Reason codes and Credit Scoring?

[RobertEG]

Can someone please explain this to me?

I am confused about the so-called “reason codes” used by the CRAs as comments on one’s credit report.

As I understand it, the “reason codes” are not actual data field and code entries directly reported by creditors  to a consumer’s credit file.  I have assumed that since they are not part of one’s actual credit file data, when the FICO algorithm is run against a consumer’s credit file, they would not directly affect one’s score.  However, many have stated here on the site that reason codes affect one’s actual credit score.

Can someone please clarify this for me?  Are they just comments, or are they actual scoring factors? 

Thanks!

[StartinOver]

I don't know the answer, but I think they don't affect the score, but rather an explanation of the score.

[AndySoCal]

The reason codes are generated by FICO when the score is calculated.  The score generates upto 4 reasons. These four reasons are what is influencing your score either positively or negatively. The are listed in the order influence.

[veracious]

Hello,  RobertEG.

You presented such an interesting question that  I did a Google search using the title of your post  and found a few things

but did not  find a direct answer. 

I then performed another search using the terms:  " Vantage 2.0 reason codes"    and found this link____-http://www.vantagescore.com/about/vantagescore_methodology/

You have probably already  dicovered the topics listed on the link ,  but,  I hope this helps.

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ETA:   press release about Vantage 2.0 patent  ----------->  http://www.vantagescore.com/press/

[haulingthescoreup]

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@RobertEG wrote:

Can someone please explain this to me?

I am confused about the so-called “reason codes” used by the CRAs as comments on one’s credit report.

As I understand it, the “reason codes” are not actual data field and code entries directly reported by creditors  to a consumer’s credit file.  I have assumed that since they are not part of one’s actual credit file data, when the FICO algorithm is run against a consumer’s credit file, they would not directly affect one’s score.  However, many have stated here on the site that reason codes affect one’s actual credit score.

Can someone please clarify this for me?  Are they just comments, or are they actual scoring factors? 

Thanks!

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They're scoring factors. Here's the list:

FICO scoring reason codes

The reason codes are what results when the data in your reports is crunched by the algorithms. Some do directly match what is on reports, but more are sort of summaries: how many different accounts with lates; how many accounts are maxed out; and so forth. They're weighted, so one factor (like a new late) can hurt a lot more than another, (like the presence of a consumer finance account.)

[RobertEG]

Ah!!   So they appear to be weighting factors directly incorporated into the algorithm?  That makes sense to me now!

Thanks!