Millions Of Americans Just Got An Artificial Boost To Their Credit Score

Tyler Durden's picture

Back in August 2014, we first reported that in what appeared a suspicious attempt to boost the pool of eligible, credit-worthy mortgage and auto recipients, Fair Isaac, the company behind the crucial FICO score that determines every consumer's credit rating, "will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency." In doing so, the company would "make it easier for tens of millions of Americans to get loans."

Then, back in March of this year, in the latest push to artificially boost FICO scores, the WSJ reported that "many tax liens and civil judgments soon will be removed from people’s credit reports, the latest in a series of moves to omit negative information from these financial scorecards. The development could help boost credit scores for millions of consumers, but could pose risks for lenders" as FICO scores remain the only widely accepted method of quantifying any individual American's credit risk, and determine how much consumers can borrow for a new house or car as well as determine their credit-card spending limit

Stated simply, the definition of the all important FICO score, the most important number at the base of every mortgage application, was set for a series of "adjustments" which would push it higher for millions of Americans.


Source: cafecredit

The outcome of these changes was clear for the 12 million people impacted: it "will make many people who have these types of credit-report blemishes look more creditworthy."

Now, as the Wall Street Journal points out today, efforts to rig the FICO scoring process seems to be bearing some fruit.  The average credit score nationwide hit 700 in April, according to new data from Fair Isaac Corp., which is the highest since at least 2005.

Meanwhile, the share of consumers deemed to be riskiest, with a score below 600, hit a new low of roughly 40 million, or 20% of U.S. adults who have FICO scores, according to Fair Isaac. That is down from 20.5% in October and a peak of 25.5% in 2010.



Of course, to be fair, we are also reaching that critical 7-year point where the previous wave of mortgage foreclosures start to magically disappear from the FICO scores of millions of Americans. 

Mortgage foreclosures stay on credit reports for up to seven years dating back to the missed payment that resulted in the foreclosure. Foreclosure starts, the first stage in the process, peaked in 2009 at 2.1 million, according to Attom Data Solutions. They totaled nearly 1.8 million in 2010 and remained above one million during each of the next two years.


Personal bankruptcies are more complicated and can stay on credit reports for seven to 10 years.


Consumers who filed in 2007 for Chapter 7 protection—the most common type of bankruptcy, in which certain debts are discharged and creditors can get paid back from sales of consumers’ assets—are now starting to see those events fall off their reports. Some 500,000 Chapter 7 bankruptcy cases were filed in 2007, a figure that swelled to nearly 1.1 million in 2010, according to the Administrative Office of the U.S. Courts.


13 bankruptcies, in which consumers enter a payment plan with creditors, usually stay on reports for at least seven years. Those filings reached a recent peak of nearly 435,000 in 2010 and are set to start falling off reports this year.



All of which, as the WSJ points out, will help to "boost originations of large-dollar loans for cars and homes."  Which is precisely what the average, massively-overlevered American household needs...more debt.

Fresh starts for credit reports are likely to help boost originations of large-dollar loans for cars and homes. Consumers have a greater chance of getting approved for financing if they apply for loans after negative events fall off their reports, in particular from large banks that have stuck to strict underwriting criteria, says Morgan Whitacre, who oversees consumer-loan underwriting at Bank of America Corp.


Credit-card lending, already on the rise, could increase further as a result of fresh starts. Consumers who have one type of bankruptcy filing removed from their credit report experience a roughly $1,500 increase in spending limits and rack up $800 more in credit-card debt within three years, according to the Federal Reserve Bank of New York.

So maybe that auto lending bubble has a little room left to run afterall...

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besnook's picture

i bet a little peanut butter would help if it doesn't.

divingengineer's picture

Fuck it, just give him the car.
It's probably a "human right" now anyway.

Sudden Debt's picture

There are signs here in europe that there's a credit freeze starting at the banks.

In just 2 months, I've heard of 3 people who's banks told them that their company credit lines where frozen. All good companies that are growing pretty fast, to fast maybe.

downside is that when you're in the middle of a project and your credit freezes, all you're investments freeze to.

So whatever they do, there's always that point where the maximum of a creditline is reached.

And like anything else, the outcomes will only be worse then what would have happened if they just did shit.

Singelguy's picture

If the business is growing fast, the banks will cut you off. This happens in the USA as well. The banks like to see slow, steady, prefictable growth. If there are any spikes, they have a nervous breakdown. I speak from personal experience.

yogibear's picture

The Federal Reserve member banksters can give everyone a FICO score of 850. Announce for a limited time only so there is a rush of subprime borrowers.

Banksters know they'll socialize losses again (taxpayer bailouts again). They have been collecting the gains (privatized) .

A larger scheme every time.

Banksters realize that they are immune of crimes and jail time.

Tme to max out your credit and buy  physical PMs, then default on the loans.

Give us Stirling Engines's picture

That's a good idea. 

Now why doesn't everyone stop paying mortgage as a 'vote of no confidence'. There arn't enough cops to kick everyone out of there house. 

Surely that would trigger the reset.

rbianco3's picture

It would be wrong to do that on purpose.

But I think you were being facetious

directaction's picture

It's not fair that some people have a good credit score and others a lousy score. I think everyone should have an 850 score, just to be fair, not racist or biased.

oldguyonBMXbike's picture

I would disagree with you, but I don't want a bunch of angry PC police to gang up and physically assault me to the point where I have to pull out a knife in self-defense, so I will agree with you instead.

logicalman's picture

It's not fair that some computer algorithm gets to decide something that affects your life.

Who ever said life is fair?

Who got to write the algorithm?


CRM114's picture

In one sense, this is good. The number of misattributed bad debts is ridiculous and the procedure for removing them from one's record is, in practice, nigh on impossible to complete (and certainly not worth the effort). I would think every credit ratings agency is liable for a class action lawsuit for libel.

However, we know full well that isn't why they are changing it.

oldguyonBMXbike's picture

This is BS.  I took my credit from 500-750 in a years time.  But, I gamed the system pretty hard, so I'm not giving any credence to this article.  I won't share the credit.

rbianco3's picture

My real-estate black eye (credit) just disappeared off credit report shortly after Trump was elected. I thougt it was pretty cool, or a coincidence - it was a major change.

Didn't know if I should thank him or the banks - the gesture was kind - yes we were bitter about being blamed for the housing crash. Ok were is too soft, we are still bitter especially considering you fleeced one last time with promises to 'help us do the right thing save the mortgate' so we were willing to accept this and paid the tens thousands of dollars via cashiers check overnight. We were quite angry when served with eviction notice the following week. The kind policeman said, oh any agreement you have doesn't matter the Judge is the only one that can stop an eviction and it was Friday evening - we had until Monday morning. And your lawyers denied receiving the payment even though I had a cashiers check receipt, photo and sent the package registered overnight. Shockingly we received an updated Seterus statement after our payment showing a large change in a suspense balance - even so your lawyers deny receiving my cashiers check. Yeah we are still bitter - and we accept some blame, and apologize for that but you will never apologize. I highly doubt we'll be using your credit again, but thanks for asking, you taught us a valuable lesson that credit is just too risky to use for non-emergencies.

oldguyonBMXbike's picture

My strategy was to get really good credit so I'd have an advantage while everyone else was reaching consumer credit debt highs...  I gotta figure out something else I guess...

Md4's picture

Wouldn't be surprised if ol' Issac's palms weren't greased up a bit to help bait new hooks.

Kinda like the shack racketeers do with AAA mortgaged backed securities...

SamEyeAm's picture

My credit score is in the lower side of fair because I own my home and a three year old car outright and I pay cash for most things.


I pay off everything every month. Oh well. Not losing sleep over my credit score.

Deplorable's picture

My credit score is in the middle of Best because I own my home and a ten year old car outright and I pay cash for most things. I pay off everything every month.

You must have some other 'Issues' if you are in the low side of Fair.

Bludklot's picture

If you don't have much of a credit record not using a credit card will score against you. You need to demonstrate a long term dicipline of paying your bills that you charge for a good credit rating. Paying cash for everything leaves no record.

Farmerz's picture

Agree, I don't owe anybody anything, and have an 815ish score.

Edit. But I do use and pay off the credit card monthly.

CHoward's picture

You're obviously anti-anything-American.  Hell - you even gave up on the great American Dream:  holding most debt in your family.  Shame on you.

indaknow's picture

You are a threat to the system.  Paying off debts and living within your means will not be tolerated. 

robertocarlos's picture

Mine is the same as my SAT score, 850.

logicalman's picture

The worm on the hook!

indaknow's picture

Pretty much tells you how phony the "system" is doesn't it.

Rather than admit they fucked up our monetary system they will now just say "hey, everybody qualifies again" go all in and everything is fixed. 

Universal income, rigged fico scores, tbtf, tbtj, private profits and socialized losses.  

It's called End of Empire. Pfft.

wide angle tree's picture

I won't borrow money unless it is at 0% interest.



fliebinite's picture

Will make it far harder to vet a potential mate.  Any good looking woman who has a college degree and a credit score under 700 is probably not worth becoming your partner one way or the other.  Those types are manic and now they can hide their mania a bit easier today.  

Swamidon's picture

Strange that the Melinnials could tolerate themselves but the idea of marrying anybody with any Student Loan debt is crazy.

newworldorder's picture

Marrying any millenial is crazy.

oldguyonBMXbike's picture

The ones above that are manic too.  What to do?  

HRH Feant2's picture

I am a strong believer in a prenup. For everyone. Male, female, confused, gay, fucking everyone. No matter your age. No matter if you own a lot or own little.

I am single and I don't see that changing anytime soon. However, in order for me to enter into the legal contract of marriage I would definately be hiring my own attorney to draw up a prenup and I would expect my marriage partner to do the same. If they refused that would be a HUGE, GIGANTIC, RED FLAG to not just walk, but run away from that person.

Anyhow, I am happily single!

BTW: I am not a fan of lawyers so for me to say I would spend money on one is very unusual. There are times when getting things in writing matters. Marriage is a legal contract and getting that contract right is critical. Without a prenup you are agreeing to go by the laws of the state in which you reside. Those laws may or may not favor you in the event of a divorce. I view a prenuptial agreement as a way to legally clarify the rules for each party in the event of a divorce. Given the divorce rate in the US, without a prenup you are playing craps, 50/50 roll of the dice with your life, your property, and your offspring. Those are shitty odds and I don't like gambling.

logicalman's picture

Vetting a potential mate is something no mathematician would ever touch - too many variables.

Good looking women hold power over men and most of them know it, but men like to fool themselves.

Mothers love their children more than fathers do, because they can be absolutely sure they are, in fact, their own kids.

All of the above is based on my personal experiences, YMMV.

fliebinite's picture

The old saying is that if you have a bad feeling about something you should avoid it.  And if you have a good feeling about something, you should wonder why you don't have a bad feeling about it.  Math should be used for pure guideline purposes.  But I'd say a woman who can't control her spending on shoes, purses and gifts to her family and doesn't bring in 6 figures should be avoided at all costs.  They'll keep on wondering why you don't forgive their debt, buy them large gifts, etc.  

besnook's picture

if you want to know how a girl is going to treat you watch how her mother treats her husband. if her mother has sisters or her mother is around look at them also. that is the best measure. i learned that from my first wife after i ignored the fact that her parents never had a civil word with each other and my marriage blew up like a moab. i made sure to interview my second wife's parents and we have been married for 30 years and counting.

during early dating i used to use a crazy scale from 1-10. 1 being boringly normal and 10 being btshtcrzy to be measured during pms. 4-6 is what i liked, crazy enough to be interesting.

Shpedly's picture

And don't forget to look at the mothers ankles. If they look like Hillary's, then the daughter is a "bone and bounce" and definitely not a "bone to own".

bub's picture

Watch how the daughter treats the parents, especially the mother.

gold rubeberg's picture

Oh great. As if there weren't enough kinds of inflation already ... now we have credit score inflation.

It ain't gonna do anything but make it more complicated though, because creditors will just index the scores for inflation the same way you can with prices ...

Swamidon's picture

Once you get debt paid off, who cares?  Credit and Scores and the hooks and life sucking hoops that come with it are a joke after that.  

oldguyonBMXbike's picture

I enjoy gaming the credit system.  

Jack McGriff's picture

Damn, I've got a credit score of 807 now

adr's picture

Having an 850 won't get you a better mortgage rate than a 720.

When people with a 650 are getting 0% for 72 month auto loans, what is the point of perfect credit. 

Having a 800+ credit score might get you a 18.5% interest credit card instead of 24.5%. Big deal. 

Any way you slice it, the banks have you by the balls. 

Bigly's picture

I confess, i have no clue what my score is as my house has been paid off for a decade and my cars have no loans. So possibly not 850.. .. but i can tell you my capital one mc (no hassle) has a 5% interest rate. It was lower last year but rates went up a bit.

People, if you have good scores, do not settle for 16% interest rates or more thinking at least it is not 25....Call and bitch....

Anything above 7-8% is usury to me as passbook and cd types of accts get almost no interest accumulation.

Oh and i pay it in full each month too. I am sure they want me to forget one month so they can jack the rate. Play the game

illuminatus's picture

Ohhh goodie, I get to take on more debt!

lasvegaspersona's picture

We can has new carz now?

Berspankme's picture

I am at 838. My dog however has an 850