Getting up close and personal with your credit score | Page 2 | General financial discussion | Discussion forum

Vatox said
The 699 versus 700 isn't going to be a 7% delinquency rate. That chart isnt meant to be hard categories. I'm quite sure a line graph would have been a better choice. They will both be treated exactly the same.  

Ought to be so. If so, then that is what they should say, but for some reason they don't, and that raises questions. As far as I know, both companies operate similarly.

The other thing to remember, is that FIs all have their own credit formulas. So the credit scores that we all try to look up, aren't going to be what they use. It's just supposed to give you general picture, so you know your situation.

Vatox said
The FICO and Equifax Credit Score use the same numerical range for scores. And the component data come from the same sources. The formulas and weightings are proprietary, so the numbers don't come out the same, but they won't be seriously different.  

Not true. Just an upgrade to the FICO can change one's score substantially.

Equifax Canada upgraded their FICO scoring model in 2012 for their BEACON 9.0 product. One of the questions was how much of a change it would make to the resulting scores.

In the BEACON® 9.0 Score at Equifax Canada: Frequently Asked Questions document, they shared that, on a test sample of credit records, "approximately 40% of consumers are expected to receive scores within 30 points (plus/minus) of the prior version." That means about 60% will have a change greater than 30 points.

And that's just from a FICO upgrade.

Loonie said
Norman, i was just pointing out that the numerical system is not really about credit risk. I think it's about marketing, but could be about something else.
No reasonable person would argue that there is a significant difference between 699 and 700, I hope. These are just convenient categories. The question is, why do they use the number since they are more keen on categorizing?

…

The "unreasonable" people actually making credit decisions do.

That's because the scores are not accurate to 1 point. If one scores 699, then one is in the 650-699 category and treated as such. Same with the person with 749 who will be lumped in the 700-749 category with those who score 700.

One can see that inaccuracy in the graph Vatox posted, in the 550 to 600 range. The default rate for some of those scores are actually lower than the default rate for the next higher score. Imagine that: higher credit score but higher default rate!

Equifax provides the score to the lender because that is what their model computes. Equifax also provides their default rate statistics. Of that information, the lender incorporates whatever it thinks is relevant into their own scoring system.

In MortgageBrokerNews.ca: Brokers sound off on new credit score, a mortgage broker shares what really happens:

However, the negative impacts [of the upgrade to BEACON 9.0] will outweigh the positives, according to [mortgage broker Ron] Butler.

“I think we should all realize once a score goes past 760 no one cares, the insurers, the lenders and the background investors do not care,” he wrote. “But if a score goes below 700 or 680 it may be a very big deal to mortgage brokers; it may lose access to certain rates under 700 and under 680 totally changes the debt ratio calculations.”

Scoring 699 instead of 700 makes a big difference in how the lenders view the applicant.

Norman1 said

Not true. Just an upgrade to the FICO can change one's score substantially.

Equifax Canada upgraded their FICO scoring model in 2012 for their BEACON 9.0 product. One of the questions was how much of a change it would make to the resulting scores.

In the BEACON® 9.0 Score at Equifax Canada: Frequently Asked Questions document, they shared that, on a test sample of credit records, "approximately 40% of consumers are expected to receive scores within 30 points (plus/minus) of the prior version." That means about 60% will have a change greater than 30 points.

And that's just from a FICO upgrade.  

I'm curious, how do you figure that 60% will have a greater change than 30 points?

Vatox said

Norman, the discussion is about differences between credit score numbers at various institutions. There is no doubt that at any time the algorithms may change your score or perhaps lenders also want to become more conservative about rating. But between institutions, the upgrade doesn't really matter because 90% of lenders are on the FICO system.

Most lenders do incorporate a FICO score in their actual loan underwriting process. However, that isn't a FICO score that RBC and CIBC are giving access to for free.

Those scores that CIBC and RBC gave access to SavingsIsGood for free (845 from CIBC and 817 from RBC) are not SavingsIsGood's FICO scores. The free score from RBC, for example, is a TransUnion CreditVision score.

For some borrower's, their FICO score is significantly different from one of the free scores they are given access to.

I have just discovered that, if you are an account holder, Scotiabank has now implemented a free credit score check through TransUnion, called CreditView. Just log into your account and look for the "free credit score" link along the right side of the accounts screen. Click on it and sign in. No charge.