Comments on: Banks Teaching the Futility of Chasing Credit Scores

By: MasterPo

MasterPo — Thu, 12 Mar 2009 02:52:36 +0000

Be it FICO scores, SAT scores, whatever – the whole world is looking for one indicator, one mark that will summarize an avalanche of information.

Sounds like a great idea – on paper.

By: kitty

kitty — Wed, 11 Mar 2009 09:20:59 +0000

There are some problems with credit scoring. For example, why don’t they include paid off loans in the score? Like why paid off mortgage counts for less than an existing mortgage? Ditto with closed credit cards. Of course, if someone gets a complete credit report, they’ll get all the history including paid off mortgage and closed credit cards, but if someone just checks the number, the closed accounts aren’t counted. Why? Logically, the length of history shouldn’t be based only on opened accounts. It should include closed accounts as well. If I were a lender I’d be just as interested in closed accounts as in opened accounts.

I don’t have a problem with having a credit score: lenders and landlords need to have some way to determine how risky someone is. But a) credit score should be only one of items to consider b) one should look at complete credit history, not just a number.
P.S. – Sorry, forgot to tell you great post!

By: kitty

kitty — Wed, 11 Mar 2009 03:00:24 +0000

By: Roger

Roger — Wed, 11 Mar 2009 02:41:54 +0000

MasterPo beat me to it; the problem with credit scores is the same problem as SAT scores. Although just about everyone agrees that these scores do not provide a thorough and complete picture of someone’s financial or academic state, they get used anyway. It’s much less effort to just glance at a single three or four digit score and make all your decisions about someone based on that.

I think that credit scores either need to become a much less important part of our financial lives, or there needs to be a dramatic reworking of how credit scores are calculated so that it more accurately reflects the real risks of lending to someone.

By: MasterPo

MasterPo — Wed, 11 Mar 2009 01:43:41 +0000

Reminds me of all the emphasis put on SAT scores. Everyone (well most anyway) will give lip service to say how the score by itself has little meaning. But then they put soooo much weight on students with higher scores, often just marginally higher than others.

By: Kacie

Kacie — Wed, 11 Mar 2009 00:50:09 +0000

I hate that I have to use credit to keep my score high. I haven’t used a credit card since I paid them all off more than a year ago, but I still have a car loan so I guess that’s what’s keeping it solid.

I don’t like debt (who does?) and I want to keep my score good so my insurance rates don’t jump. And when I eventually buy a house, I definitely want to get a good interest rate on a mortgage.

By: The Personal Finance Playbook

The Personal Finance Playbook — Tue, 10 Mar 2009 15:18:44 +0000

I agree. I think it’s ridiculous that we should have to worry about so many arbitrary things affecting our credit score. I have two credit cards, both with high limits. I really only use one of them, but keep the other one open because it’s a large piece of my available credit puzzle. This seems like such an arbitrary way to determine anything, but of course I play the game anyway.