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FICO EXPERTS: Place your wagers here.............

FICO EXPERTS: Place your wagers here.............

Next month, my severe derog (student loan) passes the  2 year mark.  That is, my student loan was 180+ days late December, 2011.  Next month, once the credit report updates, that derog will have passed the 2 year mark (>24 months).

 

HYPOTHESIS:  Since FICO has a tendency to improve, for example, when AAoA turns from 3 (full) years to 4 (full) years, FICO must work in the opposite, too, with respect to derogs as they age.  That is, when a DEROG ages from 1 (full) year to 2 (full) years, FICO should improve.

 

So, next month is a "milestone" as my major derog ages from 1 year to 2 (full) years.  So, this soon-to-be FICO expert is asking the sensei FICO masters on this board, will I see an INCREASE in my FICO score (all other aspects remaining constant) as my major derogs passes the 2 year anniversary mark?

 

Let's find out just how smart the FICO Einsteins on this board are!  Smiley Wink

Message 1 of 12
11 REPLIES
Super Contributor

Re: FICO EXPERTS: Place your wagers here.............

Major derogatory items will usually have a significant impact on your FICO® score until they drop from your reports.  In this case, I don't think that you'll see much of an increase at all because of the severity of the late payment.  

 

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 12
Established Contributor

Re: FICO EXPERTS: Place your wagers here.............

no change, based on your criteria.

Fico 8 12/9/17
Equifax 850, TransUnion 842 10/30/17 , Experian 842 12/11/17 . AAOA 12 years Oldest 20
No inquires since 2014
All credit reports frozen
Fico 8 Equifax Bankcard 866 12/27/16
Message 3 of 12
Frequent Contributor

Re: FICO EXPERTS: Place your wagers here.............

Well...i'm no sensei...but, i'd put $10 on you getting at least a 2 point increase.

(EX08 - 654) --- (TU08 - 643) --- (EQ08 - 667) --- (EQ04 - 676)


Message 4 of 12
Epic Contributor

Re: FICO EXPERTS: Place your wagers here.............

A lot of it will have to do with your score at the time of the major derogatory.  And every thing else staying exactly the same from that day forward.

 

FICO focuses on your worst delinquency and your most recent.

 

 

Message 5 of 12
Moderator

Re: FICO EXPERTS: Place your wagers here.............

I don't think that 2 years is a milestone for a major derogatory in FICO '04.  I had a tax lien from Dec 2010 (paid 2011), and just got a new one Dec 2013; 3 years difference, my score moved 4-5 points on EQ as reported by DCU and Scorewatch... lost a point somewhere in there so not quite certain whether that was an additional card with balance or lien impact.

 

That said, on FICO '08, there was a huge smackdown to the tune of 50 points for that new tax lien on both TU and EX, and incidently they had a very old tax lien on there in addition to the 2010 state tax lien.  You may get a bonus on this model, you likely won't get much of anything on EQ as tracked here or similarly.  

 

If your tracking a score would you mind letting us know what the result is?

 

ETA: yes, there are diminishing returns to both positive information and negative information based on the time domain to confirm your hypothesis, but we don't know where the breakpoints are anecdotally.  Something I hope more people with mixed files track over time.

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 741, EX 2 776, EQ 8 809, TU 8 774, EX 8 822 (1/1/18)
Goal Score:    EQ 5 771, TU 4 750, EX 2 776, EQ 8 809, TU 8 774, EX 8 822 (01/01/19)


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Message 6 of 12
Valued Contributor

Re: FICO EXPERTS: Place your wagers here.............

I have to believe major derogs do hurt worse over time. I had many at one time, and my score creeped upward. Also, at one point, my score took a dive to the tune of 27 points when a derog was removed from my report. I surmised that while the derog was gone, I benefited from the addition to my aaoa's.



EQ 847, EX 850, TU 850 (Updated 1/5/18: TU 843

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Message 7 of 12

Re: FICO EXPERTS: Place your wagers here.............

1)  I will keep track of this and see what happens.  My guess, since AAoA is calculated in years, my hypothesis is that derogs are calculated in years.  That is, as your AAoA goes from 9 years 11 months to 10 years, you may see a bump in FICO.  So, as derogs age from 1 year 11 months to 2 years, I suspect a bump in FICO.  Maybe 2 years is too soon.  Maybe it takes until a full 3 years; or 4 years to see an increase in score since the last derog.

 

2)  GFer...perhaps your drop was due to rebucketing.

Message 8 of 12
Moderator

Re: FICO EXPERTS: Place your wagers here.............


I_SUFFER_FROM_FICO_ENVY wrote:

1)  I will keep track of this and see what happens.  My guess, since AAoA is calculated in years, my hypothesis is that derogs are calculated in years.  That is, as your AAoA goes from 9 years 11 months to 10 years, you may see a bump in FICO.  So, as derogs age from 1 year 11 months to 2 years, I suspect a bump in FICO.  Maybe 2 years is too soon.  Maybe it takes until a full 3 years; or 4 years to see an increase in score since the last derog.

 

2)  GFer...perhaps your drop was due to rebucketing.


+1

 

It's pretty much close to accepted fact across everyone from consumers to underwriters to insiders that penalties fade with time.  If a substantial derog gets removed and the score drops by a non-trivial amount, rebucketing is a smart money bet.  Over time that's a very good thing, but in the short term, especially if we're talking removal of derog and limited positive history, getting dumped into a prettier people bucket can be a shock.

 

I have a flier out on getting my CA tax lien removed, if it happens, am guessing my EQ score will drop non-trivially as a result of this as I still have some black marks (paid collection, 60 day late) but that'd be the last of my public records and I suspect I'll get scored against people who have much longer histories than my 2 years AAoA and my resultant score will wind up lower as a result.

 

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 741, EX 2 776, EQ 8 809, TU 8 774, EX 8 822 (1/1/18)
Goal Score:    EQ 5 771, TU 4 750, EX 2 776, EQ 8 809, TU 8 774, EX 8 822 (01/01/19)


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Message 9 of 12
Valued Contributor

Re: FICO EXPERTS: Place your wagers here.............

Two years is too soon.  Expect some incremental relief beginning at four.

Message 10 of 12