Your FICO Score Is a Liehttp://www.fool.com/investing/small-cap/2004/08/20/your-fico-score-is-a-lie.aspx Dayana Yochim
August 20, 2004
Leave it to Dilbert to skewer the credit reporting industry like no other. In a recent strip Dogbert tells Dilbert that he's starting a credit reporting company and will be the low-cost provider because "all of my data will be wrong."
What about the people who call to complain? "I'll put them on hold until their frustrations turn into debilitating health problems... their last words will be 'Aaaagh!!! I only wanted to buy a minivan!'"
Dogbert, you had me at the first frame. (Admittedly, financial writers have a lower "funny" threshold than most.)
That cartoon dog has a point: Credit reporting agencies have a serious image problem.
Fanning the flames is the spate of high-profile identity theft crimes making local and national news nearly weekly accompanied by human-interest sidebars about a wronged consumer who has suffered atrocities because of an inaccurate FICO score. I'm ready for a knock-down, drag-out before I've even cracked open my file.
Take a deep, cleansing breath, everyone. First, many of those studies rely on a sample size too small to make accurate conclusions. Second, even yours truly has told the story of identity theft with a bit more verve than it probably deserves. (Tight deadlines tend to bring out the adjectives in me.)
That doesn't mean you should dismiss all the talk of reporting bloopers. There's a mind-numbing amount of number crunching happening daily. Turn the tables on the credit reporting industry and it becomes clear that the system is overextended. Fathom the following:
There is almost no structure in place to prevent erroneous information from sneaking into your file. The CRAs take some steps to make sure that the data reported to them comes in a standard format, but no law or government agency exists to keep properly formatted data that's simply incorrect from being reported.
What is the cr