargo-Moorhead, clarification of balderdash you bought

Do you refuse to make a clarification?

What is your journalistic responsibility regarding clarifying accurate quotes of inaccurate or unsubstantiated statements?

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 creditscoring.com, 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).

Paying judgments: Lew Sichelman, 2002 and 2010

With the Memorial Day weekend fast approaching, syndicated columnist Lew Sichelman took a shortcut.

Lew Sichelman, 2002:

Beyond that, though, proceed cautiously. One thing you don’t want to do is pay off any judgments or collections that are at least 24 months old.

Not only is this “unlikely to get you where you want to go,” [mortgage broker Ginny] Ferguson warns, it could turn an old problem the scoring software views as insignificant into a new one the program sees as much more serious.

Why? Because scores are based on the last day of activity. So if you pay off a 5-year-old credit problem, it becomes a “yesterday event” that will have a much more profound — read that “negative” — impact on your score.

Lew Sichelman, 2010:

Beyond that, though, proceed cautiously. One thing you want to be careful about is paying off any judgments or collections that are at least 24 months old. Not only is this “unlikely to get you where you want to go,” Ferguson says, it could turn an old problem the scoring software views as insignificant into a new one the program sees as much more serious.

Since scores are based on the last day of activity, paying off a five-year-old credit problem could become a “yesterday event” that will have a much more profound — read that as “negative” — impact on your score.

2002:

In a misguided attempt to improve their credit scores, too many mortgage borrowers are taking steps that end up doing more harm than good.

2010:

In a misguided attempt to improve their credit scores, too many mortgage borrowers are taking steps that end up doing more harm than good.

2002:

Among other blunders, they are paying off judgments when they don’t have to, closing out old accounts they shouldn’t and opening up new ones and unnecessarily consolidating their credit cards.

2010:

Among other blunders, they are paying off judgments when they don’t have to, closing out old accounts and opening up new ones when they shouldn’t, and unnecessarily consolidating their credit cards.

Etc., etc.

From: Greg Fisher
Sent: Friday, May 28, 2010 1:10 PM
To: Watts, Craig H
Subject: credit score, FICO, effect of paying judgment

See https://blog.creditscoring.com/?p=1257

Does paying a judgment decrease the FICO score?

AJC blogger counters her U.S. Senator

Speech-making, writing, blogging, stating and yakking adds up to much mush

Last week, the U.S. Senate passed its financial reform bill with an amendment regarding credit score use in employment. Senator Udall from Colorado sold the idea by saying that employers use credit scores. The problem with that is that the consumer reporting agencies say that they don’t even provide credit scores for employment purposes.

Udall has not replied to a request asking for substantiation.

Two weeks ago, as an Atlanta Journal-Constitution blogger profiled the Equifax consumer reporting agency CEO, the writer dropped the E-Bomb, referring to a “paranoia.” Sh’yeah! A self-fulfilling prophecy in the making.

The blogger has not replied to a request for substantiation.

But, redemption for ATL came in the personage of another AJC blogger. She quotes her senator, then contradicts his statement. Rana Cash writes:

“I believe it’s only fair to allow consumers access to their credit score when it is used against them to deny credit, require a higher interest rate on a loan or prevent an applicant from being hired for a job,” said Sen. Johnny Isakson (R-Ga) in a statement. Employers often use credit reports, but do not have access to credit scores.

Ouch. Ouch-O-Mondo-Matic!

The senator was asked by creditscoring.com to reply with substantiation.

Rag-tag army of dissenters

Cash is not alone. John Ulzheimer, a New York Times blogger and no slouch in credit reporting and scoring said that there is “mountain of evidence that scores are generally not used by employers.” He talks about the phenomenon on televison. He had the last word on it– then had the last word on it.

Highly-intelligent and incisive Bankrate writer with exquisite taste in multimedia Leslie McFadden discovered the creditscoring.com video and wrote about the issue in “Credit score myth persists.”

In the Columbia Journalism Review, a reporter had an epiphany and, in a rare moment of leadership in the media, felt a sense of responsibility to his readers that caused him to– gasp– actually make a correction.

They are joined by ChoicePoint, the Privacy Rights ClearingHouse and CNN.

And finally, Lester Rosen, lawyer, author, speaker, expert witness and background screening company president– who knows a little about employment credit reports– keeps hammering away at the “urban myth.”

But, when you’re up against the Federal Reserve, with its access to congressional hearing rooms, it ain’t easy.

The Fed has not replied to a request for substantiation.

A senator, credit scores, losers and fake guitar playing

The lyrics to FreeCreditReport.com’s latest ditty:

Wanted to get myself a new cell phone
So I could hear myself at a ring tone
Who knew the store would go and check my credit score?
Now all they let me have is this dinosaur
Hello? Hello? Hello? Can anybody hear me?
I know. I know. I know. I should have gone to

FreeCreditReport.com
That’s where I should have gone. Could have got my knowledge on

ANNOUNCER: Free credit score and report with enrollment in Triple Advantage.

Meanwhile, in a not-so-veiled reference to Experian (the owner of FreeCreditReport.com) U.S. Senator Charles Schumer states, “If these companies want to say – or sing for that matter – that they are giving people free credit reports, then they can’t charge people $15 a month, simple as that.” On his website, Schumer continues, “My plan would finally bust up this scam and give consumers some honest choices”

One problem, as stated in the FreeCreditReport.com Terms and Conditions: “The PLUS Score is not currently sold to lenders, and is not an endorsement or guarantee of your credit worthiness as seen by lenders.”

So, it really is true: You don’t get what you don’t pay for. See Fake-O FICO Funk.

Speaking of videos, don’t miss creditscoring.com’s montage of people talking about employers using scores— while the bureaus say that they don’t even sell scores for that purpose.