What's hurting your FICO score?

[Mythic850]

Is there any reasoning behind the ordering of the items in the "What's hurting your FICO score" section of the FICO score reports here on myFICO?

Are they listed in any particular order, such as the most negative factors first?

[Anonymous]

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Mythic850 wrote:
Is there any reasoning behind the ordering of the items in the "What's hurting your FICO score" section of the FICO score reports here on myFICO?

Are they listed in any particular order, such as the most negative factors first?

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Yes, they are.  Whichever factor is hurting you the most will be listed as #1.  The second most damaging factor is #2, and so on.  The negative factors can serve as a good to-do list when cleaning things up because they're listed in order of priority.

Of course, some of them you just can't do anything about other than wait (like "You have a short credit history," for example).

[smallfry]

I now have two since I have paid my car loan from 50% to under 20% of original loan amount. Public records and short average age. Number two is a result of number one since I lost, and deservedly so, my old credit card history due to the BK. Cards were closed by credit grantor.

[RobertEG]

Hey smalfry, we continue to reply!

so one more....

Whether an account is closed by the consumer, or by a creditor, has NO affect whatsoever upon FICO scoring of it as a closed account.  It is simply closed.  Period.

The issue has nothing at all to do with who closed it, it is a simple matter of whether or not it was closed in good standing (i.e, whether a balance remained upon closing).

Closing an account instantly deletes any CL on that account in %util, but does not delete any outstanding balance reported on that account from %util until that balance is paid.  Nothing to do with why, or who, closed it.  That is meaningless, except maybe to a a manual review, but not to FICO score.

It becomes a closed account in good standing once the balance is paid, and then that begins the ten year clock for future deletion of the account from the CR.

[Junejer]

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@RobertEG wrote:

Hey smalfry, we continue to reply!

so one more....

Whether an account is closed by the consumer, or by a creditor, has NO affect whatsoever upon FICO scoring of it as a closed account. It is simply closed. Period.

The issue has nothing at all to do with who closed it, it is a simple matter of whether or not it was closed in good standing (i.e, whether a balance remained upon closing).

Closing an account instantly deletes any CL on that account in %util, but does not delete any outstanding balance reported on that account from %util until that balance is paid. Nothing to do with why, or who, closed it. That is meaningless, except maybe to a a manual review, but not to FICO score.

It becomes a closed account in good standing once the balance is paid, and then that begins the ten year clock for future deletion of the account from the CR.

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I think smallfry was saying that her credit history was shortened due to the fact that her BK caused her CCs to be IIB, thus taking it out of the mix.

[RobertEG]

OK, mythic, here is the sliding order of risk that translates into a credit score.

The basic vanilla low-level view of risk is what type of accounts  you are currently managing.  This is called credit mix, and  is only 10% of risk (85 points), and is not directly dependent upon the way in which current credit is actually being managed, only upon the types of credit  you hold and have shown the ability to manage.

The remaining 90% of FICO risk analysis looks at how your credit is currently being managed.  The first indicator of potential credit risk increase is simply seeking new credit.  This is only 10% of FICO, for it is still not looking directly at how active credit is being utilized monthly.  The risk asumption under FICO scoring is that seeking new debt may be an indicator for potential problems in the next two years in managing that new debt  The basic measure of this potential risk is by way of new credit inquiries made by the consumer.  Again, being a relatively insignificant indicator of potential increased risk, it is weighted low, and drops from scoring consideration after one year.  It is an early indicator of a potential problem, but not based upon history or actual use.

On the FICO risk scale, the scoring then gets nervous when anything you are doing with your current TLs begins to exceed the norm...  it looks at the length that the consumer has been managing credit, which is 15% of total FICO, and measures this by both the length of oldest credit, and average age of prior and current credit.  Adding any new TL decreases your acount age, and is not good in current scoring, but may be neceassary for building future history..  The game is a maybe game.  FICO looks as maybes from the point of view of historicall, how such actions have increased repayment risk in the next two years, so action taken here may have a short term neg FICO impact, but a long term positive impact.

The remaining 65% of FICO scoring is the heart of the system.  FICO gets real nervous with what you do with increasing debt and paying it timely  It looks at the degree of debt utilization (30%), and the history of timely prior payment of debt (35%).  You must keep debt low as compared to your CL, and never, ever, ever make one late payment.  Late payments (including collections, etc) are the ultimate curse in your FICO, for they remain for 7 years, and account for over 1/3 of your FICO score..  Increasing debt is also neg, but can be recovered easily by paying it down, for debt util is a monthly snapshot, with no historical memory.

That is the level of importance of each category on credit score.

Message Edited by RobertEG on 05-24-2008 10:18 PM

Message Edited by RobertEG on 05-24-2008 10:21 PM

Message Edited by RobertEG on 05-24-2008 10:25 PM

Message Edited by RobertEG on 05-24-2008 10:30 PM

Message Edited by RobertEG on 05-24-2008 10:34 PM

Message Edited by RobertEG on 05-24-2008 10:43 PM

Message Edited by RobertEG on 05-24-2008 10:49 PM

[fused]

Is this your intro...or is it your dissertation on FICO scoring

[MidnightVoice]

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RobertEG wrote:

Message Edited by RobertEG on 05-24-2008 10:18 PM

Message Edited by RobertEG on 05-24-2008 10:21 PM

Message Edited by RobertEG on 05-24-2008 10:25 PM

Message Edited by RobertEG on 05-24-2008 10:30 PM

Message Edited by RobertEG on 05-24-2008 10:34 PM

Message Edited by RobertEG on 05-24-2008 10:43 PM

Message Edited by RobertEG on 05-24-2008 10:49 PM

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Did you know that each time one edits a post after the first time one can delete the old "edited by" bits so it looks like just one edit?

[smallfry]

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@Junejer wrote:

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@RobertEG wrote:

Hey smalfry, we continue to reply!

so one more....

Whether an account is closed by the consumer, or by a creditor, has NO affect whatsoever upon FICO scoring of it as a closed account. It is simply closed. Period.

The issue has nothing at all to do with who closed it, it is a simple matter of whether or not it was closed in good standing (i.e, whether a balance remained upon closing).

Closing an account instantly deletes any CL on that account in %util, but does not delete any outstanding balance reported on that account from %util until that balance is paid. Nothing to do with why, or who, closed it. That is meaningless, except maybe to a a manual review, but not to FICO score.

It becomes a closed account in good standing once the balance is paid, and then that begins the ten year clock for future deletion of the account from the CR.

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I think smallfry was saying that her credit history was shortened due to the fact that her BK caused her CCs to be IIB, thus taking it out of the mix.

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Yep. It was an aside. Sorry for any misunderstanding.

[Junejer]

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@MidnightVoice wrote:

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@RobertEG wrote:

Message Edited by RobertEG on 05-24-2008 10:18 PM

Message Edited by RobertEG on 05-24-2008 10:21 PM

Message Edited by RobertEG on 05-24-2008 10:25 PM

Message Edited by RobertEG on 05-24-2008 10:30 PM

Message Edited by RobertEG on 05-24-2008 10:34 PM

Message Edited by RobertEG on 05-24-2008 10:43 PM

Message Edited by RobertEG on 05-24-2008 10:49 PM

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Did you know that each time one edits a post after the first time one can delete the old "edited by" bits so it looks like just one edit?

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LOL.