Banks Re-Defining "Deadbeat"

A great little book, "How to Lie with Statistics", by Darrell Huff, (c)

Excerpt from Ch. 10, "How to Talk Back to a Statistic".

1. Who Says So? (bias)
2. How Does (S)he Know? (self-selecting samples)
3. What's Missing? (a comparison)
4. Did Somebody Change the Subject? (the raw figure is not the conclusion)
5. Does It Make Sense? (the magic of numbers brings about a suspension of common sense).

Or as Mark Twain was quoted, "There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact."

-Mark Bole

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I only have the experience of one, but when my wife and I applied for a mortgage a few years ago, we obtained our credit scores (provided free by the bank -- some regulation).

There were three "types" or "brands" of credit scores: Beacon, Empirica, and Fair Issac (FICO). There was not much difference between our scores. The FICO score had the largest difference with my wife scoring 3.5% higher than me.

--ron

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I must hasten to note that even though I have a larger sample base than you to work with, the evidence is still anecdotal. It's not like I set up a control group or even kept meticulous records. :-)

Did you find anything on the reports to explain why your wife had a higher score? That's what gets me, why two people who have virtually identical debt histories end up with different scores.

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"Daniel T." wrote

Bring a civil rights lawsuit against the FICO company on the basis of a suspicion for which you can provide ample evidence, and the FICO company will be required to prove that they are not breaking the law.

The court will not order it to disclose the formula to the public, since the company uses the formula for a profit. But the formula will be subject to government scrutiny, if only by sufficient expert witnesses who do see the formula and swear under oath it does not use gender.

Further, the FICO company likely will demonstrate why it is women seem to have higher credit scores than men via the raw statistics they have for women's borrowing etc. habits vs. men's.

This also begs the question: Why do you think the FICO company would stand to make more money by discriminating against men, especially since the average income of males in the U.S. is much higher than females, and so men could be argued to have a better profit potential for lenders?

I am happy to agree to disagree with you that lenders discriminate via the FICO formula giving females more points just for being female.

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Funny, they don't have to prove they are following the law until I provide evidence that I cannot legally acquire.

I don't. I am merely making an observation.

I don't know that they do. Do you know for a fact that they don't?

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The company says it doesn't. At that point, it does kind of become up to you to provide evidence to the contrary.

Brian

"Daniel T." wrote

If you have a reasonable suspicion of illegal lending discrimination, call a lawyer, the ACLU, or similar, and explain. They can legally acquire whatever is needed. This assumes there is some foundation to your claim, and that you can also show financial harm by the actions of FICO. If they think you are mistaken, they'll tell you.

The burden of proof is typically on the plaintiff in discrimination cases. Otherwise, people would make frivolous complaints right and left against corporations and individuals. Commerce would come to a halt. You have to be reasonable.

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Here's what I saw. See if you can make heads or tails of this info. To me, (see my included notes), they make no sense at all.

====================================Fair Isaac: (Spouse 3% higher)

Note: Spouse has had NO installment loans in past 20+ years; I have had a few, all paid off except one that had a few months to run at the time of this rating.

Me: Lack of recent installment loan information Proportion of balances to credit limits is too high on bank revolving or other revolving accounts Too Many Accounts With Balances Too many inquiries last 12 months

Spouse: Proportion of balances to credit limits is too high on bank revolving or other revolving accounts Too Many Accounts With Balances Too many inquiries last 12 months

=============================BEACON: (Spouse rating slightly higher) Note: Spouse has more accounts than I due to a few "store" accounts!

Me: Account payment history is too new to rate Too Many Accounts With Balances Too many accounts reported

Spouse: Account payment history is too new to rate Too Many Accounts With Balances Too few accounts reported Too many inquiries last 12 months

=================================Transunion: (Me minimally higher (2 points)) Note: We pay off our credit cards in full on the billing date. Spouse has one or two "store cards" that she sometimes uses -- but they still get paid off at the billing date.

Account payment history is too new to rate Proportion of balances to credit limits is too high on bank revolving or other revolving accounts Too Many Accounts With Balances Too many inquiries last 12 months

Spouse: Amount owed on accounts is too high Proportion of balances to credit limits is too high on bank revolving or other revolving accounts =============================--ron

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I should add to the above that our scores are in the excellent credit area.

--ron

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The above was from this past February. Right after the HELOC increase and rate drop, I was offered a chance to pull $30K off a credit card at zero interest ($75 fee) through the end of the year. Seemed an easy way to pocket $1000 by paying this against my mortgage. For what it's worth, WAMU offers a no-fee card which offers a free window into your FICO score. So I applied for that card and saw my latest FICO. 746.

So for anyone wishing to be neurotic above their score, checking to see the impact of paying down a card or loan or applying for new credit, this is a free way to do that.

Joe

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I have one of those cards, WaMu bought Providian and switched that account. You get the Transunion FICO score (not credit report, but you can get one through annualcreditreport.com). They maintain a year's worth of old scores.

My FICO is the highest it's ever been, mostly because of improving technology. All my required payments now have email alerts. Used to be I'd forget a bill every now and then get a late payment on the old report.

Brian