Credit Insider Guide to Credit Score Victims
Section #4: Secret Decoder Ring Needed
Secret decoder ring needed. Needless to say, the underlying arithmetic upon which FICO® Scores are based is kept top secret by the Fair Isaac Corporation. Put simply, if they gave away their for-profit secret sauce, somebody's business plan would likely be threatened.
Moreover, there are problems with the secrecy.
First, with so much at stake (mortgages, insurance policies, certain employment categories, car loans, and more), consumers rightfully want to know specifics regarding how to improve their scores. Fair Isaac's pat answers, stuff like "just pay everything on time, and pay down your debt," just doesn't satisfy. In fact, disappointingly, sometimes paying down debt simply has no scoring impact at all. For example, paying off an installment loan almost never helps a score, while paying down revolving credit card debt almost always will. Similarly, paying off a debt that was previously charged-off will also likely have no positive impact. (That said, doing the right thing merits other worthwhile life rewards.) For these reasons, Fair Isaac's summary statements which masquerade as score-enhancing advice often accomplish nothing.
Second, with certain government jobs and federally overseen home mortgages riding on the proprietary for-profit FICO® product, one would think that Congress would demand more transparency regarding a credit score's actual construction. And, of course, when citizens make enough noise about the matter, that will surely come to pass. Government dependence upon Fair Isaac provides another compelling reason for eventual systemic change.