FICOs are Beginning to Become Arbitrary

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by leodoggo

I work in automotive lending for a major automotive lender. With increased technology, credit swipes, credit boosts, authorized user credit, and just straight fraud, FICOs are starting to become unreliable. Below is an example of what I’m referring to:

Yesterday I had two separate applications that stood out.

Customer A: credit had a perfect paid auto, 3-4 perfect paid credit cards, 1 perfect paid installment loan and a student loan that had 1 payment over 30 days past due, the rest were perfect.

Customer B: had 15 credit cards, most had at least 2-5 over 30 days past due, a prior bankruptcy, a prior auto loss, a couple installment loans paid slow and they were currently 6 months past due on their mortgage.

Customer A: 389 FICO

Customer B: 708 FICO

Both were trying to get a similar style car around 30k, it was affordable for both. One got approved the other did not. The 389 FICO was approved, 708 rejected.

Customer A’s FICO was so low because in their specific circumstance their student loan counted 24 times. As a lender and someone with student loans myself I understand that most likely they just missed 1 total payment.

I bring this up to make a point to stop worrying about what your FICO number is, and instead worry about what makes up your credit. Pay your major credit first: autos/mortgages. If you’re going to be late on something, do it on something not detrimental to your finances (like a low interest student loan). Have individual credit, don’t rely on parents/partners credit cards to boost your score, we see it and know you do it, and don’t try to cheat the system. There are tons of people like me who look at credit all day every day, we know what to look for and generally can play the game better than most.

I say all this with the caveat that some banks have not gone away from using the FICO as an end all be all. It’s still important for determining rate tiers. However most are starting to learn the tricks. I would not be surprised if in the coming years a FICO score becomes irrelevant. So instead of trying to inflate your score, just work on paying the important things on time every time.



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