TRansUnion, True Credit New Scoring system incorporates glitch removed from FICO Internet
I recently subscribed to TrueCredit while applying for a new mortgage. I had two collection accoutns on my file and paid them in full before closing. I noticed that each time a collection account reported as paid on their scoring system, it deducted 30 points from my already borderline score. I went from a score of 660 to 603 in two weeks. Further, it states that htere is a NEW collection reporting on my file.
If you refer to the Fair Issac website the old FICOscore used to do the same thing and it was identified as a glitch in the model and has since been corrected. Why is TransUnion selling this defective model to banks who use their product to determine your interest rates and limits? Why are they being allowed to do so? I've written to their media relations as they absolutely refuse to give you a corporate contact and am still waiting on their response.
The FCRA should have some say in the way that this info is reported as it causes consumers to face unneccsary interest rate hikes as well as denial for credit that they would otherwise qualify for.
Margo
Columbus, Georgia
U.S.A.
3 Updates & Rebuttals
Steve [Not A Lawyer]
Bradenton,Florida,
U.S.A.
Margo, I think you should post the exact info here
#4Consumer Suggestion
Mon, January 08, 2007
Margo,
I have been all over those websites you suggested, and have found no such information or articles.
I think you should post the exact information here and/or the link to the specific page.
Please prove what you are stating.
Margo
Columbus,Georgia,
U.S.A.
Not True
#4Author of original report
Mon, January 08, 2007
The old FICO scoring model used to penalize you for paying off old debts. The new system gets rid of that glitch though you cannot increas your score by paying off old collections it no longer dings your score.
You can find this information not only on the Fair Issac website but from numerous articles on both msn and bankrate.com to name just a couple. The idea that a consumer should be punished for cleaning up old debt went the way of the dinosaur.
Since I monitor all THRE bureaus I know that the only onethat penalizes you from going from unpaid to paid is TU. Check the information for yourself.
Steve
Bradenton,Florida,
U.S.A.
Margo, paying an old collection account will ALWAYS lower your score!
#4Consumer Suggestion
Sun, December 03, 2006
Margo,
The foundation of credit scoring is the age of accounts, whether they are positive or negative.
Lets say you have an unpaid collection that is 4 years old. This account for scoring purposes hurts you very little due to its age.
However, you pay off that old collection and now all you have is a more recent negative account. It is now just a PAID COLLECTION which is still negative for scoring purposes, but now is a recent negative.
The mortgage company/loan officer knows this, but they don't care. They just want to make the loan so they get paid. If it falls through, they have no concern for the impact on your credit score.
Please understand that the only reason a mortgage underwriter requires you to pay off delinquent accounts is that they do not want their collateral being loaded up with leins for bad debt. this is because if you default on your mortgage, the mortgage company has to pay off all leins placed on their collateral to have a clean title again on the collateral.
It has nothing to do with helping you or your credit score. This has been the policty for as long as I can remember and the credit scoring has been the same as long as I can remember.
NEVER pay an old collection account. It will never do anything positive for you.