topic Re: Trying to understand Fico scoring in Understanding FICO® Scoring

Trying to understand Fico scoreing

fico64 — Sun, 19 Sep 2010 21:13:24 GMT

Hello, to all,

New to this forum and would like help to understand why my scores dropped.

On June 17, 2009, I applied for a new home mortage loan. The loan officer pulled all three credit scores on that day, she said they were Fico scores.

Equifax score: 673 Experian score: 700 Trans Union Score: 707 as of June 17, 2009, the loan officer told me this on the phone.

25 year credit history, no inquires, no public records, last repored late payment was 2 years, 9 months, two delinquent accounts, one was 30 day, the other 60 day, both in 2006. I was renting for 2 1/2 years with no late payments. One credit card with a balance of $2650.00 and 13,000 credit limit and one department store revolving account with zero balance. That is it, as reported on above 3 credit reports.

As a result of my scores, my mortage loan was approved. My first payment on that loan was September 1, 2009.

Fast forward to September 17, 2010. I pulled my Equifax and Trans Union scores and credit reports.

Equifax score: 669 Trans Union score: 683 Experian score: Not pulled

There was absolutely no change, except my credit card balance is now $257.00 (continued to pay on time with over payments) Now my credit history reads 26 years 3 months, last late payment, 3 years, 11 months and I now have a mortgage of $118,200.00 with 12 consecutive payments, all paid on time. No inquies listed.

I have now put an additional 15 months of time since my last late payment, WITHOUT a late payment, I have established credit by obtaining a mortgage (renting when last reports/scores pulled) and have paid it on time for 1 year.

Despite all of this, my Equifax score dropped 4 points and my Trans Union score dropped 23 points.

I have done what this forum has advised, pay down credit cards establish new credit to a limited degree and no new late payments and I have distanced my last late payment by another 15 months. The forum says, over time scores will improve. I have done postive things, but my scores went negative instead of positive. I don't understand. The only thing I can surmize is that I'm being penalized for taking out a mortgage loan. Everyone wants there own home.

Can you help please?

Re: Trying to understand Fico scoreing

llecs — Mon, 20 Sep 2010 03:42:36 GMT

Welcome to the forums!

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

There are too many variables at play here, but based on the info, here's what I would look for in the following order:

1) You mentioned you had 2 CCs last year but that isn't mentioned this year. If one ended up closing, then that could have resulted in quite a few points lost due to the loss in mix of credit.

2) You mentioned 2 delinquent accounts for last year. If those are still reporting, make sure they have not updated since 2009. If they updated this year, even if they didn't report any new lates, your FICO scores can drop. Look to make sure that a "2010" date is nowhere to be seen anywhere within the TL on your CR.

3) Look to make sure no OC accounts fell off in the past year. While your length of history is great, a dropped OC account can impact your AAoA negatively and that can drop your scores.

4) If both CCs are reporting this year, make sure both aren't reporting balances. That can drop your FICO scores.

5) If those delinquent account disappeared you could have been rebucketed, and that can result in a short-term score loss.

6) Make sure no new accounts were added since last year (aside from the mortgage).

7) Look at your FICO reports closely. Make sure the Positive and negative factors jive. Also look on the Credit At-A-Glance page to make sure that looks good.

I'd start with the above. You can lose points with a new mortgage. It can impact your AAoA and that can drop your score. However, score damage is temporary and usually goes away within a year. Also check with your lender to see if they pull FICO scores and if they did, check to see which versions they used. Most lenders now use a TU FICO version that is different from this site. That can easily explain the loss on TU.

Re: Trying to understand Fico scoring

fico64 — Mon, 20 Sep 2010 16:37:16 GMT

Hi,

No change as stated above except bank credit card brought down from $2650.00 to $257.00, department store card with zero balance and new mortgage paid on time for twelve months. No new accounts, no dropped accounts, no new late payments or inquires and late payments are now 15 months older. (3 years 11 months old)

My three open accounts show "Status as of Sept. 2010" I thought this was normal on open accounts. All old accounts were not reported, total of 18. The 2009 reports on the 2 open accounts showed "Status as of June 2009" The mortgage did not exist. One curious thing: a department store account that was closed in 2002 and reported as such, shows Status as of Sept. 2010. After I closed that account in 2002, I have not used the card, however, I have made cash only purchases. This was reported the same way in the 2009 reports.

Credit at at a glance reads: Good, Very Good, Great, Very Good. This was the same in 2009.

The mortgage is one year old. I can only say that the loan officer told me on the phone my three scores were Fico. She stated "We only use Fico"

Not only am I surprised by my scores dropping, I had fully expected them to rise to the 710 to 720 range because of the positive factors in the 15 months separating the reports, I'm dismayed by my low scores in general. With only two delinquent accounts that are almost 4 years old, I would think they would be higher. I use my two cards to make small purchase, then pay off in same month to keep zero balance, at the same time making large over payments to bring the credit card balance down with a goal of zero balance. I can accomplish that in next two months.

With this kind of credit history, should 'nt my scores be at least 50 points higher?

Re: Trying to understand Fico scoring

haulingthescoreup — Mon, 20 Sep 2010 16:49:51 GMT

My guess is that the TU FICO pulled by your lender was TU04. Unfortunately, we're still stuck with TU98 here. Although they're both FICO scores, the formula is different. That would explain the big drop in the TU score.

Four points on EQ isn't very startling. My score hops up and down with minor changes on my report. And it's possible that your mortgage is not yet showing as a full year old, depending on when it starting showing up, and with what date.

I don't suppose that you have access to the three 2009 reports, do you? If so, do they list the negative factors? There are usually four.

What are the negatives on screen 2 of your current FICO EQ and TU reports? If you're able to compare the befores and afters, that would help. Even without the negatives from the 2009 reports, the current ones are helpful.

Are you allowing balances to report? That is, do you do like a normal person would and let your month's charges report on your statements and then pay in full? That can artificially inflate your revolving util and lower your scores. (Please excuse me if you already addressed this. I'm multi-tasking this morning. :P)

Re: Trying to understand Fico scoring

fico64 — Mon, 20 Sep 2010 17:50:16 GMT

Hi haulingthescoreup,

On current and 2009 reports: Factors lowering your score, You have a serious delinquency (60 days past due or greater) etc. 1 account. (This is now 3 years, 11 months old)

You have multiple accounts showing missed payments, etc. 2 accounts. (Again, 3 years, 11 months old.)

You have a consumer finance account on your credit report. 3 accounts. (HFC, old accounts never delinquent and paid off. 4,5 and 6 years old. This only appears on Equifax report.)

That's it, 3 on Equifax and 2 on Trans Union.

Balances to report? Only the Credit card balance which is now $257.00 reduced from $2,650.00 in last 15 months. Dept. Store card always kept at zero balance.

I suppose 4 points is not much, but I' very surprised my scores did not rise, because of the positive things I'm doing.

Thank you very much.

(I noticed on the above Moderator's tag line, her or his score increased dramatically in last 8 months alone. The link shows she has lowered her credit card amount. That is what I have done, in addition to putting more time between my last late payment and my score drops? )

Re: Trying to understand Fico scoring

haulingthescoreup — Mon, 20 Sep 2010 18:33:44 GMT

Hmmm, OK, last desperate gasp:

You might be hurt by having such a "thin file," meaning that you have very few accounts reporting, so although your credit track record is long, the problem accounts carry more impact. Thin file + serious derogs (the 60-day) might be an especially lethal combo. But that's just a guess. You're very unusual in the combination of long history and few accounts, so we don't have much anecdotal evidence (polite term for "what people have claimed here on the forums," lol) for this.

I know that when I was in a similar situation (19 years longest history, a 60-90 day late, multiple accounts with lates), my scores stayed fairly stuck until I opened a half-dozen new accounts. I took a beating for lowered AAoA, but eventually my scores started moving upward. One term for this is "diluting" older bad credit with good. I still have the same number of account with lates, but they're a much smaller proportion of my total accounts than they used to be.

In general, it would probably help to have a third open revolving account (CC, line of credit), because successful management of revovlving credit is rewarded by the scoring formula (because you can get into so much trouble with it, alas), but I would certainly never advise opening new credit just to attempt to please the FICO scoring gods.

btw, I typed and deleted a bunch of other theories about how you might have been assigned to a new score card (score bucket, "rebucketing"), but then I kept remembering that you're stuck in a negative score bucket as long as the 60-day late is on there. But I was able to get into the 740's - 750's with a 60-90, so it's not simply from being in the negative score bucket.

Re: Trying to understand Fico scoring

fico64 — Tue, 21 Sep 2010 00:22:00 GMT

I see what you are saying about diluting your credit.

To few accounts? Is 18 accounts to few? 3 open, 2 past accounts delinquent now 3 years, 11 months old and 16 accounts with a perfect record over 26 years?

I'm retired, and don't need to open a lot of credit, but I would like my scores to be at least 750, if I want to do something with real estate later.

I guess in 3 years when the 2 delinquent accounts drop off, I should have perfect credit right? :-) ... and a near perfect score right? :-) Or will Fico continue to hold me back because I'm not taking out a lot of credit, i.e.: 2 cards and a mortgage. :-) When I need a new auto, I will pay with cash, and the banks are not helping much when I had a 5.9 % credit card for 2 years and suddenly they raise it to 22%. That's not much of a reward for paying on time. No incentive to use it. Why should I pay 22% interest? I know, the economy. Once I get the credit card to zero balance in the next 2 months, I will make small purchases and repay immediately just to keep it active.

Time will tell. Thanks for your help.

Re: Trying to understand Fico scoring

haulingthescoreup — Tue, 21 Sep 2010 00:51:00 GMT

Oh, I didn't realize that you had so many closed accounts on your reports.

That means that you don't have a thin file, per se, but you also don't have a lot of new clean history coming in, so that still might be a factor.

As for when things drop off, it takes 7 years, not 5 for negatives to fall off. If the accounts are closed, they should continue to report for 10 years after they were closed, meaning that a closed account would have at least 3 years of clean history after the last negative fell off, depending how soon after the negative the account was closed. If the account is open, if course, it keeps reporting, but as a clean account.

I have to admit that I'm stumped. The only other factor that I can think of is maybe having one or two more open revolving accounts to generate new clean history, and also to specifically increase the number of open CC's, which are a pretty big driver of scores. But as I said above, just opening accounts in hopes of improving scores doesn't seem wise. But if you do plan to get into real estate, you'll want to qualify for the best rates, so it might be worth it.

As for interest rates, if you can get into the mindset of using your CC's as if they were debit cards, only using them to buy things that you can pay off immediately, then the APR's don't matter. I genuinely don't know what any of my APR's are, because except for an occasional 0% BT, I don't even look. (And even then I calculate the BT fee over the timeframe of the offer to figure what the effective "interest" really is.)

Anyone else out there with some useful ideas?

Re: Trying to understand Fico scoring

GregB — Tue, 21 Sep 2010 02:08:24 GMT

I read it as the delinquent payments are 3 year 11 months so in 3 years they will drop off - or actually drop off a month or so after that. I have to believe that the negatives are hurting a lot with the small number of open accounts. That is mostly based upon there being nothing else that seems to be a reason, which isn't very solid.

If you are buying a car for cash, it might be better to finance and then pay off quickly so you have little interest. Since interest is based upon the open balance, a big chunk extra with the first payment will give you a high original amount and little spent on interest. I'm thinking this might help credit mix with a recent installment loan.

Never any reason that it makes sense to pay 22% on a CC if you can possibly avoid it.

Re: Trying to understand Fico scoring

fico64 — Tue, 21 Sep 2010 21:57:02 GMT

An interesting sidenote, 3 weeks after my bank raised my credit card from 5.9% to 22%, they sent a letter offering me interest free purchases on the card for 6 months, then any unpaid balance at end of 6 months is subject to 22% interest.

I'm not going to play that game. Banks want people to go in debt.

I would think my 26 year history with 16 perfect accounts should have more influence on my credit scores. I think there is something flawed about this scoreing system. I'm not going to take on additional debt in retirement, need to be conservative.

Re: Trying to understand Fico scoring

fico64 — Mon, 04 Oct 2010 22:52:03 GMT

An update: Today, I pulled my Experian credit report dated Oct. 4, 2010. Same score as 16 months ago, 694. At least it did not go down.

Still wondering why all the positive things I'm doing is not raising my score. Experian said having a mortgage is the best credit. I have been paying on it for 13 months without a late. Please read my original post at top of this tread.

Question: I see Fico is not offering a product from Experian. Is Experian generating Fico scores to lenders etc, or did they stop and only offer Vantage and Plus?

Was Experian offering Fico scores 16 months ago? Since my score is the same, want to try and figure out what model was used for me 16 months ago, as compared to today.

Thank you.

Re: Trying to understand Fico scoring

MarineVietVet — Mon, 04 Oct 2010 23:45:02 GMT

fico64 wrote:
An update: Today, I pulled my Experian credit report dated Oct. 4, 2010. Same score as 16 months ago, 694. At least it did not go down.

Still wondering why all the positive things I'm doing is not raising my score. Experian said having a mortgage is the best credit. I have been paying on it for 13 months without a late. Please read my original post at top of this tread.

Question: I see Fico is not offering a product from Experian. Is Experian generating Fico scores to lenders etc, or did they stop and only offer Vantage and Plus?

Was Experian offering Fico scores 16 months ago? Since my score is the same, want to try and figure out what model was used for me 16 months ago, as compared to today.

Thank you.

No one has been able to buy their own Experian FICO score since February of 2009. Creditors can pull Experian and also there is a CU in Pennsylvania that supplies that information to it's members only.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Re: Trying to understand Fico scoring

fico64 — Tue, 05 Oct 2010 01:05:45 GMT

I made a mistake. My Experian score 16 months ago was 700, not 694, so it dropped 6 points. I reduced my credit card from $2600.00 to $257.00 with a credit limit of $13,000.00. I had no mortgage 16 months ago. I made 13 on time payments on it.. I put another 15-16 months of no lates since June, 2009 and yet my scores dropped on all three reports instead of going up. No inquires since June 17, 2009. No new lates.

My lender then pulled a Experian "Plus" score" 16 months ago and it went down???

Re: Trying to understand Fico scoring

MarineVietVet — Tue, 05 Oct 2010 01:58:37 GMT

fico64 wrote:
I made a mistake. My Experian score 16 months ago was 700, not 694, so it dropped 6 points. I reduced my credit card from $2600.00 to $257.00 with a credit limit of $13,000.00. I had no mortgage 16 months ago. I made 13 on time payments on it.. I put another 15-16 months of no lates since June, 2009 and yet my scores dropped on all three reports instead of going up. No inquires since June 17, 2009. No new lates.

My lender then pulled a Experian "Plus" score" 16 months ago and it went down???

I very much doubt that your lender pulled a "Plus" score. The normal Experian FICO score was available to lenders at that time and still is.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Re: Trying to understand Fico scoring

GregB — Tue, 05 Oct 2010 02:14:51 GMT

We can probably assume the original scores were FICO scores since they were pulled by a mortgage lender.

It is possible that some of the scores pulled by the OP are FICO.

IF the TU is a FICO, then it is probably TU98 instead of the TU04 probably pulled by the mortgage lender. Even if he pulled a TU FICO, that makes it slightly different.

I think it is safe to say that the lender didn't pull a EX Plus. It is likely that the OP's recent EX "score" is a Plus. That means there is little correlation between those scores.

Fico64,

Complete info is needed since you can't compare a FICO to any of the FAKOs like the EX Plus. They are based upon different algorithms and can't be compared to each other. Can you tell us where each score after the mortgage scores came from and if it has the FICO logo?

Re: Trying to understand Fico scoring

fico64 — Wed, 06 Oct 2010 06:01:52 GMT

Thanks!

That's what my lender said, that they were all Fico scores. If I understand correctly then, Experian Fico is still available to lenders even though consumers can't access it.

I'm just trying to understand the scoring. If you have read through the thread, you see that all my scores dropped, even though I did positive things. Just can't understand why my scores went down when I believe they should have gone up. It seems when I call the credit agency's I get someone with limited knowledge and they tell me to call a credit counselor for help. I sure don't need that. Is there a way to escalate my questions with the credit bureau's?

I have 26 year credit history. Total of 18 accounts, 16 of which are/were perfect. I have 2 old accounts, one 30 days late, the other 60 days late. Both closed. Last late payment was 3 years 10 months ago. I have 2 open accounts, a mortgage now 13 months old with no lates and a credit card with a credit limit of $13,000.00 and a balance of $257.00 and no lates. It was opened in 2006. The balance was $2600.00 16 months ago. I have 1 dept store card open with zero balance. Last inquiry was June 17, 2009. That's it.

Re: Trying to understand Fico scoring

GregB — Tue, 05 Oct 2010 13:35:16 GMT

I'm sure the scores the mortgage lender pulled are FICOs. That is based upon the fact that they all seem to use a FICO score from all three Credit Bureaus.

We don't know what the scores are after that. I'm suspecting that some of them are not FICOs since you haven't said where they came from and there are few places to get an actual FICO. Some of the FAKOs are way off - high or low.

If you pulled a EQ FICO from myFICO.com then that would be the same as the one the lender pulled. They would both be EQ FICO scores. If you pulled a TU FICO from myFICO.com then they would be slightly different since most mortgage lenders are using TU04 and and myFICO uses TU98. You can't pull an EX FICO so you can't get a score that is the same as what your lender provided.

EX FICO is available to lenders but not to consumers. EX is promoting their Plus Score but my understanding is that lenders don't use it at all.

It is important to understand that "credit score" doesn't mean much unless you know what score. You can't compare apples to oranges even though they are each good in some way. Trying to understand scoring is difficult and the variety of different scores just makes it harder.

The path you are on will definitely increase your scores. Length is helping, mortgage is probably helping by now. The lates are getting older but probably still hurt. I believe you need another major credit card to help - others would know better.

Re: Trying to understand Fico scoring

fico64 — Tue, 05 Oct 2010 15:53:35 GMT

GregB,

I ordered Equifax and Trans Union from my Fico. Please read top of post for what I said. Do not want to rehash again.

What I'm trying to understand, over the last 16 months, things were substantially improved and all three scores dropped instead of improving. As I suggested earlier, I conclude that taking out the mortgage has hurt me instead of helped me. I have been paying on it for 13 months and the reports correctly reflect the existing balance.

Experian says in it's analysis: Mortgage, 4 stars, best credit one can have. I did not have a mortgage 16 months ago. My last late is almost three years old.

Re: Trying to understand Fico scoreing

GregB — Tue, 05 Oct 2010 16:50:41 GMT

OK, so we are assuming your EQ FICO was 673 when they pulled the mortgage. From your last post we know that the EQ score of 669 is also a EQ FICO. Those are directly comparable. In between you had the inquiries from the mortgage, new mortgage account, lower use of CC, and no more lates. I would expect that to result in a score increase and you have a decrease. 4 points is actually close enough we should call that "the same" but I do realize it is in the wrong direction. I would guess the hit from the inquiries has fallen off but don't know about the new account. I would think a mortgage would help your mix of accounts and would think the reduced CC utilization would help a bit also. The big hit from the lates was already over when you pulled the mortgage score so I doubt you benefit much, if at all, for the age of the lates. If you look at the details of the two reports you could get a better idea but imagine that you don't have the actual reports from the mortgage. I understand that some mortgage companies pull a "mortgage enhanced" FICO score so that might be a bit different also. Others may chime in with more info since I'm not really sure on that. The important part is that your score is headed up, not down.

We now know your TU FICO was 707 and is now 683. That is clearly down but if Hauling's guess is correct, one is TU04 and the other TU98. That makes it hard to compare them directly. You need two scores that you know are based upon the same scoring model.

The current EX report is useful for the details of your accounts. Any EX consumer score or info on what is helping or hurting your score is pretty useless. EX Plus is know to vary by 100 points in either direction to an EX FICO. When I could still get an EX FICO from myFICO.com, my Plus score typically ran 40-80 points higher since Plus seemed to love my 5 mortgages. Others regularly reported Plus way less than their FICO.

Re: Trying to understand Fico scoring

fico64 — Tue, 05 Oct 2010 18:32:37 GMT

GregB and all the others,

Thank you so much for responding to my questions.

Now, I will reveal something. In theory, it should have no effect and that is why I did not mention it. In the early 90's I got in trouble for to much credit. To many credit cards and high balances. I sought the help of credit counseling. They successfully wiped out a few high balances but this information was shown on my credit reports. This information has since long dropped off my credit reports(prior to 2004) My scores were way down prior to 2004. I vowed to never use credit card like I did.

So 16 months ago, when I saw my scores, two of which were 700 and 707, I was delighted. When I pulled my Fico scores last month, was fully expecting to see scores about 715-720 based on the last 15-16 months. You can see my disappointment. "The important part is that your score is headed up, not down." The trend is, it went down not up.

My theory is either the new mortgage is hurting me and can't see why or the system is "holding my feet to the fire" for the past transgressions which long dropped off my reports. I understand this should not be the case, my scores were in the 500's prior to 2004 and may be much slower to recover. In any event, just dose not seem right.