topic Re: Perfect 850 score question in Understanding FICO® Scoring

Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 15:02:09 GMT

Is it possible to have a perfect 850 without a mortgage on your credit? If not, if there a minimum mortgage amount? Strategizing over here. I notice CK keeps mentioning my lack of a mortgage being a factor. Or are they saying that so that they can recommend a vendor? Thanks.

Re: Perfect 850 score question

SouthJamaica — Wed, 30 Aug 2017 15:26:10 GMT

@ohjoy wrote:
Is it possible to have a perfect 850 without a mortgage on your credit? If not, if there a minimum mortgage amount? Strategizing over here. I notice CK keeps mentioning my lack of a mortgage being a factor. Or are they saying that so that they can recommend a vendor? Thanks.

CK's advice and recommendations are completely meaningless. Disregard.

As to whether you can have an 850 without a mortgage, I personally don't think you can, but according to MyFICO's simulator (which I don't believe) you can.

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 16:20:57 GMT

850 without a mortgage is doable, but will take a lot of work and discipline.

Are you trying to accomplish that? where do you stand now? What cards/balance/CLs do you currently have? other loans? etc.

Re: Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 17:17:35 GMT

850 without a mortgage is doable, but will take a lot of work and discipline.

Are you trying to accomplish that? where do you stand now? What cards/balance/CLs do you currently have? other loans? etc.

Yeeeeuuuhhh... That's overall goal. Right now I'm just trying to make it to 760. My scores in my siggy dropped because I bought my daughter a car, dealer hit me with a zillion inq (15), and I ran my credit card balances up to pay a lawyer (divorce stuff). So my scores are currently 676 (EQ), 712 (TU) 658 (EX). Seriously, I expected it to be worse. I hope to see a rebound once my scores update in September.

NF Sig Cash Rewards $1373 bal /$7,000 limit ----paying down to $490 (7%)

NavCheck $0 /$15,000

AU Cap One $657 /$4000 (My brother's acct. going to ask him to request CLI or pay on the card)

Cap one $474 /500 ---> paying this to 0

Discover $193 /200 ---> paying this to 0

Credit One $500 /550 --> paying this to 0

VicSec $0 /$250

Epress $0 /$500

NYC $0 /500

Buckle $0 /$250

MyJeweler Club $0 /$5000

Ulta $35 /$750 ----paying this to 0

(Total revolving limits $19,500)

NF Pledge Loan $377/$501

NF Auto Loan $13,256/13,302 (just bought this July4)

My credit is fairly new

AAoA <1 yr

AoOa 5.3 yr

Being added as AU on 15 yr account today

1 baddie (Midland funding) drops off 9/1 (EX), 1/1 (EQ) already off TU

Looking for anything else that I can do to maximize points. Do you see anything?

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 17:35:38 GMT

Not bad, not bad.

Next time, i would sugggest going to a CU for a car loan. Dealerships will always run up HPs for approvals

You should see your scores go up as your balances decrease. Your AAOA looks good as well, i would not get anymore CCs for now. When you can, you should start workig on CLIs on your cards.

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 17:39:40 GMT

I would think an 850 score would be perfectly possible without a mortgage. You'd definitely need an installment loan paid down to under 9%, but as long as all other factors are maximized (1% util, AAoA 8+ years, AoOA 15+ years, AoYA > 1 year, zero inquiries, etc) I would think 850 would be attainable.

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 17:54:17 GMT

Welcome to the forums, OhJoy. :-)

Credit questions can be broadly divided into theoretical and practical. Theoretical questions are asked purely for the sake of being a credit score hobbyist. You don't actually need to know the answer, it won't help you do or achieve anything important to your finances, etc. -- the hobbyist asks because he is purely interested (in a geeky way) at guessing the abstract workings of the scoring algorithms. Practical questions are asked because you need to raise your score so you can do something: get approved for a car loan, get better rates on PMI, etc.

The question about whether some of FICO's models might give you some small benefit for having a mortgage, such that without such a mortgage you could only get up to (say) an 845 -- this is a theoretical question. It has no practical importance, because nobody needs an 850. Lenders stop caring what your score is once it is over 780. (Arguably 760.)

It sounds like you are much more interested in the practical nuts and bolts of how to achieve a 760. If so, forget about buying a house as a credit score raising strategy. That would be a terrible idea. Only buy a house because you want that house. Actually, getting a mortgage will typically lower your FICO 8 and FICO 9 scores for the first decade or so -- or as long as it takes to pay a significant chunk of it off. That's as compared with having a single small loan that is mostly but not entirely paid off.

As far as improving your score, the only thing you need to do is get the derogs off and wait. And of course keep making payments on time on your loans. Should you end up with a huge amount of extra cash (a relative dies and leaves you 12k) you can improve your score by paying your loans down but still keeping them open for the full term.

One thing you should not do (if you want to improve your score) is open more cards. Also avoid any CLI requests that could result in hard pulls. You have plenty of cards and increasing your credit limits will not help your score.

Re: Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 18:09:40 GMT

Not bad, not bad.

Next time, i would sugggest going to a CU for a car loan. Dealerships will always run up HPs for approvals

You should see your scores go up as your balances decrease. Your AAOA looks good as well, i would not get anymore CCs for now. When you can, you should start workig on CLIs on your cards.

I knew better. I actually did end up getting a NFCU auto loan and went in saying so. I let the manager convince me to give him the chance to get a lower rate with ONE HP....from them, apparently. Got me!

Thanks for the feedback!

Re: Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 18:14:33 GMT

AN installment loan? Meaning, paying down my small one to under 9% would help? Or must it be the auto loan? TIA

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 18:30:17 GMT

The thing that needs to get down to under 9% is something we'll call "installment utilization" -- for a lack of a better phrase. It is a lot like credit card utilization, but it applies solely to installment debt, rather than revolving debt.

That factor measures how much of your existing open installment debt you have paid off. Here's how that factor works. You take all your current open installment loans (only the open ones -- ignoring all closed loans). You then add up all the amount you currently owe. Call that CURRENT. Then you add up the amounts that the loans were originally for. Call that ORIGINAL. Then you divide CURRENT by ORIGINAL and you get a percent. (Do you see how that is a lot like the credit card utilization calculation?) When that % is close to 100, or if you don't have any open loans at all, then you get no FICO points from this factor. But when the % is very low (say 1-9%) then you get most or all of the points from this factor.

So in your case you'd need to pay down the car a great deal, since that is part of your total open debt.

The total number of points you might expect to get from going from a total installment utilization of > 91% (where you are now) to < 9% would be about 30 points.

This is why I said, in my earlier reply to you, that if you get a big windfall of cash (12-13k), you'd benefit from paying down your loans but keeping them open.

Re: Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 18:29:44 GMT

Welcome to the forums, OhJoy. :-) Credit questions can be broadly divided into theoretical and practical. Theoretical questions are asked purely for the sake of being a credit score hobbyist. You don't actually need to know the answer, it won't help you do or achieve anything important to your finances, etc. -- the hobbyist asks because he is purely interested (in a geeky way) at guessing the abstract workings of the scoring algorithms. Practical questions are asked because you need to raise your score so you can do something: get approved for a car loan, get better rates on PMI, etc. The question about whether some of FICO's models might give you some small benefit for having a mortgage, such that without such a mortgage you could only get up to (say) an 845 -- this is a theoretical question. It has no practical importance, because nobody needs an 850. Lenders stop caring what your score is once it is over 780. (Arguably 760.) It sounds like you are much more interested in the practical nuts and bolts of how to achieve a 760. If so, forget about buying a house as a credit score raising strategy. That would be a terrible idea. Only buy a house because you want that house. Actually, getting a mortgage will typically lower your FICO 8 and FICO 9 scores for the first decade or so -- or as long as it takes to pay a significant chunk of it off. That's as compared with having a single small loan that is mostly but not entirely paid off. As far as improving your score, the only thing you need to do is get the derogs off and wait. And of course keep making payments on time on your loans. Should you end up with a huge amount of extra cash (a relative dies and leaves you 12k) you can improve your score by paying your loans down but still keeping them open for the full term. One thing you should not do (if you want to improve your score) is open more cards. Also avoid any CLI requests that could result in hard pulls. You have plenty of cards and increasing your credit limits will not help your score.

Thanks for the welcome

So, I have a new car loan and a secured installement loan totaling around $13,600. If I put my hands on $12K (without someone dying, that is), should that pay off the small loan and the rest on the car? Or, keep them both open and take them both down to 9%? Surely that would really boost my scores.

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 18:32:35 GMT

I anticipated your question and replied just a few minutes ago. I think it is post #10.

Re: Perfect 850 score question

ohjoy — Wed, 30 Aug 2017 18:44:25 GMT

Perfect! Thank you for explaining that and estimating the point value.

Re: Perfect 850 score question

Anonymous — Wed, 30 Aug 2017 19:22:07 GMT

As a practical strategy, I would strive to keep both loans open as long as possible. Talk to the lender beforehand and see of a big paydown will cause the next payment "due date" to get pushed way into the future. (You are hoping to hear a Yes.) If so, make sure you turn off any automatic monthly payments -- otherwise your loans will get paid off way early. There's a solution if that happens, but it's simplest to just pay each loan down and keep both open (or at least one).

Re: Perfect 850 score question

Thomas_Thumb — Thu, 31 Aug 2017 11:36:38 GMT

@ohjoy wrote:
Is it possible to have a perfect 850 without a mortgage on your credit? If not, if there a minimum mortgage amount? Strategizing over here. I notice CK keeps mentioning my lack of a mortgage being a factor. Or are they saying that so that they can recommend a vendor? Thanks.

Yes, 850 scores are possible with no open (or even closed) loans of any kind on file. Ubuntu reported having an 850 on Fico 8 a couple years ago with his file. His file is over 20 years old, AAoA over 10 years and he only had a two credit cards and a couple charge cards listed in his file. Unfortunately, his data point is an anomoly that many choose to discount as suspect. Below is a short cut to his post(s).

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Our-Forums-FICO-High-Achievers-Who-has-at-least-one-FICO-Score/m-p/4339441#M101639

Re: Perfect 850 score question

manyquestions — Thu, 31 Aug 2017 23:30:10 GMT

@ohjoy wrote:
Is it possible to have a perfect 850 without a mortgage on your credit?

It sure is. A clean aged file with revolving accounts and an installment loan with utilization below 9% as was mentioned upthread will get you there with FICO 8 and 9.

Re: Perfect 850 score question

Anonymous — Sat, 02 Sep 2017 13:05:05 GMT

Totally possible.. Here is a snapshot of TU score with profile. FICO8 score 850

IMO a score of 850 is just a cool, factor. It is all gravy after 780 IMO. I am sure with a profile of 3 to 4 credit cards with 3% or lower UTI, 1 installment loan paid down to 9%, and 7 or 8 years AAoA, no negative info would get anyone at or very close to 850 FICO8 score.

Another point I can make is, I have not hit 850 on my EX or EQ with the same profile with the exception of one account. The only real difference is a 33yr old AU revolving trade line, clean with 0 balance. However FICO8 is discounting the AU card in their scoring anyway. So, IMO each reporting agency has a little variation in their FICO algorithm.

Number of Accounts: 9

Revolving accounts open: 5

Revolving accounts closed: 3

Revolving utillization: 0.5%

Average age of accounts: 5.7 years

Age of oldest open Account: 31 years

Installment accounts open: 1 (This is a shared secured loan)

Installment accounts closed: 0

Installment utilization: 8.6%

Inquiries: 0

Negative reporting: 0

Admittedly, there is one unusual trade line and one FICO scoring strategy trade line. Highlighted in RED.

1. I have a very old department store credit card joint account holder on. This is getting me extra points in the AooA portion of my credit score. Not sure how many points this is adding to the score, but it is a little point kicker.

2. I have only one installment loan of $500 that is paid down to below 9% utilization. This is Share Secured Loan strategy pioneered by many people on the forum. This is probably worth 30 points on the scoring model.

Re: Perfect 850 score question

thom02099 — Sat, 02 Sep 2017 17:05:13 GMT

@ohjoy wrote:
Is it possible to have a perfect 850 without a mortgage on your credit? If not, if there a minimum mortgage amount? Strategizing over here. I notice CK keeps mentioning my lack of a mortgage being a factor. Or are they saying that so that they can recommend a vendor? Thanks.

Yes, it is possible. I am currently one point shy of 850 across the board (Fico 8 850/849/850). The question that may be asked is, open or closed mortgage? I recently did a refi on my mortgage, so it's showing as paid off, along with 2 prior mortgages. The new refi'd mortgage not yet showing. One open loan, 1% util on CCs. That's it. Recent auto loan has not yet reported. So, with no mortgage showing, 1% CC util (around $200K in available credit) and one outstanding loan, I'm 1 point off. I also have a very thick file and it's also a very old file.

The near perfect score won't last, for me. Once the new mortgage hits, and the auto loan as well, there will likely be a decline in score. However, I don't care. An 850 across the board is more for bragging rights than anything else. And since I'm not applying for any more credit, it's just not important.

Re: Perfect 850 score question

manyquestions — Sat, 02 Sep 2017 21:52:06 GMT

@thom02099 wrote:
@ohjoy wrote:
Is it possible to have a perfect 850 without a mortgage on your credit? If not, if there a minimum mortgage amount? Strategizing over here. I notice CK keeps mentioning my lack of a mortgage being a factor. Or are they saying that so that they can recommend a vendor? Thanks.
Yes, it is possible. I am currently one point shy of 850 across the board (Fico 8 850/849/850). The question that may be asked is, open or closed mortgage?

I have no mortgage open or closed. I have about 30 revolving accounts showing on my report and one two year old $500 share secured loan paid below 9% which is the only loan open or closed of any kind on my reports. . Oldest revolving account >20 years. AAOA > 8 years. My scores were around 820 before I got the share securred loan, so the loan trick was worth about 30 FICO points for me.

Re: Perfect 850 score question

Anonymous — Sun, 03 Sep 2017 05:17:39 GMT

Any inquiries in the last year or new accounts in the last year?