Understanding FICO® Scoring

[aggieguy]

In 2007 I wasn't very bright and let some student loans get late, default, and then go to guarantor. I realize this wasn't the smartest thing to do, but I have since rehabbed the loan and it is with a new lender and on time, never late.

My question is in regards to the myfico report and account information it has listed. When I view the "Understanding Your Score" tab, I have several factors hurting my score. It shows 5 account being seriously delinquent, and 5 accounts under the "Bad Payment History section with description: "You have multiple accounts showing missed payments or derogatory descriptions."

My issue: these 5 accounts are all the loans from WellsFargo, and they have status lines of "90 days past due" and "120 days past due" despite the late payment being well over 4 years ago (last one was October 2007) and having a $0 balance. I understand the individual late payments will stay on for 7 years, but how long does the status line continue to be a problem? And, more importantly, how can I have a "Bad Payment History" simultaneous to having "You've recently been paying your bills on time." listed in the good side of the equation? It doesn't make sense to me.

[RobertEG]

Your credit file and report record and display your status on different levels.

Codes related to current status are snapshots of where the account stands today, with no regard to prior history. Creditors concerned with your current status can get a quick view of whether you are currently in good standing on all or individual accounts, and if not, the level of current delinquency.  An account with a prior status of, for example, 60 late, will have that status overwritten and evaporate from current status when the account is brought back into good standing.

To enable creditors who want more info than just the current account snapshot, other codes are used to retain historical information.  For the above example of an account that was 60 late and then brought current, the current status will be updated to show pays as agreed, but the old status of 60 late is retained in a separate code called your Payment Rating.   And, of course, all prior reported derogs back for at least 24 months are retained in your complete Payment History Profile, on a monthly basis.

So, returning to your question, how much it "hurts" depends upon the degree to which a creditor wishes to dig into your CR.

If a relatively low principal/CL decision, such as a $350 secured card, they might look only at FICO score, or additionally at current status.

However, as the principal or CL involved in their decision rises, they may dig deeper, looking at the prior history codes and data in addition to FICO score and current status.

[aggieguy]

Ok, I get that.

But here's the thing, those current status messages show 90 days late and 120 days late, but the accounts are no longer with Wells Fargo. I called Wells Fargo and they want nothing to do with me. So how can an account continue to be 90 days late if there is no possible way to pay it? I will be "late" until the loan falls off my report.

[Crashem]

Not unusal to have late payments on closed accounts.  It is not saying that you are currently late on payments.  It is saying when the loan was open, you were late on one or several payments.  If I remember, late payments stay on for 7 years from the date of it being late (could be wrong here and stays for life of loan).  You can try the GW method to get it off.

[RobertEG]

Reporting of a delinquency at any level is only its status as of the month reported.  That fact remains, and is unchanged if the account is therafter brought back into good-standing.

Having a reported 90-late, for example, does not mean the account is still 90-late unless it is still reported as such under the Current Status.

Levels of delinquency/derog status prior to the current status are retained in a code called your Payment Rating, and each individ derog is retained, back for approx 24 months, under your Payment History Profile. 

[aggieguy]

Yes as I said, I understand all that.

Here is the question: on a TransUnion "report" (both on myfico and through the TransUnion report interface) it has the following or similar for each of the loan accounts; is the specific status line indicated factored into the scoring model? Again these are accounts that cannot have a pay status of current because I cannot pay the creditor since they washed their hands of the account and tossed it to the guarantor.

Pay Status:

>Account 120 Days Past Due Date<

[RobertEG]

Yes.

The reported delinquency will be picked up by FICO and scored as long as it is recorded in your credit file.

It does not ignore derogs based on positive, subsequent updates to status codes.