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The math behind credit scores is quite good. They're very effective at predicting credit risk.

• pg_is_a_butt 7y ago
  If only they were good at not incorrectly predicting credit risk
• codernyc16 7y ago
  I had a recent 30 day delinquent payment reduce my credit score by 80 points. And this was because the letter in the mail was mid-delivered. Not that the credit card issuer, nor the credit agencies give two shits. This was after about 5 hours of calls ping-ponging between the two.
  • harryh 7y ago
    Your anecdote is interesting but does not constitute data on the overall predictive powers of credit scores.
    • zonidjan 7y ago
      It does when millions of people have similar anecdotes, and when the system is literally set up for it. Places can report whatever they want to. And you can dispute it, but the person who report it will just say "no, we're right" and it'll stay up.
      • nudiustertian 7y ago
        This I've been fighting with Equifax and TransUnion for 5 years to remove 30 year old reports on my credit history (which are clearly not me because im less than 25 years old)
        • mehrdadn 7y ago
          This is amazing. How are you running into trouble with this for 5 years? What is their counterargument?
      • adrr 7y ago
        If you could build a better algorithm to do underwriting, you could make billions. Companies try all the time like zest finance.
        • munk-a 7y ago
          Not being the worst is not the same as succeeding. Following that logic the Burj Khalifa is a space elevator because no one has been able to build a better space elevator than that. I have general objections to this sort of underwriting assessment being an ethical business for a private organization to begin with due to the immense amount of possibility for discrimination it opens up.
          • harryh 7y ago
            On the contrary, the modern credit scoring system has been a huge success when it comes to fighting discrimination. Previously banks left underwriting decisions to the whims of individual bankers. Unsurprisingly, many of these whims were based on things like the color of an applicants skin. While there are certainly some arguments to be made about disparate impact under our current system basically everyone agrees that access to credit for minorities is much much better than it used to be.
        • mikeash 7y ago
          Better for whom? I’m sure the existing credit bureaus are great for the people who give them money. They sure suck for the rest of us, though. Fortunately for them, we get zero say.
          • adrr 7y ago
            Market is efficient. If underwriting wasn’t efficient, a company could utilize better algorithms and offer better rates and better determine risk to minimize default. This a multi billion dollar opportunity. People don’t care about who is underwriting their car or home loan, they care about rates.
            • 7y ago
  • billh 7y ago
    I've had credit card companies call me and straight up say "If you pay this right now over the phone with me and pay the $15 telephone transaction fee, this won't hit your credit report" Between the "Pay for Delete" scams and the gamifying of your credit score through services like CreditKarma I really questions how close these scores are hitting anymore in relation to relative credit risk.
    • mehrdadn 7y ago
      > I've had credit card companies call me and straight up say "If you pay this right now over the phone with me and pay the $15 telephone transaction fee, this won't hit your credit report" Does that not qualify as extortion?
      • throwawaycert 7y ago
        The contract you agree to for credit cards or other forms of debt you choose to take on will specify things like late fees and that it's up to the company's discretion whether they report you a late payment to the agencies. If they didn't have this clause, you'd just be complaining that they report everyone indiscriminately rather than giving people a break when it seems appropriate.
        • mehrdadn 7y ago
          > The contract you agree to for credit cards or other forms of debt you choose to take on will specify things like late fees and that it's up to the company's discretion whether they report you a late payment to the agencies. If they didn't have this clause, you'd just be complaining that they report everyone indiscriminately rather than giving people a break when it seems appropriate. Thanks for making ridiculous assumptions and putting nonsense in my mouth. Nobody opined on anything in the first place. I was merely asking a legal question, because calling someone to demand an immediate payment to avoid direct harm to them sounds an awful lot like extortion, whether I like the approach or not. If you want to know whether I'm impossible to satisfy or whether I think the company could in fact cut people slack while getting their $15 and avoiding potential extortion, you could just ask me. Yes, I think that's perfectly possible. Call the person up, tell them you'll waive the credit report if they make a payment by the end of the day, and optionally remind them that according to their contract, there is a $15 fee if they pay by phone. There. Now the person gets to spend more than 5 seconds thinking about it to make an informed decision. No need to put nonsense in my mouth.
  • throwawaycert 7y ago
    Credit scores change constantly. What your 80 point drop told creditors is "This person might not have enough money to pay their bills, or is careless or forgetful.". You are perceived as higher risk because, statistically, you are a higher risk. Those of us who maintain excellent credit do it in part by making sure our money gets where it's supposed to. I check online to make sure payments post, or hand in payments in person, or call in the rare case these days when there's no other way to check. Fortunately, credit scores usually recover rather quickly from one-off delinquencies if you stay current afterward. And I bet you'll be paying more attention to your bills now, won't you? The credit score is doing exactly what it's supposed to.
    • kome 7y ago
      > The credit score is doing exactly what it's supposed to. policing people and make the poor to pay more.
      • throwawaycert 7y ago
        If you don't pay your bills, I think it's entirely reasonable for businesses to tell each other about that so you don't defraud them out of a lot of money.
        • XaoDaoCaoCao 7y ago
          >the entire banking system promotes systematic moral hazards and has lowered the purchasing power of stagnating wages for most people "Why are people defaulting on their bills!?" The whole notion of transfer of majority responsibility to an individual is one of the slimiest things in this society. We get monitored by an array of hidden surveillance measures and algorithimic judgement we have no way to properly counter or defend ourselves against. Meanwhile central credit gets to borrow money and get bailed out. Give me a fudging break.
          • throwawaycert 7y ago
            This isn't complicated. You incur a debt, you pay it. If you can't, people aren't going to want to do business with you, and will quite reasonably refuse. You are trying to make everyone else responsible for my finances and I'd damn well thank you to stop, since they're mine.
  • mehrdadn 7y ago
    This doesn't solve the problem that already happened, but I would take this as a sign that it might not be a bad idea to just opt into e-statements and avoid snail mail. The world is electronic now. If nothing else, you'll at least save some carbon, paper, etc. from being consumed along the way.
  • ryanmercer 7y ago
    I have autopay set up on my Google store Synchrony account, this last bill, for whatever reason, it did not attempt to withdrawal the money then sent me an email saying I was overdue and I now had to pay DOUBLE so I did manually, two days later I get an email saying my adjusted auto-pay had applied. Guess what popped up on my report this week? A late payment. It does not let you pick the autopay date, and instead puts it on the date the bill is due, otherwise I'd have it auto pay at the first of the month weeks before it was due. However, it is not worth my time to call and probably have to deal with a call center for an hour before I get someone that will promise to remove it and then have to write three letters to send off to the CRBs to dispute it and wait another couple of months for it to possibly get removed.
• gzer0 7y ago
  Your statement is interesting but does not constitute nor provide any substantive information that is backed by evidence. Backup your 'anecdotal' claims.
  • harryh 7y ago
    Banks and credit card issuers all pay hefty sums of money to the reporting agencies to use in underwriting their loans. They wouldn't do this if they weren't helpful in modeling risk.
    • munk-a 7y ago
      The majority of people on this board work in tech - just because money is exchanged for a service does not mean that the service purchased is worth that money... so can many attest about terrible highly paid consultants. Large organizations are astoundingly good at finding inefficient ways to spend money.
      • throwawaycert 7y ago
        Large financial organizations have teams of analysts whose entire job is to relate consumer information, such as credit scores, to statistical outcomes. If the credit scores weren't giving them useful information, that would show up rather quickly.
        • brazzledazzle 7y ago
          I’m suddenly reminded of the ratings used to fuel the subprime mortgage crisis.
          • throwawaycert 7y ago
            That was something subtly different. The banks more or less knew they were taking poor risks, the problem is it wasn't their risk to take. They quietly packaged these bad mortgages along with others and resold the mess to less sophisticated investors (like pension plans). Then the bubble burst, the well dried up, and banks started collapsing. It wasn't a mismanagement of risk, it was criminal fraud writ large.
• fallingfrog 7y ago
  Why do you say that? I’ve seen some of their criteria and while I can’t remember a lot of specifics, it was a bunch of ad-hoc rules, not updated since before computers were a thing, only stuff you can calculate with pen and paper and all of it totally arbitrary.
• patio11 7y ago
  This statement, which is currently greyed out, is an objective statement of engineering fact about one of the most important technologies introduced in the last one hundred years. I hope I have bought enough street cred to say the following by ghostwriting hundreds of letters to the credit reporting agencies to fix their problems, which are numerous and essentially inevitable given their model and present operations. Credit scores are important because they allow banks to do standardized, automated underwriting for effectively free at 2 AM in the morning, which is what makes credit abundantly available in the United States and one of the reasons why it is so cheap to the middle class. (This routinely escapes the notice of people in the middle class, but the ordinary operation of banks is to advance well-organized people money for free and pay you to be chosen to do so, partly due to credit scores making this a derisked proposition and partly due to interchange revenue.) Credit scores decimated the costs of unsecured consumer loans, as is readily observable by seeing what loan availability, pricing, and the "credit box" looks like when they're not available for underwriting. (This is a term of art in consumer credit that I provide for your future Googling pleasure, not having enough time to explain it at the moment.) Compare the cost on a cash advance on any card in your wallet to a payday lender. That delta is substantially (not solely) due to credit scores, both in improved understanding of default risk and in reduced operational cost (of underwriting and servicing, both enabled by the scoring infrastructure). Credit scores are an important justice-enhancing technology because they make the inputs to an underwriting decision objectively observable and for the first time in history those inputs provably do not include race, religion, etc. There is an argument which is not immediately dismissible that credit scores are based on borrower behavior which reflects the socioeconomic realities of the United States and therefore somehow effectively encode race, but it is an obvious improvement that banks now mechanically reach the same decision on similarly situated white and black borrowers. Regulation did not make that happen. FICO did. I think well-off computer programmers should understand that there is a societal tradeoff which buys "middle class black Americans have the same access to credit you do" at the cost of Equifax knowing your credit limits; understand that if you are advocating for rolling back the second you should accept that ceteris paribus we will experience material disimprovement on the first. (Obligatory disclaimer: personal opinion here.)
  • ineedasername 7y ago