05-08-2014 02:24 PM
Hello all. I got an email from score watch telling me that I have an upgraded credit score and a complimentry equifax report...
I logged on to see my score go from 742 to 779 and some explanation saying how the calculations are different.
Anyone else have this happen?
05-08-2014 02:57 PM
There are lots of ways of calculating a score, and a switch from one scoring model to another is currently in progress.
Here's a document that explains the differences:
Another way of saying it is that there's not a single "right" score -- the lending industry is diverse, and uses a bunch of different scoring systems.
05-08-2014 02:59 PM - edited 05-08-2014 03:00 PM
Official announcement here: http://ficoforums.myfico.com/t5/Understanding-FICO
05-08-2014 06:27 PM
A little info on the FICO 08. And it's getting even more popular with CC companies.
What Changed in FICO® 8 Score
Here's a look at what changed the most in creating the FICO 8 score.
High credit card usage
FICO 8 score is more sensitive to highly utilized credit cards. So if your credit report shows a high balance close to the card's limit, your score will likely lose more points than it would have previously. You may want to consider keeping any monthly credit card balance low.
Isolated late payments
If a lender reports to the credit bureau that you were at least 30 days late with your payment, your FICO 8 score will likely lose points. If the late payment is an isolated event and your other accounts are in good standing, the FICO 8 score is more forgiving compared with scores from previous FICO formulas. However if your credit report shows numerous late payments, the reverse is true and your FICO 8 score will likely lose more points.
Authorized user of credit card
Every generation of the FICO score formula has included authorized user credit card accounts when calculating a person's score. FICO 8 score continues that policy. This can help people benefit from their shared management of a credit card account. It also helps lenders by providing scores that are based on a full snapshot of the consumer's credit history.
To protect lenders and honest consumers, the FICO 8 formula substantially reduces any benefit of so-called tradeline renting. That's a credit repair practice that entices consumers into being added to a stranger's credit account in order to misrepresent their credit risk to lenders.
Small-balance collections accounts
FICO 8 score ignores small-dollar "nuisance" collection accounts in which the original balance was less than $100.
05-08-2014 06:51 PM - edited 05-08-2014 06:53 PM
Seems the new scoring model is designed to make people like it more. Almost everyone has jumped points most by alot.
It's a self-selecting population; that skews the analysis badly
People don't typically find this forum unless something didn't go right for them... occasionally the gold-plated person walks in off the street, but it's mostly people that started with negative information, or no information, and wanted to know more and start improving.
Anecdotally FICO '08 seems to weight more recent information more heavily, whereas FICO '04/'98/'95 once you got dinged you were stuck pretty much till it was gone off your report. So mixed files like me who have aging derogatories more than ~2 years old, tend to see a stronger uptick in a FICO '08 model than a FICO '04 one.
We have very few people who incur a derogatory after they've found this forum: I'm likely one of the lone exceptions in that I paid an old tax bill that the IRS was complaining about, figuring that would go into the database and the IRS officer would check it before filing the lien two weeks later: newp. With the recent derogatory (and prior tax liens on all 3 reports), Beacon 5 (FICO '04) barely moved, lost 5 points, but lost 50 points on EX '08 and 40+ on TU '08... and all three scores looked remarkably similar after that IRS lien landed. At the six month mark of the lien issuance my scores have started to diverge a bit, EQ '04 is still flat, TU / EX seeing slight but noticible improvements in comparison (10-20 points divergence). Also if it penalizes high balances more heavily, with the zero sum nature of tradeline and aggregate utilization, it's possible that having low utilization is a bigger benefit as well and virtually everyone on the forum self-selects into that pool.
Likewise people that are gold-plated, usually see some benefit but I don't fully know why this is: it's possible that in our theory of it's looking at shorter history longer AAoA's and longer tradelines suffer increased diminishing returns... added to the fact that the FICO '08 scores have a higher obtainable max score (can actually hit 850 now on the base / classic score) which wasn't doable on the older ones.
Anyway it's a complicated mess but generally people on this forum have seen a slight increase in their scores with the conversion: I don't know if that holds true over the entirety of the FICO consumer dataset of which we are an incredibly small group of outliers.
05-12-2014 11:56 AM
How is it that everyone scores are going up with this upgrade. Mine went from 703 to 670. What am I doing wrong?