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Valued Contributor
my-own-fico
Posts: 1,237
Registered: ‎01-05-2010
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New credit a bucket?

Inspired by Revolving Accounts written by llecs, I came across What are Buckets? And What are Tradelines? Message 8.

 


Timothy wrote:
Well known Buckets:
 
New to credit
Public record
Has new account/applying for new credit (i need to get out of this bucket)
 
It has been published that there are 2 negative and 8 positive buckets in the current FICO formula.  In FICO 08 4 negative and 8 positive.

 

I was wondering if someone somewhere else might have elaborated on new credit as a bucket?

How do you obtain a link directly to his post by the way? If you click on Timothy's name and then view all, his least recent post is #100, two months after his bucket post. And looking at his most recent post, there is no indication of why this highly prolific poster suddenly stopped?

The lost luggage office’s trained professional, “Has your plane arrived yet?”
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llecs
Posts: 32,881
Registered: ‎08-04-2007
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Re: New credit a bucket?


my-own-fico wrote:


How do you obtain a link directly to his post by the way? If you click on Timothy's name and then view all, his least recent post is #100, two months after his bucket post. And looking at his most recent post, there is no indication of why this highly prolific poster suddenly stopped?


To select a specific post, look within that post towards the lower left under the poster's name. You'll see something like "Message 2 of 5" or whatever the number is. Click the first number (e.g. 2,3,4,5,whatever) and your webpage will zero in on that post and the URL will change. That's the copy and paste you'd want to use to link to a specific post vs. a whole thread.

 

Timothy was great. We chatted on and offline. He was busy with work and moved on I suppose.

Mega Contributor
RobertEG
Posts: 17,701
Registered: ‎03-19-2007
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Re: New credit a bucket?

[ Edited ]

My take….

 

The two primary methods of consumer default/delinquency risk analysis are to produce a numerical score indicative of risk or to designate a category of risk.  While FICO output produces a score, it is actually a mixture of these two methodologies.

 

There are models that do not even produce a numerical score, but rather divide the consumer base into categories, of which the consumer either is or is not a member.

The result could be  a simply yes/no decision.

A simple example is a tree that first divides consumers into two groups… those with at least three active trade lines, and those with less than three.  So-called thin or thick files.

 

Branching off of each would then traditionally be sub-categories of consumers with clean or dirty files, defined, for example, by the presence or absence of major derogs.

 

Further branching could then include those who have % util of revolving accounts less or greater than, for example, 40%.

 

And on and on, using each of the overall scoring categories, such as credit mix, length of credit, new credit, with the categories considered most significant being at the higher branches.

 

Once a consumer is traced through all of the branches in the model, a final determination of risk is made at the end twig.  It could simply be a yes/no, lend or don’t lend,  decision, or it could be a number designating degree rather than a simple yes/no.  A FICO score, for example.

 

A category, or “bucket,” exists at each branching.  Thus, these models don’t use one categorization, but rather a multitude of cascading categories, each with its own level of importance.  I have yet to see a model where new credit is at the top of the tree.

 

The higher the category is on the tree, the greater is generally its importance in the final decision.  Regardless of the major branch one is on, flowing into a dirty branch usually results in an unfavourable end number or decision.


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