Consumers should understand that maintaining one revolving credit card, with a small balance relative to the available limit, is necessary to maximize their FICO scores.
Massillon, OH (PRWEB) October 07, 2014
SubscriberWise®, a leading provider of analytics-driven subscriber decision management technology and the nation’s largest issuing consumer reporting agency for the communications industry, announced today that the company CEO is offering specific advice for consumers seeking to maximize their FICO credit scores.
The information is intended, and particularly important, for consumers who are actively in the market for loans and other credit products.
According to the CEO, maximizing a credit score and understanding the granular predictive factors of one's credit should be a pursuit for everyone.
“To most educated and reasonable people, it seems ridiculous and counter-intuitive – perhaps even outrageous and unreasonable – that a credit score would generate fewer points when every credit card or revolving balance contained on the consumer report is updated with zero balances owing,” commented David Howe of SubscriberWise. “In other words, despite this seemingly irrational reality, it’s a fact that having less outstanding and reported debt can - and does - result in lower FICO scores.”
“To expand and clarify this point further, when a credit score is generated at the very moment the file contains no reported revolving balances outstanding, this will result in a lower credit score. While this may not be demonstrated for every unique credit scenario, this fact is certainly true among consumers who otherwise generate high percentile credit scores (FICO 760 to 850),” Howe added.
“Although I don’t have the evidence to substantiate the same negative impact for every scorecard and every possible scenario, it’s reasonable to assume that this scoring dynamic will remain consistent for all credit circumstances,” argued Howe.
“Consumers should understand that a loss of points in this otherwise counter-intuitive situation is the result of predictive analytics,” explained Howe. “Despite comments from conspiracy-theorists and others, it’s not because FICO and model developers want to confuse, trick, or fool the nation’s credit consumers. Rather, in the absence of (responsible) revolving utilization, the scoring algorithms calculate and assign fewer points. Why? Because it’s an empirically derived fact - from a statistical evaluation of millions of consumer credit reports - that individuals who maintain an active ‘mix’ of credit (i.e. an installment loan with one credit card balance), they are proven most reliable from the standpoint of their credit reports and future payment behavior.
It’s a point worth noting that predictive analytics and rank-order technology flow form highly refined and sophisticated processes that evolve over time and with changing economic and financial realities (i.e. FICO 8 vs. FICO 9; Vantage model updates). These processes are typically created by highly trained and experienced PhD mathematicians, statisticians, scientists and other experts who have no interest other than making their models highly accurate," remarked Howe.
"FICO, SubscriberWise, Equifax, Experian, and TransUnion, including every model developer, all understand that they must produce incredibly accurate credit scores and rules based decision management technology to survive and remain competitive. If they don’t, FICO and the other organizations know well that businesses, including SubscriberWise member operators across the nation, will simply not continue making the substantial investments required to purchase this technology. In other words, FICO, SubscriberWise, and similar organizations will be out of business if they don’t get it right.
Perhaps Dave Ramsey, Consumer Reports, and other conspiracy-loving consumers will one day understand this too."
"I've incorporated a screen shot from an October 6th my FICO purchase. Notice the TransUnion and Equifax files each generate perfect FICO 850 scores. The TransUnion and Equifax file each contain one revolving credit card balance with a utilization of less and 1 percent of available credit; the Experian file has no revolving balances reported. I also have a remaining mortgage balance with a similarly low balance relative to the original loan amount that's currently reported with all the bureaus.
My credit card statement closing date is the 4th. I paid the account to a zero balance. However, on October 6th when I obtained updated FICO scores, only the Experian file immediately reflected the paid-in-full account. The net result is a loss of 19 points," affirmed Howe. "I have repeated and documented this same scenario in the past. If there are journalists who want evidence, then give me a call and I'll he happy to share," Howe concluded.
Earlier this year, Howe explained credit inquiries: David Howe, Founder of SubscriberWise, on Credit Inquiries and FICO Scores.
About SubscriberWise and David Howe
SubscriberWise founder and president David Howe is a consultant and credit manager for MCTV (http://www.mctvohio.com). During his 18-year career at MCTV, Howe has reviewed more than 50,000 credit submissions. His interest in credit began in 1986 while a 17-year old student in high school.
Howe is the only known individual – living or deceased – to have obtained simultaneous perfect FICO 850 across every national credit bureau. Howe has also obtained multiple perfect Vantage 990 scores. Howe has obtained FICO Professional Certification and is also the first and only citizen of the world to describe and report the details of the perfect FICO score to a U.S. reporter.
Howe produced and published two videos on the subject of perfect credit: FICO 850 Credit Report Facts and FICO Scores: The Facts. The first general-purpose FICO scores were debuted nearly a quarter century ago.
SubscriberWise® launched as the first U.S. issuing consumer reporting agency exclusively for the cable industry in 2006. In 2009, SubscriberWise and TransUnion announced a joint marketing agreement for the benefit of America’s independent cable operators. Today SubscriberWise is a risk management preferred-solutions provider for the National Cable Television Cooperative. Over the past decade, Howe has been consulted by every leading communications operator in the country including Sprint, Time Warner, Mediacom, Metrocast, Atlantic Broadband, Armstrong, Antietam, Comporium, Grande, Cincinnati Bell, Cable ONE, NewWave Communications, TruVista, USA Communications, Shentel,and many others. Howe consults regularly with CEOs and other high level executives who own and operate the nation’s communications companies.
SubscriberWise contributions to the communications industry are today quantified in the multiple tens of millions of dollars annually.
SubscriberWise is a U.S.A. federally registered trademark of the SubscriberWise Limited Liability Co.
David E. Howe, +1 330-880-4848 Ext: 137