topic Re: Rebucketing in Understanding FICO® Scoring

Rebucketing

smallfry — Thu, 15 May 2008 22:57:53 GMT

I have a while until this happens to me but I am curious if I can avoid the ill effects if I just do nothing now. My average age is currently 3 and longest is 10 due to the fact my BK wiped what would be a 33 yo Chase card from my reports. Ouch. I have 2 public records. State lien goes July 09 and BK7 drops April 10. My average age will go to 5 years when the BK drops. Utilization will be optimum. Credit mix decent with 7 revolving and one car loan showing. Scores are 706 717 731. Think I can avoid the rebucketing drop and vault over 760 by then?

Re: Rebucketing

haulingthescoreup — Thu, 15 May 2008 23:09:37 GMT

You know, there's not an automatic drop with re-bucketing. Since the lien drops before the collection, it will be the collection drop that determines what happens.

At that point, if your average is 5 years, and your overall is 12 years, assuming nothing else drops off in the meantime, and you have great util, perfect mix, and no remaining baddies, your scores might well remain the same or be even better. You would be ahead of others in this intermediate-history-and-clean bucket (assuming there is such a thing), in that you would have no other baddies. Believe me, there will be others in that group that have a generous handful of 30's.

Don't be afraid of re-bucketing --think of it as a promotion in credit land.

Re: Rebucketing

smallfry — Thu, 15 May 2008 23:22:49 GMT

Nope. Just the paid tax lien and the BK. I guess I'll take a hit for the short history (comparatively) and the low average age. I have the credit history of a 28 year old unfortunately.

Re: Rebucketing

haulingthescoreup — Thu, 15 May 2008 23:33:42 GMT

But I don't think that's true! You'll be at 12/5 history with a squeaky clean history, and that sounds like a great place to be.

We've had some info from members who can tell when they've been re-bucketed. Again, there are other factors than age, but we've gotten feedback for going over 5 years, over 12 or 13 (not sure of the precise number), and over 18 (again not sure.) I do think that there is an intermediate age bracket, and you will fall squarely into it. So maybe a bit youngish, but the newly-clean reports will pack a punch.

Your credit scores are a bit like mortgage markets, or MMA markets, or really, any other financial market. You hope that everything will be at the perfect point when you want to make a move, but realistically, you know that you might have to jump a bit early, or tread water for a while until everything falls into place. Just stay light on your feet, keep everything clean, and if you're hoping to app for something, stay flexible and aware of the options.

Re: Rebucketing

Anonymous — Fri, 16 May 2008 03:50:01 GMT

Rebucketing is not that usually painful. I was rewarded for the first 2 installments. My reward was very noticeable on the second one. You might consider a second installment to boost scores. It helped me.

Message Edited by ilovepizza on 05-15-2008 11:50 PM

Re: Rebucketing

smallfry — Fri, 16 May 2008 09:21:58 GMT

Pizza outside of a new car loan or a mortgage what would you suggest? Night school is out.

Re: Rebucketing

Anonymous — Fri, 16 May 2008 11:48:19 GMT

Well right now 7 revolving and 1 installment and about 5 years avg age (2 yrs from now)with opt UTL oldest account over 10 yr, that kinda sounds like a great position. 760 is very likely. A personal loan small, maybe $500 for a year should help. CitiBank (not_Citi-financial) has them with no fee to open, no early prepayment fee and reports as regular installment loan. They are great for cheap installments. You can do a CD savings loan. They still pull credit but they will not deny since it is cash secured. You make payments just like any other loan. Other than that I'd just sit and let it ride out, grow avg age. Your scores are very good now. With this second installment under current model I think you would be closer to about 780-790 in 2 years when all negs fall off.

But with changes coming with FICO 08 lack of installments would not help a score. I'd do one installment just for that reason alone to prevent a drop in score when they put out FICO 08. But until it comes out no one really know the effects of 08. I only saw the article that was posted on Bankrate.com.

Re: Rebucketing

smallfry — Fri, 16 May 2008 11:54:43 GMT

I have a local Citi I can open a small CD with. So this is kinda like the old passbook savings loan idea huh?

Re: Rebucketing

smallfry — Fri, 16 May 2008 12:31:57 GMT

Penfed told me this morning they have a personal loan at 7.9% available 36 month no prepayment penalties which reports as an installment. Might look into that down the road. You saying I might want 2 open installments as opposed to 1 for higher scoring?

Re: Rebucketing

Anonymous — Fri, 16 May 2008 16:56:14 GMT

kinda the same as a passbook savings installment. Each bank may report to the CRAs a bit differently. I had another bank report it as a negative installment. So I am kinda picky which banks I choose. Just be sure you check your CR if you go with another bank to check that they are reporting it as a normal installment. CitiBANK reports properly. You know the deal consumer finance, LOC, yada yada...

Some people with scores in the 400s would not be approved by many banks and Citi will still approve for this type of secured installment. You could do the pen fed deal too.

$500 x 8% = about $45 total for an installment over 12 months with doc stamps. That would be your out of pocket cost.

Now if you wanted to take out 2 more loans I so far don't know if you would be rewarded for the third other than history. I got points for opening the 2nd installment, then again I gained more points when it gained history. I got dinged for the third installment not rewarded. I don't know the long term effects of more installments at this time. Could help or do nothing? Dunno. But they are changing it with 08 release so I am guessing more is better later. Right now I would guess 2 will do total.

And this may only reflect my credit profile? not sure. But I am sharing what Score Watch told me.

Message Edited by ilovepizza on 05-16-2008 12:56 PM

Re: Rebucketing

smallfry — Fri, 16 May 2008 17:53:44 GMT

Well I wouldn't want to get dinged for an installment reporting too much utilization so I imagine I should immediately pay it down to 25% of the balance right? I wonder if by doing that I force the loan to be removed quicker or will I be able to make smaller monthly payments on the loan and carry it to full term like Navy Federal allows with its car loans.

Re: Rebucketing

Anonymous — Sat, 17 May 2008 02:28:39 GMT

Depends on how the loan is set up. They have loans where you can make interest only payments and a lump sum at the end of the loan for the balance. So a $500 loan could have payments of $5 per month and then $500 due on last payment. This would give you the ability to pay it down faster to reduce UTL. But if you don't need credit for the next so many months it should not really matter since in 6 months you will be below 50%. I am sure there are other ways to reduce the payment and still have the ability to make 12 payments...

Re: Rebucketing

smallfry — Sat, 17 May 2008 13:45:10 GMT

Extrapolated a bit carrying accounts out to early retirement when I will be looking for a smallish mortgage on a retirement home. In 4 years assuming one more car loan and no new cards I will have 25 total accounts average age 6 years oldest account 10 years and 4 months. Same basic credit mix. 7 revolving lines with 1 open car loan. Not optimum but not all that bad I think.

Re: Rebucketing

Anonymous — Sat, 17 May 2008 14:44:33 GMT

Yea, me and my well how do I hit 850 I sometimes forget that I miss the point of... It doesn't matter once over 760. You have done very well and probably another installment won't gain you more credit just improve a score that will not benefit you above 760. I sometimes think people are playing the game to get as close to 850 as possible. But at least I learned extra little tricks which are helping folks get a bit further. If I stopped at 760 I would never have been pushed to learn them. You're great right where you are. I agree.

Re: Rebucketing

RobertEG — Mon, 19 May 2008 07:51:31 GMT

From all I have read from FairIsaac posts, the major rebucketing (transfer to different scoring algorighms) occurs as a result of: short vs long established credit history, absence or presence of major (60+ derogs), absence or presence of BK (a big bucket), absence or presence of a PR or CA. More minor buckets that all seem to rail the most about, but appear much less significant, are shifts of %util.

If you were about to lend $10,000 to someone, how you want to evaluate them? I think I would want to know which bucket they are in....

I think FICO does a pretty good job of discrimation.