I’m getting sick of FICO. My score dropped from 825 down to 745 presumably because I took out some arbitrage money and took out a new car loan. Here are the “reasons” my score allegedly dropped:

1. The proportion of balances to credit limits on your revolving/charge accounts is too high.

Analysis of consumer credit behavior repeatedly finds that owing a substantial balance on revolving/charge accounts (Visa, MasterCard, Discover, American Express, Diners Club, department store cards, etc.) relative to the amount of revolving/charge credit available to you represents increased risk. In fact, the level of revolving debt is one of the most important factors in the FICO score. The score evaluates your total balances in relation to your total available credit on revolving/charge accounts, as well as on individual revolving/charge accounts. For a given amount of revolving credit available, a greater amount owed indicates a greater risk, and lowers the score. (For credit cards, the total outstanding balance on your last statement is generally the amount that will show in your credit bureau report. Bear in mind that even if you pay off your credit cards in full each and every month, your credit bureau report may show the last billing statement balance on those accounts.)

So I’m allegedly an increased risk because I borrow money at 0% and put it into safe investments. Stupid. But what really gets me boiling is this last part, “Bear in mind that even if you pay off your credit cards in full each and every month, your credit bureau report may show the last billing statement balance on those accounts.” So even if I didn’t carry a balance but borrowed 30k and repaid it every month I’d STILL be penalized with a lower score. How the f*** does this make sense? This rationality is bordering on defamation of character.

The second reason for my score drop,

2. The time since your most recent account opening is very recent.

Research shows that consumers who have recently opened new credit accounts are slightly more likely to miss payments than those who have not. This is not an especially strong risk factor, and therefore usually means a difference of no more than a few points in a consumer’s FICO score.

  Source: Fair Isaac

Huh?  People who open accounts  are more likely to default?  So we should never get a car loan or open a credit card account because this is a negative – what would the purpose of FICO be in that case?  No open accounts, no need for FICO but then someone must have had a sense of irony because the whole thing is neutralized with, “This is not an especially strong risk factor, and therefore usually means a difference of no more than a few points in a consumer’s FICO score.”  So if my score went from 825 to 745 and a single new account only accounted for 5 points (or so) then I experienced a 75 point drop (9%) on strictly borrowing some arbitrage money.

I can’t tell you how peeved I am at this right now.  FICO is a SHAM!   I wonder how many BILLIONS of dollars consumers are being overcharged because of the shamsters.  SOMEBODY PLEASE FILE A CLASS ACTION ON THESE CLOWNS!

By the way, in late January, I will likely pay off ALL my debts with cash, it’ll be interesting to see what happens to my score when I pay off my car note, mortgage and all credit card debt.