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Fair Isaac - credit scoring fraudware

Tuesday, February 24, 2009

Houston backs off credit score enhancement plan to pay off first-time buyer credit card debt

I could write a book in response to this article:

White backs off ‘credit enhancement’ with tax dollars
Houston plan ‘hit a nerve across this country,’ councilwoman says

By CAROLYN FEIBEL
Copyright 2009 Houston Chronicle

Feb. 24, 2009, 8:44PM
Mayor Bill White yanked a controversial plan Tuesday that called for the city to use taxpayer funds to pay off some personal debts for first-time home buyers, following a flood of outrage and criticism from across the city and beyond.

“I don’t think we ought to be in the business of paying off someone’s debt so they can buy a house,” White conceded during an impassioned City Council meeting. “Paying off people’s credit cards is ridiculous.”

Many council members expressed “embarrassment” over the idea, which received national media attention after the Chronicle wrote about it in Tuesday’s editions. The story appeared to strike a nerve among taxpayers already angry over the recession, the housing meltdown, and federal bailouts of banks and automobile companies.

“Everybody’s outraged about this,” said Councilman Ron Greene, adding that a constituent e-mailed him a copy of a bill and asked him to pay it. “This was not well reasoned.”

The “Credit Score Enhancement Program” would have given up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city’s homebuyers assistance program. City officials had said some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.

Councilwoman Pam Holm waved a thick stack of e-mails from angry residents.

“I do not understand how we can ever justify spending taxpayer dollars to pay somebody’s credit card,” she said. “I don’t understand how it can be even considered to come up. I am truly embarrassed. I think it shows poor leadership.”

National outrage

Kris Errickson, a stay-at-home mom from northwest Houston, appeared before council to voice her indignation.

“This proposal is a slap in the face for the average Joe who is trying to get ahead,” Errickson said. “The government should not punish taxpayers and bail out those who cannot buy homes.”

Errickson said later that she and her family moved recently from the Heights to a less-expensive home near Timbergrove. “We adjusted our living so we could afford to live in a house,” she said.

“If you can’t afford it, and you can’t qualify, then you shouldn’t have it,” she said.

Councilwoman Anne Clutterbuck said news of the plan had hit a nerve across the country.

“Giving people the ability to increase their credit score artificially because we’re allowing them to pay off their credit cards is exactly what got us into this (national economic) crisis in the first place,” she said.

Hoped to curb crime

Councilman Jarvis Johnson said the $3,000 grants were not a good idea but said the city needed to promote home ownership because it increases the tax base and lowers crime.

“If you look at where the money was going to be put, into Houston Hope areas, they are areas that are typically underdeveloped ­­— where there is crime because of a lack of home ownership,” he said.

The $3,000 grants would have been available only to those who agreed to buy a home in a Houston Hope area. Those neighborhoods, which the city is trying to revitalize, include Sunnyside, Denver Harbor, Fifth Ward, Trinity Gardens and Acres Homes. The $444,000 proposed for the program was leftover money from a $1.5 million appropriation the city made for emergency home and roof repairs after Hurricane Ike. Councilwoman Wanda Adams said the money should be spent on those still in need of home repairs.

Good intentions

Housing Director Richard S. Celli said that the plan would only have been able to help applicants pay off installment debt like student loans, and not revolving debts, such as credit cards.

“This program was never intended to pay off someone’s flat-screen plasma TV,” Celli said. “This program was intended for hardworking, credit worthy low- to moderate-income individuals who needed a helping hand in paying off some debt like a medical bill or a student loan.

My first thought was:  What a stupid idea, waste more money on the banks.

My second thought:  Those credit card bills are most likely going to get paid anyway since the account holders want to buy a home. 

Then I read some of the comments in response to the article and they just go to show how VILE and incredibly IGNORANT so many people are.

The same goes for the government.  The IGNORANCE is overwhelming.  You could replace half the American people and especially elected officials with monkeys and nobody would notice the difference.  You just can’t beat their stupidity.

It’s hard to believe that despite the Business Week 2/08 article on FICO scores NOBODY bothered to ORDER FNMA and FHLMC to STOP utilizing FICO scores.  The gruesome details:

Lenders agree: FICO scores do NOT predict defaults

The Houston money would be MUCH better spent on MAKING Obama issue an executive order to prohibit FICO scoring.

Just think of the GOOD jobs you’d be creating by hiring back some of the many thousands of underwriters to MANUALLY underwrite mortgages and auto loans again.  It takes skill and experience and these are high stress jobs, but they are also good paying job.  Desirable jobs for skilled Americans.

You add 1 - 10 hours of work to each loan.  It takes time to request documentation from borrowers to prove the incorrect credit reporting and to establish whether a loan SHOULD be approved.  “Compensating factors” should be part of many low income borrowers’ approvals.

It would be too cool to be treated as HUMAN BEING.

Isn’t it WORTH a few extra underwriting hours to prevent so much misery, foreclosures, suicides and economic crisis by putting truly qualified people into homes with properly underwritten fixed rate mortgages?

That’s what I used to do in the early 90s until FICO scores become MANDATORY.

I turned away many prospective clients because I did not think they’d be able to stay current on the loans.  Despite HIGH debt/income ratios and past credit problems, I’m not aware of ANY of my buyers being late on their mortgages.

They knew to contact me if they ran into trouble.  Many stayed in touch and sent referrals and/or we refinanced as rates went down. 

I’m disturbed by the idea of paying people to buy homes in high crime areas.

That’s like the signing bonus in the military, it might well get you killed.

I’m especially worried after reading some of these vile comments in response to the article.  They’re not going to help anyone.  If the economy gets worse, the people in the cities and especially in those bad neighborhoods will be so screwed. 

Crime is high now?  What if unemployment doubles?

One of the primary reasons my buyers did so well was that they bought into the very LOW end of GOOD neighborhoods on the San Francisco peninsula.  You can’t imagine how many fixers I’ve seen.

It was a LOT of work and I could only do it because I got both the real estate and mortgage commission and part of my commission went back to the buyers for remodels/carpets, whatever.  Obviously, the homes all needed at least some cosmetic work and landscaping, but we made sure they were structurally sound.  I’ve learned so much from the home inspections.

Even during the last real estate slump in the early 90s most of my clients had NO problem refinancing with lower rates and some even got cash out for remodels due to appreciation.

I don’t think you can revitalize bad neighborhoods by putting more poor people into subsidized and possible CRAPPY homes.

I’m not familiar with Houston, so I don’t know how bad it is.  But sometimes, you just have to be realistic and bulldoze everything.  Rebuild or turn the neighborhood into a park? 

There’s so much that COULD be done.  Develop a NEW sustainable town for people wanting to try something different.  Building isn’t so hard.  So many construction workers are unemployed.  Land is cheap.  The possibilities are endless and the sky is the limit!

I’m afraid the geniuses in Houston or any government could only screw it up.

I can only hope that the SUCKER BUYERS get a clue and don’t just buy houses because they can.

Owning a home and struggling to make the mortgage payment, especially in a BAD neighborhood and in a crummy house, is not all it’s cracked up to be.

I don’t expect Houston or any government to take action to prohibit FICO scoring unless there’s MASSIVE pressure from the general public.

So you might want to send this post to your city or state housing departments and if you’ve been campaigning for Obama, try to get his staffers’ attention.  I’m still waiting to see some CHANGE, but heard Richard C. Hoagland yesterday and he was very optimistic about changes in the Obama administration.  One ought to give him a chance.

Sunday, February 22, 2009

Funny, but BAD for your FICO scores:  Retailers in trouble

Yahoo Finance:

Get Ready for Mass Retail Closings

About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it’s clear there’s too much retail space. Just visit Web site deadmalls.com and track retail’s growing body count. And luxury retailers? They’re on “life support,” Davidowitz says.

Among the brandname stores Davidowitz says are in trouble:

* Nordstrom
* Neiman Marcus
* Tiffany
* Jeweler Zale Corp.
* Saks
* J.C. Penney
* Sears
...

I read some of the comments and found this one particularly funny:

I’m almost looking forward to this. Maybe my wife will finally stop buying all that crap we don’t need.

Yup. 

But on second thought, these are the accounts that really help FICO scores.  Of course they will CONTINUE to add to FICO scores due to the AGE, but once the account is closed, they obviously won’t be helping your B/L ratio with the ZERO limit and your score may go down because the account is no longer open. 

Closed accounts will be deleted.

The CRAs claim that they’ll report positive accounts for 10 years after an account was closed, but I’ve seen MANY closed accounts deleted much sooner.

How many of you are old enough to have had a Montgomery Wards account?  It long ago disappeared from my credit reports.

Unlike with credit cards, these store charge cards are not usually taken over by another store.

I’m more bearish than ever on credit reporting and scoring and I’m hoping that if enough people remove themselves from the system and stop buying credit reports, the credit bureaus will go out of business just like the retailers.

But I’m also fully aware that there still are people trying hard to get a refi and they need those scores to qualify.

So here’s my FICO scoring tip of the day:

If you haven’t used your store cards in a while, the GOING OUT OF BUSINESS SALE is the time to get some deals and use the store charge card. 

A more recent DLA should help to have the account reported longer and you can even carry a balance to artificially prolong the “life” of the account.  How it effects your CURRENT FICO scores depends on WHAT ELSE is on your credit reports.

Whether you should bother is a different story.

Saturday, November 29, 2008

Experian refuses to provided the scheduled deletion date

A client disputed two accouts, they investigate one and ignored the other.  He asked when the charge-off would be deleted.  The account was not mentioned in the investigation results and there still isn’t a deletion date on the report.

At least 20% of Experian chargeoffs don’t have a deletion date.  Experian OFTEN reages accounts to delete 7 years after the charge-off was sold instead of 7 years after the account was charged off (or sooner, depending on the date of first permanent delinquency.)

And, Fair Isaac STILL creates entirely fictitious lates on the myFICO reports.  It is truly incredible that FICO scores are based on formulas developed by the world’s most INCOMPETENT programmers.

I can only try to make them irrelevant, I’ve given up fighting for justice.  The new Trado site is slowly coming along, got lots to learn about Drupal.

Wednesday, November 19, 2008

FICO score increased 6 points after deletion of 2 collections, 12 points after using old account

The ONLY two old collections were deleted.  The Equifax FICO score increased from 666 to 672.

Disappointed client.  There would have been a larger increase if we didn’t have the 76% B/L ratio.

A few days later a $77 balance showed on his JC Penney card and the score went to 684. 

That’s a 12 point gain, TWICE the 6 point gain for the deletion of the 2 collections.

And once he paid the account and the $0 balance is reported, he might get a few more points because he’ll have fewer accounts with balances.

When I reviewed the reports, I couldn’t tell whether the JCP account was still open.  The DLA was in 2000.  The client also didn’t know whether the account was open, didn’t have the card anymore.  He called and they immediately sent a new card.

Compare the effort people put in getting collections deleted with how easy it is to make a quick phone call and then go shopping.

Of course a RECENTLY ASSIGNED collection can lower the scores by over 70 points, even if the collection is 6 years old.  It all depends on the specific reporting of collections and WHAT ELSE is on the report.

That’s why I really can’t give advice without reviewing the reports and that takes anywhere from 3 to 6 hours, depending on the number of accounts and especially derogatories.

What reason do we have to put up with this absurd system, designed explicitly to exploit people who are NOT wealthy?

Last night I posted about the new Trado and then contemplated ways to eliminate Dollar debts owed to banks by refinancing Dollar debts with Trados.

These aren’t easy concepts for people who never looked into alternative currencies and how the banks create Dollars.  But it’s a LOT easier to understand than trying to figure out why you deserve lower interest rates and insurance premiums because you just went shopping a JCP.

Soon we won’t need the commercial banks, credit bureaus and credit scores.

They destroyed the global economy and it’s up to us to do whatever it takes to survive.  Only corporations are being bailed out.

The banks, insurance companies and credit bureaus can focus an screwing each other and making billion dollar loans to failing corporations and governments by creating trillions of dollars until the dollar is worthless.

We don’t have to be part of the failing system.

Saturday, October 11, 2008

Lenders agree: FICO scores caused the credit crisis

From a Business Week article from February:

Credit Scores: Not-So-Magic Numbers

The once-vaunted FICO credit scoring system is now being blamed for failing to flag risky home-loan borrowers. Will an overhaul be enough to appease angry lenders?
by Dean Foust and Aaron Pressman

...

Now the credit markets are in disarray, and big mortgage players like HSBC (HBC), JPMorgan Chase (JPM), and Washington Mutual (WM) —perhaps opportunistically—are laying much of the blame at Fair Isaac’s feet, arguing that its score didn’t predict delinquencies as expected. (Meredith Whitney, an analyst at CIBC World Markets, called FICO scores “virtually meaningless” in a December note to clients.) Consumer advocates and state regulators are clamoring for Fair Isaac to disclose its formula. And credit-card providers are beginning to question the score, too. “So many people, I think incorrectly, looked at FICO as being the’ measure of risk,” Discover Financial Services (DFS) Chief Executive David W. Nelms told analysts in December.

Fair Isaac vigorously defends its product. “We don’t think FICO scores have caused or contributed to the subprime mortgage problem,” says CEO Mark N. Greene, a 12-year IBM (IBM) veteran who took the helm at Fair Isaac last February as its problems were becoming apparent. [emphasis added]
...

This must be the article a reader once mentioned in email, but I never had the link.  Are there any updates? 

I really hope the banks will sue Fair Isaac out of business. 

There’s a lot about “credit doctors” in the article. It’s amazing how so many credit repair people engage in illegal activities.  Apparently I’m still the only person who can analyze score factors and make recommendations to LEGALLY improve the scores.

I also seem to be the only person who documented that FICO 08 is nothing but a lot of hype and that Authorized User accounts are NOT ignored as Fair Isaac claims. 

Maybe Fair Isaac hadn’t figured out yet that AU accounts are STILL rated for account history.  It wouldn’t be the first time that I’ve documented a FICO scoring “bug.”

Fair Isaac programmers can’t even get the correct field labels on the myFICO reports!  And that’s first year programming.

Please post or email any articles on possible legal action against Fair Isaac by the banks.  FICO scores aren’t the only cause of the credit crisis, but they are a MAJOR cause. 

Isn’t it too bad the regulators and legislators ignored and CONTINUE to ignore my research?

Nobody can claim that I didn’t try to prevent the credit crisis. I’ve done all I could do, I’ve given all I had. 

EVERYBODY ignored me.