Understanding FICO® Scoring

[militivy]

I just received a report from CBCInnovis of a score disclosure from a mortgage loan application. It shows 3 fico scores. A beacon 5.0 score of 716, a classic score of 744 and a fair isaac score of 727. It shows a derogatory public record or collection filed. This was a bankruptcy discharged in June 1998. OK 9 years ago. It says lack of recent installment loan information. We have no installment loans. It says too many inquiries last 12 months. To the best of my knowledge there has been only one when I got a copy of my report from Experian in February. Why does us not having a car loan, installment loan, and unknown inquiries hurt our credit score and why are there 3 scores. We have worked very hard over the past 9 years to to keep as debt free as possible. Why does not buying a new car lower our score?

Thanks

[Tuscani]

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militivy wrote:

I just received a report from CBCInnovis of a score disclosure from a mortgage loan application. It shows 3 fico scores. A beacon 5.0 score of 716, a classic score of 744 and a fair isaac score of 727. It shows a derogatory public record or collection filed. This was a bankruptcy discharged in June 1998. OK 9 years ago. It says lack of recent installment loan information. We have no installment loans. It says too many inquiries last 12 months. To the best of my knowledge there has been only one when I got a copy of my report from Experian in February. Why does us not having a car loan, installment loan, and unknown inquiries hurt our credit score and why are there 3 scores. We have worked very hard over the past 9 years to to keep as debt free as possible. Why does not buying a new car lower our score?

Thanks

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Classic, FICO, and Beacon are synonyms and all refer to your actual scores. The variations in the numbers are your scores for each respective credit bureau (Equifax, TransUnion, and Experian).

For the BK, check the SOL in your state. BKs can stay up your reports for 10 years. For the Inqs, you referred to pulling your own report, this is called a soft inquiry and does not count against your total number of inquiries. Check and make sure no one is applying for credit in your name, or pulling your reports without permissible purpose (any person(s) checking your credit other than you is referred to as a hard inquiry). Both of which is illegal. And buying a new car does not lower your score. You may notice a slight score fluctuation since a new tradeline is being added.

[masdeocho]

Ten % of your FICO score is your "mix" of credit.  This considers whether you have revolving debt (credit card), mortgage debt, installment (car loan), etc.  Apparently you've never had installment debt, so your credit is not as "mixed" as it could be.

Some people would advise you to take a small personal loan.  IMHO, it's not wise to take on debt just to try to raise your score.  It might even work against you because you increase the total amount you owe (which counts for 30% of your score).

[MikeToreno]

Don't worry about it except as a matter of academic interest. Your scores are in the "excellent" range, and those factors it talks about I would characterize not as "lowering your score" but as "keeping your score from being even higher than it already is". Once you get the mortgage loan you'll have installment debt so don't worry about it. "Too many inquiries" is only a minor hit and ages off pretty fast. I suppose that you can increase your score by lowering your utilization ratio, so what I'd do is, I'd just keep an eye open for whatever good credit card offers come along and get new cards at a moderate rate. You could take a slight hit due to inquiries and opening new accounts, but the new limit will cut your utilization ratio, and the negative effects will age off. I probably wouldn't get new cards until all the house stuff closed.