Help Reform FICO

We have made it no secret that we are not fans of the current FICO scoring process. But what do you do about it? How can you change the industry standard? Well ladies and gentlemen, this might be our one chance to make a difference. Here is my plan and how it came about.

I live in Michigan and have been know to write letters via email to my elected officials. Even if I'm confident it will land on deaf ears at least I know that I tried my best. These emails have added me to all of my reps. mass emailing lists so I get to hear what issues they are working on. Today I received an update email from Senator Levin discussing the Financial Crisis investigation hearings he is helping to conduct. In the email he talks about the next three hearings. One of them is for the credit rating agencies.

This got me thinking. What if Senator Levin's office received lots of emails and phone calls from Americans who felt that the current FICO score was inherently bad? Would it make a difference? Would it shed some light on the problem? Well, there is only one way to find out.

Let's do it!

Let's let his office know that we are sick of the FICO score games. We want to be judged fairly and accurately. Below is a copy of the email I sent Senator Levin's office today. Feel free to use my text or to create your own message. To contact Senator Levin click on this link. Then select "position on an issue" followed by "economy/taxes". If you happen to have a senator from your state on this subcommittee please send the same message to your senator.

Dear Senator Levin,

I received your email entitled "My Hearings Investigating the Financial Crisis‏". I found both your email and your statement very insightful. I was also glad to see that there are three more hearings in which you will look at others who had a role in the Crisis, especially the credit rating agencies.

The current FICO scoring criteria forces consumers into making poor financial decisions if they want to maintain a high FICO score. This is extremely dangerous for families and our country’s economy. The reason it is so dangerous is that it does not take into account four key factors: income, savings, investments, and net worth. How could you honestly say that someone is able to pay back a car loan, mortgage or monthly rent if you don't take into account these four factors. Instead the score is solely based on 5 debt factors. This forces consumers to stay in enough debt that it keeps them from ever being able to live beyond paycheck to paycheck.

Senator Levin, I strongly urge you to consider the ramifications of allowing the credit rating industry to continue to abuse the American people. The formulas that they use to judge one's ability to pay their bills are in need of reform. They need to be based on the person’s entire financial picture not just their current debt load. If properly restructured it would encourage Americans to be wiser with their money. This would help to prevent another financial crisis.

Thank you for taking my opinion into account.

Mrs. Not the Jet Set

I would also welcome other bloggers to link back to this post and non-bloggers to feel free to email this to like minded people. Let's make a difference!


Corey said...

I agree completely. FICO is rogue and needs reform. I would like to post this article on my credit improvement website http://creditagenda.com/resources.php. Do I have your permission to do so?

Mrs. (not) the Jet Set said...

That's fine with us as long as you show that it's are post and a link back to the original article.


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