They Get It!

They get it, my new company “gets it”. Granted, I have only been here a couple of days, but that has proven to be enough time to determine that Quest has a much better understanding of “correct” software development than most of the companies I have worked for in the past, especially recent past. The code that I have been reviewing is pretty darn good, has comments, is formatted consistently, and has unit and functional tests written for it. The style is not my own of course, but it is consitent and easy to read and follow.

My manager, like me, very much believes in Test Driven Development. That is developing code using this simple principle to create much less buggy software, giving the end-user a much better experience with the program. It takes a little bit longer initially to create the code, but the end result is high quality code that ultimately took less time to write because it was bug-free to begin with. It is nice to have a manager that see’s things this way, instead of one that I have to do constant battle with because he doesn’t “get it”.

I am just getting going here, but it appears I will soon be able to contribute a lot to the team and add significant value to the product. And the best part is, I don’t have to do any web development, ever! I am perfectly fine not creating boring old web pages and “web applications”. Give me the low-level grunt code any day and I will be happy.

On the personal front, it’s been a while since I have written about finances. I have just been so busy lately, my little hobbies tend to take a back seat. Missy and I did find a nice little gem on the Internet last night, a site called CreditKarma. It allows you to see your credit score and has a FICO simulator. It is not perfect, but it is still a very nice tool. The price is right too, 100% free, paid for my targetted advertising on the site. I highly recommend it.

We are hoping to refinance our house. Yes, already. The rates are nearly 2% lower now than when we purchased the home in July, and we can lower our payments by $250 every month! We are submitting the paperwork tonight and hopefully will have this wrapped up the first part of February, which would give us 2 months without a house payment!

The credit cards are, once again, completely paid off. I know I have said this before, but we (all of us) need to stop using them. However, CreditKarma also did some research that showed people that used 10-19% of their available credit had up to 60 point higher credit scores than people that had 0 credit utilization, literally the difference between a 720 FICO score and 660, which is huge. I think that should be illegal, but it appears that that is exactly how the credit scoring system works. So what is more evil here, having 0 credit card debt and a lower FICO score, or a little credit card debt and feeding those monsters? I don’t have an answer, though the new iMac and iLife suite from Apple is looking very appealing! 🙂

FICO Scores Are The Only One's That Matter

In some of my previous posts I mentioned that I pay for credit monitoring and scoring. I called yesterday to cancel our membership, it just isn’t worth it. The credit scores they calculate are not even close to the Fair Isaac FICO scores, and when only pulling information from Experian (not TransUnion or EquiFax), you just are not getting the correct information.

The credit bureaus are damn slow at updating information, TransUnion and EquiFax are the worst, Experian somewhat faster. Nothing will happen quickly with these companies, even after you prove your case. Daily credit monitoring is a waste of time and money. Rather than using a service like, save your money and pull full reports quarterly using FICO is the only score that matters, scores provided by the credit bureaus themselves are meaningless.

In case your are curious as to why the credit scores you see when you pull your own report are different from what lenders see when they pull the same report from the same agency, I will tell you. When a lender pulls your report, the information in it is passed through the Fair Isaac scoring software, which generates a real FICO score. FICO licenses their software to the credit bureaus, and receives money each time a FICO score is generated. Because the credit bureaus don’t want to pay FICO when you request your own score, they invent their own scoring software, which is supposed to emulate FICO, but falls well short.

Yes, I think this should be illegal. You should have access to the exact same information and score that a lender can get on you, but you cannot, unless you use MyFico. FICO allows you to make “soft inquiries” into your credit report, which does not count against your score. I think they should have “soft scoring” too, which would allow a credit bureau to give you a FICO score without incurring charges from FICO. That would be fair.

Hell, the credit bureaus should be fighting for this as well, as it would make their scoring accurate and they could quit spending all the money the do on the programmers that generate scoring models that don’t work. Now that is the first time I have ever advocated firing computer programmers!

You know what? I am a computer programmer, and a damn good one. FICO thinks their algorithm cannot be reverse-engineered. I disagree, in fact it does not look that difficult. Maybe someday if I have some free time on my hands (which won’t be anytime soon), I will write a program that lets you scan your report and generate a FICO score for you for free. Then I will charge a lot of money for it and pay cash for my house, Cessna, Harley and Corvette. Yeah, that’s the ticket.

What I Have Learned About Credit Scores

I have been educated over the last several weeks about how credit (FICO) scores are calculated and what you can do to improve your score, sometimes by a drastic amount. During this educational process, I found bits and pieces of critical information scattered all around the net, and by talking to mortgage brokers, banks and others. I am not a lawyer, and this is certainly not legal advice, but here is the (relatively) short version of what I have learned.

Your Fair Isaac FICO score is a 3-digit number that can be used to quickly evaluate your past credit performance, and can be used to predict your likely future credit worthiness. The valid range of numbers is 350-830, with the US Average somewhere in the 680 range. Scores above 620 are considered fair to good, 650 and higher good, and over 700 is basically the same as those over 800. Anything under 600 is poor to very poor. In today’s mortgage market, you won’t get anyone to talk to you with less than a 620, and they really want to see a 650, especially if you are looking to do a 0-3% down payment. Many mortgage companies are even going back to the old style of underwriting, requiring more documentation, proof of employment and salary, etc. in addition to determining your FICO score.

Fair Isaac scores are based on your payment history, at least primarily, that is the largest component of your score, some say as much as 35% of your score is based on this. The best way to improve your credit score over time is to ALWAYS pay your bills on time. Some mortgage companies will not offer a mortgage to you even if you have a high FICO score if you also have more than 5 late payments to your creditors in the last 2 years.

Another major player in determining your FICO score is how you use credit. This is the part that I feel is totally un-American and contrary to excellent money management skills. You must have credit cards, even if you don’t use them. In fact, you need at least 3 credit cards, and you need to use them, but just a little. Most experts will tell you to never let your balances go above 10% of your available credit, other say 30%, but never more than 30%. So if you have 3 credit cards with a total credit limit of $6000, you should never have more than $600-$1800 on them. The best practice is to use credit cards for day to day purchases, such as gas and food, and then pay off the credit card balance before any interest has been charged. The credit card companies will report this to one or more credit bureaus. They will report not only that you pay your bills on time, they will report the percentage of available credit you have. Good credit card skills, keeping balances below 10-30%, paying the bills on time, etc. go a long way towards your FICO score. Some believe this is worth up to 30% by itself.

Pay off your credit cards, now! Carrying high balances, or specifically high percentage of used credit to available credit, will bring down your score. Credit cards are a necessary evil, at least with regards to your FICO score, you have to override common sense with what is required to “fit” into the FICO system.

Don’t make the mistake I made. When you do pay off your credit cards, DO NOT close the account. The length of time your account has been open also plays into your credit score. Closing the credit card accounts is a bad thing, pay them off, use them just a little to keep the account active and keep the credit card company reporting to the credit bureaus. If for some reason your credit card company does not report inactivity to the credit bureuas, you can request that they do.

Do no accept credit cards with a very low credit limit. Having a card with a $300 limit will likely lower your score. It shows creditors that the company “just barely” trusts you. Plus, if you stick to the 10% utilization rule, you will only have $30 worth of credit to use. You cannot even fill your car with gas these days for $30, so don’t bother. Of course if you are rebuilding your credit and can only get a card or two with these very low limits, do it. Within just a few months of low usage and paying the balance off before the interest can be charged will probably be enough for the card issuer to increase your limit, though you may need to call them to request this. If they refuse after several months, take your business elsewhere. Often the threat of doing this will be enough for them to increase your limit. Some say it costs credit card companies up to $200 to attract a single new customer. Take advantage of this. When they do increase your credit limit, stick to the 10% rule. Your score will go up.

In addition to credit cards, always pay all of your bills on time, especially car and other loans. These are scored somewhat differently than revolving accounts, but paying on time is critical. If you must let something slide for a month due to financial hardship, let it be the telephone, power or other utility. In my 21 year credit history, none of these companies has ever reported to the credit bureaus, good or bad, so if something must be deferred, let it be one that nobody will ever see. DO NOT not pay them, just pay them late. If you skip out on them, they will turn it over to a collection agency, which certainly will report it.

Limit “hard” inquiries into your credit. Credit bureaus classify inquiries into 2 groups, hard and soft. A soft inquiry is when you check your own credit, or when credit card companies or others are “pre-screening” potential credit customers. These DO NOT reduce your credit score. Hard inquires are done when you request credit, via a loan or credit card application, for example. Having many hard inquiries in a short period of time can reduce your score, and these inquiries stay in your report for 2 years. Having many in a short period of time can indicate you may be overextending yourself. There is an exception to this rule, however. When you are shopping for a home mortgage, multiple mortgage companies can make hard inquires into your credit in a 2-week time frame and basically count as a single inquiry. I guess the logic here is that a smart mortgage shopper will shop multiple companies before picking one, and you are not likely to be trying to secure multiple mortgages in a short period of time. Use this exception to your advantage when shopping for a home mortgage.

Pay off ALL collections and charge-offs that are reported. These account for up to 30% of your score and collection companies will always report negative data. After some period of non-payment, your credit report will show “KD” for each month. This stands for “Key Derogatory”, and no, I don’t know exactly what that means, but it ain’t good! Basically after you go past 150 days late, they flag it as KD, which is worse than worse. These must be paid! KD’s have to go. Even accounts that are marked as “charge off” or “account closed” can and should be paid off. Contact the creditor or collection agency. Chances are very high they will accept a settlement offer from you, taking less money than is actually owed. This is good for both parties, they get most of the money you owe instead of none, and you get them to remove the negative data from your credit report.

Subscribe to credit monitoring, or at least check your credit report and score every 3 months.
The scam here is that there are 3 major credit reporting bureaus, all with different information about you. Some creditors report to all 3 (which is a good thing as long as you pay your bills on time), some report only to 1. There seems to be no pattern as to which companies report to which bureaus, but I suppose you can ask before you open accounts. The big 3 are Experian, EquiFax and TransUnion, and to get a valid picture of your credit, you must get reports from all 3. You are entitled to reports from each of these companies once a year for free by going to They will give you the report online, but not a score, you will have to pay for this. An alternative is to use one of the many companies that pull these reports for you, such as, which is run by Experian, and despite its name, is far from free. This can get expensive, especially if you are monitoring all 3 companies. But this is the price you have to pay to keep on top of what is in your credit report. Yes, I think this is a scam too. If you have deep enough pockets, you can even monitor your credit with all the bureaus using Fair Isaac Corporations (the FICO people) MyFICO service. It’s expensive, but accurate.

The Fair Credit Reporting Act provides consumers with good protection from misinformation contained in your credit reports. Without hiring lawyers or “credit fix-up” companies, you can request that inaccurate information be removed from your credit report. This can be done online with each of the credit bureaus, or by mailing form letters to each disputing the information. When you file a dispute, if the credit bureau cannot verify the information in the report, by law, it must be removed. They have 30 days to investigate disputed information, and up to 60 days to remove inaccurate information.

If they fail to repond to your request for changes to inaccurate information, you can report them to the Federal Trade Commission. You can also hire a good law firm to force their hand. One of the most respected is Lexington Law, who’s only business is helping consumers legally clean up their credit reports. Their fee’s are reasonable considering the level of service they provide.

This brings up another point. There is no “quick fix” to cleaning up bad credit. It takes initiative, time, and money on your part. Companies that claim otherwise are trying to sell you snake oil, don’t believe it. At best, you will be out some more money, at worst you will be breaking the law. The ONLY WAY to clean up your credit is to take responsibility for the negative marks on your credit by working with the creditors, having inaccurate information removed from your record, and time. A history of late payments will only go away over time, up to 2 years. You may be able to talk some of the creditors into removing late payment history, but this is entirely up to them. If you do decide you need help clearing up inaccurate information, use a respectable law firm that deals with this, one that knows the law and does not break it.

As for mortgages, everyone knows that right now they are hard to get with less than stellar credit. Most mortgage companies that I have talked to will pull your credit report from all 3 bureaus, then toss out the low and high score, using the middle score as the base for determining if they will extend a mortgage to you. This is why if you are shopping for a mortgage, you must monitor and correct information with all 3 bureaus. The difference in interest rates between a 620 and 720 score can be staggering, literally up to $1000/month difference in your home payment for a modest midwestern home.

It is said, even by Fair Isaac, that 90% of banks use FICO scores for determining who they will extend a mortgage to, and what interest rates will be offered. Who is the other 10%? I have not found a single mortgage lender that does not use FICO as the basis for mortgage decision.

As bad as this whole system is, Fair Isaac is far from fair, having 3 different companies with different sets of inaccurate information about you that you must to pay to see should be illegal, this is the way it is, and will not change for a long time to come. This is the world we live in, knowledge is power, and I hope this blog entry summarizes accurately the research I have been doing over the last several weeks and months. I’m not done yet, and as I learn more or remember things I forgot, I will update this page.

About Credit Scores, Ignorance, Stupidity, and Frustration

In my previous post I mentioned the need for our family to find and purchase a new home. This was easier for me when I was younger, when I had a credit (FICO) score over 800, was not divorced and only had 1 child. At one time I even had 2 mortgages for over a year while waiting for the old house to sell. That was also before the crash of the housing and credit markets, money was easy to get, and just as easy for me to earn.

Skip ahead 6 years, 6 tough years. A divorce and bankruptcy in 2003, $3000 per month to my ex-wife for child support (I never complained about this) and “maintenance” (AKA alimony, this I will forever complain about), and total meltdown of my chosen profession in 2003 and 2004, I find myself with a credit score just a shade above 600. The alimony stopped in December 2007, thank God! It is truly amazing how much of a beating one person can take and still manage to pull themselves up. I won’t even mention the gory details of these years of my life, they were very tough years and I would just assume block them out permanently. Kind of like 1987-88, but for very different reasons.

My life is so much better now. I married Missy in July 2007 and we are rebuilding the American Dream together. Life is much better now, and in a strange way I am happy to have experienced 2003-2006. It gave me a new perspective on everything financial. I took so much for granted before that, I always had money, good credit and a great income. I was miserable, but financially I was sound. Now I am broke, but happy. This is a better place to be.

But only for now. Dare I say the best place to be is financially sound AND happy? I think so, and that is the remaining goal. I make a decent income now working like a dog for a great company, Missy is employed as well, the alimony ended in December, the credit cards were paid off (we put some back on them, but that will be taken care of by mid-April), and collections on our credit reports were paid. We did not even know they existed until we pulled our reports, many were 6+ years old!. This is the ignorance part of this post. If you have not looked at your credit report lately, do it! You will be amazed how much information is wrong!

So, back to the credit scores, speaking only in generalizations here. Missy had very little credit history, a car loan, an old credit card account, and a JC Penney credit card she got in 1996, never used, and didn’t even know she had. She had 3 items in collections or charge-offs, from many years ago. She did not even know they existed, only one company ever bothered to even call her to ask her to pay. Her score was in the mid-500’s, not good. The total amount she owed to old accounts was less than $900. I contacted each of the companies listed in her report and paid them the balance owed. 48 hours later, her FICO score was over 700, well into the “good” area. She literally went from being a very high risk to lenders to a very low risk in less than 48 hours, the change in FICO score was over 150 points!

Now to me, mine is more complicated. Like I said, I used to have a score over 800, but that was yesteryear. When I pulled my credit reports, I was alarmed to see my scores in the mid 500’s. Now I am not stupid, I realize I had a bankruptcy in 2003 associated with the divorce, but most people with a bankruptcy hover around 600, so why was I considered more of a risk than someone with a recent bankruptcy? I have established good credit since then, including car loans and credit cards, all with decent rates. Well, let me explain…

In 2003 I went to Oconomowoc Memorial hospital following a 3-day migraine headache that would not go away. I was there about an hour, got a shot of some miracle drug that I still don’t know what it was (could have been cocaine for all I know), and left ready to party like it’s 1999. I received a bill for about $700 and paid it. Another bill arrived for almost the same amount and figuring my check and their bill crossed in the mail, I discarded it. A month or so later I moved, chasing work in 2003, no more bills arrived even though I left a forwarding address. Well, there were indeed 2 bills, one for the doctor and a separate one for the hospital. Apparently I paid the doctor $700 for him to ask me how I felt (which should have been obvious as hell) and give me a shot. I apparently did not pay the hospital $700 for the 1 hour rental of a bed. I would have happily laid on the floor and saved the $700. This went into collections with State Collection Service of Wisconsin. They never contacted me, just put it on my credit report as a collection. It sat there until I discovered it last month.

I mentioned above that I moved in 2003, and left a forwarding address. This is true, so is the fact that I gave my apartment complex (Country Aire in Hartland, WI) 60 days written notice from my employer regarding the relocation, and knew that I would lose my security deposit. This is the contract that I signed, so all is good, right? Wrong. They turned almost $2800 in broken lease fee’s over to La Chapelle Collection Service in Green Bay, Wisconsin that got a judgment against me in 2004. They did contact me, by their own admission and their own records, in 2005. See something wrong with this? They got a judgment against me a year before they bothered to even call me! I even had the same cell phone number following the move, I would have been real easy to locate. They had my new address and my phone number, but used neither. If $2800 was really due to them, my employer would have paid it on request. It was never requested. As stated, they did contact me in 2005 and I refused to pay. I have no defense for this, other than I maintained (and still maintain) that I did not owe them the money. Yep, this was in my credit report as well, and since it was not marked for deletion until 2011, I paid it. Actually I paid $3300. The total amount due was over $4000 with interest, La Chapelle settled for $3300. Because this was a judgment, when I get the settlement letter, I will have to drive 80+ miles to Waukesha County to have it removed from my record. As far as I am concerned, this is scam; get a judgment that a person has no knowledge of, no recourse to fight it, let it collect 12% state sponsored interest for a year or so, then contact the person to get paid? Something is fishy here.

So I moved to Florida. I opened a checking account with SunTrust bank. For various reasons, I only lived in Florida for 4 months before transferring back to Wisconsin. When I got home, I moved most of my money from SunTrust back to my local bank and waited a month before zeroing out my SunTrust account and contacted them by phone to close the account. I thought everything was fine, until I looked at the credit report. Apparently they put $222.87 into collections. I called them to find out why. They told me it was sent to NCO Financial for collection in 2004, they have no records of it other than that. I contacted NCO and they informed me it was sent to Chex Systems. I contacted them via their web site, I could not find a way to actually talk to a human being there. They mailed me information showing that I owed $222.87, but could not explain why or what the money was for. I called them with the number provided in the mail. They had transferred it to Enhanced Recovery Systems, which I contacted next. ERS confirmed the amount and that they were now in charge of the collection, but again, had no information about what the $222.87 was for, other than it was from SunTrust. I had spent 4-6 hours chasing this down and was no closer to figuring out what the collection was for, but needed this removed from my credit record. In a move very unlike me, I surrendered and paid the $227.87 + $9.95 fee to ERS.

The final blemish on my record was reported by the law firm of P

askin and Oberwetter, a Princeton Club fitness center contract that I had defaulted on. Okay, this one I can own up to. I did default on the contract, shortly after signing up with the fitness center, but I did contact the manager via phone and express my dislike of the club. It was dirty and oversold, you could not get lockers for your stuff, and whenever I went the place was full and you had to wait to use equipment. They also rented out the gym and swimming pool to every organization that wanted it, seems like they always had something going on. He said he would suspend the contract. This was my mistake. Don’t do this over the phone, get it in writing. Princeton Club sent it to Paskin and Oberwetter for collection, and to their credit, they did contact me, both by mail and by telephone. I explained (in writing, they are lawyers after all) my contention that the contract had been suspended at my request following a conversation with the Princeton Club manager. Some time lapsed, maybe 2-3 months, and I had not heard anything. In this time frame, they reported the collection to all 3 credit bureaus. They sent another letter offering a settlement of $500 (the original charge was almost $700) and I reluctantly paid it.

So where am I now? Theoretically in the same place as Missy. All negatives on my credit report, with the exception of the 2003 bankruptcy, have been paid in full or settled. So where is my 150+ point jump in my FICO score? My score hasn’t moved any, not a single point. Why? I don’t know, maybe it just needs more time for the accounts that I paid to be removed. Maybe I will have to get my own attorney to force the credit bureaus to remove the accounts that have been paid. Maybe I will have to study the Fair Credit Reporting Act myself, possibly resulting in complaints filed with the FTC. I have notified them using their online dispute forms that these have all been settled. I expect my credit reports will be updated with this information before the end of March.

(Re)Building the American Dream

When Missy and I got married in July 2007, we formed very specific goals and milestones for achieving those goals. They are not far-fetched, pie in the sky type daydreaming, just a simple plan for achieving the American Dream.

1) We needed a better family car. When we got married, Missy had 1 daughter and I had 2. She drove a Toyota RAV-4 that we called the “Go Cart” because of its size, and I had a Pontiac Grand Turd, err Am. These cars were fine for us at the time, but our new family of 5 could not go anywhere together. Within 2 weeks of getting married, my Grand Am was gone, replaced with a shiny new Ford Explorer. Problem solved, we no longer needed to borrow my ex-wife’s minivan to take the family on trips, we just have to add gas every time the damn thing passes a gas station.

2) We needed a truck. I had a great Dodge Dakota truck that was destroyed in the Stoughton tornado way back in August 2005. I had to buy the Pontiac Grand Turd, err Am quickly because of that, I need a car quickly, and the Pontiac was available for the right price. My needs for a vehicle are not that high, I sort of prefer crappy old trucks, but did not want a POS. We traded the RAV-4 for a 2001 Ford F150 at Suburban Wheels of Madison. Problem solved. Actually 2 problems solved, I will never own a non-American made vehicle, but that is for another post.

3) We have to pay off our credit cards! Ok, they were my credit cards, but still they had to be paid off. The balance was over $11k and they were maxed out following the wedding and honeymoon in Mexico. I set up a plan and we did this in less than 5 months.

4) We pulled our credit reports from the 3 major companies, Experian, TransUnion and EquiFax. There was some old stuff we didn’t even know about, things we had to take care of to get our credit scores up. Nothing too major, but combined was several thousand dollars we had to pay. We paid it.

5) We need a house. Before I was married, or even seriously dating Missy, I rented a 2 bedroom duplex. It’s a real nice place, for a single guy or small family, but 5 of us is really pushing it. All 3 girls have to share a bedroom which means the kids room has a bunk bed and a regular bed in it, sort of cramped when you add the other stuff in there too. The single car garage is great for Missy, but I have to scrape snow and ice off my truck whenever I want to drive somewhere. The basement is unusable because it is filled with the leftover stuff from merging two households, my kitplane cannot even be reached, so that project sits dormant. The house is cluttered because we have too many people and too much stuff in too small an area. My home office is in our bedroom, and I work about 80 hours a week, about half of that while Missy is trying to sleep. The 1987 IBM M keyboard I refuse to give up does not help any. Like I said, we need a house.