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  • elaich
    replied
    FICO secrets

    On Sat, 15 Apr 2006 04:53:18 GMT, Ernie Klein <[email protected]>
    wrote:
    denied. It wouldn't outlaw FICO outright, just say that creditorscouldn't use or cite a FICO score to deny credit unless the exact sourceof the FICO score was revealed.
    That seems redundant. They obviously couldn't cite a FICO score if
    they couldn't use it. So the law should just say they can't use it,
    not that they can't cite it. It should simply say the scoring
    software has to be disclosed to the victim, and that such disclosure
    could be in the form of a URL letting the victim download the scoring
    software and run it on their own credit report to verify it worked.
    Then a lot of open source programmers would add features to let you
    experiment with the score, do what-if scenarios, display pie charts
    showing how much weight each factor had in your own score, etc.

    You can bet if a law were passed requiring all credit scoring software
    to be open source or not used, then all the credit reporting agencies
    would get together and form an open source consortium to develop a
    good open source scoring system, and the resulting software would end
    up being much better than FICO.

    Leave a comment:


  • elaich
    replied
    FICO secrets

    On Sat, 15 Apr 2006 04:53:18 GMT, Ernie Klein <[email protected]>
    wrote:
    denied. It wouldn't outlaw FICO outright, just say that creditorscouldn't use or cite a FICO score to deny credit unless the exact sourceof the FICO score was revealed.
    That seems redundant. They obviously couldn't cite a FICO score if
    they couldn't use it. So the law should just say they can't use it,
    not that they can't cite it. It should simply say the scoring
    software has to be disclosed to the victim, and that such disclosure
    could be in the form of a URL letting the victim download the scoring
    software and run it on their own credit report to verify it worked.
    Then a lot of open source programmers would add features to let you
    experiment with the score, do what-if scenarios, display pie charts
    showing how much weight each factor had in your own score, etc.

    You can bet if a law were passed requiring all credit scoring software
    to be open source or not used, then all the credit reporting agencies
    would get together and form an open source consortium to develop a
    good open source scoring system, and the resulting software would end
    up being much better than FICO.

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote: > > What does the federal law have to say about that? Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year and a half ago, they couldn't make much sense of it. Several expert witnesses testified that they studied many credit reports and compared the report to the FICO score for the same person and concluded that one could not predict from the credit report alone what the resulting FICO score would be.
    If FICO scores were that easily predictable, the company that comes up with them would be out of business, since they wouldn't be necessary.
    Exactly. That's why why I took exception to what you said above: "Your
    "credit score" is simply a representation of one of your credit
    reports."

    If one is denied credit because of their FICO _score_, pulling their
    credit report won't necessarily give a clue as to why they were *really*
    denied credit because FICO contains other _unknown_ (to everyone except
    FICO) things.
    I regularly (once a year) get my credit reports from the three main credit bureaus. My scores from each are generally in the same ballpark, but they're not identical. Each one has their own formula and weight different factors differently.
    They presented several pairs of credit reports where one obviously was a better credit risk than the other, but the better credit risk (in their opinion based on the credit report) had the lower FICO score. They concluded that the FICO score must be skewed by factors not found in the underlying credit report.
    So you've just made the argument FICO scores are not completely accurate representations of the credit-worthiness of the person. So what? No one said they're perfect.
    The argument being put forward in the CA hearings was that people denied
    credit because of their FICO scores have no recourse and can't really
    find out the real reason they were denied credit, notwithstanding
    Federal and State laws to the contrary, because FICO is secret and not
    even subject matter experts can figure why that person was denied credit
    based on their credit report.
    As I recall a FICO representative was called but refused to testify citing proprietory business secrets. As would be expected.
    I believe one CA Senator attempted to introduce a bill last year and may
    try again this year to outlaw the use of FICO scores in giving or
    denying credit unless the person seeking the credit is given full
    disclosure as to exactly what the FICO numbers mean, where they come
    from and how they are arrived at. In other words, if the law passes,
    they will not be able to deny credit based on any secret or
    proprietary methods but will have to say exactly why the credit was
    denied. It wouldn't outlaw FICO outright, just say that creditors
    couldn't use or cite a FICO score to deny credit unless the exact source
    of the FICO score was revealed.

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote: > > What does the federal law have to say about that? Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year and a half ago, they couldn't make much sense of it. Several expert witnesses testified that they studied many credit reports and compared the report to the FICO score for the same person and concluded that one could not predict from the credit report alone what the resulting FICO score would be.
    If FICO scores were that easily predictable, the company that comes up with them would be out of business, since they wouldn't be necessary.
    Exactly. That's why why I took exception to what you said above: "Your
    "credit score" is simply a representation of one of your credit
    reports."

    If one is denied credit because of their FICO _score_, pulling their
    credit report won't necessarily give a clue as to why they were *really*
    denied credit because FICO contains other _unknown_ (to everyone except
    FICO) things.
    I regularly (once a year) get my credit reports from the three main credit bureaus. My scores from each are generally in the same ballpark, but they're not identical. Each one has their own formula and weight different factors differently.
    They presented several pairs of credit reports where one obviously was a better credit risk than the other, but the better credit risk (in their opinion based on the credit report) had the lower FICO score. They concluded that the FICO score must be skewed by factors not found in the underlying credit report.
    So you've just made the argument FICO scores are not completely accurate representations of the credit-worthiness of the person. So what? No one said they're perfect.
    The argument being put forward in the CA hearings was that people denied
    credit because of their FICO scores have no recourse and can't really
    find out the real reason they were denied credit, notwithstanding
    Federal and State laws to the contrary, because FICO is secret and not
    even subject matter experts can figure why that person was denied credit
    based on their credit report.
    As I recall a FICO representative was called but refused to testify citing proprietory business secrets. As would be expected.
    I believe one CA Senator attempted to introduce a bill last year and may
    try again this year to outlaw the use of FICO scores in giving or
    denying credit unless the person seeking the credit is given full
    disclosure as to exactly what the FICO numbers mean, where they come
    from and how they are arrived at. In other words, if the law passes,
    they will not be able to deny credit based on any secret or
    proprietary methods but will have to say exactly why the credit was
    denied. It wouldn't outlaw FICO outright, just say that creditors
    couldn't use or cite a FICO score to deny credit unless the exact source
    of the FICO score was revealed.

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>,
    Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year and a half ago, they couldn't make much sense of it. Several expert witnesses testified that they studied many credit reports and compared the report to the FICO score for the same person and concluded that one could not predict from the credit report alone what the resulting FICO score would be.
    If FICO scores were that easily predictable, the company that comes up
    with them would be out of business, since they wouldn't be necessary.

    I regularly (once a year) get my credit reports from the three main
    credit bureaus. My scores from each are generally in the same ballpark,
    but they're not identical. Each one has their own formula and weight
    different factors differently.
    They presented several pairs of credit reports where one obviously was a better credit risk than the other, but the better credit risk (in their opinion based on the credit report) had the lower FICO score. They concluded that the FICO score must be skewed by factors not found in the underlying credit report.
    So you've just made the argument FICO scores are not completely accurate
    representations of the credit-worthiness of the person. So what? No
    one said they're perfect.
    As I recall a FICO representative was called but refused to testify citing proprietory business secrets.
    As would be expected.

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>,
    Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year and a half ago, they couldn't make much sense of it. Several expert witnesses testified that they studied many credit reports and compared the report to the FICO score for the same person and concluded that one could not predict from the credit report alone what the resulting FICO score would be.
    If FICO scores were that easily predictable, the company that comes up
    with them would be out of business, since they wouldn't be necessary.

    I regularly (once a year) get my credit reports from the three main
    credit bureaus. My scores from each are generally in the same ballpark,
    but they're not identical. Each one has their own formula and weight
    different factors differently.
    They presented several pairs of credit reports where one obviously was a better credit risk than the other, but the better credit risk (in their opinion based on the credit report) had the lower FICO score. They concluded that the FICO score must be skewed by factors not found in the underlying credit report.
    So you've just made the argument FICO scores are not completely accurate
    representations of the credit-worthiness of the person. So what? No
    one said they're perfect.
    As I recall a FICO representative was called but refused to testify citing proprietory business secrets.
    As would be expected.

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote: > Do companies that > check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report, and the basis of that score is proprietary even to the lender who denied the credit, then what good is the right to a free credit report, when the lender says we denied credit based on your score and _not_ your credit report and we can't tell you why your score was low because even _we_ don't know and the scoring company keeps it a secret. What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year
    and a half ago, they couldn't make much sense of it. Several expert
    witnesses testified that they studied many credit reports and compared
    the report to the FICO score for the same person and concluded that one
    could not predict from the credit report alone what the resulting FICO
    score would be.

    They presented several pairs of credit reports where one obviously was a
    better credit risk than the other, but the better credit risk (in their
    opinion based on the credit report) had the lower FICO score. They
    concluded that the FICO score must be skewed by factors not found in the
    underlying credit report. As I recall a FICO representative was called
    but refused to testify citing proprietory business secrets.

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote: > Do companies that > check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report, and the basis of that score is proprietary even to the lender who denied the credit, then what good is the right to a free credit report, when the lender says we denied credit based on your score and _not_ your credit report and we can't tell you why your score was low because even _we_ don't know and the scoring company keeps it a secret. What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit bureaus have their own scoring system, and they use their own credit report data to come up with your score. Your "credit score" is simply a representation of one of your credit reports.
    Well, when the CA legislature held hearings on the matter about 1 year
    and a half ago, they couldn't make much sense of it. Several expert
    witnesses testified that they studied many credit reports and compared
    the report to the FICO score for the same person and concluded that one
    could not predict from the credit report alone what the resulting FICO
    score would be.

    They presented several pairs of credit reports where one obviously was a
    better credit risk than the other, but the better credit risk (in their
    opinion based on the credit report) had the lower FICO score. They
    concluded that the FICO score must be skewed by factors not found in the
    underlying credit report. As I recall a FICO representative was called
    but refused to testify citing proprietory business secrets.

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>,
    Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote: Do companies that check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report, and the basis of that score is proprietary even to the lender who denied the credit, then what good is the right to a free credit report, when the lender says we denied credit based on your score and _not_ your credit report and we can't tell you why your score was low because even _we_ don't know and the scoring company keeps it a secret. What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit
    bureaus have their own scoring system, and they use their own credit
    report data to come up with your score. Your "credit score" is simply a
    representation of one of your credit reports.

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>,
    Ernie Klein <[email protected]> wrote:
    In article <[email protected]>, Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote: Do companies that check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report, and the basis of that score is proprietary even to the lender who denied the credit, then what good is the right to a free credit report, when the lender says we denied credit based on your score and _not_ your credit report and we can't tell you why your score was low because even _we_ don't know and the scoring company keeps it a secret. What does the federal law have to say about that?
    Scores aren't divined out of thin air. Each of the three major credit
    bureaus have their own scoring system, and they use their own credit
    report data to come up with your score. Your "credit score" is simply a
    representation of one of your credit reports.

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote:
    Do companies that check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report,
    and the basis of that score is proprietary even to the lender who denied
    the credit, then what good is the right to a free credit report, when
    the lender says we denied credit based on your score and _not_ your
    credit report and we can't tell you why your score was low because even
    _we_ don't know and the scoring company keeps it a secret.

    What does the federal law have to say about that?

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • Ernie Klein
    replied
    FICO secrets

    In article <[email protected]>,
    Larry <[email protected]> wrote:
    In article <[email protected]>, [email protected] wrote:
    Do companies that check our credit tend to disclose what score system they use? Yes, usually. And federal law says that if you're denied credit due to their reliance on a score, you have the right to know what credit report they relied on, and to get a free copy of that credit report.
    But if you are denied credit based on a *score* and not a credit report,
    and the basis of that score is proprietary even to the lender who denied
    the credit, then what good is the right to a free credit report, when
    the lender says we denied credit based on your score and _not_ your
    credit report and we can't tell you why your score was low because even
    _we_ don't know and the scoring company keeps it a secret.

    What does the federal law have to say about that?

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."

    Have you done your backup today?

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>, [email protected] wrote:
    I'm always suspicious of a company whose business model depends on deep secrecy.
    Well, if FICO released their formula, they'd be out of business, since
    no one would need them.
    And I'm even more suspicious of popular opinion about the details of such secrets. Popular opinion is that FICO is the most widely used score, by a wide margin. But how does popular opinion know that?
    You contradict yourself. What gives you the idea that popular opinion
    says FICO is so widely used?
    Do companies that check our credit tend to disclose what score system they use?
    Yes, usually.

    And federal law says that if you're denied credit due to their reliance
    on a score, you have the right to know what credit report they relied
    on, and to get a free copy of that credit report.
    Popular opinion is that FICO treats open accounts drastically differently than closed accounts. That opinion might exist for the sole reason that it's pretty ****ed obvious that the difference between closed and open accounts should be given a lot of weight.
    Obviously.

    But what if FICO has trouble parsing the information that indicates whether an account is open or closed?
    It's not that hard to "parse" the information. There isn't much
    discrepancy or grey area between "open" and "closed."
    Or what if that information tends to not be consistent and reliable?
    The credit bureaus specifically say they act on the information provided
    to them. Its up to you to make sure that information is accurate, not
    the credit agencies.
    Wouldn't it be equally reasonable for FICO to parse something easier, as a secondary indicator, and ignore the actual indication of open/closed? They might parse the date of last activity, and make assumptions about inactive accounts being less important, while ignoring the actual open/closed status of the account.
    Except making "assumptions" is worse than taking known quantities such
    as open/closed. Indeed, an account that hasn't been used for years
    could be closed (which could be good for your credit score or bad,
    depending on why it was closed) or open, but unused (which could also be
    good or bad for your credit score, depending on why it hasn't been used
    in so long).
    How would anyone know such things, unless they knew the FICO formula in detail? Without that knowledge, it's all just speculation. And the more research I do on FICO scores, the more I think popular opinion might be the most speculative of all.
    Again, you contradict yourself. If popular opinion is speculative about
    FICO, then why does it matter?

    In any event, we all know that FICO scores depend on your credit
    history. So get a copy of your credit report and make sure its accurate.

    Leave a comment:


  • X
    replied
    FICO secrets

    In article <[email protected]>, [email protected] wrote:
    I'm always suspicious of a company whose business model depends on deep secrecy.
    Well, if FICO released their formula, they'd be out of business, since
    no one would need them.
    And I'm even more suspicious of popular opinion about the details of such secrets. Popular opinion is that FICO is the most widely used score, by a wide margin. But how does popular opinion know that?
    You contradict yourself. What gives you the idea that popular opinion
    says FICO is so widely used?
    Do companies that check our credit tend to disclose what score system they use?
    Yes, usually.

    And federal law says that if you're denied credit due to their reliance
    on a score, you have the right to know what credit report they relied
    on, and to get a free copy of that credit report.
    Popular opinion is that FICO treats open accounts drastically differently than closed accounts. That opinion might exist for the sole reason that it's pretty ****ed obvious that the difference between closed and open accounts should be given a lot of weight.
    Obviously.

    But what if FICO has trouble parsing the information that indicates whether an account is open or closed?
    It's not that hard to "parse" the information. There isn't much
    discrepancy or grey area between "open" and "closed."
    Or what if that information tends to not be consistent and reliable?
    The credit bureaus specifically say they act on the information provided
    to them. Its up to you to make sure that information is accurate, not
    the credit agencies.
    Wouldn't it be equally reasonable for FICO to parse something easier, as a secondary indicator, and ignore the actual indication of open/closed? They might parse the date of last activity, and make assumptions about inactive accounts being less important, while ignoring the actual open/closed status of the account.
    Except making "assumptions" is worse than taking known quantities such
    as open/closed. Indeed, an account that hasn't been used for years
    could be closed (which could be good for your credit score or bad,
    depending on why it was closed) or open, but unused (which could also be
    good or bad for your credit score, depending on why it hasn't been used
    in so long).
    How would anyone know such things, unless they knew the FICO formula in detail? Without that knowledge, it's all just speculation. And the more research I do on FICO scores, the more I think popular opinion might be the most speculative of all.
    Again, you contradict yourself. If popular opinion is speculative about
    FICO, then why does it matter?

    In any event, we all know that FICO scores depend on your credit
    history. So get a copy of your credit report and make sure its accurate.

    Leave a comment:

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