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hegemony

NEW SCORES!!!! (ULTRAFICO) "FICO Plans Big Shift in Credit-Score Calculations"

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52 minutes ago, hegemony said:

My take differs. This is a good thing and opposition is actually against govt. policy:

 

Quote

Rossman also wonders how a new score using bank account info might change the way credit is doled out.

Duh. The CARD Act, now almost 10 years old, requires lenders to consider ability, as well as inclination, to repay. The  law strongly encourages lenders to consider INCOME and ASSETS. Most request income info and many request info on assets such as savings. But there has never been any real way for an issuer to verify or otherwise know about much beyond just how well (or if) one handles credit.

 

It seems to me that this is way overdue and entirely in line with federal law. And really, whether banking info is provided is up to the consumer. They have to opt in. It's of most value to people starting out that have bank accounts and handle them responsibly. Currently, this is invisible to credit card issuers unless they happen to be the same bank the consumer uses.

Edited by cashnocredit

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2 hours ago, cashnocredit said:

 

The CARD Act, now almost 10 years old, requires lenders to consider ability, as well as inclination, to repay. The  law strongly encourages lenders to consider INCOME and ASSETS.

 

 

The only impact of the Card Act on this topic I've seen is the periodic requests by CC lenders to have their customers update their annual income

 

Any halfway prudent lender already considers "Ability to Pay" via their internal risk models. This just strikes me as a product FICO wants to sell to lenders as a replacement for a sound internal risk model.

 

Strictly for the sub-prime market, (and it might or might not work out for both lenders and borrowers).

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8 hours ago, Chris58 said:

The only impact of the Card Act on this topic I've seen is the periodic requests by CC lenders to have their customers update their annual income

 

Any halfway prudent lender already considers "Ability to Pay" via their internal risk models. This just strikes me as a product FICO wants to sell to lenders as a replacement for a sound internal risk model.

 

Strictly for the sub-prime market, (and it might or might not work out for both lenders and borrowers).

It seems to me obvious that if a lender can get some banking info when they only have a thin or non existent credit only file they will have an improved risk model.

 

Since banks have already mined those with material credit files this seems more prudent than expanding into the subprime market without banking info. That's not to say either approach is a good idea but lenders want to lend and there isn't much unclaimed territory left.

 

While the CARD Act mandated ability to pay and encouraged lenders to include both income and assets, lenders have almost universally relied only on stated income to augment credit reports. They are already operating with the minimum requirements and there is significant risk at the macro level when the next downturn occurs.

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Could this in any way lead to debt collectors having the ability to "see" what is in peoples checking and saving accounts?  Perhaps the CRA's selling this info?

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1 hour ago, pacemaker67 said:

Could this in any way lead to debt collectors having the ability to "see" what is in peoples checking and saving accounts?  Perhaps the CRA's selling this info?

Good question. At this point it would require the consumer's permission. But who knows years from now? 

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15 minutes ago, cashnocredit said:

Good question. At this point it would require the consumer's permission. But who knows years from now? 

I guarantee there would be many dedicated threads here for people trying to both raise scores using it and opting out making sure Mr. JDB isn't handed a "pot of gold" to go after.  Man, that would be bad for people who trying to fight their way back up.  It would be the return of the "cash buried in the backyard" era.

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29 minutes ago, pacemaker67 said:

I guarantee there would be many dedicated threads here for people trying to both raise scores using it and opting out making sure Mr. JDB isn't handed a "pot of gold" to go after.  Man, that would be bad for people who trying to fight their way back up.  It would be the return of the "cash buried in the backyard" era.

opting out doesn't stop JDBs, CAs, or skiptracers.

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10 minutes ago, hegemony said:

opting out doesn't stop JDBs, CAs, or skiptracers.

So if you could not really opt out or otherwise stop the CA's from seeing all of your bank accounts AND that became a profit source for the CRA's, this will end up being a gold mine for debt collectors.  I will be free and clear by then but I can imagine people getting destroyed.

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23 minutes ago, hegemony said:

opting out doesn't stop JDBs, CAs, or skiptracers.

 

At this point the consumer would have to opt in but if they do the info would likely be available to CAs. Probably not very appealing to peeps with collection accounts.

 

Directly from Fair Isaac:

Quote

With UltraFICO™ Score, a consumer grants permission to contribute information from banking statements, including the length of time accounts have been open, frequency of activity, and evidence of saving, which can be electronically read by Finicity and combined with consumer credit information from Experian to provide an enhanced view of positive financial behavior

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10 minutes ago, cashnocredit said:

 

At this point the consumer would have to opt in but if they do the info would likely be available to CAs. Probably not very appealing to peeps with collection accounts.

 

Directly from Fair Isaac:

yes I read the new scoring system will be opt in. It also does not seem to be a protocol designed to help/assist people with major derogs like charge offs but rather to "help" people with thin files and perhaps a few minor lates.

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I wonder where it came from?  Who wrote it...  Could be a big private financial data grab disguised as way to help regular folk grab a piece of the new american dream.  In my old career I was paid to find good deals but was indispensable for always trying to figure out what can go wrong.  I might just be wearing that hat today and all is good with this.

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10 minutes ago, pacemaker67 said:

I wonder where it came from?  Who wrote it...  Could be a big private financial data grab disguised as way to help regular folk grab a piece of the new american dream.  In my old career I was paid to find good deals but was indispensable for always trying to figure out what can go wrong.  I might just be wearing that hat today and all is good with this.

there already are databases on income and assets out there used by creditors and others. Many people have salary and benefits that are in the public domain as public employees or C-level officers of certain types of firms.

 

I wonder if this new $core can be used to help people as an alternative to the 4506-t process some creditors have established. For instance, in retirement my "income" will not be very high but liquid assets will be high.

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11 minutes ago, hegemony said:

there already are databases on income and assets out there used by creditors and others. Many people have salary and benefits that are in the public domain as public employees or C-level officers of certain types of firms.

 

I wonder if this new $core can be used to help people as an alternative to the 4506-t process some creditors have established. For instance, in retirement my "income" will not be very high but liquid assets will be high.

I guess you are right about that.  It could also help those who do not show much taxable income but who have healthy cash accounts across several different institutions.  Small business owners and the self employed could also potentially benefit without having to park money exclusively in the bank that you might be borrowing from. 

 

But at this point in time, in my situation of awaiting the expiration of SOL in 4 months time on several items, I would be freaked if anyone could just pull my DR and see all of my banking accounts...  not that they are brimming with piles of cash...

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28 minutes ago, hegemony said:

there already are databases on income and assets out there used by creditors and others. Many people have salary and benefits that are in the public domain as public employees or C-level officers of certain types of firms.

 

I wonder if this new $core can be used to help people as an alternative to the 4506-t process some creditors have established. For instance, in retirement my "income" will not be very high but liquid assets will be high.

It would likely have benefited me back in 2009 when I had zero credit, was retired (no job), and some negative but paid baddies. After brief research here mostly, I just opened a couple secured cards and, since the baddies fell off about the same time and the cards unsecured, it left no trace of negative credit.

 

I also had a lot of asset info as well as income from before retirement in the public domain courtesy of the SEC's Edgar but it's not something credit card creditors, or most anyone else, normally check.

Edited by cashnocredit

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This all seems to be sort of PEAK CREDIT CYCLE to me.

 

Mortgage lenders are lowering standards.

More and more FinTech companies seem to be popping up weekly offering personal loans and new credit products.

Student loan defaults are going thru the roof.

The Fed keeps raising rates, as if they are intentionally trying to stall the economy.

 

Now Fair Issac is finding a way to qualify more people with thin files to allow higher FICO scores, and thus more approvals.

 

Edited by RocketGoBoom

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23 minutes ago, RocketGoBoom said:

This all seems to be sort of PEAK CREDIT CYCLE to me.

 

Mortgage lenders are lowering standards.

More and more FinTech companies seem to be popping up weekly offering personal loans and new credit products.

Student loan defaults are going thru the roof.

The Fed keeps raising rates, as if they are intentionally trying to stall the economy.

 

Now Fair Issac is finding a way to qualify more people with thin files to allow higher FICO scores, and thus more approvals.

 

Yep. Standard business cycle. In the latter stages lenders turn over rocks looking for new biz. Not as bad as 2007-8 in the mortgage and CC area. Much worse in the student loan sector. But still, it's approaching the late stages. Rising interest rates are impacting mortgage affordability and hence prices. Also, prices on high value properties in Calif., N.Y., N.J., etc are getting impacted more as a result of the the 2017 tax reform's 10k combined limit on state income and property tax (SALT) deductions. Most people saw a tax decrease but the SALT change made my home market value drop and increased my federal income taxes. Which sucks because I'm retired.

 

OTOH, it's broadly been an economic stimulus at the price of really large deficits. How this plays out and being possibly offset by incredibly rapid tech advances intrigues me. I'm concerned, but not as much right now as I was in 2006-2007 when a lot of very bad factors were coming together and ignored too long. Automation will have accelerating impact on the economy and things will look much more different in 20 years than say, between 1998 and now. That will be the largest unknown.

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1 hour ago, cashnocredit said:

I'm concerned, but not as much right now as I was in 2006-2007 when a lot of very bad factors were coming together and ignored too long. 

 

I am also not as concerned about the comparisons to 2006-2008.

 

The banks in the USA are much better capitalized now than they were back then. The leverage in the FDIC insured banking system is lower and that is not fake. 

 

European banks however have not yet taken their medicine and fixed this.

 

Italy is the next Greece and Italy has 10x more government debt than Greece had back then. $2.7 trillion or more and Italy is too big for the EU to bail out. This could get ugly.

 

https://www.msn.com/en-us/finance/markets/forget-60lo-spread-italys-already-on-precipice-of-debt-spiral/ar-BBOs3NA

 

Italy's debt to GDP is at 131%. That is about where Greece was when the market lost confidence in them and cause rates to spiral out of control. The only thing keeping Italian interest rates low is EU Central Bank buying.

 

https://www.reuters.com/article/italy-ratings-sp/update-1-sp-leaves-italy-rating-unchanged-but-lowers-outlook-to-negative-idUSL8N1X67LT

 

 

 

Edited by RocketGoBoom

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