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New Contributor
tylersmom4
Posts: 74
Registered: ‎03-30-2012
0

Rebucketing?

What is rebucketing? I don't understand.

Valued Contributor
Duncanrr
Posts: 2,841
Registered: ‎06-08-2012
0

Re: Rebucketing?

My understanding is that as you increase (or hopefully not decrease) your scores you are bracketed/bucketed into a population of people with similar scores.  For example you may be in the subprime group with people who have bad credit.  As your score improves, you are removed from this population and normalized into another group of people you typically have higher scores than your last group.  (think of it as going from JV to Varisty).  As a result, your scores tend to take a hit as you are now compared to people that will typically have higher scores than you.  The benefit is that in the new bucket your scores are supposed to normalize with the rest of the group in a quicker fashion.  This results in quicker gains (and/or loses) to your scores.

 

Someone let me know if my understanding of this concept is off.

 

Duncan



Starting Score: EQ 551 TU 548 CK 607on 6/8/12, EX 542(AMEX pull 3/4/12)
Current Score: EQ 710 TU 727 EX 704 CK 719(FAKO-EX 697, EQ 697, TU 697)
Goal Score: 750

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Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007
0

Re: Rebucketing?

Good summary.

Each segment controls the weighting of paramenters used for your scoring. Thus, FICO is effectively not one, uniform scoring algorithm.

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007
0

Re: Rebucketing?

The purpose of pools (aka scorecards, buckets, ect.) works out more to the benefit of those with derogs or very little to no history than it does them harm.

 

If there was only one simple bell curve including all credit files then those fortunate, extremely long established folks would have the whole top half of the score numbers scale absolutely locked up tight.

 

So where would that leave the person who is only beginning to build a credit history at all? Or who has had some derogs in the past but now is trying to work toward a better CR and score? They would be locked down into the basement of the score range for probably ten, twenty years or more. There's no WAY that that new user or rebuilder individual has as much good history yet as that long established individual does.

 

So what the pools are attempting to do is to help potential lenders figure out which of the new-credit individuals are showing characteristics which usually go on to blossom into a long clean history, and which other ones don't. The same for rebuilding individuals. By assigning relatively better scores to top of each scorecard and lower scores to the least improved, the individuals who are making progress float to the top. They actually are scoring a bit better than they would if being compared head to head with Mr. Jones who has no derogs whatsoever and has 30+ years of history already.

 

By trying to compare apples to apples and oranges to oranges, that means that amongst the pool of individuals who share certain key history elements, Customer A looks most like someone who will continue to do better and better and is not as likely to default whereas Customer B from the same group is not showing those indicators of steady improvement.

 

If it weren't for scorecards, IMO, it would be very difficult to get decent mortgages and accounts and loans without thirty years of history already established. That would mean that it would be like climbing an ice mountain barefoot to buy a house or a car or open a credit card before the age of at least forty or fifty.

 

The pools tend to be split out according to:

 

-Age of file (length of credit history)

-Thickness of file (number of trade lines)

-Presence of a new account (opened within past X months)

-Presence of seriously negative payment history (90+ days late, charge off, etc.)

Established Contributor
compassion101
Posts: 575
Registered: ‎06-06-2012
0

Re: Rebucketing?

Great post Tuscani, I think I am closer to understanding that concept now!

 

So lets take, for instance, that 15% of the score is length of credit history, which is supposedly broken into AAoA and oldest account. So there is 82.5 points available for this section (850-300=550 points x .15%=82.5). If old guy has 30years oldest and 20 years avg, and young guy has 5 years oldest and 2 years avg, then young guy would automatically be losing alot of potential points, and not really have a shot at a good score, as he will lose let's say 60 points off the top as a guess, so that his best potential score with perfect payments and util etc would be 790. But instead they group oldest guy into a bucket with other older guys and compare him to them, and the younger guy is compared to younger guys? It makes some common sense, but it isn't fair if the old guy is at the very bottom of old guys and loses a tremendous amount of points because of it. 

 

Perhaps the algorithms for FICO go deeper than dropping someone into a bucket, perhaps you are dipped into various buckets for various percentages of your points? Like, for instance, the old guy's 15% for length of credit history is broken into 5x3% sections and 3% is compared to all in the database, 3% compared to other old guys, 3% to others with more than 15 accounts, 3% to others with positive payment history, and 3%  compared to others with newly opened accounts?Obv the numbers and buckets in this example are just made up out of thin air, but does the theory seem to be logically on base?

 

 

 

 

Regular Contributor
solstice00
Posts: 153
Registered: ‎03-09-2013
0

Re: Rebucketing?

Excellent thread.

I think we should make this into a sticky. A beautiful explanation and it helps all of us to understand more about FICO and its scoring algorithm and to have trust, patience and temperament while moving forward. 

 



"Its your AAoA, Sir. It seems, Sir, that it is so short that i dont think it would hurt for it to get a little shorter"
New Member
MC15
Posts: 2
Registered: ‎01-29-2013
0

Re: Rebucketing?

Agreed! Outstanding knowledge! I just got educated, thank you.

Starting Score: 580
Current Score: 580
Goal Score: 850


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Valued Contributor
Gunnar419
Posts: 1,152
Registered: ‎01-23-2013
0

Re: Rebucketing?


Tuscani wrote:

The purpose of pools (aka scorecards, buckets, ect.) works out more to the benefit of those with derogs or very little to no history than it does them harm.



Very informative, Tuscani! Thank you.

 

But why are we "graded on a curve" at all? It seems to me that other people's credit behavior should be irrelevant to our scores -- unless we personally let those other people into our credit lives. In the example you give, it woud be just as easy (and IMHO more fair) to grade a person according to his/her own improving behaviors and history, making adjustments for personal behaviors and improvements, not someone else's behaviors.

 

New Member
sail
Posts: 1
Registered: ‎08-10-2009
0

Re: Rebucketing?

Is this what the message I just got in My Fico means: 

"You moved from one category of credit users to another as time passed. For example, you may have transitioned from the category "consumers with a new credit history" to the category "consumers with a two- to five-year credit history". As a result, your credit report is evaluated differently, causing a slight change in your score. The good news is that moving between categories like this usually offers you the potential to reach a higher FICO® score in the future"

I moved from 796 to 722 in one night. Also my American Express just gave me a limit on my credit card that had never had a limit. I have worked hard on my making sure that my credit score stayed in a favorable range and I'm quite distressed by this change. I do not understand this message and that gets me more upset.  I did just need to lease a car and I expected that to hit me a bit but a 75 point drop was not expected. Please explain this to me.

Established Member
poldies4
Posts: 18
Registered: ‎03-09-2012
0

Re: Rebucketing?

I just got the same message this week and dropped 30 points! From what I understand, though, it's a good thing long term. My score had maxed around 740 - I'm hoping in this new bucket that my score will eventually go higher. My only negatives are high credit card balances (literally nothing else). I got rebucketed *I think* because I've been agressively paying down debt and I went from 16 years 5 months history to 16 years 6 months. Those are the only changes to my reports.
No baddies - only high CC utilization - Goal of 800!
3/2012 EQ 707 76% CC utilization ~ 3/2013 EQ 731 TU 721 56% CC
4/2013 EQ 703 TU 731 56% CC utilization *rebucketed*
4/2013 EQ 707 TU 754 45% CC utilization
4/2013 EQ 721 TU 754 45% CC utilization

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