Saturday, November 1, 2008

The end of the FICO score?

i'm going to make the bold assumption that a significant number of credit scores will be damaged in the coming months. like most things in life institutions are forever attempting to rationalize human nature and reduce it to a perfectly logical math equation. an algorithm can not consistently nor accurately predict irrational human behavior, especially during times of crisis (just ask the guys on wall street). i wonder if lenders will change their underwriting standards to discount the value of the FICO score? how many people with 720 credit scores are going to have their homes and SUV's repossessed? the determining factor in the repayment of a loan is not how many credit card payments a person has payed on time, but their character. character compels a person to fulfill their obligations even in difficult times. character cannot be deciphered from a credit score; the only way to determine character is through a relationship. relationships cultivate accountability between people and form the basis for a successful transaction. unfortunately a relationship can not be quantified with math.
good luck to the lenders!


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