VERY interesting info about FICO score points

[jello77]

This board is full of posts and speculation about how many points your FICO score might change when certain items in your credit report changes.

But it's rare to find FICO itself offering illustrations of this.

Below is a chart produced by FICO giving hypothetical examples of how score points can vary based on changes in the five main categories that affect your score. 

The chart is dated 2010 (in bottom left corner), so the information is quite recent.

Here are some highlights from the chart:

Outstanding Debt

The chart shows maximum score points when "Average balance on revolving trades" is between $1 and $99. This confirms what numerous posters on this board have found, that their score was highest when one credit card reported a balance that was small but greater than 0.

Pursuit of New Credit

For hard inquiries in the last 6 months, the chart shows a loss of 10 points for 1 inquiry, 15 points for a 2nd inquiry, 20 points for a 3rd inquiry, and 5 points for a 4th inquiry.

Credit Mix

The chart shows maximum score points being received with 3 credit cards. A 4th card causes a loss of 10 points.

---------------------------------------------------------------------------------

This chart is obviously intended to give a general, hypothetical idea of how different factors can affect the FICO score. The actual change in score points for a real person will depend on numerous factors such as which "scorecard" or "bucket" you are on.

What do you think of this chart?

How does it match with your experience?

Does it have any practical value for us FICO junkies?

--------------------------------------------------------------

EDITED TO ADD THIS:

On the same FICO document that contained the chart I posted above, I found another interesting illustration of score point changes.

Number of months

since most recent

bankcard opening______Points

____0 to 5_____________20

____6 to 11____________25

____12 to 17___________30

____18 to 23___________38

____24+ ______________45

What this tells us:

If all of your cards are more than 2 years old, and you then get a new card, you might have a 25 point decline in your score. This decline would gradually "wear off" until it is all gone after 24 months.

This is useful information I did not know previously. I thought the "ding" caused by a new card probably wore off after 12 months.

[ztnjpv]

I have never asked but I suspected that little feature about not having a zero balance. At Credit Karma, my utlization is graded "C" because the report they have has 2 cards with a zero balance and one with a $53 balance on a $9,700 limit. It made no sense as I felt I was being penalized for paying off the cards every month before my statement posted. 

It seems silly because I use both cards quite often and the usage is very visible on my statements....sometimes as much $600-700 in purchases in a monthly cycle. BUT, I pay the balance in full a few days before statement date so the balance is zero when it reports. 

[jello77]

ztnjpv:

Some of the things Credit Karma says can be seriously misleading.

I follow the same practice as you, making payments before the statement date so that only one card reports a small balance. This has helped me maintain FICO scores consistently over 800. But Credit Karma grades my Utilization as C, which doesn't make any sense.

Credit Karma also gives a grade for TOTAL ACCOUNTS. I have 10 accounts and CK gives me a grade of C. To get an A, CK says you must have at least 22 accounts.

Of course, this is nonsense. I suspect CK grades this way to encourage people to apply for more cards. Why? Because the site is free to consumers and CK makes its money from promoting credit card offers.

Probably the worst feature of CK is its notorious "Score Simulator." The Simulator will say that if you cancel your oldest credit card, your score will go UP. This is crazy and very bad advice.

CK is useful for some things, but do not trust the "grades" it gives you.

[llecs]

---

@jello77 wrote:

CK is useful for some things, but do not trust the "grades" it gives you.

---

...and don't trust their FAKO scores.

[ztnjpv]

Thanks for the reply, Jello!

However, if that chart in the Original Post is to be believed, then it confirms the suspiscion many have  that having your cards report a ZERO balance is less optimal than leaving a few bucks on the balance. 

The end result is people can barely truly use credit...say, buying some candy every month and leaving a $2 balance...and get more rewarded than someone who demosrates an ability to use the credit more liberally and pay in full every month. That, to me, is just plain wrong. Oh well....

[MarineVietVet]

---

@ztnjpv wrote:

Thanks for the reply, Jello!

However, if that chart in the Original Post is to be believed, then it confirms the suspiscion many have  that having your cards report a ZERO balance is less optimal than leaving a few bucks on the balance. 

The end result is people can barely truly use credit...say, buying some candy every month and leaving a $2 balance...and get more rewarded than someone who demosrates an ability to use the credit more liberally and pay in full every month. That, to me, is just plain wrong. Oh well....

---

Hi there.

Here is how you manage that $2 charge (or any amount) for the month. Let it report the $2 on the monthly statement and then pay in full before the due date and never carry a balance forward to the next month and thus never pay any interest.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[ztnjpv]

MarineVet,

Paying my balance to ZERO every month is precisely what I do. However, it would seem I am being slightly penalized for it and it would be better for my score if I left a few bucks on balance. Truth be told, I have yet to pay a penny of interest on my 2 cards. 

[MarineVietVet]

---

@ztnjpv wrote:

MarineVet,

Paying my balance to ZERO every month is precisely what I do. However, it would seem I am being slightly penalized for it and it would be better for my score if I left a few bucks on balance. Truth be told, I have yet to pay a penny of interest on my 2 cards. 

---

I think you might still be a little confused. You don't pay your balance to zero before the statement posts. That is what penalizes you on points. You let a small balance report and then pay in full. This tactic will show activity on your card and you won't be penalized in any way.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[RobertEG]

The chart seems to be a bit at odds with the mantra that is often heard on the site.... that FICO primarily scores % util of CL, not balance of revolving debt.

Since the chart was published by Fair Isaac, and does not even mention % util of credit limit, I would suspect that the lesson to be learned is that balances are significant.  Whether on a par with % util is not addressed, but it gives food for thought.... far beyond the relatively isolated issue of 0 balance vs some balance.  It extends up the ladder.

It would be great if % util was also included in the chart, thus giving some idea of their relative importance.

[ztnjpv]

Marinevet,

OK. I was a little confused. 

On that note, I must have been misinformed in the past on this matter.  I was led to believe that activity on your card....even if you pay in full before your statement date...is noticed by the credit bureaus. I guess not. That's too bad.