Credit Score Animation

[smallfry]

How would they decide on what is prime or subprime considering the overlap these days. Many CCC's have both products. Cap One for example. Some companies offer decent CL's with semi high APR's like Juniper Carnival Sea Miles. I got 7.5K with a 16.24% APR. What about CU's? I got two CC's from Navy Federal high CL's 20K each with 10.99% APR. Will they consider CU's subprime? FICO has a very tough job ahead in this area. There is too much overlap.

[BuckiRob]

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@smallfry wrote:
How would they decide on what is prime or subprime considering the overlap these days. Many CCC's have both products. Cap One for example. Some companies offer decent CL's with semi high APR's like Juniper Carnival Sea Miles. I got 7.5K with a 16.24% APR. What about CU's? I got two CC's from Navy Federal high CL's 20K each with 10.99% APR. Will they consider CU's subprime? FICO has a very tough job ahead in this area. There is too much overlap.

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Its not Fico that will make that determination. If the debt was issued as sub prime it will be reported as sub prime. What will be surprising is the number of people with good credit scores who have a mix of both prime and sub prime credit. Get used to it.... at least they are in front of the curve. : )

[Junejer]

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@Anonymous wrote:
My opinion... I was trying to point out that FICO separated prime and subprime. Just the fact that they included bank cards sounds like they will see a difference between them in the new score models. At least that's how I took it.

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If that is the case, then people with poor credit (that have to obtain subprime cards and auto loans) will continue to have poor credit, b/c they will be penalized for having subprime loans. If this truly is the case, FICO has missed it big time. How can one EVER get out of the rut of subprime credit? They are insuring that the subprime population will remain subprime.

[Anonymous]

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masdeocho wrote:

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ilovepizza wrote:
And relating to my car insurance post... Did I really change from a great driver to a higher risk over night because I have more inquiries on my credit report the next day because I was trying to improve my credit score? How fair is that?

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Yes, it seems unfair to assume that if you have a low credit score, you're more likely to get rear-ended by the idiot driving behind you.  But the auto insurance industry claims that their number crunchers have found a correlation between low FICO scores and high number of auto claims. 

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Exactly.  However, correlation doesn't equal causation.  I'd be interested to see how tight the correlation actually is.

[upinflagstaff]

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@Junejer wrote:

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@Anonymous wrote:
My opinion... I was trying to point out that FICO separated prime and subprime. Just the fact that they included bank cards sounds like they will see a difference between them in the new score models. At least that's how I took it.

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If that is the case, then people with poor credit (that have to obtain subprime cards and auto loans) will continue to have poor credit, b/c they will be penalized for having subprime loans. If this truly is the case, FICO has missed it big time. How can one EVER get out of the rut of subprime credit? They are insuring that the subprime population will remain subprime.

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If, as previously stated, they count these against negatively when they are new but over time they begin to count normally then it's more likely that it counts heavily against you for a year and less so after a year. Going app happy and only qualifying for sub-prime certainly could hold you down for quite a while. Getting one sub-prime card, using it responsibly for a year and then app for a prime card sounds like the better way to go. There will be a huge segment of the population that might never get out of their mess, but they might not have done that regardless of FICO.

[Anonymous]

Does that mean (eventually) ditch sub-prime CC's and keep only PMS-ies like AmEx??? My oldest card is probably a sub-prime, I may be potentially amputating history length!!!

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@upinflagstaff wrote:

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@Junejer wrote:

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@Anonymous wrote:
My opinion... I was trying to point out that FICO separated prime and subprime. Just the fact that they included bank cards sounds like they will see a difference between them in the new score models. At least that's how I took it.

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If that is the case, then people with poor credit (that have to obtain subprime cards and auto loans) will continue to have poor credit, b/c they will be penalized for having subprime loans. If this truly is the case, FICO has missed it big time. How can one EVER get out of the rut of subprime credit? They are insuring that the subprime population will remain subprime.

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If, as previously stated, they count these against negatively when they are new but over time they begin to count normally then it's more likely that it counts heavily against you for a year and less so after a year. Going app happy and only qualifying for sub-prime certainly could hold you down for quite a while. Getting one sub-prime card, using it responsibly for a year and then app for a prime card sounds like the better way to go. There will be a huge segment of the population that might never get out of their mess, but they might not have done that regardless of FICO.

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[haulingthescoreup]

I would hang onto it, unless the fees are totally outrageous.

You should realize that a closed account will stay on your reports, contributing to your total history and AAoA (average age of accounts) until it falls off, generally 10 years after closing, although EQ likes to lose them early. So you wouldn't see an immediate history ding by closing.

If you want to see the effect of closing on down the road, calculate your AAoA currently and what it would be in 10 years. Most of us find that once the account falls off, other accounts will maintain the average and longest histories, unless there was a huge gap in years between that oldest account and whatever comes next.

Try reading fused's "Closing Credit Cards" in my siggy below. There are a lot of counter-intuitive factors involved.

[MattH]

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@Tuscani wrote:

Fair Isaac held its annual InterACT conference recently. At the conference they had a "FICO Power Station" that allowed attendees to check their FICO scores for free. At that station the following flash movie played:

FUN FACTS

I thought some of you would find the information given fun and informative! Total run time is about 10 mins.

Enjoy!

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Um www.patchworktechnologies.com gets a DNS lookup failure, and when I checked at whois.net and www.networksolutions.com this DNS name is available for purchase.  Anybody know a working address where this video can be found?

[bigtim]

Question for hauling regarding 'sub-prime' CCs. Do you think department store cards are considered sub-prime in terms of FICO scoring?

Thanks.

[haulingthescoreup]

No, not at all.

What I was told is that "sub-prime" refers to the issuing bank.

Think First Premiere and the other leech banks.

If anything, if there's a problem with so-called "sub-prime" cards, it's when you apply elsewhere and the potential lender gives you stink-eye for their presence. There does seem to be some evidence that a report with nothing but $200-$300 CL's from FP and its kin make it harder to be approved for a card with a decent CL from a big bank. The solution seems to be to then go the CU route and get something halfway decent, keep it for a while, possibly close the sub-primes (perhaps not the oldest; depends on the situation), and then try to move up to the majors.

FICO scoring gives some points preference to national banks over both local (non-chain) banks and credit unions, but the term "sub-prime" doesn't appear.


eta: OK, duh me, this thread (two and a half years old!!!) was referring to an industry presentation about a new FICO scoring formula, it appears. I don't know if it was FICO 2008, since the link is broken, or if the new formula ever was launched with the "sub-prime" reference.

I do know that the scoring formulas currently in use do NOT address this. Maybe FICO08 does, for the few lenders who are trying it out, I dunno.

At any rate, this is what happens when someone (often a newbie; no criticism meant!) resurrects an ancient thread and we don't notice the date! This is all probably a moot point now.

Message Edited by haulingthescoreup on 02-07-2010 07:06 AM