bg-hero

    Is Isaac Fair?

    Home
    /
    Blog
    blog-background

    JUNE 22, 2025

    Is Isaac Fair?

    Weekly Blog #9

    “There is nothing either good or bad, but thinking makes it so.” William Shakespeare 

    Let’s start with a question: What does your credit score really say about you? If you’re like most people, you might assume that it measures financial responsibility, discipline, or even moral worth. After all, banks, insurance companies, landlords, and sometimes even employers use it to size you up. But here’s the uncomfortable truth: your FICO score is less a reflection of who you are, and more a snapshot of how well you play Fair Isaac’s game.

    The Fair Isaac Corporation—now commonly known as FICO—launched the first general-purpose credit scoring system in 1958. The idea was simple: assign a numerical value to a borrower’s likelihood of repaying a debt. And it worked. Lenders needed a standardized, non-emotional method to evaluate applicants, and Fair Isaac delivered.

    Today, the FICO score remains the gold standard in credit risk assessment. It ranges from 300 to 850, although hitting the upper end is about as common as a unicorn riding a Harley. While there are other scoring models, most lenders (especially mortgage underwriters) still rely on FICO.

    The irony? FICO doesn’t measure wealth, income, or even savings. You could have $10 million in the bank and still end up with a lower score than a college sophomore with a $500 secured card and good habits. Why? Because the algorithm rewards behavior, rather than balance sheets or six-digit incomes.

    Anatomy of a Credit Score. Your FICO score is a composite of five weighted components:

    • 35% Payment History: Have you paid your bills on time? Nothing drags your score down faster than a missed or late payment.
    • 30% Amounts Owed: This includes not just how much debt you have, but how much of your available credit you’re using (aka “credit utilization”).
    • 15% Length of Credit History: Longer is better. Creditors like to see long-term relationships.
    • 10% Credit Mix: A variety of credit types (mortgage, auto loan, credit cards, etc.) reflects well on you.
    • 10% New Credit: Opening too many accounts in a short period can make you look desperate—or reckless.

    What doesn’t Fair Isaac consider? Your income, your assets, your net worth, and your investment portfolio. In Isaac’s eyes, a debt-free, cash-paying minimalist might be invisible—or worse, unworthy of credit.

    Which brings us to the central question: Is Isaac fair? Well, it depends on what you expect from the system. If you believe a credit score should assess a person’s holistic financial health, then no—it’s wildly incomplete. But if your goal is to predict whether someone will make their payments on time, it’s a pretty reliable tool.

    Still, there are some clear shortcomings:

    • Debt Avoiders Get Penalized: If you’ve always paid cash, have no loans, and never needed credit? Congratulations—you’re financially prudent and systemically punished.
    • Mistakes Linger: A single missed payment can haunt you for seven years. Context doesn’t matter.
    • Gamification Is Real: People make financial decisions to game their score rather than build long-term wealth. That’s like skipping lunch to weigh less at your doctor’s appointment.

    Perhaps the most glaring flaw is this: FICO doesn’t reward financial success; it rewards predictable debt behavior. There’s no bonus for owning your home free and clear, amassing a seven-digit 401K account, or avoiding consumer debt entirely. The system wants you to borrow—just not too much—and to pay faithfully—just not too early.

    If you want to play the game effectively, here are a few rules to follow:

    1. Always Pay on Time: Set reminders, automate payments. Just don’t miss it.
    2. Monitor Your Utilization: Try to keep balances below 30% of your total available credit, even if you pay in full each month.
    3. Keep Your Oldest Accounts Open: Credit age matters. Closing your first credit card can lower your average account age.
    4. Open New Credit Sparingly: Every new inquiry dings your score, and opening a dozen retail cards at holiday time isn’t helping.
    5. Check Your Report Annually: Use annualcreditreport.com. It’s the only federally authorized site. Review all three bureaus (Equifax, Experian, TransUnion).
    6. Dispute Errors Promptly: Mistakes are more common than you’d think. Correct them before they cost you.
    7. Don’t Chase Points for Points’ Sake: Credit card rewards are great, but applying for cards just to get the signup bonus is a short-term play.

    And here’s a subtle strategy most people miss: if you’re planning a major loan—say, buying a house—don’t touch anything for at least 90-days beforehand. No new accounts, no major purchases, no surprises. Think of it as a financial quarantine before your big exam.

    As of today, the median FICO score in the U.S. is around 715. A score above 740 gets you most of the best rates and terms. Anything above that is just bragging rights. Lenders don’t offer bonus rates for an 830 versus a 780. There’s no black card reserved for the perfectly scored.

    That’s why the real goal isn’t the highest score—it’s wealth creation. Credit, if used wisely, is your best friend. Your credit score should serve to increase your wealth, not the other way around. Sometimes, building wealth means using credit strategically: refinancing, investing, or consolidating at lower rates. Other times, it means ignoring the score entirely in favor of building assets and reducing liabilities.

    Your credit score matters. It can impact your mortgage rate, your insurance premium, even your job prospects. But it’s not a character test. It’s not a substitute for sound financial planning. And it certainly isn’t worth obsessing over.

    So… is Isaac fair? He’s efficient. He’s influential. But fair? Only if you know the rules—and play by them.

    At Wasatch Finance, we believe credit is a tool—not a trophy. Used wisely, it can help build lasting wealth. Used carelessly, it can create lasting regret. Either way, the score is just a number—what matters is how you leverage it.

    Mark Lazar, MBA
    CERTIFIED FINANCIAL PLANNER™

    Share:

    Add your comment:

    Comments: 0