Fighting credit bureaus, creditors and debt buyers

Category Archives: Credit scoring – FICO

Credit scores utilize phone data to determine risk

From No Credit History? No Problem. Lenders Are Looking at Your Phone Data

… FICO’s partner EFL sends psychological questionnaires of about 60 questions to potential borrowers’ mobile phones. With Lenddo’s technology, FICO can check if users’ phones were physically present at their stated home or work address, and if they are in touch with other good borrowers — or with people with long histories of fooling lenders.

“We see this as a good opportunity to explore that type of data for risk assessment, as a viable means of extending financial inclusion,” David Shellenberger, a senior director at FICO, said in an interview.

“Financial inclusion?”   Debt. Interest. Fees. Stress.

… By checking phone records to see if a credit applicant associates with people with a poor track record of repaying loans, for example, lenders risk practicing discrimination on people living in disadvantaged neighborhoods….

Of course. It used to be called redlining and now they don’t even have to use your zip code or a map.

And if your parents have financial problems, don’t call them!

Business opportunities: 

“50 calls for $50.  I’ll call you 25 times and you get access to my phone #, just talk to my VM for a while.  My FICO is 800+ guaranteed!”  I should put up a “buy it now” button!

… Several large phone companies contacted by Bloomberg declined to comment about whether they share data with financial institutions, and few of the startups or financial companies were willing to disclose their telecommunications partners. …

Not surprising.

… “The way you use the phone is a proxy for the way you live,” Hakim said. “We are capturing a mirror of the customer’s life.” His company collects phone data — such as whom the potential borrower is calling and how frequently — from partners like Airtel Ghana, and crunches it for customers like Equifax, as well as marketers. It scores some 100 million consumers in 10 countries each month, Hakim said. Banks typically use such assessments alongside other evaluations to decide whether to grant a loan. Cignifi always gets customers’ permission to use data, he said. …

It doesn’t sound like they get permission from the people who the customer calls.

So someone else can give permission to the phone company to provide MY call data? 

… Startups like Lenddo, Branch and Tala have collected several years’ worth of data to prove that their methods of using mobile-phone data work — and that customers flock to them for help. Started in 2011, Lenddo, for instance, spent 3 1/2 years giving out tens of thousands of loans, in the amount of $100 to $2,000, in the Philippines, Colombia and Mexico to prove out its algorithms. Its average default rate was in the single digits, CEO Richard Eldridge said in an interview.

The company stopped offering lending in 2014, and stepped into credit-related services to financial institutions and banks in early 2015. Embedded into banking mobile apps, it can collect data on users with their consent. The company’s revenue is up 150 percent from last year, Eldridge said. ….

Yup.

So depressing.

I’ll focus on baking some organic cookies and growing veggies.

Fair Isaac considers incorporating social media into FICO scores

From the Wall Street Journal article Borrowers Hit Social-Media Hurdles:

… Lending companies—some of which are backed with venture funding from Google Ventures, the venture-capital arm of Google Inc., and Accel Partners, an early Facebook Inc. investor—are looking at potential problems such as whether applicants put the same job information on their loan application as they posted on LinkedIn, or if they shared on Facebook that they had been let go by an employer. A small business that draws negative reviews on eBay also could undermine its chances of getting more credit, lending companies say.

The practice is being used largely by startups that grant smaller loans, but the concept seems likely to spread. Fair Isaac Corp., which provides the credit scoring used in more than 90% of lenders decisions, says it is weighing possibilities for incorporating social media.

“There could come a time where certain social media could be predictive and we’re looking at that, but it isn’t yet,” said Anthony Sprauve, senior consumer-credit specialist at FICO. ….

It makes sense to analyze online customer reviews, BBB ratings, etc. when underwriting a BUSINESS loan.  However, using ANY data on the web to determine a human being’s credit worthiness is just appalling.

I have a HUGE dislike for “social media” because not just because it is a giant waste of time, but it is so annoying to have to read what people post on Facebook (a giant marketing operation).  Not to mention having to decide whether you want to approve some stranger’s “friend” request.

I love the internet and I have learned SO much.  There’s no way that I’d be growing organic veggies in the desert while building an adobe living room / greenhouse with very little cash if I didn’t have access to so much free info.  Of course it takes time to research and to validate that the info is correct because, guess what — not everything you read on the web is true!

How do the lenders currently using social media notify consumers that they took “adverse action”

According to the Fair Credit Reporting Act, creditors have to  disclose to you any adverse action (decline, higher interest rate / fees, lower credit limit) due to your credit report. There are NO regulations regarding information obtained on the internet. Maybe one day you’ll get this disclosure:

Your application was declined because you don’t have enough local Facebook friends.

Underwriting at an all new low.

What happened to stable employment and paying your bills on time?

What happened to having to IGNORE an applicant’s religion, sexual preference, color, race, etc.?

As I have documented for many years, credit scoring is nothing but a huge fraud, deliberately designed to justify the bankers’ desire to charge higher interest rates and fees for lower limits based on FALSE data.

When I notified Fair Isaac in 2007 that they are CREATING completely fictitious late payments for Equifax FICO scores they ignored me and did NOTHING to fix their software. In 2013 I again documented that myFICO still creates entirely fictitious late payments on Equifax reports.

It is incredibly easy to manipulate FICO scores, but often IMPOSSIBLE to get FICO scores based on accurate data.  It is also very easy to set up fake social media accounts.  You can set up 50 Facebook accounts and create the APPEARANCE of being the perfect borrower – posting as your friend, co-worker, boss, relative …  I also know that it can be impossible to remove false info from the web.

The internet turns into a credit report.

Your internet activities and what other anonymous people post about you determines whether you get approved or declined.  The internet turns into a credit report without ANY way to dispute incorrect data.  And even if you could dispute, why should you have to waste your precious time on this BS?

I have no desire to participate in this charade.  I realize that one day I may have to apply for credit again, but I sure hope I don’t have to play that game.

Credit scores based on social networking

Here’s a CNN article about more strangeness in credit scoring:

Facebook friends could change your credit score

Since I’m focused on getting my clients approved for mortgages, I really only care about FICO scores.  An interesting and totally FALSE statement from this article:

FICO only considers a handful of factors, but they are all “incredibly predictive of risk,” Ulzheimer said.

Exactly HOW predictive are FICO scores?

A client’s mortgage broker got an Experian score of 597.  At myFICO two days later, the score was 646.

The myFICO score means APPROVAL, the mortgage broker score results in DECLINE.

I’ll be posting more about this once I get done with a gazillion court filings.

 

myFICO extreme efforts to prevent cancelation of ScoreWatch

A CreditFactors member had trouble using ScoreWatch and I decided to sign up for the free trial so that I could help him along.  As the end of the 10-day trial approached, I logged in to cancel.  I searched the FAQ for “cancel” and found this page:

http://myfico.custhelp.com/app/answers/detail/a_id/391/kw/cancel

To cancel your subscription:

Log in to the Member Center
Click on “My Subscriptions” on the right side under “Account Settings”
Find your Score Watch subscription on the My Subscriptions page
Click on the “Cancel my subscription” link under “What do you want to do”?
Follow the instructions to cancel

Sounds easy!  Unfortunately, my “instructions” demanded that I call 1-800-319-4433.

I called and verified my name, address, SSN and birthdate.  And that was NOT enough!

The first person demanded my previous address as  shown on the credit report.  I didn’t have the credit report in front of me and WHY on earth would they demand this info to CANCEL?

I could see them being extra cautious BEFORE releasing credit information, but clearly they were just trying to make it difficult or impossible to cancel.  When I asked for a supervisor, they guy hung up on me.

I called back, again went through all the verifications, did not have my previous address and asked for a supervisor.  After a long hold I was disconnected.

I called back again, this time did not even ask to cancel, but requested a supervisor.  Again, I had to verify my name, address, SSN and DOB.   After a long hold I finally got to a supervisor and I told him that I needed to confirm that you can not cancel ScoreWatch unless you have internet access and a phone.

He then explained to me that they were NOT looking for the previous address on the credit report, but for the current address on the myFICO account.  Since I opened the account in 2003, I had NO idea which address used.

The supervisor CONFIRMED that myFICO expects you to have internet access when you call to cancel because you had internet access when you ordered the service.

Apparently myFICO does not realize that many people lose their internet access when they can’t pay the bill or they move and many people just don’t have a computer and use a friend’s or library computer to order.

Of course I would have canceled online if I hadn’t been required to call.  So why do they make customers jump through hoops, first sending them online and then demanding a phone call WHILE being able to access the internet?

According to the supervisor, not EVERYBODY has to call.  Their system RANDOMLY selects accounts for phone calls.

Why would they do that?  I suppose they are analyzing how much they can increase profits by making it more difficult to cancel.

We REALLY need to have FICO scores prohibited for all credit, housing and employment decisions.

Not because of their refusal to cancel their overpriced subscriptions, but because they serve no purpose other than to make its shareholders and bankers wealthier.

MyFICO has been creating entirely fictitious late payments on Equifax reports since at least 2007 and it has continued to willfully destroy lives — KNOWING that millions should have 50 or 100 point higher FICO scores if they only fixed their software to eliminate the fictitious lates.

For the screenshots and explanations please visit Fair Isaac FICTITIOUS lates on Equifax reports