Monday, December 14, 2009

Are You Sure FICO isn't spelled FYCO?

I think the acronym for FICO should be changed to FYCO, because it sure seems to be sending a clear message that it doesn't think much about me.

(Before I go on my tirade, I bought my FYCO score on myFICO.com with a 30% off coupon, promotion code: SURVEY30. If any of you are looking to get your scores, hope this code works for you as well.)

After my self-congratulatory post last Friday about paying off my cc debt, I admit I was feeling mighty smug that my FYCO score would be darn awesome. (After all, my CreditKarma score is 801!) But instead, I got a cold splash of reality last Friday when I learned my new FYCO score is:

The last time I got my FYCO score in May, it was 723.

Granted, the last FYCO score was based on Equifax's data and this credit score is based on TransUnion's data. But the data is pretty consistent between the two. You could also argue that the difference between 719 and 723 is de minimis, but here are several reasons why I think this whole FYCO scoring system is bogus:

1.) Paying Off My Huge Revolving Credit Card Debt Did Bupkis
One of the negative issues in May was that I was using too much (i.e., 18%) of my available credit limit. I didn't disagree with this negative mark since I had over $11k+ in credit card debt at the time. But as you know, I paid that debt off in October and am now only using 2% of my available credit limit.

Considering the fact that FYCO claims "usage ratio" plays a big factor in its secretive scoring formula, paying off a huge cc debt didn't do me much good. Do you want to know what FYCO is nit-picking about now?

I allegedly have too many accounts (11) with balances. First off, 6 of the 11 accounts are my student loans. The remaining 5 accounts only have balances between $26 to $1,613, which I already paid off in full this month.

In case you were wondering why I have 5 accounts with balances, it's because I'm splitting my cc usage over multiple cards so that I don't get dinged with "inactive" penalties like fees, reduced credit limit or outright cancellation by the cc companies.

Bottomline - - If I don't use my cards, I get penalized with fees and reduced limits by the cc companies, but if I use my cards responsibly, FYCO beats me up for it. Lovely!

2.) FYCO's Infernal (and Eternal) Scarlett Letter
I was always under the belief that a bad credit rating doesn't stick around forever. I believed that negative information (such as late payments) would fall off 7 years from the date the payment was late. Boy was I wrong! Apparently, FYCO still takes that information into consideration. For example:

TransUnion's data on one of my account indicates:

Seven year payment history

30 days late 0 times
60 days late 0 times
90+ days late 0 times

But guess what? It also says:

Worst Delinquency

90 days past due
The Worst Delinquency reports the worst missed payment status that has been documented on this account. Your FICO® score evaluates how recently that missed payment occurred and in general, the more recent, the more impact it has on your score. However, the fact that it occurred is still predictive of future payment risk and could be considered by your FICO® score.

I guess my late payment history WILL haunt me forever and ever. It reminds me of this tasteless joke:
This Scottish farmer walks into the neighborhood pub, and orders a whiskey.

"Ye see that fence over there?" he says to the bartender. "Ah built it with me own two hands! Dug up the holes with me shovel, chopped doon the trees for the posts by me ownself, laid every last rail! But do they call me 'McGregor the Fence-Builder?' No..."

He gulps down the whiskey and orders another. "Ye see that pier on the loch?" He continues, "Ah built it me ownself, too. Swam oot into the loch to lay the foondations, laid doon every single board! But do they call me 'McGregor the Pier-Builder?' No."

"But ye #$&! just ONE lousy sheep ..."

3.) FYCO Simulator is a Joke
Here's a joke: FYCO's simulator claims I can dramatically improve my score to 779 to 819 if I pay off 90% to 100% of my credit card balances! Uhhhhh... Yeah, sure.

Considering that my elimination of $11k in cc debt didn't do me much good, I doubt paying off my current credit card balances of <$2,000 in full every month will dramatically increase my score by about 60 to 100 points. Yeeeahhhhh....

And here's another sick joke: Back in May, FYCO's simulator predicted my score would increase to 723-763 if I paid off my $11k+ credit card debt within 6 months. Ummmm.... it's been 6 months and I paid off that debt. But my FYCO score did a backslide instead. What gives?

I am now pretty discouraged that I will forever have to live with a "below average" credit score. Perhaps I should rename this blog to "Hester Prynne's PF Blog"...

9 comments:

444 said...

You got it, Shtinkykat - you got it with the tasteless joke (that's EXACTLY the way it is) and you got it with figuring out that the "simulator" is useless and worthless.

I've got a far lower score than you, mainly because of high utilization (if you think 19% is bad, try 58%.) But I am still quoted things like, "a serious delinquency" when turned down for credit or for a credit line increase or a rate decrease.

Why? In summer 2006, in the midst of 24 perfect payments in a 24-month installment loan, apparently ONE payment hit the 30-day-late mark. I don't even remember what happened and have tried unsuccessfully to get this removed as an error, whether it was or not. I don't think the loan issuer remembers what happened, either. I don't think anyone but Fair Isaac has any understanding of what might have happened.

But I sure do have to hear about it forever, and ever mind the hundreds upon more hundreds of perfect payments to ALL my other accounts before and since then, as far as the eye can see.

Sallie's Niece said...

FICO is just weird but I don't understand how a late payment that doesn't even show up on your report anymore is still hurting you. That's weird! FWIW your score is still probably way better than mine. And LOL @ Hester Prynne's PF blog.

chacha said...

A coworker of mine has a theory that they are messing with the model since the crash. His fico dropped below 700 and doesn't have any late payments ever.

I haven't checked mine mostly because I don't feel like seeing 720 when just 3 years ago I had more debt and had a score of 790.

Miss M said...

I haven't checked my score in awhile, I'm curious now. Don't you hate the secretive nature of the whole thing? Who knows what goes into their calculations, some of it is probably arbitrary and capricious. As long as you aren't needing new credit soon, it doesn't really matter. Your score is good enough.

Ms. MoneyChat said...

i'm so not a fan of fico!! good luck managing your score.

JJ said...

My Fico score from Experian and Equifax is higher than my Transunion score. Don't know why. Did you get all three scores? It may just be that Transunion people calculate it differently.

Anonymous said...

Your problem, like so many other bozos is that you are fixated on this FICO bullshit and that's just the way Fair Isaac and all the agencies want it. If you had half a brain and used some of that $100,000+ education you threw your money away on, you'd simply pay your debts as required and look to pay them off as quickly as possible, pay your bills on time, and just forget the credit score crap, it will take care of itself. Suze and others have brain washed you and millions others that your FICO score is sooooooo important, and rightly she should as she gets paid by Fair Isaac.

Understand it good...you've been fucking brainwashed. Just forget your FICO score and trying to manipulate it. Just live your life.

Got it? I seriously doubt it.

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Mrs. (not) the Jet Set said...

I think it’s time we challenge congress to help reform credit scores or at least pressure credit rating agencies to have better practices. Check out my post to see what you personally can do. Thanks!

http://www.notthejetset.net/2010/04/help-reform-fico.html