Understanding FICO® Scoring

[ChrisinKC]

Hello, I was a dumba$$ about a year and a half ago (maybe I still am).  I got into trouble with my bank charging me over-the-limit fees simply because I wasn't paying attention to my account balance.  To counter the over-the-limit fees, I didn't make a payment on my credit card.  I know that payment history is 35% of your FICO score, and I also know that your credit history stays on your report for up to 10 years, but how old does the 30/60/90/forever day late payment have to be before it doesn't lower my score?  What percent could I expect my FICO score to go up when the late payment no longer is lowering my score?  Another thing - why is the FICO, or any credit scoring algorithm such a huge secret to everyone?  It effects everyone in many aspects of their lives and I believe it should be public knowledge.  It should be public knowledge so people can run "what if" scenarios for their OWN credit situation.  Hurting a person's credit score because they did something (apply for new credit, consolidating debt, closing accounts, etc) that they didn't know the exact consequences for is unfair to all consumers.  If FICO scores are going to be used, then consumers should have the right to know what consequences their actions will have on their score - BEFORE they take action.  I think people would be much more careful in making their decisions if they knew EXACTLY what would happen before they took any action regarding credit.

[MidnightVoice]

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ChrisinKC wrote:

Hello, I was a dumba$$ about a year and a half ago (maybe I still am).  I got into trouble with my bank charging me over-the-limit fees simply because I wasn't paying attention to my account balance.  To counter the over-the-limit fees, I didn't make a payment on my credit card.  I know that payment history is 35% of your FICO score, and I also know that your credit history stays on your report for up to 10 years, but how old does the 30/60/90/forever day late payment have to be before it doesn't lower my score?  What percent could I expect my FICO score to go up when the late payment no longer is lowering my score?  Another thing - why is the FICO, or any credit scoring algorithm such a huge secret to everyone?  It effects everyone in many aspects of their lives and I believe it should be public knowledge.  It should be public knowledge so people can run "what if" scenarios for their OWN credit situation.  Hurting a person's credit score because they did something (apply for new credit, consolidating debt, closing accounts, etc) that they didn't know the exact consequences for is unfair to all consumers.  If FICO scores are going to be used, then consumers should have the right to know what consequences their actions will have on their score - BEFORE they take action.  I think people would be much more careful in making their decisions if they knew EXACTLY what would happen before they took any action regarding credit.

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FICO is secret because if it were public no one would need Fair Isaac    And there is a great deal of information out there on how scores are calculated, and a bunch of simulators on the web.  It is just that no one checks until they are in trouble 

But - baddies (except BK) stay on your report 7 to 7.5 years then drop off.  They hurt less as they age - every year helps (the FICO computer seems to like the year as the unit of time)

[ChrisinKC]

I understand that they hurt less as they age, but HOW much less?  How much less after 1 year, 2 years, etc?

[ricdiablo]

Depends on what was paid late and how late it was. A single 30 day on my credit cards stopped anchoring my score down after 14 months of being on time while paying down the balance. For the 90 days on my installment debt it took almost 2 years for my score to recover--again being on time AND actually paying down the balance.

So in general lates stay on your record for 7 years, but your actual score recovers in about 2.