Having Store Cards Necessary!!!

[CreditDunce]

About 6 years ago switched to GEICO.  They had the lowest rates for me by far.   Then each year, they increased my rates a little.  Not enough to make it worth the effort to switch.  I knew they were "price optimizing" me, but they did it well.  But it added up over the years.  I found it very suspicious the only times they didn't increase my rates were the times I requested quotes from other insurance companies. I never had a problem with GEICO's service.  On the other hand, I didn't actually use the insurance. 

Last spring,  I decided to switch insurance companies due to the "price optimization".  My current plan is to switch insurance companies again next spring.  I will probably try Amica after reading the CR article.  I am hoping switching insurance a couple of times will help my price optimization score for my Internet provider, not just car insurance.  If not at least Amica doesn't do price optimization.

For those that are interested, here is the part of the previous article on price optimization:

http://www.consumerreports.org/cro/car-insurance/auto-insurance-facts-myths/index.htm

Note: my state allows price optimization, Florida does not. 

Regarding the article, I came close to posting the full article it when it came out.  At the time, I decided not to because CR is subscription supported, not ad.  I didn't realize until recently, they published the articles on the web for non-subscribers.   Plus this article is part of CR's advocacy role, not ratings of products.  I think they would like for people read the article and add their name to the petition:

http://www.consumerreports.org/cro/car-insurance/auto-insurance-special-report/index.htm

Full disclosure, I didn't add my name to the petition.  I don't have a problem with insurance companies using a risk (aka credit) score when issuing insurance.   The changes I would like are: 1) transparency - if you don't get the best rates, you should be entitled to the score and the reasons why your score isn't higher;  2) allow us to pull our credit reports electronically when ever we want.  Only once a year mailed copy is fine.   You need to monitor your credit report more than once a year with all of the data breached being reported and not reported. 

[Anonymous]

Yup.  I agree that it is possible to have multiple open credit cards with a non-zero balance and still score an 850.  You'll note that I was careful not to mention that.  I would be surprised, however, to hear that someone can score an 850 with a 10% utilization.  It's a straightforward thing to test... Can Inverse or TT put his utilization at 10% for a couple months?  Then we'll know. 

Regardless of the exact percentage (10%, 11%, etc.), I was just observing that Jamie had (accidentally) left out one of the most important categories in FICO scoring, namely Amounts Owed, in his description of the basic stuff you need for a top score.

[jamie123]

I'm posting this for the benefit of you readers that don't have a subscription to Consumer Reports. It is only a couple of paragraphs but they seem important.

Look here:

[Thomas_Thumb]

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@Revelate wrote:

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@Anonymous wrote:

Hey Jamie!  I totally agree with your four tips on the road to an 850.  The only one you left out is the Amounts Owed category.  My guess is that there's no way to get an 850 with a 10% or more CC utilization (overall).  And I am guessing that if your "installment utilization" is over 90% it is not  possible either.

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We don't know how large the buffers are; TT's file demonstrates that you don't have to have uber pretty installment utilization to get to an 850, and 10% aggregate revolving utilization isn't exactly a big deal FICO wise, nor do you have to have an optimum number of cards reporting a balance (think he tested 4/5, which really should be a drop based on everything we've seen and JagerBombs had a confirmation in his data on that).

That's probably 15ish points right there on my dirty file even between the cards reporting a balance and the middle ground installment utilization, maybe 20-25 on a clean file... which suggests a non-trivial buffer north of an 850, and I think that'd be higher than 10% aggregate revolving.

Admittedly FICO doesn't quite work this way but given that aggregate utilization isn't a bucketable offense to the best of our knowledge, it is reasonable I think.

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FYI - My installment loan balance utilization is currently at 41%. It was at 50% when Discover 1st reported my score 2/2014. I tested 4 of 5 (5 of 6 counting AU card) after joining MyFICO. However, upon review of old credit reports last month I discovered that I posted balances on 6 of 6 credit cards (Experian 3B credit report June 2014) and maintained an 850. Overall utilization was around 3.5%

Inverse file indicates he has an aggregate installment loan balance to loan ratio around 66%. This suggests below 70% satisfies the loan balance requirement based on both Inverse and CAPTOOL's data. True upper limit TBD.

Regarding installment loans, a key "seasoning" factor might be total # of months of payments combined across all loans in a file (open and closed). Once you reach a certain count your file satisfies the seasoning criteria. That could offset potential negative asociated with opening a new loan. 

A VS 3.0 simulator I tested a while back suggest I couild open a $20k car loan with no negative impact on score but a 3 point drop at $30k. The results suggests no "young age" effect associated with a new installment loan but some type of aggregate balance/loan threshold exceeded effect. Fico 08 might work in a similar manner but with a higher balance/loan threshold.

P.S. CGID - I am unable to test the 10% CC level.  Based on my spend habits I would need to allow charges to accumulate over 4 or 5 months while paying only minimum due. Really not up for that. I decided to postpone a new car purchase so no option for a large CC downpayment on a car at this time.

P.S. #2 - cards reporting summary (aggregate UT% between 1.5% and 2.5%)

	Category	July-15	August-15	September-15
source	# cards reporting	3 of 6	4 of 6	5 of 6
1	EX Fico 08 Classic	850	850	850
2	TU Fico 08 Classic	850	850	850
3	EQ Fico 08 Bankcard	886	882	882
	1 - from AMEX
	2 - from Discover
	3 - from Citi

[Anonymous]

Thanks TT! 

If you get interested, I can suggest a way to raise your CC balances by a pretty big number in just a few days.  If you decide you want to open a Citigold checking account in the next couple months, they permit CC funding up to a huge level (100k I believe).  You'd just need to use a card that is protected against it being classified as a cash advance.  The sign up bonus is pretty huge for a Citigold at the moment.  But of course I wouldn't expect you'd necessarily be that interested, so I am certainly not pushing you.

Being able to score 850 with a < 70% aggregate installment utilization doesn't surprise me at all, though I would be surprised by someone doing it with an IU of > 90%.  Your idea of "seasoning" is something I personally always guessed might exist somewhere in the algorithms (though exactly how it's implemented I wasn't willing to hazard a guess).  It makes sense that installment loans are most meaningful when they show a series of payments over time (an ability to manage the loan and never miss a payment.  Thus if Bob and Fred have the exact same 68% IU, each with three installment tradelines, but Bob's loans have been open for 4 months and Fred's for four years, it makes sense that FICO might give Fred more points than Bob for that one factor.

Thanks again....

[Thomas_Thumb]

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@CreditDunce wrote:

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I think we are talking about different things.  Your auto enhanced credit score is something you can buy.  Auto Enhanced FICO 08 credit scores are used by banks and CU's to help set auto loan interest rates.  You auto insurance risk score isn't something you would normally have access to.  Instead, it is something you see indirectly in your auto insurance rates.  According to the September 2015 Consumer Reports article on Car Insurance, having a bad auto insurance risk score is worse than having a DWI.   A few store cards will not give you a bad auto insurance risk score.  But they are a negative factor in your auto insurance risk score.  I don't know if it is a complete list, but the article lists: department-store cards, tire-dealer cards, auto-parts stores, service stations and finance company (retailer) cards.

Here is a link for the part of the article on auto insurance credit scores:

http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

 EDIT: I am changing auto insurance credit score to risk score to help avoid confusion. 

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CD - Since you mentioned it, I couldn't resist and had to go track down my Auto and Property insurance scores. They are available (with a credit report) through LexisNexis - for a $12.95 fee of course. They source their data through Equifax (my worst CB). Score range for both is 300 - 997.

LexisNexis® AttractTM Auto Insurance Score

Your score of 873 places you in the 93% percentile of consumers throughout the nation. If an insurance company evaluated you solely on your insurance score, you would be considered a GOOD risk. Because insurance companies use your insurance score with other underwriting guidelines (i.e. motor vehicle records, claims loss history), your risk level could change. For example, if you are considered a good risk but have a poor driving record and claims history, your ranking could be lowered.

It is important to know your insurance score because it is a determining factor in your auto insurance. It is important to understand how your score is determined so you can improve your score over time.

Score:

873

Graph shows the percentage of consumers who would receive a lower insurance score than yours. The maximum insurance score is 997.

LexisNexis® AttractTM Property Insurance Score

WHAT YOUR SCORE MEANS

Your score of 855 places you in the 92% percentile of consumers throughout the nation. If an insurance company evaluated you solely on your insurance score, you would be considered a GOOD risk. Because insurance companies use your insurance score with other underwriting guidelines (i.e. motor vehicle records, claims loss history), your risk level could change. For example, if you are considered a good risk but have a poor driving record and claims history, your ranking could be lowered.

It is important to know your insurance score because it is a determining factor in your homeowner insurance. It is important to understand how your score is determined so you can improve your score over time.

Score:

855

Graph shows the percentage of consumers who would receive a lower insurance score than yours. The maximum insurance score is 997.

Here is a analytical article on insurance risk scoring models

https://www.casact.org/pubs/forum/04wforum/04wf251.pdf

Here is a chart of Choice Point risk scoring buckets provided by West Bend Insurance. http://www.thesilverlining.com/safety-resources/tips-to-help-avoid-losses/auto-tips/credit-based-ins...

[CreditDunce]

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@Thomas_Thumb wrote:

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@CreditDunce wrote:

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I think we are talking about different things.  Your auto enhanced credit score is something you can buy.  Auto Enhanced FICO 08 credit scores are used by banks and CU's to help set auto loan interest rates.  You auto insurance risk score isn't something you would normally have access to.  Instead, it is something you see indirectly in your auto insurance rates.  According to the September 2015 Consumer Reports article on Car Insurance, having a bad auto insurance risk score is worse than having a DWI.   A few store cards will not give you a bad auto insurance risk score.  But they are a negative factor in your auto insurance risk score.  I don't know if it is a complete list, but the article lists: department-store cards, tire-dealer cards, auto-parts stores, service stations and finance company (retailer) cards.

Here is a link for the part of the article on auto insurance credit scores:

http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm

 EDIT: I am changing auto insurance credit score to risk score to help avoid confusion. 

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CD - Since you mentioned it, I couldn't resist and had to go track down my Auto and Property insurance scores. They are available (with a credit report) through LexisNexis - for a $12.95 fee of course. They source their data through Equifax (my worst CB). Score range for both is 300 - 997.

LexisNexis® AttractTM Auto Insurance Score

Your score of 873 places you in the 93% percentile of consumers throughout the nation. If an insurance company evaluated you solely on your insurance score, you would be considered a GOOD risk. Because insurance companies use your insurance score with other underwriting guidelines (i.e. motor vehicle records, claims loss history), your risk level could change. For example, if you are considered a good risk but have a poor driving record and claims history, your ranking could be lowered.

It is important to know your insurance score because it is a determining factor in your auto insurance. It is important to understand how your score is determined so you can improve your score over time.

Score:

873

Graph shows the percentage of consumers who would receive a lower insurance score than yours. The maximum insurance score is 997.

LexisNexis® AttractTM Property Insurance Score

WHAT YOUR SCORE MEANS

Your score of 855 places you in the 92% percentile of consumers throughout the nation. If an insurance company evaluated you solely on your insurance score, you would be considered a GOOD risk. Because insurance companies use your insurance score with other underwriting guidelines (i.e. motor vehicle records, claims loss history), your risk level could change. For example, if you are considered a good risk but have a poor driving record and claims history, your ranking could be lowered.

It is important to know your insurance score because it is a determining factor in your homeowner insurance. It is important to understand how your score is determined so you can improve your score over time.

Score:

855

Graph shows the percentage of consumers who would receive a lower insurance score than yours. The maximum insurance score is 997.

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Thanks, I had no idea LexusNexus sold auto insurance scores.  Do they give the reasons why your score isn't higher?  It is hard to improve your score if you don't know what the model wants to see.

I have seen many SP's from LexusNexus when I shop around for auto insurance.  I assume they are pulling the above score.  Do we know for sure?  One of the things I questioned when I read the ConsumerReports article is they implied there was only one auto insurance credit score.  I suspect it is likely many insurance companies used their own internal scoring.  It has been a couple of months since I read the article, I need to go back and read it again.

[Anonymous]

This is a really good thread even with the drift from the original post, maybe the OP can change the title to something that belies the great information hiding in this thread.

Since I don't know how to multi quote.

CGID

I could run up 10% reporting fairly easy with the holiday coming since I don't have huge lines.

That may change as I am debating joining/apping NFCU and NASA with the high income I had last year and high scores posting.

I am looking to do some number of cards reporting testing next month

TT

I am likely to refi my mostly paid off mortgage for leverage reasons, so I'll be saying goodbye to the 850 soon enough, but I'll keep everyone posted on how it effects me.

I am debating doing the refi prior to the NFCU/NASA apps just to show a ~15% DTI ratio.

Oh, I am going to get my insurance score, that's good information.

I do everything through USAA, but I am sure they optimize me.

I might get it now and then once my score cleans up on EQ just for fun.

[jamie123]

Thomas_Thumb that is great information!

Did you know that an auto insurance score is offered for free at CK? It would be very interesting to find out how your Lexis-Nexus score compares to the free CK score.

You can find it under Auto Savings and then the Insurance tab. It will be located on the left column.

This is what my score looks like:

It says it is a Trans Union score but being from CK I have my reservations.

[Thomas_Thumb]

CreditDunce wrote:

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Thanks, I had no idea LexusNexus sold auto insurance scores.  Do they give the reasons why your score isn't higher?  It is hard to improve your score if you don't know what the model wants to see.

I have seen many SP's from LexusNexus when I shop around for auto insurance.  I assume they are pulling the above score.  Do we know for sure?  One of the things I questioned when I read the ConsumerReports article is they implied there was only one auto insurance credit score.  I suspect it is likely many insurance companies used their own internal scoring.  It has been a couple of months since I read the article, I need to go back and read it again.

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I am reasonably sure these ARE the scores that get pulled - If they use LexusNexus which appears to be an industry leader. Transunion also offers Auto risk scores but I don't believe they have the same presence in the industry.

Yes - the reports include reason codes...but I found them to be of limited use. However, the 1st one does reference the negative impact of retail accounts. Click on "more info" for details. See below:

The key factors in influencing your Auto Insurance score are:

0137	# OF RETAIL ACCOUNTS ESTABLISHED...more info
0907	INSUFFICIENT INFORMATION ON OIL COMPANY ACCOUNTS...more info

Oil company accounts??? I worked for Amoco from 84 to 96 and had an company issued Amoco Diner's Club ... but really.

The key factors in influencing your Property Insurance score are:

0165	% OF ALL DEPART STORE ACCTS REPORTED IN LAST 24 MOS TO TOTAL # ACCTS...more info
0911	INSUFFICIENT INFORMATION ON PERSONAL FINANCE ACCOUNTS...more info

P.S. Jamie123 - I checked CK and got my free TU Auto insurance score. The score [range 150 to 950] is referenced in the Money Crasher article link below

http://www.moneycrashers.com/auto-insurance-score-credit-history