topic Re: FICO Scoring in Understanding FICO® Scoring

FICO Scoring

Jdman — Fri, 26 Jun 2020 14:08:10 GMT

My utilization is at 0% but my score isn't rising. Is there a reason why? Everything else is paid as well(2 auto, 2 installment and the 6 CC).

Re: FICO Scoring

AllZero — Fri, 26 Jun 2020 15:35:01 GMT

You will be penalized for going all zero revolving utilization. You want to report credit usage. Have a $5-$10 statement report. For optimized scoring; aggregate utilization 8.9% or below, individual utilization 28.9% or below. See AZEO, All Zero Except One card reporting a balance.

Re: FICO Scoring

SouthJamaica — Fri, 26 Jun 2020 16:08:12 GMT

@Jdman wrote:
My utilization is at 0% but my score isn't rising. Is there a reason why? Everything else is paid as well(2 auto, 2 installment and the 6 CC).

FICO 8 and other late model scores have penalties for not owing money (yes you read that right). You are probably being hit with 2 of the penalties:

1. Installment utilization: having no open loans.

2. Revolving utilization: if reported balances are all zero.

IMHO it's better to be debt-free than to curry favor with FICO's ridiculous algorithm, but if you want to get your points back:

(a) you can get rid of the zero installment penalty by taking out a small loan and then immediately paying it down to 9% of the original loan amount. It's best to do this with share secured loan that (a) has no hard pull and (b) keeps the payment dates where they are, rather than advancing them, when you prepay the loan, so that the loan will continue reporting for a long time as a mostly paid down loan. The only institution I know of which has a product that perfectly fits the bill is NFCU.

(b) you can easily get rid of the all zero revolving penalty by letting a tiny balance report before you pay it off. It is possible that this will only work with a bank credit card (as opposed to a credit union or store card). If you use a Chase card as the balance-reporting card, you have to be sure not to let the balance go down to zero, because Chase will report mid-cycle whenever a card gets down to zero.

Re: FICO Scoring

Anonymous — Fri, 26 Jun 2020 17:17:03 GMT

Got to pretty much agree with everything that SJ said, except that I’ve got to give another perspective on the penalty being viewed as a penalty when it’s actually an award, or could be viewed as such.

You see we don’t start out at 850s. We start out at what like 300 or 350? From there forward, our actions, or rather the metrics evaluating the data in our file, award us more points based on where they fall.

For instance if you happen to have an installment loan with a B/L at 9% or less you are awarded around 15 to 35 points.

Likewise if you have at least one balance on a revolving credit line you are awarded 10 to 15 points for using your revolving credit without incident.

Now if you go to higher percentages of installment or revolving utilization, less points are awarded because your higher risk.

Now if we started at 850, I could see all these being penalties, but we don’t, so IMHO, they’re not. But that’s just my two cents.

Re: FICO Scoring

AllZero — Fri, 26 Jun 2020 17:29:59 GMT

@Anonymous wrote:
Got to pretty much agree with everything that SJ said, except that I’ve got to give another perspective on the penalty being viewed as a penalty when it’s actually an award, or could be viewed as such.

You see we don’t start out at 850s. We start out at what like 300 or 350? From there forward, our actions, or rather the metrics evaluating the data in our file, award us more points based on where they fall.

For instance if you happen to have an installment loan with a B/L at 9% or less you are awarded around 15 to 35 points.

Likewise if you have at least one balance on a revolving credit line you are awarded 10 to 15 points for using your revolving credit without incident.

Now if you go to higher percentages of installment or revolving utilization, less points are awarded because your higher risk.

Now if we started at 850, I could see all these being penalties, but we don’t, so IMHO, they’re not. But that’s just my two cents.

@Anonymous .I've read it both ways in regards to starting scores.

It looks like a penalty. I guess out of habit I call it penalty. Same has saying 8.9% or 9% for thresholds. Coming around to using new terms.

Re: FICO Scoring

Anonymous — Fri, 26 Jun 2020 18:39:46 GMT

Oh no, you did great. I agree with everything you said, too. I was just giving another perspective for our members/readers. I even call it an AZ penalty in the primer..... Maybe I should change that? All this political correctness LOL

Re: FICO Scoring

AllZero — Fri, 26 Jun 2020 18:52:01 GMT

@Anonymous wrote:
Oh no, you did great. I agree with everything you said, too. I was just giving another perspective for our members/readers. I even call it an AZ penalty in the primer..... Maybe I should change that? All this political correctness LOL

Lolz. Sometimes certain words do carry more weight and accuracy. It does help clarify our way of thought when it comes to scoring.

Re: FICO Scoring

Anonymous — Fri, 26 Jun 2020 19:07:46 GMT

So then I should re-read the primer with the lens of political correctness then?

Re: FICO Scoring

AllZero — Fri, 26 Jun 2020 19:15:10 GMT

@Anonymous wrote:
So then I should re-read the primer with the lens of political correctness then?

Hmmm... Tough call. It can go either way? Flip a coin because both ways appears to be right. Maybe put it on the back burner when you have time?

Re: FICO Scoring

FlaDude — Fri, 26 Jun 2020 20:34:04 GMT

@Jdman wrote:
My utilization is at 0% but my score isn't rising. Is there a reason why? Everything else is paid as well(2 auto, 2 installment and the 6 CC).

What are your scores and do you have any derogatory marks (lates, etc.) on your report?

Re: FICO Scoring

Jdman — Sun, 28 Jun 2020 15:25:10 GMT

FICO 8 EQ 644 EX 643 TU 699. I have a few medical collections on my acct. I have a credit repair company I am working with and they are trying to get them removed. My utilization is at 1% not 0%. I owe $8 on a card. I have 2 auto loans and 2 installment loans. One of the installment loans will be paid off next month.

Re: FICO Scoring

Revelate — Sun, 28 Jun 2020 15:34:55 GMT

AFAIK starting scores are outside the boundary condition.

If someone opens an account and immediately goes 30/60/90/120/150/180/180/180... assuming the account doesn't get closed I am pretty sure that isn't a 300 score, and we know 6 months positive history on a single tradeline isn't either.

Single collection on a report, likewise not 300.

I don't really know how to even get a minimum score but I don't think we can say we start there. A no file is a no file, unscoreable which is it's own penalty in this day and age.