10-31-2007 07:13 AM
10-31-2007 07:20 AM
Credit-Blues wrote:I understand that FICO8 will affect people scores.........Now that I work hard on building back my credit in the last couple years to pay everything on time and raise my score into 700s. The problem I am concern about is that I still have a judgment on my reports, and accounts that show 30 days lates. How the new system calculate the negative things on your account from the past and how much credit will the new fico8 system give to people that are trying to pay on time going forward. My next concern is buying a home this summer will the negative things on report out weight my fico scores.
10-31-2007 07:52 AM - edited 10-31-2007 07:52 AM
Credit-Blues wrote:what do you mean by "2 more buckets for people with fair/poor credit
fused wrote:Scorecards, scorecards, scorecards!!!Scorecards ensure that mangos are compared with mango, and not mangos with papayas. Your risk (score) is determined by how well you manage your credit with others who have a similar credit file. In an ideal world each of us would know which scorecard we're in and know the best ways to outperform the others. But since we really don't know which scorecard we're in and also have no clue on what is a good action or bad action, we're left guessing and having to experiment. Scorecards are not only a huge factor in scoring with regard to util%'s and determining how many accounts should you have reporting balances, they also determine how much your scores will increase or decrease when you apply for credit (inq(s) plus a new account), paying down debt particularly revolving accounts and etc. Here is another example of how scorecards can affect scores.- Person A scores at 770, applies for a new CC and this account and 1 new inq reports. I will nearly guarantee this person's scores are going to drop a lot. Why? Because others in their scorecard are not applying for new credit.- Person B scores at 620, and does the same as Person A will more than likely take a smaller hit than Person A. Why? Well as we all know at these forums, many in the 620 (not sure if it is really called the 620 scorecard but you catch my drift) club are apping and trying to build or repair their credit.In closing, what works for one may not work for others. Don't hate scorecards...if your scores suddenly drop for no apparent reason this might mean you moved-up a scorecard and now your treading water. In time your scores will come back up provided your not being outperformed by the others in your scorecard. Without scorecards it would be virtually impossible for anyone to improve their scores. It would seem everyone with low scores stay at bottom while others with high scores would have no fear of falling.
10-31-2007 07:54 AM
Tuscani wrote:I will share my theory. The purpose of pools (aka scorecards, buckets, ect.) works out more to the benefit of those with derogs or very little to no history than it does them harm.If there was only one simple bell curve including all credit files then those fortunate, extremely long established folks would have the whole top half of the score numbers scale absolutely locked up tight.So where would that leave the person who is only beginning to build a credit history at all? Or who has had some derogs in the past but now is trying to work toward a better CR and score? They would be locked down into the basement of the score range for probably ten, twenty years or more. There's no WAY that that new user or rebuilder individual has as much good history yet as that long established individual does.So what the pools are attempting to do is to help potential lenders figure out which of the new-credit individuals are showing characteristics which usually go on to blossom into a long clean history, and which other ones don't. The same for rebuilding individuals. By assigning relatively better scores to top of each scorecard and lower scores to the least improved, the individuals who are making progress float to the top. They actually are scoring a bit better than they would if being compared head to head with Mr. Jones who has no derogs whatsoever and has 30+ years of history already.By trying to compare apples to apples and oranges to oranges, that means that amongst the pool of individuals who share certain key history elements, Customer A looks most like someone who will continue to do better and better and is not as likely to default whereas Customer B from the same group is not showing those indicators of steady improvement.If it weren't for scorecards, IMO, it would be very difficult to get decent mortgages and accounts and loans without thirty years of history already established. That would mean that it would be like climbing an ice mountain barefoot to buy a house or a car or open a credit card before the age of at least forty or fifty.The pools tend to be split out according to:-Age of file (length of credit history)
-Thickness of file (number of trade lines)
-Presence of a new account (opened within past X months)
-Presence of seriously negative payment history (90+ days late, charge off, etc.)