Employers using credit score myth, Salt Lake Tribune, MediaNews Group

From: Greg Fisher
Sent: Sunday, March 13, 2011
To: Lesley Mitchell, business reporter, Salt Lake Tribune, MediaNews Group
Cc: Dean Singleton, chairman & CEO, MediaNews Group, Inc.; Dean Singleton, chairman & CEO, MediaNews Group, Inc.
Subject: credit score, employers, Salt Lake Tribune, MediaNews Group

You wrote, “Companies of all types — lenders, employers, insurance companies, utilities and others — increasingly are relying on credit scores to determine whether they want to do business with you, whether they want to give you a loan or even whether to hire you.”

 Who is your source regarding credit score use by employers?

 See this message and your reply at https://blog.creditscoring.com/?tag=myth.

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

Expert: Utilization factor overstatement a credit score myth

On mint.com, John Ulzheimer blogs, “The debt category is worth 30% of your FICO score points and while the credit card utilization percentage isn’t alone worth all 30% (that’s a myth), it’s certainly key to earning and maintaining great scores.”

The myth to which he refers was documented in 2009 on creditscoring.com with links calling out the offenders.  His comments are part of a growing chorus of voices who set the record straight.

But it faces a gargantuan, ever-sprawling, contradictory, capricious foe.  The silliness has existed on Wikipedia (looks like an encyclopedia; really just a message board) for over 5 years.  Later, in the chain of wacky influence and rumor that swirls around credit scores, the Wikipedians (rhymes with comedians) were emboldened by–none other than–USA TODAY, which states, “The amount of debt you have outstanding, as a percentage of your available credit limit, accounts for 30% of your score.”

On February 4, the newspaper’s reply to a creditscoring.com inquiry for its source was only this URL:

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

And so, of course, as anyone can see, USA TODAY’s story is bunk, thus Wikipedia is bunk.

Five years of bunk.

Almost six.

And counting.

Kat Malone, where are you?

Wikipedia states scores under 600 are “poor”

Wikipedia has an article about practically everything credit-related:  annualcrediteport.com, consumer credit risk, credit history, credit rating, credit score, credit score “(United States),” FICO, and on and on.

There is even an article about the number 600.  In it, a Wikipedian contends that 600 or below is a “poor” credit score, but does not identify the score model.

Of course, a 600 FICO score is a relative number; what is poor to one lender might be acceptable to another.  On its shining new website ScoreInfo, FICO credit score company Fair Isaac can’t seem to bring itself to even use the term.  And, while it calls 560 to 659 “Not good,” it says that some lenders will still approve loans at that range.  But, the Wizard takes a hard line in the next lower category.  It calls scores lower than 560 “Bad.”

Wikipedia removes one, but not all references to employers and scores

In the Wikipedia article Credit score, a Wikipedia editor removed the word employers from a typical series describing who uses credit scores:  “mobile phone companies, insurance companies, employers, landlords, and government departments.”

The Wikipedian noted: “It’s a common misconception/myth that potential employers receive credit scores. Their specific version of a credit report does not include a score.”

However, the editor failed to remove the reference to employers later in the same article.

Wikipedia links to Federal Reserve document that claims employers use credit scores

Popular message board pretending to be an encyclopedia Wikipedia added a link to a source using an unattributed claim this week.

In its article Credit score, Wikipedia listed the paper, “Your Credit Score Is a Ranking, Not a Score,” an item in the Federal Reserve Bank of Cleveland publication “Economic Commentary.” 

The first sentence of the November 16 paper states that credit scores are used in hiring decisions.  However, the consumer reporting agencies all state that they do not provide scores for employment purposes.  John Ulzheimer of SmartCredit.com calls it the myth of the decade.

To drive home the notion, the Federal Reserve even created a video containing a depiction of a job application.  The paper’s author, a Federal Reserve spokesperson and the chairman have not responded to a request for evidence supporting the claim.  The central bank did not mention creditscoring.com again. 

The Wikipedia user who added the link has also contributed to the articles Bubble Tea, Play-Doh and The Ambiguously Gay Duo.  Last week, creditscoring.com published “Groundhog Day, 2011 – Wikipedia on credit scores.”

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?