 |
| Old school house |
Fair Isaac announced in the news this week that they are
now offering a kinder gentler credit score the FICO 9. Who is running the schoolhouse?
What they did not say is:
They were forced to do this by the Consumer Financial
Protection Bureau. Richard Cordray is more powerful than President Obama. If Cordray can get William J Lansing to
change his business model, imagine the possibilities ahead...
Fair Isaac Corp. creates products and services that
help businesses to automate, improve, and connect decisions to enhance business
performance. It provides a range of analytical solutions, credit scoring, and
credit account management products... They are used in mortgage lending, commercial
loans, employment applications, and information gathering. Consider them the
inventor of constantly improving and growing software that snoops, measures and
predicts.
How did CFPB get FICO to change how they award points?
CFPB saw inequities in credit scoring for the “underserved.”
Perhaps CFPB just wanted some of the secret sauce of exactly how the mathematical
models make up and individual’s score from day to day.
A bad debt later paid off through collections, that bad debt won't affect
FICO scores anymore.
Yesterday I dealt with a collection company for a Borrower. Amy sat at my
desk while we called the company that four years ago wrote a letter stating
they knew this was not her debt, that it belonged to someone else in another
state with a similar name. The collection had been cleared from her credit in
2010. This same collection company now reinstated the account against her name.
We called the owner of the collection company, as his name is on the
letter.
“Mr. Norman may I fax you the letter you wrote to me in 2010 that states
you researched and discovered this tow truck collection is not mine?”
“Hell no I’m not giving you my fax number. Go take it up with the bureaus.”
“I did Sir but they state your company is reporting this again.”
He hangs up.
The frustration of dealing with clearing an erroneous collection is great.
It’s difficult to prove information from years in the past. Victims of identity
theft have it even harder.
Any debt
relating to medical problems will have less impact on scores. In fact, if the
only bad debt someone has relates to a medical problem, those people might see
an increase of 25 points or more in their FICO numbers. This one is important because if you ever went to a hospital, even with health insurance, the bills fly in from all directions. It is easy to miss one.
Fair Isaac will evaluate people with little credit history using a new algorithm that will give them a higher grade.
Steve Brown, president of the National Assn. of Realtors,
excited about the new score's potential that he predicted it would "make a
real difference in the lives of millions of Americans who have been shut out of
the housing market or forced to pay higher mortgage interest rates because of
flawed credit scores." Perhaps Mr. Brown is just looking for any good news
with the fights NAR has with Zillow ahead, but I digress.
What the news media missed (and the CFPB is probably already
planning) is this won’t help consumers. It gives the CFPB a second phase step
into regulating the software and hardware that every private and public
mortgage lender, bank, credit offer(er) uses.
Fannie Mae and Freddie Mac announced they aren’t going to
use FICO 9. They respectively have their own software – DU and LP which lenders
access nationwide. Fannie and Freddie are not going to add in updates or new
software to allow for FICO 9. Think of it this way: I love Netflix but they
aren’t going to allow a Film company to tell them they have to use smell-vision.
Also all the direct lenders, banks, credit unions and mortgage companies have
twenty different platforms they use that would have to be changed or trashed to
add in a new score.
Why would thousands of companies change? Can we expect CFPB
will make it so? Tell me what you think.
Tell me your story about errors on your credit.
Fair Isaac is
a NYSE traded stock as FICO they are based in San Jose California
.JPG) |
| Cute bedroom with teddy bears on the beds the kind of dream home everyone wants |
 |
| Glass house guess I shouldn't throw stones |
Fair Isaac is a NYSE traded stock as FICO they are based in San Jose California
