Why FICO scores are dumb
Recently I pulled my FICO score after not having checked it for five years. For those that don’t know, banks use your FICO score to decide how credit worthy you are. Seeing my Credit Sesame free credit score gave me a great sense for just how broken our banking industry is!
Five years ago, my wife and I bid a fond adieu to our alma mater with barely a penny to our name. The last five years have been very good to us: my salary has increased, we’re saving for retirement, and our house is half paid for. You wouldn’t know that from my FICO score, though: Today it is 50 points lower than it was five years ago. That’s right, the average bank would rather lend money to me as a starving student. Thanks to the FICO algorithm, which apparently has Kool-Aid for brains, I’m a credit risk.
Of course I was curious. Why was it lower?
A little detective work revealed that my score sunk mostly because of a $150 clerical error. Amazing! One hundred fifty measly bucks, and even though I’ve never missed a house or credit card payment, and even though I make much more money than I used to, I’m less credit worthy.
After I pay off this house, I hope to never borrow money again. Fair Issac and Company: you can keep your credit score. With any luck I won’t be needing it!