Understanding FICO® Scoring

[madsans1]

I would like to thank this forum as I learned a lot after reading through this forum for past 2 weeks. I am buying a home and after a meet with mortgage agent, I was surprised to see my scores: EQ: 679, EXP: 684 and TU: 699 as of 06/12/08. I had an old collection account and I had paid it off in full to the Medical Center (and not collection agency) long time ago. This collection account damaged my credit scores for good 3 years. But to get the best rate in market, I had to cross 700 so I contacted the Collection Agency and got a deletion letter! It was a smooth transaction for a change. With this letter, I got rapid re-scoring through my mortgage agent and guess what! My scores bumped up to : EQ: 756, EXP: 766, TU 774. (as of 06/18/08)

Apart from this Collection Account, I never had any issues, no late payments, Util as low as 2% for past 6 months.

I verified on my fico that my scores are higher.. Do I still need to send the deletion letter along with photocopies of my ID and SSN to the 3 credit agencies in order to remove this collection account permanently? Or it's already taken care of through rapid re-scoring.

Are the effects of rapid rescoring permanent ones or just for the time being?

Also, I opened up a couple of credit lines within last 8 months which reduced average length of my credit history. I don't really use them so what will be the effect if I close them out?

[athensguy]

See the closing credit cards sticky. If you close your lines, they will not stop affecting your average age, and will stay on your report for 10 years. They will no longer be counted in util.

[RobertEG]

madsans, if the CA has deleted the account with the CRA, and apparently they have, it is gone. 

Credit scoring is always, and only, based on what is in your CR.  There should be no need, once you are sure that it is gone, to take any further action.

Rapid rescoring is just a service that is offered to get immediate CR updates, and thus updated scoring based on the updated CR, which is always a new look at only your current CR.

It looks like all is cool.

Message Edited by RobertEG on 06-21-2008 01:20 AM

[haulingthescoreup]

Hi, madsans, welcome to the forums, and congrats on the report clean-up and great new scores! And a new house too, it would seem.

As the others said, it looks like the OC submitted the letter to the CRA's, as the rapid rescore resulted in the high score jump. Scores reflect what's on the reports at the time that the scores are pulled, so the collection must have already been gone. To verify that it doesn't pop back up, you can wait 3-4 weeks or so and pull again to confirm that it really is gone.

The common advice is to not close cards unless there are fees, or unless they somehow annoy you to death. If you want to close them, realize that their credit limits are removed from your overall total credit limit, so your current util will rise by some amount. (With your low util, it doesn't sound like a big issue, though.) Even after closing, though, they will report for 10 years.

The following is a scoring issue. If you aren't going to apply for anything else in a good while, please disregard:

One extra thing to consider is that now that you have a mortgage, that's an account that will report a balance every month. There is a score ding for "too many reports with balances" that results from half or more of your accounts (loans, mortgages, revolving, all of them) showing a balance. I'd try to have at least 2 more CC's than the total number of open loans and mortgages, plus any cards carrying balances; three would be better.

So if you have, say, a mortgage, a car loan, a student loan, and a CC with a 0% balance transfer that will take a while to pay off, that's four accounts with balances. To avoid the scoring ding, while allowing wiggle room for updating problems, you should have an additional 6 cards that can report $0. I've had 15-20 point swings, especially on TU, for minimizing the number of accounts reporting.

Again, this is strictly a scoring tweak. I keep my extra cards in the sock drawer, and use them occasionally to keep them alive. If you have all the credit you need for the foreseeable future, you don't need to worry about this.

[marty56]

---

haulingthescoreup wrote:
So if you have, say, a mortgage, a car loan, a student loan, and a CC with a 0% balance transfer that will take a while to pay off, that's four accounts with balances.

---

Ys is is true for my profile.

It says the high FICO achievers have an average of 3 accounts reporting a balance and they count my mortgage and car loan so that leaves me with one CC.  I have had 2 CCs report a balance and I know it sounds strange but sometimes is lowers my TU score and somtimes it doesnt 

Anyway I would try 2 CCs with a mortgage and autoloan and see how this works.  If not then try 1.  Experimenting with small balances can really help you see what is going on and will help you when you want to go after a big prize like an auto loan or mortgage/refi since you dont want to be suprised that your score drops from say 720 to 719 when you are going for an auto loan and your CC repots that $20 DVD you just bought at Best Buy.

[madsans1]

Thank you very much haulingthescoreup, erchambers, RobertEG for your information.

Looks like rapid rescore works permanently. I still sent letters to all CAs as a fallback option and I got a reponse from EQUIFAX that they deleted the collection account.

I learnt the importance of having CCs with 0 balances. Now I will not close these 2 CC accounts.
Apart from the mortgage loan that will begin to show up in my credit reports, I have 6 CCs and I use only 1 or 2 every month.
Rest of them always show up 0 balance. All cards have a cumulative credit limit of around 50K.

Now my question is: If I take a 0% balance transfer offer of 14K on one of CC with credit line 15K, how drastically will that affect my scores? I don't really have to take this offer but if it doesn't affect my scores much then I would like to take advantage of this offer. I will be using in all 2 CCs (one of them with BT offer) and a mortgage account. Remaining 4 of my cards will always show 0 balance.

Thanks once again for your priceless wishes and suggestions.

[cimbrone]

I know this is an old thread, but I can't believe how similar our circumstances are and this gives me hope! There is a medical collection on my husband's report from 2011. Like you, I actually paid it off in full to the Medical Center a year and a half ago but the collection agency never knew. I contacted the collection agency and they wrote me a deletion letter that day. They were actually really nice and helpful! I gave it to our lender on Monday and he is working on a rapid rescore. His score is also in the 690s/670s and we need it to be over 700 to qualify for a jumbo loan.

My husband only has one credit card and his utilization was about 14%--I am paying it down to under 9%.

There was one late payment (because of an expired cc number that was set on auto-payment) but it has been changed from 30 days to 0 days past due by the car company. So, that is gone.

I hope we have the same success as you.

[rubbercity]

That's great to hear cimbrone!  I have had 2 recent medical items deleted from my credit reports but have not checked my fico score to see if it has improved.  I did this around the end of August 2012.  When do you think I will see the effects of these deletions?

[rubbercity]

Sorry cimbrone ... I guess you're waiting to see if you get a boost in you credit and ut was the 2008 poster who received the boost.