What you need to know about scoring... (Financially speaking)

We get lots of calls with lots of questions about scores. People want their score up, that's all they seem to understand. And while this is understandable in and of itself, it's not all about a high score. For example, a high score won't necessarily get you a better interest rate or even approval for a loan or other financial product. the number itself doesn't mean anything if it doesn't have a good history behind it. Scores are nothing more than risk management tools, developed by scientists and kept secret crazy by corporations (they fear other corporations stealing their formula, kind of like how Coke thinks Pepsi will get it right, when you know damn well that if they haven't by now, they never will) and other corporate officers. So, formulas (not the cute diagram they share with the general public) are really, really secret.  Area 51 is known, where they keep the secret to this, no one has a damn clue.  So, to all the people out there that think they can predict scores rising or falling in any particular way, all I have to say is "you're all full of shit". The only people that can predict the rise are quite possibly the people who developed it in the first place, but because each person is different, each person's score will react differently. So then, maybe not even the scientists can tell you. And if a dude making $500K a year with financial degrees from Yale and Harvard doesn't know, how much better do you think some dipshit in New Jersey is going to fare?

Now before we begin, this section will grow as time goes by, kind of like your uncle Bob's waistline at barbecues. But in this section, I'll try to break down, and source what scores are, how many types or scores exist, why each is different, what each means and how banks use them to shape your life. We don't sell financial products on this website. We don't seek to influence anyone's life or alter their decision-making ability. We just strive to educate, titillate and unclog competitors mental masturbatory bullshit what with promising scores rising, boosting or blasting off into the stratosphere.

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FICO Score

developed and owned by the Fair Isaac Corporation (hence the name FICO) it is the best known, most widely used risk management model in the industry but, it isn't the only model. There are 29 versions of FICO scores used in the U.S. to date. Some you'll never need, but nevertheless let's go over a few. Some scores models are "industry specific" which means these are scores created for a particular market niche. Say, automotive lending or bankcard lending. Industry specific FICO are formulated (engineered) differently than other FICO, because the particular score takes only into account payment history relating to automobiles. FICO also has other scores which are termed "general purpose" scores, not necessarily used for bankcard or automotive risk management but they could be. FICO is the mostly widely used, trusted (as much as banks can trust anything) and circulated score. FICO 8 or FICO 9 is the one you'll usually get from when they pull data from the top 3 CRA's (Experian, Equifax and TransUnion). Again, the method of scoring is scaled, but the actual parts that go into the score is a closely guarded secret. For simplicity's sake (too late) let's just lump it into payment history, utilization, age of credit history, number of accounts and general credit worthiness. It takes a whole lot more to come to a conclusion score wise, but we don't have a Yale MBA here peering over our shoulder, so lets leave it at that.

Vantage Score

Developed and owned by a joint effort to beat the Fair Isaac Corporations ass at its game, err, excuse me, developed to compete for market share with Fair Isaac, Vantage score was paid for by the top 3 CRA's but managed by an independent company (Vantage Score Solutions LLC) so as not to play favorite. The model itself was unveiled as 3.0 in 2013 and then in 2017 changed to model 4.0.

Model aside, it takes data mined from the top CRA's jointly and arrives at the score number. Using statistical analysis to predict defaults by consumers (it predicts if a consumer is likely to pay on time or shaft the lender without lube), it does this by calculating a detailed "score" according to the scale range of 501-990 as depicted in the following example:

A: 900-990

B: 800-899

C: 700-799

D: 600-699

F: 501-599

The original Vantage adopted the same scale FICO used because consumers were already used to it and had some familiarity, so in the spirit of enterprise, Vantage copied (insert euphemism here) the score from FICO, which runs on the scale we are familiar with, the 300-850 scale. The main difference to remember here is this: FICO scores are custom built for each of the top 3 CRA's, while Vantage score uses the same data culled from the top 3 without changing the scores structure to conform to the data inside each specific bureau. if you're eyes aren't crossed yet and you haven't abandoned all this to hit the bong and watch Simpsons reruns, let's keep going.

Credit Worthiness

If you've ever attended an American high school then you'll be familiar with the concept of worthiness...ironically if you dropped out and worked at a bar, you will also be familiar with the term. You know how it was, Angelina with the sweater puppies had to make sure you were worthy enough to consider, as if she was the last Coke in the desert (as if!!) … err, hold up, let's forget I wrote that and move on. Credit Worthiness is basically all the score means. It's just a bunch of digits and sometimes a letter or two thrown in (you don't see those, so don't worry about it). The score just gives a lender (in theory anyway) an idea of who is likely to be a good credit prospect or a bad one. that's it. They arrive at this conclusion by taking into account a person's credit history. payments, timely manner of payments, age of accounts, number of accounts opened, standing of accounts, etc. to arrive at this conclusion. In high school if you had the right clothes, had the right attitude, had the right haircut and in some instances had the right mindset, you got the invite to the parties and beer blasts. if you didn't or didn't give a shit, you got into fights, tossed into detention and generally went down as a ball buster (don't infer anything here about your kindly author, let's move on)

Credit worthiness aka likelihood of paying back a debt is just another way of saying, is this guy going to pay his bills? Do we have to chase his ass down? Will we lose the note and have to settle??! Information is taken from the top 3 CRA's and from other sources (see data mining) to come to this conclusion. To date, while some employers and rental companies actually look at a person's credit score, employment history or income are not factors to having excellent credit or being credit worthy. So, equating it to the hot chick, if she likes you, it doesn't matter if you got big bucks or drive a pinto, but you better be worthy.

What a score usually does during disputes

This part is the part some people can't quite understand. During disputes, not only do scores change, but instead of rising, they are known to plummet. While this seems like crazy talk (the hell you say?) it actually isn't. Scores are dependent on numerous factors as stated above, chief among them is age of credit history. So, when you have one of those collections you don't recognize from Bob's World of Bobbers or someplace you have never been, heard of or care about, and it gets taken off, the score will likely drop if the age of credit history is not that great to begin with. So there.

What a score could also do, if...

The big "secret" to those scammers out there promising scores rising (remember, no such thing can be promised) is that one should always have current accounts in good standing reporting good credit. During disputes, when the erroneous stuff comes out, and the actual stuff gets put in, it is presumed that a score will rise. generally speaking, these geniuses among mere mortals must make Einstein look like a mental midget. of course, it will improve, it can't get any worse. However, no specificity can ever be guaranteed. Whoever tells you this, is a big fat liar, and his or her pants may actually be on fire.

Better score + Better interest = unhappy bankers

Before you think I'm full of shit, stop and think this through in the first person (or the second if you're the compulsive type). How does a bank truly profit from a client? Is it the free checking where they don't require a balance maintained? Is it the free coffee giveaways where they serve the dark roast that Costco couldn't give away fast enough with the powdered creamer that clumps up and won't ever dissolve? is it by ensuring that their clients all have the perfect 850 score? Or is it by taxing the poor guy whose credit is not the best, at an outrageous interest rate and waiting for the eventuality of a calculated default and foreclosure? If you picked the last one, you are correct. Banks, like a casino, never loses. No matter how many payouts it gives, it always takes in more than it can ever give out. Sheer madness would ensue if this was not so. banks actually want the people with bad credit, because this lack of credit worthiness means that a higher risk entails a higher interest. And a higher interest means more money in a bank's pockets and less in your own.

So why credit in the first place? Even if you don't need it, have enough money put away to permanently live in the keys and have tanned native Floridian girls slather coconut oil on your back for eternity. It doesn't matter if you have money or not. credit, is a system of usury. lending out money at interest. It's not called usury anymore, but that's exactly what it is. And it's so prevalent that even if you have cash, even if you don't need credit and don't care for it, you still need some kind of portfolio history if you intend on buying big ticket items such as houses, private planes, private islands or private call girls. OK, maybe not the call girls. the rest requires credit.

So next time you're at Walmart and see those really cool bugs bunny slippers, or that lava lamp, or even that collection of ceramic plates with adorable tacky pink pigs on them, consider what throwing a shopping spree on your Walmart card will truly cost you. Keep your spending short, a dollar saved is a dollar not taxed by astronomical interest and with time, you too could be a well-qualified buyer, which is just fancy talk for "some person we can't gang rape into submission on interest". Apparently, this is what passes for well qualified. On this note, I sincerely wish for all consumers to be well qualified, or at the very least, have steel plated underwear.