TransUnion - FICO Score (Scoring of credit union cards vs "national" bank cards)

[MidnightVoice]

As in many FICO things, a good mix seems a good idea

Message Edited by haulingthescoreup on 04-01-2008 06:45 PM

[smallfry]

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@Barry wrote:

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@eemjlh wrote:

Hi, I ordered the FICO Credit Complete and my question is regarding the section under "What's hurting your FICO score". My report shows "There is no recent activity on your creditcard. Your credit report shows no open credit cards or it does not report recent information." I don't understand this since I use my credit card on a montly basis and I pay on it twice a month. The TU report does show my recent CC balance - so why would I receive this message as an item that is hurting my FICO score?

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Hi eemjlh....You've pointed out an example of where myFICO needs to do a better job of explaining certain factors affecting the score -- and I'm letting the appropriate people at myFICO know.

What this should have said is something like "There is no recent activity on a national bank credit card."

This is because, while it's good to have any credit card, the scoring formula gives you a few more points for having a card issued by a "national" bank card issuer, i.e. Chase, BofA, Wells Fargo, etc, as opposed to a small/regional bank or credit union. Is your credit card issued by one of these?

Keep in mind that this factor does not count for a lot of points, i.e. payment history or revolving utilization, but still can keep your score from being higher.

Sorry, this description didn't do a better job of explaining but I do appreciate you bringing to my attention so we can fix it.

Barry

Message Edited by haulingthescoreup on 04-01-2008 06:42 PM

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Does recent activity mean letting a balance report or using the card and paying before the statement date? I thought FICO knew the card was used even if the account didn't have a balance report.

[haulingthescoreup]

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@smallfry wrote:

Does recent activity mean letting a balance report or using the card and paying before the statement date? I thought FICO knew the card was used even if the account didn't have a balance report.

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I *think* that on the quoted post, Barry actually checked the member's report, and the negative was referring to no recent activity on a bank card. While the member was wearing out the CU card, he/she was losing points by not recently using a bank card. FICO is aware that CU cards are being used, but if they're looking for bank card activity, that's different.

This was one factor behind my CC spree --I wanted to get more big boy cards on my reports, whether I lean on them much or not.

[marty56]

I just have a real hard time understanding why FICO looks at a CU Mastercard diffrent then say one from Citibank.  I have seen that comment on my TC TU FAKO score report about not having enough prime cards and when my credit was in bad shape my CU wouldn't give me their Mastercard but Captiol 1 gave me one of those 300 subprime cards.

Anyway wont be the first or last thing about FICO that I find hard to understand.

[smallfry]

Marty I wouldn't even consider comments made on any reseller reports. Even FICO generates a bunch of off the wall stuff at times.

[MidnightVoice]

From my CreditSecure Plus score comments:

Your average credit limit for your major credit cards is high. This tells lenders that you have enough financial experience, and they will be more likely to see you as a good credit risk.

You have at least 2 or more open major credit cards on your credit report. This often tells lenders that you are a responsible borrower and they may be more likely to see you as a good credit risk and extend you credit.

[haulingthescoreup]

FWIW, I used to get similar comments about lacking "good" bank cards on my FAKO's, before I went shopping.

I don't know that it's a FICO decision. Remember, the CRA's commission the score formulas. Maybe they have issues with CU's. Plus the CRA's probably make more money from the national banks on credit pulls, so there might be some nod-nod, wink-wink going on there as well.

If FICO came up with the idea, I would think that it's a leftover from back in the day when CU's genuinely were pretty penny-ante. There seem to be a lot of underlying assumptions in the scoring formulas that belong in older days, when Americans used credit very differently.

[Anonymous]

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@haulingthescoreup wrote:

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@smallfry wrote:

Does recent activity mean letting a balance report or using the card and paying before the statement date? I thought FICO knew the card was used even if the account didn't have a balance report.

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I *think* that on the quoted post, Barry actually checked the member's report, and the negative was referring to no recent activity on a bank card. While the member was wearing out the CU card, he/she was losing points by not recently using a bank card. FICO is aware that CU cards are being used, but if they're looking for bank card activity, that's different.

This was one factor behind my CC spree --I wanted to get more big boy cards on my reports, whether I lean on them much or not.

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One thing that comes to mind, for me, is that FICO is a commercial product.  Commercial products are designed to be mass marketed.  The national banks represent a potentially larger FICO pofit center than regional or CU's.  So, has FICO stacked the deck in their advantage in order to encourage consumers obtain and use them?

What other criteria could FICO have for preferential treatment to the big banks?  Supply and demand are forces in all markets, possibly FICO hopes to create more FICO demand by granting preferential scoring to those bigger markets?  Just a thought

[haulingthescoreup]

Sure, I can see that. I can also see that all the formulas currently in use are not exactly recent, and since they're based on historical data, they're looking at a slice of American credit behavior from way more than a decade back.

Thus the High Achievers who have only had 5-6 CC's, open and closed. I'd say that they were evaluating credit histories from before the rewards cards days.

So maybe the same for the lower weight of CU's and regional banks: it was easier to get those cards then, so it was more likely that those with shaky credit carried them, and had more risk of default. IMO, if they're going to ding that type of card, they need to be dinging First Premier and Continental and all the other bottom-feeders.

In the end, that's what FICO scores are: attempts to predict who is more likely to default on a loan/ extended credit than others.