The FACT Act of 2003: Notice and Request For Public Comment On the Effects of Credit Scores and Credit-Based Insurance Scores on the Availability and Affordability of Financial Products
To whom it may concern: I have several issues relating to the existing credit scoring system. Firstly, I have conducted my own survey across several credit boards related to the scoring model for those with poor credit who pay past-due debt, and those with past due-debt who file for bankruptcy protection. The differences between the scores of people in these two categories are significant. In fact, within one year after filing for bankruptcy protection, 75% of all persons surveyed had credit scores at least 50 points higher than my own (with paid off collection accounts as the only "negatives" reported), and thus were able to secure additional credit far more easily (and with more favorable rates) than I was. If the FICO model (and variations thereof) is to be used as a risk-assessment tool, then shouldn't those individuals who actually paid debts in full, albeit late, be considered less of a risk than someone who has sought protection through the bankruptcy courts? I am 100% opposed to the use of bankruptcy protection, and thus paid $60,000 worth of debt acquired due to active duty (Marine Corps) deployments and a subsequent divorce because I saw these bills as my obligation. What is, perhaps, more disturbing, is the use of the credit score in insurance pricing and availability. I recently obtained renewal quotations from several companies, and the difference simply from adding my name first, rather than my wife's name (who filed for bankruptcy protection prior to our marriage) is astounding. One company changed the quotation by over $300 in a six-month period! None of the other variables in the policy changed, and simply by changing the order that credit scores were submitted made a significant difference. Stating that those with lower credit scores are more likely to file a claim is absolutely incorrect. In fact, I have been less likely to submit for claims as I did not want the correlating increase in insurance premiums. Insurance scores should reflect the risk posed by driving habits alone, and not penalize people based on credit scores. Of the $60,000 in debt mentioned before, $40,000 was for bills that either were incurred by my ex-wife after our legal separation (the birth of another man's child) or medical bills not covered by CHAMPUS. In fact, I did not even have a credit card until 1997, well after I had begun the credit repair process. Even now, with few negative items, and lower balances on revolving accounts than the national average (and dropping significantly monthly), my FICO score continues to fluctuate wildly, and has yet to rise above the 650 mark. As a result, I will continue to pay additional fees and ridiculous interest rates based solely on this score, despite the fact that I have fulfilled all of my past obligations.