The Death of FICO?

Last week, Sadie wrote about how debt free living means not being a slave to a FICO score. In the article, she pointed out that FICO has become such an integral part of our lives that even the debt free can’t ignore the score completely, which is annoying, at best. But I’ve been giving it a lot of thought and I think that this recession might be the end of FICO as we know it. I’m not ready to declare the complete death of the score because I have a feeling it will be like roaches — impossible to kill completely. But I do think that the way the score is used and how it is calculated will have to change when this recession is over.

The credit card industry and banks, i

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7 Responses to The Death of FICO?

  1. justme says:

    I blame the fico for a lot of the crash and burn in our economy, how many forum question have we seen over the years of people manipulating their fico

    the number was good until it was released to the public then it became trash,I have never worried about my fico I just pay my bills and have always had a great fico,but if they manipulate the fico I will not change my plan top accomadate it,always makes me grit my teeth when people talk about getting this kind of debt or that trying to raise the fico
    the fico bit is a good racket for those selling it,very smart of them ,like other finacial products make people believe they cannot live without it and convince them they love it ,masses and masses of sheeples ;-)

  2. Diane says:

    I would like to believe you’re right & that this will cause a change.

    So far I’m doing okay, good score, no loss of credit availability. I was lucky, as I’d just paid off nearly all my debt (other than mortgage) before everything hit the fan.

    Others I know are not so lucky, even though they’ve handled their credit properly, paid all bills on time, etc. Credit limits have been cut, interest rates raised, FICO scores dropped…

    I’d love to see credit determined by actual behavior and ability to pay, not some weird formula that is not accurate.

  3. Pingback: The Death of FICO Scores? @ Credit Help Line

  4. Sandy says:

    It is really crazy to me that employers use your FICO to determine your job eligibility. Or course you wouldn’t give a bank teller job to someone convicted of embezzlement but my FICO says nothing about my ability to do my job. Most people are one serious, catastrophic illness (think cancer or major surgery) away from a bad FICO through no fault of their own.

    First we were all just social security numbers and now we’re just our FICO scores. That’s just horrible.

  5. dawn says:

    FICO scores are not going away anytime soon. Lenders and banks need a standardized way to objectively measure the risk of loaning a given person money, and without the FICO formula and given the fact there are 300 million Americans in this country, assessing credit risk in any other way would be hugely impractical.

    For the record, the FICO scoring formula does look at your prior experiences with debt; in fact, that’s a very large part of it.

  6. antifico says:

    First of all, the main point of this blog is to say that measures of credit will have to be modified. And yes, just because a company decides to lower one’s available credit line, even though they are up to date on payments and have a high credit score, legitimately speaking, is no justification for these ridiculous credit bureaus to lower a credit score. What incentive do people really have of paying off any bad debts, or keeping good with payments, if in the end credit bureaus, FICO and the like can toy with the score based on their own parameteres, not actual actions of the consumer. Yes, Yes, your history this and your history that, it’s all lovely, but what about someone who struggled with money all their life, never declared bankruptcy, but finally is put into a situation to remedy their old debts? Try to go and pay those old debts, reconcile things, you, initially find yourself with a lowered credit score, unless you can negotiate with meatheaded creditors to delete the entry off one’s report. Realistically speaking, judging quantitive data only in determining one’s abitlity to pay or a lender’s willingness to lend is not objective enough. Qualitative data included in this is the only true means of coming to objective conclusions. The fico score isn’t even transparent, we only get estimates as to what percentages of what features of credit go toward the calculation. Not only this, I can tell you I have duplicate and triplicate entries on my reports, that legally the credit bureaus only have get around to start investigating within 30 days. That’s slow, especially in this day and age. Better policies and practices could use to go into effect with credit policies AND INCENTIVES

  7. antifico says:

    should be in place in order to promote paying of debts, especially old debts. Either once reported as paid should immediately raise the score in a significant way, perhaps based on the outstanding debts significance (perhaps the higher the debt the more significant the raise of the score). One should also have more immediate access as to how exactly the score is being calculated. We can all do our own taxes if we have the time and patience, just simply download the tax forms and codes from the IRS. Similarly, we should have access to the specific effect of scores and not just implications of percentages and be subject and victim to the “free trials” of various free credit report web agencies and the like. And for once and for all, I understand not having any credit history or any recent credit history does not give anyone the abitlity to determine payment habits. But income certainly does. The way creditors tend to lend out a great deal of credit to perhaps many that shouldn’t be taking on that much debt, is a clear cut problem for why people are in so much debt and have bad credit scores in the first place. If you have no recent significant debt, no debt at all or no debt ever, in a rational and ideological sense, in a common sense way that should actually be a good thing. Having no debt in the first place, means you can actually take on some debt if you need to, for example, when buying a needed house.

    Thanks

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