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Any solid data on "average credit limit" & scoring?

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Anonymous
Not applicable

Any solid data on "average credit limit" & scoring?

I know this topic has been discussed here and there on the forum, but I'm not sure if there was any real answer to this question. 

 

It's been suggested by some that your average revolving credit limit (total revolving credit limits divided by total number of revolvers) could play a small role in FICO scoring.  I remember reading that some thought this number, if it does exist, was somewhere around $10k. 

 

Since so many variables are usually at play, I can see how this would be quite difficult to test.  Therefore it wouldn't surprise me if we don't know the answer, yet.

Message 1 of 11
10 REPLIES 10
newhis
Valued Contributor

Re: Any solid data on "average credit limit" & scoring?

IIRC it was CreditGuyInDixie that commented about this some time ago (the first time I saw it). I think it was not for FICO 08, I think it was about some other score model like auto insurance score. The 'bad' thing about it is that closed accounts count as $0 limit, so it will be hard to get above 10K if you have several closed cards.

 

EDIT: changed auto score to auto insurance score

Message 2 of 11
SouthJamaica
Mega Contributor

Re: Any solid data on "average credit limit" & scoring?


@newhis wrote:

IIRC it was CreditGuyInDixie that commented about this some time ago (the first time I saw it). I think it was not for FICO 08, I think it was about some other score model like auto score. The 'bad' thing about it is that closed accounts count as $0 limit, so it will be hard to get above 10K if you have several closed cards.


My recollection is that it related only to insurance scores, which have hundreds of factors not used by the regular FICO scores.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 3 of 11
Revelate
Moderator Emeritus

Re: Any solid data on "average credit limit" & scoring?

Virtually all of the FICO algorithm is percentages.

 

Vantage has something on largest tradeline, maybe there's something in the data, but it's not in FICO 8 and earlier.   I would suggest my flatlined EQ Beacon 5.0 score when I've substantially increased my average limit over that period, suggests it's not there unless the average limit is something absurd like 20K or above which is just not normal historically.  Abovementioned insurance scores are all over the map to be sure in their weightings.

 

Credit limits have very very little to do with credit worthiness in the current market or maybe any market, and it'd be sort of silly to base a component of a risk model on something that's effectively market determined.  Anyway to my knowledge there's no data on it for FICO, it'd be hard to track anyway.

 

Also being flatly cold sbout it: when a $500 secured loan appears to count the same as a mortgage, and a $500 secured card counts the same as a $50K UNFCU card, why would we rationally think that average loan size or credit limit matters, at all?  Just hasn't been borne out in the data.




        
Message 4 of 11
Thomas_Thumb
Senior Contributor

Re: Any solid data on "average credit limit" & scoring?

I have not seen anything in Fico reason codes/statements suggesting such a factor - See below link.

 

http://www.fico.com/en/wp-content/secure_upload/FICO_Score_Reason_Codes_1424PS.pdf

 

Note Fico does also market CBIS in competition with LN and TU but, I believe the OP is strictly asking about scores available on 3B reports.  Fico Nextgen & Nextgen II are a bit odd in what those models use for scoring factors relative to Fico 98, Fico 04, Fico 08 and Fico 09.

 

VantageScore and CBIS (both LN and TU) do consider average credit limit and/or "amount of credit available" separate from utilization..

 

VS score factors.jpg

 

Transunion CBIS reason codes:

 

TU CBIS general.jpg

https://www.fmins.com/PublicDocs/pdf/FI/Auto_Property_Reason_Codes.pdf

 

 

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 5 of 11
Anonymous
Not applicable

Re: Any solid data on "average credit limit" & scoring?

Hi BBS!  I wrote a response to you very shortly after you posted this, but somehow it never get sent.  Here is what I wrote:

 

There are in this regard extremely specific reason codes for the Lexis Nexis Auto Insurance score, which nail down a value of $10,532 and below as the place where ACL penalties begin.

 

Vantage is less forthcoming about the exact dollar value but their reason codes also make it clear that ACL matters in their V3 model.

There are however no reason codes that suggest ACL plays any role whatsoever in FICO scoring.

 

So apparently some statisticians who develop credit scoring models (Vantage, NL, TU CBIS) perceive ACL as a valuable risk factor -- but FICO's developers do not.

Message 6 of 11
CreditMagic7
Mega Contributor

Re: Any solid data on "average credit limit" & scoring?

And to this end is exactly the quantary aka:uncertainty that i currently find in entering a next stage in my credit climb or for lack of yet another term, refinement.

 

This is a useful topic and the replies with those relevant data comparisons is something i am attempting to correct on my own profile per ACL.

 

For example, the AAOA crossing threshold is been obtained. At least the first stage of (2) years. Oh boy, only another 24 months or so to go to work up to the next one right?

 

But back to topic at hand. I am seriously and only days away from releasing my oldest card account from Active/Open to Closed as it is a $4.5K limit and i find no confidence the lender of that card is in any position to compete with others cards that are 15-20K range anytime soon or the near future. The reason for making this adjustment now rather than later.

 

The drive or expectation or even ambition of mine is to now focus on raising the ACL ratio. Some recent SP CLI's coupled with a HP CLI should help with that, and i won't even get into a recent new one (only 1) which by the way surpassed the current limit on the longest standing card which i will soon be closing out by $1K, however they also routinely offer regular increases per a scheduled period which should also help with this effort.

 

After the reportings are in for Februry, my current FICO Scores may or may not pick up or translate to points from changes on the value of a higher ACL, but according to you guys above, Vantage 3 certainly does if only to some small degree so we'll see. LexisNexis as indicated suggests i suppose what can be considered a fairly accurate representation as to do with the ACL but then their models do display many different levels of grading/scoring if i follow this right.

 

 

 

 

 

 

Message 7 of 11
Anonymous
Not applicable

Re: Any solid data on "average credit limit" & scoring?

Thanks for all of the replies above.  Some really good information here, as always.

Message 8 of 11
Anonymous
Not applicable

Re: Any solid data on "average credit limit" & scoring?


@CreditMagic7 wrote:
I am seriously and only days away from releasing my oldest card account from Active/Open to Closed as it is a $4.5K limit and i find no confidence the lender of that card is in any position to compete with others cards that are 15-20K range anytime soon or the near future.

 

The drive or expectation or even ambition of mine is to now focus on raising the ACL ratio......

 


Hello CM!  Always a pleasure to see you on here.  Would you mind answering a few questions?

 

This card you are about to close...

      How old is it?

      Is it your oldest open account?

      Does it have an annual fee?

      Is it a store card or a major CC?

 

What is the age of your next oldest open card?

 

Bear in mind that if the card you plan to close is substantially older than your next oldest open card, you will end up being hurt in ten years when your "Age of Oldest Account" is reduced..  To see how that works, I'll give them names.  Card A is 9 years old.  Card B is your next oldest card at 4 years.  You close card A next week.  In ten years from now, your "Age of Oldest Account" will be 19.  But then Card A will fall off your report.  Suddenly your Age of Oldest will go down to 14.  That will hurt your score -- perhaps not by much, but by some.

 

Note that I am not talking about how card A falling off will affect your AAoA (Average Age of Accounts).  AAoA is a different factor altogether.  "Age of Oldest Account" is used in determining what scorecard you get assigned to, and that is important.

 

The harm caused by card A falling off could in fact occur sooner if card A falls off in less than ten years -- we have a thread going on somewhere else right now with more than one person complaining about how certain positive closed accounts have fallen off much sooner than ten years.

 

On the other hand, suppose card A is only 1-2 years older than card B.  In that case, when card A falls off your report, then there will be little impact to your "Age of Oldest Account."

 

Finally, bear in mind that there is no evidence that any scoring models ding you for having an ACL lower than 11 years -- even the aggressive LN model currently stops any ACL penalty (whatever small penalty that might be) at $10,533, which it sounds like you are above now.

 

Your decision to close the small CL account may still be the right choice for you.  Just wanted you to be considering all the issues in play.

 

Message 9 of 11
CreditMagic7
Mega Contributor

Re: Any solid data on "average credit limit" & scoring?


@Anonymous wrote:


 

Hello CM!  Always a pleasure to see you on here.  Would you mind answering a few questions?

 

This card you are about to close...

      How old is it?-Opened 12/2012

      Is it your oldest open account?-YES

      Does it have an annual fee?-NO

      Is it a store card or a major CC?-Major CC

 

What is the age of your next oldest open card?-Opened 8/2013 Discover Card

 

Bear in mind that if the card you plan to close is substantially older than your next oldest open card, you will end up being hurt in ten years when your "Age of Oldest Account" is reduced..  To see how that works, I'll give them names.  Card A is 9 years old.  Card B is your next oldest card at 4 years.  You close card A next week.  In ten years from now, your "Age of Oldest Account" will be 19.  But then Card A will fall off your report.  Suddenly your Age of Oldest will go down to 14.  That will hurt your score -- perhaps not by much, but by some.

 

Note that I am not talking about how card A falling off will affect your AAoA (Average Age of Accounts).  AAoA is a different factor altogether. 

["Age of Oldest Account" is used in determining what scorecard you get assigned to, and that is important"]

I didn't realize this or else skipped over it in my thinking but.....

 

So a single credit account "Oldest Account" carries a first order for scorecard assignment?

 

If so, which one? Open OR Closed "Oldest Account"?

 

The harm caused by card A falling off could in fact occur sooner if card A falls off in less than ten years -- we have a thread going on somewhere else right now with more than one person complaining about how certain positive closed accounts have fallen off much sooner than ten years.

 

On the other hand, suppose card A is only 1-2 years older than card B.  In that case, when card A falls off your report, then there will be little impact to your "Age of Oldest Account."

 

Indicated in those details provided above in answer to the questions on "How Long?".

 

The date of the Oldest Card Account until the Next Oldest is a span of 9 months.

 

 

 

Finally, bear in mind that there is no evidence that any scoring models ding you for having an ACL lower than 11 years-- even the aggressive LN model currently stops any ACL penalty (whatever small penalty that might be) at $10,533, which it sounds like you are above now.

 

Your decision to close the small CL account may still be the right choice for you.  Just wanted you to be considering all the issues in play.

 


CreditGuyInDixie- I think that was a typo on your part? where you mention 11 years but meant to say 11 thousand?

 

Which completely by accident might have just raised another interesting prospect or not.

 

Suppose that for sake of this discussion, that on the same order your AAOA is measured for scoring purposes, and at set levels to be reached before accruing some additional FICO points, that your ACL "also might be" measured then compared and finally scored by some percentage or just simple raw numbers as expressed with the LexisNexis sample over a given time period.

 

For example the ACL your very first year (or 6 months) is one result and then for each next year and the years after it continues to grow.

 

Am i reaching here or could this also be another useful area of exploration for data sets that might go into some scoring formula used to measure Credit History/Dependability in however one might assign numbers in a point system to better refine their results?

Message 10 of 11
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