Re: those with credit scores near or over 720[ Edited ]
03-27-2012 12:57 PM - edited 03-27-2012 12:59 PM
FICO tailors its scoring algorithm based on a general "categorization" of your credit file. That tailoring is referred to as "rebucketing" on this site.
Just what those buckets are and their specific effects are deep, dark secrets known only to Brother Fair Isaac. However, two general categorizations are fairly apparent.
First is a "clean" credit file, and second is a "thick" credit file.
A clean credit file refers generally to one having no major derogs. 30-lates, unless multiple, wont put you in a dirty bucket, and the same most likely also applies to 60-lates, particularly if old. Kinda murky, but little question that a collection will keep your file "dirty."
While still in a dirty bucket, scores up to the low 700 level seem to be about the max. So I agree that moving into the 700+ level will be tough until your credit file become void of major derogs. Then the fruits of the labor will be easier to reach.
Consumers with "thin" vs "thick" credit files are much harder to risk-analyze. "Thick" files generally refer to those with at least 3 active trade lines and multiple revolving accounts. Until that degree of predictive data is present, it is tough to do a solid risk analysis. I would surmise that anyone who has reached the 700 level will already have a thick credit file, leaving the "dirty" to clean up.
With a file containing multiple 60-lates and a collection, I would predict that further upward movement will be difficult until at least the collection is gone.
I would put all my efforts into the deletion of the collection. Steps to remove it will be very difficult unless it has at least been paid, or you are willing/able to offer a PFD as incentive for deletion. How old is the collection? Paid or unpaid? Have PFD or GW offers been made?