Re: How Much Is A Credit Score (FICO) Worth?

John A. Weeks III wrote:

>  FICO does not look at
> assets or savings, only debts.  

Not too many months ago from the archives, Elle posted an informative
link,

http://www.myfico.com/Downloads/Brochures.aspx

Fair Isaac clearly states the FICO score is based *only* on what is in 
the credit re****t. Since you have three credit re****ts, you have three 
official FICO scores.

Since the FICO score is derived exclusively from the credit re****t(s), 
it stands to reason that if you are going to spend time or money 
reviewing anything, it should be the source of the data, namely the 
(free annual) credit re****t, and not the (for-a-fee) FICO score. If you 
are actively trying to change your score, the only way you'll know how 
you're doing is to obtain it periodically.

> I think credit part has to
> include assets to be fair.  After all, is someone like Bill
> Gates a bad credit risk if he has no loans outstanding, and
> thus a zero FICO? 

As a lender, I'd want to know why he suddenly wanted to take out a loan 
-- what does he know about the future of his income and his assets that 
I don't? ;-)

> And if a person can handle a $200K loan,
> but also has another $100K in the bank, aren't they a better
> risk than someone with $0K in the bank and $50K in credit card
> debt?

No, the $100K in the bank could have appeared yesterday, or be gone 
tomorrow -- for example, it could just be the proceeds of another loan!

> I still only see FICO as a measure of how badly a bank can
> rip you off, not what a great deal they can give you.

I agree the FICO is designed primarily for the benefit of the lender. 
Your (John's) comment is focused on the items in Fair Isaac's product 
line that they call "precision marketing", the FICO is a risk *****sment 
tool.   But at least you can get your hands on it, even if at a cost 
(the folks who work at Fair Isaac are not volunteers).  Better than 
having it be a secret, which, I recall, it was in the early days.

As joetaxpayer has noted in the past, some people think of the FICO 
score in much the same way as they think the SAT/LSAT/GMAT academic 
score, whether a good thing or not.  I see some parallels, including a 
parallel to John's observation -- the higher your academic score, the 
more likely a high-priced Ivy League school can reel you in, instead of 
a more reasonably priced local or state school.

-Mark Bole

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