Groundhog Day, 2011 - Wikipedia on credit scores

2/2/2011

Here is a supplement to Wikipedia's information about credit scores; you'll need it.

Credit score (United States)

Today, in its article Credit score (United States), Wikipedia states that a consumer's credit utilization ratio makes up 30 percent of the FICO credit score, that the scale (which it terms the "range") is 300 to 850, that 60 percent of scores are between 650 and 799, and that the median FICO is 723.

Credit score

In the Credit score article, a Wikipedian (rhymes with comedian) states, "Recently, many jobs are using pre-employment credit checks and the trend has appear[SIC] to have grown since 2000 within the United States."

What that claim is doing in an article named Credit score is not explained. Beyond the mangled syntax, the national consumer reporting agencies all state that they do not provide credit scores for employment purposes.

Credit history

In Credit history, Wikipedia wags its finger, "In the United States insurance, housing, and employment can be denied based on a negative credit rating."

That's harsh. And, if the term rating seems nebulous, in the same article, the entire section called Calculating a credit rating is devoted to the FICO credit score. So, see the part about employment above.

The Wikipedians admonish: "When a lender requests a credit score, it can cause a small drop in the credit score. That is because, as stated above, a number of inquiries over a relatively short period of time can indicate the consumer is in a financially difficult situation."

What is actually stated above the admonition is: "A lender may perceive many inquiries over a short period of time on a person's report as a signal that the person is in financial difficulty, and may consider that person a poor credit risk."

What lenders might perceive is different than the regression analysis of a credit score algorithm.

But Fair Isaac, the FICO credit score company, gives a more complete explanation that is not so mean: "To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping."

And, the Wizard of San Rafael even says, "For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For others, one additional inquiry would take less than 5 points off their FICO score."

Wikipedia: "Credit scoring is the process of using a proprietary mathematical algorithm to create a numerical value that describes an applicant's overall creditworthiness."

Overall? What about income level and stability? What about assets? Others define credit scores in terms of actions, rather than the worth of a person. It may just sound more politically correct, but it is also more accurate.

Experian

The wiki Experian states, "Experian provides regional data at nationalscoreindex.com which shows average credit scores by region and zipcode as well as various other measures of household debt. The site does not indicate if it uses a FICO based credit score, the new VantageScore, or some other scoring model."

Sure, it does. It says "PLUS Score" right on the home page. See Fake-O FICO Funk.

Remember, "ANY INFORMATION YOU MAY FIND IN WIKIPEDIA MAY BE INACCURATE, MISLEADING, DANGEROUS, ADDICTIVE, UNETHICAL OR ILLEGAL."

At least, that's what somebody wrote. What you choose to believe is up to you.

Wiki schmiki.