I was in hopes others would comment on this and maybe I could get a handle on exactly what the FICO score is and why it became the measure rather than the old fashioned reports. When I used to work in credit, it depended on your age, your salary, length of time on the job, assets, outstanding credit and payment record. Those were the things we checked.

I wonder how much the FICO standard entered into so many bad loans?

Maybe someone can explain it to me.

A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation.

A credit score attempts to condense a borrowers credit history into a single number. Fair Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.

There are other credit bureau scores, although FICO scores are by far the most commonly used. A FICO score is the method that many lenders use to determine a consumer's creditworthiness.

Many lenders also use a proprietary credit scoring system in conjunction with FICO. My DH is the head of all lending for a large regional financial institution. They use both FICO & their own systems. Their proprietary system is currently under review & several changes are likely to occur during '09. Their system is tougher than Fair Isasc. At DH's institution, your final score is the average of the 2 scores.

/tricia

The site linked below explains what goes into it along with the percentages.

I wonder how much the FICO standard entered into so many bad loans?
I wonder how much the greed standard entered into so many bad loans.

Sue

Here is a link that might be useful: How Does a FICO Score Get Calculated?

But time on a job is meaningless in the age of perma-temps and contract employees. There's no life-time employment and "job-hopping" is the norm.

Trica, Thanks. I'm wondering how many use FICO alone?

chemocurl - I am satisfied greed was 100% of the reason for the debacle. Maybe I should be asking is use of FICO part of the greed? Was it designed to encourage people to have too much debt?

I have heard a lot of people talk, 'experts' and just people, but they suggest you need to have unsecured credit - such as credit cards and to not close a credit card if you aren't using it.

Just me, but I think a lot of the times it isn't the house payment, or even the car payment that trips people up- but the ability to whip out a credit card - store, or Mastcard type - and get in trouble before you know it.

ideefix, You are right about the time on the job being meaningless. I understand the way the employment is these days, with the 'casual' or contract labor and I was shocked that job hopping was no longer a bad thing. Of course, employers don't operate the way they once did either.

It's a whole new world out there -

Thanks everyone -