topic Re: Not understanding difference in score! in Understanding FICO® Scoring

Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 00:08:40 GMT

OK, I applied for Discover secured card after it said I was pre-qualified but I was denied! They pulled EQ. When I got the rejection letter it said my EQ score was 520. However, before I applied, and just now I checked it said 568! My question is, why would they pre-qualify me knowing my score was too low and 2nd why do they have a far lower score than creditchecktotal? I thought they were supposed to have true scores? Complete BS I got a HP for nothing. Smh

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 00:20:37 GMT

It seems odd that your score post-app would be the same as pre-app for the simple reason that the inquiry should snag a few points from you, especially on a profile such as yours.

40-50 points is a big change for a drop / regain. The only thing I can think of that could cause that is the addition/removal of a baddie, meaning that a baddie like a 30 day late payment was put on your report for a week or two (whatever this span of time was) and then the creditor removed it due to it being a mistake or something.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 00:21:59 GMT

Part One: The Discover pre-qualification is know to be VERY unreliable.

Part Two: Don't know what would caused the disparity of scores (I'm assuming they are both FICO 8's?).

If you haven't already, try the Capital One prequalifier. It has a good reputation for being legit.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 00:33:40 GMT

Hello. Thank you both for the responses.

Credit karma shows me taking a 6 point hit for the HP.
CCT has not updated it seems.

I did have a 10 hit on EX after some deletions but other than that, no new changes.

I already have a cap1 unsecured and 1 month ago I got the cap1 secured using the pre-qualify (note my scores were over 600 when I got the unsecured)

Also Discover said my utilization was too high. Its 42%. I know that's not under 30 but jeez give me a break I'm trying!! Anyway should call Discover and tell them about the discrepancies?

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 00:49:10 GMT

A CC utilization of 42% is actually high. You want yours to be < 9%.

You'll have much better luck applying for more credit cards if you pay off all your CC debt entirely (except for $10 on one card). Since it sounds like you have exactly two cards right now, that would be $10 on one and $0 on the other.

Then use debit cards for a while (no CC purchases). When you are sure that the new balances are appearing on all three credit reports, then apply for your next card.

Do you have an open installment loan? If not, we can suggest an easy way to get 30 more points.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 03:48:24 GMT

@CreditGuyInDixie I have 3 cards. 2 credit, 1 department store card which has a balance of $140. The other 2 are under $50. No installment loans. I would be extremely interested in some suggestions.

Re: Not understanding difference in score!

newhis — Tue, 06 Dec 2016 04:14:54 GMT

Take a look here:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/td-p/4506756

You need a credit mix (cards and loans) to get a better score. CreditGuyInDixie will give you more information.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 04:36:59 GMT

That link that Newhis gave you will walk you through how to get a lot of points with an open installment loan that is mostly paid off. Gives you an overview, then an explanation for the scoring theory for why it works, then step by step instructions.

As far as your credit card balances, your goals should be to pay them all off. Completely. It sounds like you really want a fourth card, which is fine though you can have an extremely high score with just three. Since you want a fourth, you should make sure that two of the three cards are reporting $0 with one card reporting a small balance. AFTER all three cards are reporting the way you want, then you can apply for the 4th.

You also need to set up autopay for all your cards so that you will never EVER be late on a payment. Do you have any bad marks so far? (lates, chargeoffs, collections, judments, liens, anything like that?) If you have anything like that, we can hook you up with a community of people to help you.

If you have no derogs, here is the basic order in which I would tackle your stuff, if I were you.

(1) Pay off all your CC debt. Then use one card for small purchases. Keep your total utilization under 9% at all times. Keep most of your cards with a $0 balance. If a card has never been used even once, make sure you use it once.

(2) After paying off your CC debt, always be sure to pay your cards in full moving forward.

(3) Apply for the Alliant loan using the instructions in that link.

(4) After the loan is all set up and paid down (as per the guidance) you will see a bog boost from that.

(5) After that, you can apply for a fourth card if you want.

If you have derogs, then you will want a mentor or community to help you with those. You will see what progress you can make on those at the same time that you do 1-4. Hopefully you'll get some of them removed before you tackle applying for the fourth card (step 5).

I am not experienced with dealing with derogs but I can suggest some people here who can help.

Hope that is useful!

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 12:59:56 GMT

Very good advice above. Adding that loan to your profile and getting your utilization down as CGID suggested above together will get you out of the 500's into the 600's. With that add 6 months of gardening and you could see a mid-600's score with inquiries/accounts aging, AAoA growing, etc.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 14:01:51 GMT

Thank you so much guys!!! This makes me so optimist. I really do appreciate it!

CGID I have a consultant making challenges. I have two charge offs. One from First Premier, and one from BOA reporting on all 3. Only on TU I have about 5 medical collections that were deleted from EX and EQ. So I assume my consultant will get those removed. Leaving only the 2 charge offs till I'm clean.

I'm paying all my cards down today!

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 16:51:42 GMT

Good luck, pal.

Quick postscript about your credit card payoff. You do want to payoff ALL of your CC debt. But you also want to always have one card reporting a small positive balance. So here's the way to do that.

Pick one of your major credit cards as the card you will always use. Many people make this the card with the biggest single credit limit.

Pay all cards down to $0. That means completely zero out the current balance.

Then the next day use your main Go-To card for something: a tank of gas, some groceries, whatever. Something you absolutely needed anyway.

Figure out when the statement for that card typically prints.

Then, moving forward, make sure that you have paid the balance on that card down to a small positive number every month several days before that statement prints. A balance of $10-20 is about right. The total amount owed that appears at the top of the statement will be what gets reported to the credit bureau.

Finally, every 4-5 months, I'd pull your other cards out of your "shoebox" (where they have been sitting unused) and use them for something small. You might end up with all of your cards reporting a small positive balance that one month, which is not a problem. But be sure that in the month before you apply for anything new (the Alliant loan, the fourth card, etc.) that you have all cards reporting at zero except one.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 20:15:26 GMT

CGID Got it! My two cc are now 0. 140 on my store card. Gonna pay it to 0 tomorrow. Then $15 in gas on my unsecured card. one more thing. I have a person willing to make me a authorized user on their discover. They've had the account for over 10 years. How does that work and will it significantly help? I don't like asking friends for such favors but if it's a big help I will.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 20:50:16 GMT

Great question about being an AU. Here is the stuff you'd need to tell us before we could advise you.

What is the age of your oldest account?

How old would this Discover card (from your friend) be? You say at least 10 years... any way we could nail that down to a specific year? (e.g. 11 years? 17 years?)

Has your friend ever had a late payment on this card?

What is the card's credit limit? What is the typical balance on it? (You might say, for example, between $300 and $600.)

Does this person live at the same address as you?

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 21:55:03 GMT

I'm going to say definitely the account is definitely 13 years old.

Never late. They auto pay everything.

40k limit. Average balance is 2-3k monthly paid in full.
Statement has their score on it and its over 800.

Does not share my address. : /

This friend is someone who's life I saved and they feel they owe me. They don't, but I decided if I would ever ask a favor it would be something that can help me help myself, not some random ask. Thoughts?

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 22:00:31 GMT

Great! We are really close. The one thing you didn't mention was the age of your oldest account (not including the possible AU). What is that?

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 22:00:43 GMT

p.s. age of my oldest account 2 years

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 22:35:03 GMT

I think you should go for it. Unless that is, you want reserve your get out of jail free card (Saved Friend's Life -- Get Any Wish Granted!) for something huge in the future.

If FICO ends up classiying you as a "legitimate" AU, then you'll instantly get a long credit history on all three reports. This is will be SWEET. A nice help for you in the next few years. The kicker is that it might classify you as not a "real" AU.

Examples of real AUs (from FICO's perspective) are a mom's son, a husband's wife. At the other end of the spectrum are two people who barely know each other and are in the AU relationship purely for one person to increase his credit score.

FICO has some weird totally secret way of trying to detect people it regards as being on the illegitimate end of the spectrum. I asked if you lived together because I thought it was possible that could help. So would sharing a last name.

But the bottom line is that I think you have a good shot at FICO considering you legitimate. So have your friend add you, and then see what happens. Personally if you really want to know if it worked, wait until you have achieved some stability in your profile (e.g. after all your CC balances are paid down and have reported their new status to the credit bureaus). Then pull your scores. Then have your friend add you as an AU. Wait till the AU account is appearing on all three reports and then pull your scores again. If you get a big jump, then it worked.

Just one thing:

Only use your AU status for the age. Treat your credit cards as if you didn't have his 40k limit affecting your utilization. It's crucial early on that you develop a habit of paying your cards in full and keeping the reported balances on the cards low. Otherwise you'll develop bad financial habits.

Re: Not understanding difference in score!

Anonymous — Tue, 06 Dec 2016 23:19:19 GMT

CGID, if this AU account did work for the OP, what do you realistically think he'd gain from it (score wise)?

While it would help him no doubt, I question whether or not it would be significant. If he has 3 CC's now and his oldest is 2 years, let's say his AAoA is 1 year. This is assuming he has no other non-revolver accounts on his credit report, which I don't believe the OP has stated either way at this point. If he adds the AU account and it works, his AAoA would move to 4 years. While that definitely crosses a threshold, possibly two, I'm not sure that would make a huge difference in his scores. I know that the 15% of FICO scoring that makes up account history also factors in AoOA which would of course factor in a 13 year account instead of a 2 year account which is a significant improvement, but my understanding was that this piece of that slice of the pie carried less weight than AAoA. I'm not really sure though. Anyway, I was just curious how many points you felt that the OP could potentially gain assuming that the AU account did get factored into his profile.

Re: Not understanding difference in score!

Anonymous — Wed, 07 Dec 2016 00:40:51 GMT

Hey BBS! For all the reasons you give, this is why I said he might want to reserve cashing in on the You-Saved-My-Life favor until he really needs somebody to save his life. He's not gonna get that big of a bonus with the AU trick.

That said, he will get some bonus. A key thing to bear in mind is that Age of Oldest Account is one of the three factors that are used in scorecard assignment. As long as his Age of Oldest is a small number he'll be be placed in one of the more limited scorecards. Admittedly, he's in one of the dirty scorecards now, but he's working on getting all his derogs removed, so it would be nice for him to be in a scorecard giving him a lot of room for his score to grow if and when his profile is clean.

I am bad at predicting score increases when there's lots of confounders, especially derogs present, so I really have no good guess as to the benefit he'll get now or when his profile is finally clean. Great question, but I honestly do not know.

Even though his Average Age of Accounts (different factor in case other folks are reading this) will not be increased a lot, it will keep his AAoA above 2.0 during this year and next while he is adding accounts (Alliant loan and 4th card) and if he can exrecise some restraint will quickly enable him to cross 4.0. An AAoA of 2.0 and 4.0 are valuable milestones, I am told, though I can't prove it based on personal experience.

My feeling is that if his buddy is eager to do this for him, there's no reason why not, though I think he should only do it if he is carefully watching his score to see if it helped him. And he'll only know that by getting his CC balances in line first.

NOTE TO OUR OP:

The conversation I am having with BBS right now is a little arcane. It involves some weird advanced topics like scorecard assignment. Bottom line is that (a) if FICO doesn't view as a legitimate AU then you won't get any benefit. And (b) even if FICO does, you might not get the full scoring benefit of the AU account until your derogs go away. And (c) maybe the full benefit won't be that big anyway.

But those issues aside, there's no drawback to adding it if you really want to give it a try.

Re: Not understanding difference in score!

Anonymous — Wed, 07 Dec 2016 01:54:05 GMT

CGID, great reply as always. I hadn't considered scorecard assignment so what you are saying makes sense.

OP, would you mind sharing how many other accounts you have on your reports in addition to the 3 CCs?