this post was submitted on 15 Feb 2024
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I don't think that changes the fact the system is illogical and stupid though. It's way too basic a system if that's how they're running it.
It’s pretty good for most people. There will be outliers.
The problem is, we have massive faceless banks that cater to nearly everyone. They need some system to gauge how much of a risk an individual lendee is.
The only real fair way to do that is based upon their reputation with other creditors over the past so many years. There’s a lot of metrics they can use ti measure that reputation, but all of them suck if you have little-to-no reputation to begin with.
Small community banks and credit unions had some more flexibility here since the bankers knew you, personally. However, I think it’s pretty obvious how subjectively judging someone’s credit worthiness can have some serious consequences based upon any -ism or -phobia you can name.
From what I understand it's a pretty shit system that doesn't work that well.
From the example posted here, it'd be extremely trivial to set up a system that doesn't deduct points because you paid off a debt. That makes zero sense.
Some dude may have come up with a basic model 20 years ago but it needs updating - any half decent data scientist at this stage would be able to build a better system.
A lot of the FICO scores (there are different scores for different things) don't ding you for it, but most of the monitoring apps use Vantage.
I find the difference between my FICO 8 and Vantage 3 to be as much as 100 points. Most people seem to have higher Vantage scores, but my FICO tends to be higher. They're different companies that use different systems.