topic Re: Negative Reason Codes on 840 score: in Understanding FICO® Scoring

Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 09:25:15 GMT

I don't know if I've just been oblivious to my Lowe's (Synchrony) card providing a monthly TU FICO 08 score for the last 1.5 years that I've had the card or if it's simply a new feature to my account. I already know my TU FICO 08 score is 840, but I clicked the link anyway just to see if Synchrony had my most recent score data. 840 score pops up, as expected, but what I found cool is that it gave me 2 negative reason codes. From what I've seen, many providers of a score omit any negative reason codes once your score is > 800. Through my mortgage company I get a TU FICO 4 score (801) and I'm given the same 2 negative reason codes there with that model that I see with my 840 on FICO 08:

Time since most recent account opening is too short

and

Length of time revolving accounts have been established

Since my AoYA is 7 months, the first code above is completely expected. I'd think that in 5 months when I hit the 1 year mark this statement may go away and perhaps I'll see a slight score boost.

Can someone elaborate a bit on the second statement above though? In the text following the statement it reads,

"FICO® Scores consider the age of a person's oldest revolving account and/or the average age of revolving accounts. Your score was impacted by the relatively low age of your oldest revolving account and/or the average age of your revolving accounts."

Does this refer to only open revolvers? I feel like it must. The oldest revolver on my credit report is nearing 17 years, but it's been closed for a couple of years now. My oldest open revolver is a little under 3 years old. The average age of my open revolvers is probably around 1.5 years.

Anyway, does anyone have an opinion on this negative reason code? Whenever I've considered the "age of accounts" category, I've always considered ALL account types (not just one, such as revolvers) and I've always considered all accounts present on your credit report, not just open ones.

Are AAoRA (Average Age of Revolving Accounts) and AoORA (Age of Oldest Revolving Account) real factors here? If so, I definitely have not seen them discussed on this forum. I appreciate any feedback on this.

Re: Negative Reason Codes on 840 score:

atarvuzdar — Sat, 16 Dec 2017 13:25:51 GMT

~~Most~~ All of my Synchrony accounts now offer FICO scores (same version). Not sure when it happened but I know Walmart, JCP, Amazon, Lowe's and eBay offer it now.

As for the revolving comment, I've seen it on TU reason codes, even on the score updates I get from myFico 3B Ultimate on this site. My actual credit report pulled from here doesn't mention any negatives other than my mortgage/non-mortgage loan amounts (across all bureaus), but the last score update I got for TU here indicates the following factors:

SCORE FACTORS
The following represents the factors most impacting your FICO Score
- Proportion of loan balances to loan amounts is too high.
- Length of time revolving accounts have been established.
- Too many inquiries last 12 months.
- Length of time accounts have been established.

At first I took reasons #2 and #4 to be duplicitous but, in reality, they're not. Do they actually matter or are they fluff? Not sure, but am definitely curious to know!

I also logged into my Sync CC accounts (including Lowe's) to see what they had to say. They were all the same:

#1: Proportion of loan balances to loan amounts is too high

#2: Length of time revolving accounts have been established

My true AAoA is 4 yrs 7 mos

AAoRA (including closed): 4 yrs 5 mos

AAoRA (only open): 3 yrs 11 mos

AoORA (which is closed): 6 yrs 10 mos

AoORA (which is open): 6 yrs 0 mos

My scores are: EQ 784 / TU 791 / EX 785

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 14:07:52 GMT

This is like in school where there was always someone who got a 98 on the test and went crazy finding out where the other 2 points went.

It sounds like they just want to provide value by offering reason codes - the nice thing about the reason code you have is they are basicaly telling you to do absolutly nothing and they will fix themselves.

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 14:34:08 GMT

FICO differentiates between the age of oldest revolver and oldest account for sure. I haven't seen enough data to figure out what the balance is.

What's your oldest non mortgage loan and your oldest mortgage loan?

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 14:55:10 GMT

Hey BrutalBodyShots are these statements from your FICO Score 3B Report? If they are then this might help you since I had that on one of my older reports. First let me say that it appears that this includes all revolving type accounts. I had/have a similar statement on my TU report. “You have not established a long revolving and/or open-ended account credit history. Trans Union” I feel certain about my supposition in that it only appeared as a TU negative issue since EQ and EX reported an account opened in 2001 and closed in 2012 that TU does not report. But similar to you it did not seem to impact my score too much.

Soto check, go to your Content menu on the 3B report. Scroll down to FICO Score and click on it. Look for the statement under the Negative Factors toward the bottom right on that page. You should see something similar to what I had above “You have not established a long revolving and/or open-ended account credit history. Trans Union“ If you click on that statement (expand the section) you will see some explanations and then a box containing the words: “YOUR FIRST REVOLVING AND/OR OPEN–ENDED ACCOUNT WAS OPENED…” It will show the time in years and months below that.

Now go back to your Content menu and click on “Revolving and Open-End Accounts.” This will give you a list of every one of those type of accounts as reported by each CRA. You do not need to expand them because the “Date Opened” is at the bottom of each visible section of the unexpanded list. Simply scroll down the list and look for the date of your oldest account still reporting in this section. If you do the mental math, this should coordinate with the date listed above under “YOUR FIRST REVOLVING AND/OR…” Remember to make allowances for the date of your 3B Report too so you don’t get upset.

So, to answer your question, it appears it counts all revolvers (open and closed) as long as they are still reported/showing on your CR. If you do not see your 17-year account in the negative list nor on your statement for TU, then this is the problem. It doesn’t seem to be affecting you too much (it didn’t me) so I’d just wait.

FYI the consensus appears that it will stop showing when the time crossed the 7-year mark. I can’t tell for sure since my EX, EQ show an average of nearly 17 years while TU is just over 3 years. Having said that I have no idea if it starts to increase after some time threshold. I mean opposite to what happens to inquiries after 6 and 12 months respectively (before falling off completely after 2 years).

"FICO score takes into account:

How long your credit accounts have been established. Your FICO score considers the age of your oldest account, the age of your newest account, and an average age of all your accounts – open or closed. The only difference is if there is a negative on the closed account (7 years) no negative (10 years) after closing.

How long specific credit accounts have been established.

How long it has been since you used certain accounts."

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 15:57:19 GMT

@Anonymous wrote:
This is like in school where there was always someone who got a 98 on the test and went crazy finding out where the other 2 points went.
It sounds like they just want to provide value by offering reason codes - the nice thing about the reason code you have is they are basicaly telling you to do absolutly nothing and they will fix themselves.

Hey Nurse! Glad to see your comment.

There are really two kinds of concerns that pop up in this particular sub-forum ("Understanding FICO® Scoring"): practical vs. theoretical. People raising practical concerns are, as you rightly observe, freaking out about their score. They need it to be higher because they are about to buy a house, a car, etc. Or it has just taken a substantial drop and they are worried about why that could have happened.

There's a whole other kind of conversation, however, which is people trying to guess how the algorithm works on the back end, the proprietary details of which are shrouded in FICO secrecy. This is a theoretical conversation. These folks aren't going crazy about their score; they aren't desperately trying to get it higher. In contrast to the "practical" conversation often going on in parallel on another thread, these folks have a much more relaxed, curious, puzzle-solving approach.

The first group wouldn't care much why FICO does a thing, as long as you could raise their score and help them buy that house. The second group wouldn't care much about their score going up, as long as you could shed more light on how FICO works.

Of course, the same person can have both practical and theoretical interests, though most often people tend to be one or the other.

When one group tries to understand the other in terms of its own set of interests they get baffled, as you were with BBS post. It just seemed silly for somebody to be scrambling to get higher than 840.

BBS is raising a good point (for a theory-chaser). He's observing that it appears that FICO seems to consider the age of revolvers separately from the age of all accounts (which would include installment as well). He's also suggesting that it is even more finely grained and looks sprecifically at open revolvers.

From a theory perspective this is revealing and has implications for pretty much all people. That's what theoreticians do. They look at really obscure experimental evidence (e.g. what small sub-atomic particles do) and build theories which (if true) have implications for all kinds of "normal" stuff that we see in everyday life.

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 16:08:13 GMT

The FICO scoring model had/has a few different age of accounts reason codes which aligned with my own (theory-based) research into account age factors:

Length of time revolving accounts have been established (reason 12)
Length of time accounts have been established (reason 14)
Length of time installment loans have been established (reason 25)
Length of time open installment loans have been established (reason 36)
Length of time bank/national revolving accounts have been established (reason 65)
Length of time open mortgage loans have been established (reason 67)
Length of time reported mortgage accounts have been established (reason 78)

I believe this was from a FICO explanation paper dated 2014 so it may include FICO Score 8 but it may also not (it doesn't differentiate in the paper).

I've also noted on practically identical profiles (married couples) where one had the old mortgage and the other had an old pre-marriage credit card but no mortgage and the person with the old mortgage but new cards had a lower score that the person with the old card but no mortgage, everything else being identical!

So it does appear that the age of revolving accounts may have some supremacy over age of installment loans as long as neither is > 20 years. From my (theory-based) research, if you have an account > 20 years, open or closed, installment or revolving, it seems to negate all of the other age-related factors. But if all your accounts are < 20 years, then there may be some negative outcome from revolvers being young and only reporting an old mortgage.

The question as to whether or not open/closed revolvers < 20 years matters, I think it does NOT matter. If OP has an installment loan reporting > 20 years, I think the reason code should go away (OP let us know your absolute oldest account of any kind), but if not, then the age of revolvers may be a negative situation producing said reason code.

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 17:34:33 GMT

Curious side note: in the LexisNexis models (used by the insurance industry and not made by FICO) the models punish you if your oldest account is a loan! There's a whole family of reason codes for it. And stranger still the penalty is not abated when both your oldest loan and oldest card are really old. As long as the loan is older (e.g. if you have a 29 year old loan and a 26 year old card) then you get a penalty. Wild, huh?

Re: Negative Reason Codes on 840 score:

FireMedic1 — Sat, 16 Dec 2017 17:36:52 GMT

For what its worth. This shows on my MyFICO 3B. Dont know why EX wasn't listed.

According to high achievers average? Oldest 25 yrs and AAoA 9 yrs or more.

Re: Negative Reason Codes on 840 score:

arkane — Sat, 16 Dec 2017 20:40:01 GMT

@Anonymous wrote:
Curious side note: in the LexisNexis models (used by the insurance industry and not made by FICO) the models punish you if your oldest account is a loan! There's a whole family of reason codes for it. And stranger still the penalty is not abated when both your oldest loan and oldest card are really old. As long as the loan is older (e.g. if you have a 29 year old loan and a 26 year old card) then you get a penalty. Wild, huh?

More proof the insurance industry is nothing more than a racket.

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 22:17:56 GMT

Are you saying the LexisNexis models do not consider mortgages? In the majority of cases, those type of installment loans will be the oldest loan any USA American will have. It seems that may be an auto model and not representative of all FICO scoring models - but I am not familiar with that scoring model (too poor to afford a Lexis:-) so I am just curious.

Re: Negative Reason Codes on 840 score:

Anonymous — Sat, 16 Dec 2017 23:20:14 GMT

The three penalty codes in question are 3489-3491:

3489 Ratio of Oldest Bank Revolving Account to Oldest Account is 44.55% or Less
3490 Ratio of Oldest Bank Revolving Account to Oldest Account is 44.56% to 53.28%
3491 Ratio of Oldest Bank Revolving Account to Oldest Account is 53.29% to 99.51%

As you can see, if your Oldest Account is in fact a BRA, then the ratio of your Oldest BRA to Oldest Account is X / X or 100%.

The penalty creeps in when your oldest account is something other than a BRA. In that case, the numerator is less than the denominator and the ratio is < 100%.

Theoretically you can see it is possible to escape the penalty when your oldest account is not a BRA, but then the oldest account can only be the tiniest bit older. One example would be a mortgage that is 28 years and 1 month old and a bankcard that is exactly 28 years old.

As you can also see, if your oldest account is something other than a BRA, then no special exception is made if the oldest account is a mortgage. LexisNexis does distinguish between mortgage and non-mortgage accounts in other parts of their models, but not here.

Below is the full text of the reason statement. All three are pretty much the same, so I will only reproduce the first of the three codes. You'll see that I didn't quite have it right originally. The penalty occurs any time your oldest account is not a BRA. That could be a mortgage, a student loan, an auto loan, etc. But it could also be various revolving accounts, such as store cards, lines of credit (LOCs), etc. A BRA (as you will see below) is "one such as a Visa, MasterCard, etc."

=======

Ratio of Oldest Bank Revolving Account to Oldest Account is 44.55% or Less
A Ratio of 99.52% is Better

1. What information is this message derived from? The score considers how long you
have had a credit history with a bank revolving account. This may be done by figuring
how long it has been since you opened your oldest listed bank revolving account. If the
account has been closed, it still may be considered. A bank revolving account is one
such as a Visa, MasterCard, etc.

2. How does this affect my insurance risk score? Insurance industry research shows
that consumers with longer experience managing their bank revolving accounts have
fewer insurance losses.

3. What can I do to improve this aspect of my score? As your credit history ages on your
bank revolving accounts, the score may improve based on this factor. To avoid lowering
this aspect of your score, consider keeping your oldest bank revolving account active and
only open new accounts when needed.

Re: Negative Reason Codes on 840 score:

arkane — Sun, 17 Dec 2017 00:18:01 GMT

Speaking of LexisNexis, does anybody know if this is simply a rebranded ChoicePoint score? Google seems to indicate yes -- I remember reading about A-PLUS and CLUE reports along with their associated scores years ago, but at the time they were called ChoicePoint.

Also if anyone cares, here's a laundry list of all the reason codes for LexisNexis: https://consumer-solutions.custhelp.com/app/answers/detail/a_id/2523

(mods I apologize in advance if this external link is not allowed)

Edit: Looked through some of the reason codes a bit deeper, and they reveal some interesting data:

Codes 3004 to 3011:

2. How does this affect my insurance risk score? Insurance industry research shows that consumers whose accounts have been established on average for more than 7 years 7 months have fewer insurance losses.

Codes 3012 to 3018:

2. How does this affect my insurance risk score? Insurance industry research shows that consumers whose accounts have been established on average for more than 16 years 2 months have fewer insurance losses.

Wonder if these say anything about the break points for AAoA under the LN model.

Re: Negative Reason Codes on 840 score:

arkane — Sun, 17 Dec 2017 00:34:50 GMT

@Anonymous wrote:
The three penalty codes in question are 3489-3491:

3489 Ratio of Oldest Bank Revolving Account to Oldest Account is 44.55% or Less
3490 Ratio of Oldest Bank Revolving Account to Oldest Account is 44.56% to 53.28%
3491 Ratio of Oldest Bank Revolving Account to Oldest Account is 53.29% to 99.51%

Interestingly, there are some reason codes earlier in the series that attempts to cover every bracket it would appear:

3024 Ratio of Oldest Bank Revolving Account to Oldest Account is 37.34% or Less
3025 Ratio of Oldest Bank Revolving Account to Oldest Account is 37.35% to 99.77%
3026 Ratio of Oldest Bank Revolving Account to Oldest Account is 71.54% or Less
3027 Ratio of Oldest Bank Revolving Account to Oldest Account is 71.55% to 87.50%
3028 Ratio of Oldest Bank Revolving Account to Oldest Account is 87.51% to 91.67%
3029 Ratio of Oldest Bank Revolving Account to Oldest Account is 91.68% to 99.33%

Seems like under the LN model, there's just no escaping that "oldest account =/= BRA" penalty.

Then if you look through codes 3030 through 3045, even your Average Credit Line on Bank Revolving Accounts gets considered, with code 3045 topping out at ACL = $7,500.

Well, all the more reason to request CLI and get those limits up as high as possible.

Man when I have time/feel bored over the holidays, I'm gonna have to sit down and go over those LexisNexis reason codes with a fine-tooth comb to dissect their model to the best of my brain's capabilities.

Re: Negative Reason Codes on 840 score:

Anonymous — Sun, 17 Dec 2017 01:39:22 GMT

@Anonymous wrote:
What's your oldest non mortgage loan and your oldest mortgage loan?

Oldest non-mortgage loan (auto) is 10.5 years old (closed). Oldest mortgage loan is 14 years (closed).

Refinanced the above mentioned mortgage loan in 2009, so my current mortgage loan (open) is 8 years and change old. Current oldest open non-mortgage loan is an auto that is 2 months shy of 3 years old.

Re: Negative Reason Codes on 840 score:

Anonymous — Sun, 17 Dec 2017 01:50:29 GMT

Dang you've got that mystery profile -- old CC, not old mortgage! Most folks appear to have the mortgage older, so it's definitely going to be good data points coming out of your profile as it ages!

Will that ancient CC fall off before it hits year 20?

Re: Negative Reason Codes on 840 score:

Anonymous — Sun, 17 Dec 2017 01:52:00 GMT

@Anonymous wrote:

Hey BrutalBodyShots are these statements from your FICO Score 3B Report?

No, those statements were provided by Synchrony with my monthly TU FICO 08 score on my Lowe's account.

If just never considered just revolvers for anything other than the utilization sector. When it comes to age of accounts, I always assumed that FICO viewed all accounts as equal, regardless of what type they are coded as.

Then to further complicate things, it sounds [from the reason codes] that the algorithm may differentiate between open and closed revolvers, which gets even more specific. On my profile this could be a significant difference, as my oldest closed revolver is > 14 years older than my oldest open revolver.

Re: Negative Reason Codes on 840 score:

Anonymous — Sun, 17 Dec 2017 02:17:43 GMT

@arkane wrote:

Then if you look through codes 3030 through 3045, even your Average Credit Line on Bank Revolving Accounts gets considered, with code 3045 topping out at ACL = $7,500.

Well, all the more reason to request CLI and get those limits up as high as possible.

Man when I have time/feel bored over the holidays, I'm gonna have to sit down and go over those LexisNexis reason codes with a fine-tooth comb to dissect their model to the best of my brain's capabilities.

Yep. ACL matters in both LN and I think in Vantage. FICO doesn't care about size of CL at all.

The problem with trying to develop a practical LN score strategy is twofold. First, we don't have any idea what the scoring impact of these things are individually. Yes ACL matters. And yes, so does whether your oldest account is a bankcard. But conceivably these might cost you very little. Or maybe either or both matter a lot.

This first point is really serious. If all we had was a list of FICO 8 reason codes, we'd know very little about the model. The reason we do know as much as we do is because there are thousands of people on this forum alone regularly pulling their FICO scores -- often multiple times a month -- and comparing the changes in the score with changes in the reports and with the required four reason codes for the four biggest problem with your score.

Second, the LN reason codes are in tension with one another. When you optimize your profile to protect against reason code X, you end up realizing that you have put yourself in the penalty box for reason code Y. Not all of the codes are in tension with another code -- for example you can improve your LN score by having no lates, no collections, no chargeoffs, etc. By eliminating all lates, you won't be penalizing yourself somewhere else. But many of the codes are in tension with some other reason code somewhere else.

Still, going through the LN code list is a lot of fun and I encourage you to do it. It would be great to have somebody who makes it his mission to become an expert on it. You'll find a lot of fascinating stuff. Here are just a few differences between LN and FICO:

LN dislikes seeing you have a store card FICO doesn't care.

LN dislikes seeing you have an auto account (like Pep Boys, AutoZone, etc.). FICO doesn't care.

LN dislikes it when your Age of Oldest Account is substantially higher than your AAoA. No evidence that FICO cares.

LN is especially worried about the Mark of The Beast (666). Thus it looks at the total dollar value of all your debt (excluding mortgages, but with credit cards and loans combined) and if your total debt is $666 or more, it imposes a penalty. The developers at FICO spent less time watching The Omen as kids and are less stressed out by 666.

And so on.

Have fun!

Re: Negative Reason Codes on 840 score:

arkane — Sun, 17 Dec 2017 09:07:05 GMT

@Anonymous wrote:

Yep. ACL matters in both LN and I think in Vantage. FICO doesn't care about size of CL at all.

The problem with trying to develop a practical LN score strategy is twofold. First, we don't have any idea what the scoring impact of these things are individually. Yes ACL matters. And yes, so does whether your oldest account is a bankcard. But conceivably these might cost you very little. Or maybe either or both matter a lot.

This first point is really serious. If all we had was a list of FICO 8 reason codes, we'd know very little about the model. The reason we do know as much as we do is because there are thousands of people on this forum alone regularly pulling their FICO scores -- often multiple times a month -- and comparing the changes in the score with changes in the reports and with the required four reason codes for the four biggest problem with your score.

Second, the LN reason codes are in tension with one another. When you optimize your profile to protect against reason code X, you end up realizing that you have put yourself in the penalty box for reason code Y. Not all of the codes are in tension with another code -- for example you can improve your LN score by having no lates, no collections, no chargeoffs, etc. By eliminating all lates, you won't be penalizing yourself somewhere else. But many of the codes are in tension with some other reason code somewhere else.

Ha yeah they have a smatter of codes on "department store cards", and it seems in particular code 0165 is in conflict with pretty much everything else. This is an excerpt:

Code 0165: Percent of All Department Store Accounts Reported in the Last 24 Mos to Total # of Accts
Property - More than 56% is better <--- what???
2. How does this affect my insurance risk score? Insurance industry research shows that consumers who with recent experience paying their department store accounts on time have fewer insurance losses

This is in clear conflict with codes 0134 (# of dept store accounts) and arguably 0120 (length of time dept store account has been established).

Still, going through the LN code list is a lot of fun and I encourage you to do it. It would be great to have somebody who makes it his mission to become an expert on it. You'll find a lot of fascinating stuff. Here are just a few differences between LN and FICO:

LN dislikes seeing you have a store card FICO doesn't care.
LN dislikes seeing you have an auto account (like Pep Boys, AutoZone, etc.). FICO doesn't care.
LN dislikes it when your Age of Oldest Account is substantially higher than your AAoA. No evidence that FICO cares.
LN is especially worried about the Mark of The Beast (666). Thus it looks at the total dollar value of all your debt (excluding mortgages, but with credit cards and loans combined) and if your total debt is $666 or more, it imposes a penalty. The developers at FICO spent less time watching The Omen as kids and are less stressed out by 666.
And so on.

Have fun!

It would appear that if you must have store cards, you better make sure of the following:

- less than 2 store cards (code 0134)

- less than 38 months (3 yr 2 mo) of history on each of the 2 store cards (code 0120)

- less than $284 total credit limit on both store cards combined (code 0146)

- have at least seven other types of open accounts (if you have 2 store cards) or five other types of accounts (if you have 1 store card) so your open store cards are <24% of all open accounts (code 0174) -- this is obviously in direct contradiction to code 0165

But most importantly, there is a separate code 0181 for "number of open department store accounts". So I say with all the potentially negative reason codes towards department store accounts, LN just doesn't like seeing any store accounts period.

Re: Negative Reason Codes on 840 score:

Anonymous — Mon, 18 Dec 2017 00:42:35 GMT

Yep. ACL matters in both LN and I think in Vantage. FICO doesn't care about size of CL at all.

Since FICO is the Big Dog on the scoring block, shouldn't we simply consider these LN and Vantage as another FAKO? I personally don't know anything about LN and have only a cursory knowledge of Vantage; but since their algorithms seems to diverge so much, can't we just ignore them when discussing and examining FICO score models?