25% of consumers over FICA 800

[KTP]

We just applied for a capital one Venture rewards CC to use for interational travel (2 miles per $1, 25000 mile bonus, no international fees) and I found the credit score chart from Transunion they sent interesting. It claimed 25% of consumers had a score above 800. I find that fairly encouraging, what do you think? I had thought it would be much lower, like 15% or so, based on media reports of everybody and their grandma in debt and defaulting.

[GREENBACK]

You can have a lot of debt and still have a great credit score. If you make the minimum payments on your debts your score will be fine. Credit scores don't always tell the full story.

[Joan.of.the.Arch]

I'll admit that does surprise me, however I also think that sometimes in these forums we exaggerate how many USAmericans are in credit card debt at any given time. A large percentage of card holders pay off the credit cards to zero every month. I once, before the recession, ferreted out the percentage. I think it was 49%. Those people probably also pay all their bills on time and have high credit scores.

It bothers me somewhat when we assume that everybody has consumer debt. I think that makes us all feel more comfortable with debt. It enables us to think of debt as unavoidable. It makes us feel like we are comfortably one of the crowd --that "everybody" has debt until they start chipping away at it at some magical point of maturity coupled higher earnings. Nope, there really are plenty of people who live with in their means (even if just barely and even if they aren't managing to accumulate savings).

[JoshuaHeckathorn]

That is very interesting. Are you sure they were talking about FICO scores, and not the distribution of Transrisk scores? I saw a similar report from myFICO a few months ago that claimed less than 10% of Americans have FICO scores above 800, which would seem more realistic to me.

[bennyhoff]

I bought a car this weekend, and they came back with a chart showing my score of 801, and it showed the percentage over 800 at well less than 25%. I forget, but I think it was something like 10%. It wasn't Transunion, I think it was Equifax. The salesman said if he knew my score was so high he would have tried to sell me a new car instead. He was kidding (*I think*).

[KTP]

Originally Posted by JoshuaHeckathorn

That is very interesting. Are you sure they were talking about FICO scores, and not the distribution of Transrisk scores? I saw a similar report fro myFICO a few months ago that claimed less than 10% of Americans have FICO scores above 800, which would seem more realistic to me.

the chart says my score was 814 and then had a bar graph of the FICO credit score range (that was the label on the graph).

6% 250-499
9% 500-549
9% 550-599
9% 600-649
11% 650-699
13% 700-749
18% 750-799
25% 800-873

(who the heck has a score of 873??? Buffet?)

[GREENBACK]

I'd like to see the demographics on this. I'd bet that those over 750 are over 55 or so.

[disneysteve]

Originally Posted by KTP

It claimed 25% of consumers had a score above 800.

This is not true.

Here is one article at bankrate.com that says 13%:
The true cost of a low credit score (Page 1 of 2)

Here is something on Fair Isaacs own website that says 1% of the population is over 800:
What are the demographics of people with a FICO score of over 800?

This data is from 2003 but says 11%:
Home Buying - How Your Credit Score is Calculated - Your FICO Score

I don't think the 1% figure is correct either for some reason. The real number seems to be in that 11-13% range.

[GREENBACK]

Okay, why the disparity in the percentages? This shouldn't be data that's all that difficult to compile, even if it's from different companies.

[KTP]

Originally Posted by disneysteve

This is not true.

Here is one article at bankrate.com that says 13%:
The true cost of a low credit score (Page 1 of 2)

Here is something on Fair Isaacs own website that says 1% of the population is over 800:
What are the demographics of people with a FICO score of over 800?

This data is from 2003 but says 11%:
Home Buying - How Your Credit Score is Calculated - Your FICO Score

I don't think the 1% figure is correct either for some reason. The real number seems to be in that 11-13% range.

The data from that bankrate link shows a pretty close match if you lump the final two brackets:

750-799 = 27 percent

over 800 = 13 percent

= 40% 750+ from bankrate site vs 43% 750+ from the capital one graph (which actually says at the bottom data obtained from Fair Isaacs)

[disneysteve]

Originally Posted by KTP

25% 800-873

Here's the problem. FICO scores only go up to 850. If they are reporting scores up to 873, they are NOT using the FICO score. They must be referencing some other credit scoring model.

[kork13]

Originally Posted by KTP

6% 250-499
......
5% 800-873

(who the heck has a score of 873??? Buffet?)

umm..... no one.

FICO scores only go from 300 to 850. So I'm not sure how they would have anyone down to 250 or up to 873, unless (as mentioned already) those numbers are for a credit scoring system that is NOT the FICO.

I also lean to doubting those statistics somewhat due to the absolute lack of any sort of bell curve relationship. Rather, it's an exponential growth trend. A little strange... That makes me think that it may not be a full reflection of society, but rather a restricted sector of people. Age, income level, or something like that would be a believable discriminator.

"OH, BUT WHY WOULD THEY WANT TO DECEIVE PEOPLE?!?" Really? It's a commercial company that makes money by selling this score to people. Any strategy that makes people want to check their score more often, enroll in credit monitoring, or anything like that will make them more money, and thus give them reason to advertise it.

[jpg7n16]

Originally Posted by KTP

(who the heck has a score of 873??? Buffet?)

Buffet scores a measley 718

How can a billionaire like Warren Buffett have an average FICO® score?

Makes you wonder what they truly consider when they calculate it huh? (Or why it's so important that yours is high)

Who would you rather lend to:

A) Mr - I have more money than most countries do? or
B) 25% of American families?

hmmmm...


[I stand by my belief that the credit score is a rating of how likely a company is to make money by lending to you - and that there are ways to trick the system higher, by taking actions that typically would result in them making more money, but eeking out at the last minute. example - build a balance on your card by using it, but pay it off every month.

reports a balance and usage = good possibility to make money = high score; but pays it off every month = sike!

late payments, past chargeoffs, bankruptcy? = uh oh! possibility we could lose money = low score

So if you have a high credit score, you are, in their system calculated opinion, a great opportunity to make money.

That's my story and I'm sticking to it.]

From: VALUE INVESTOR HAVEN: Buffett Talk to MBA Students at Florida University 1998.

We basically never borrow money. I never borrowed money even when I had $10,000 basically, what difference did it make. I was having fun as I went along it didn’t matter whether I had $10,000 or $100,000 or $1,000,000 unless I had a medical emergency come along

From: Warren Buffett on Debt

Warren Buffett does not like debt

Warren Buffett does not like debt and does not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.

In 1982, Warren Buffett noted that Berkshire Hathaway preferred to buy companies with little or no debt and has repeated this mantra on many occasions. He adopts the same philosophy for his company, preferring to avoid debt but where necessary going into it on a long-term basis only with fixed rates of interest and to obtain the finance before they need it.

------------------------------------------------------------------------------------

Just watch this, and you'll see why his score is so low...

YouTube - Buffett's best tip for personal finance

[disneysteve]

Originally Posted by jpg7n16

Buffet scores a measley 718

Makes you wonder what they truly consider when they calculate it huh? (Or why it's so important that yours is high)

Who would you rather lend to:

A) Mr - I have more money than most countries do? or
B) 25% of American families?

hmmmm...

This is absolutely true. While I don't totally agree with Dave Ramsey who calls it an "I love debt" score, I do agree that it in no way measures if you are winning with money. You could have a great score because you have a lot of debt but manage it responsibly. You could have a low score but have a ton of money and little or no debt. The FICO score is not meant as a measure of financial success. It is meant as a measure of risk to potential lenders. If they can see that you have handled debt well, made payments on time and not defaulted on your obligations, they consider you a better risk than someone who either hasn't done those things or simply has little info on file on which to base a judgement.

[kalimaniac]

I don't know if I buy these statistics. They don't jive with demographic data.

[kv968]

I'm not sure what they're doing with the FICO range either, but like bennyhoff I just bought a car and got the same graph. The only difference was I received scores of 808 and 806 with a FICO range from 253 to 893 One was from a car dealership dealing with a bank and the other was from Capital One but both reports came from Transunion. As a matter of fact, the Capital One score even has FICO with the trademark sign and Fair Issac Corporation (all rights reserved) written right underneath the chart.

I also got another credit report pulled from PNC Bank (shopped around for loans) and they gave me a score 777 in a range of 250 to 900 from Experian and said my score ranks higher than 73% of U.S. consumers. If you do the math, that roughly works out to be around 800 or so on the other range so at least they're somewhat consistant.

I did find this and even the courts can't seem to figure it out:

"However, in the July, 2009 MEMORANDUM OPINION AND ORDER from a Fair Isaac lawsuit, U.S. District Judge Anne D. Montgomery wrote: "Fair Isaac argues in response that the term 300-850 is not the 'actual scoring range for any of [Fair Isaac’s] classic FICO credit scores. The actual scoring range for the first FICO score developed for Trans Union is 397-871, for Experian is 368-839, and for Equifax is 407- 829. Every version of these scores has a different range—none of which is 300-850.'”
That makes the scale, apparently, 368 to 871."


As far as a TRUE FICO score goes, who knows? Just keep your debt-to-credit ratio low and pay your bills on time and you'll be fine

[Joan.of.the.Arch]

I think sometime in the last three years, the three largest credit reporting agencies made an agreement to standardize among themselves their report scales, though, of course, not their methods for arriving at the numbers. Perhaps the scale confusion has something to do with that agreement being implemented.

[Ima saver]

I recently bought some land and am having it financed by a local bank. My score was 809 and the letter that they sent me said that 98% of consumers have scores lower than mine. That leads to believe that only about 2% of consumers have scores of 800 and above.