AFSCME 3357-HOF'S BLOG

The Logic of the Illogical: Your Credit Score

Only on the Bizzaro planet would you expect a system as strange as the FICO credit scoring model established by the Fair Issacs Corporation, the system used by almost all the consumer finance industry. Closing an unused account is simple prudence, right? No, not on the Bizzaro planet, and not with FICO. It makes sense to consolidate high interest rate debt into a single lower interest account, right? Nope - FICO Bizzaro again. Here's a link to an MSN Money article with more on the irrationalities of FICO.

Speaking of credit scores. Starting this year, Fair Issac will be offering a different model to establish your score. Under the new model, you will no longer be rewarded for "piggybacking" as an authorized user on an account of a person with A+ credit. ON the other hand, you will not be punished quite as much for a single major delinquency. You will be punished more for seeking credit, but rewarded for handling a diverse mix of credit. The FICO 08 model will be phased in as market demand allows. The truth be told, Fair Issac has always tailored its scoring systems to the demands of its customers, to the point where it would be largely inaccurate to say that anyone actually had a truly standardized credit score. For more information on FICO 08 see this link to MSN Money.

Thanks to PAD for the link.