topic Re: Rebucketing: What's seen by creditors? in Understanding FICO® Scoring

Rebucketing: What's seen by creditors?

Anonymous — Sun, 08 Jun 2008 13:56:13 GMT

If anything?

Also, since these rebucket groups are mythical at best, do credit issuers see that a person is in a certain bucket over someone with the same exact score?

My mother and father paid their house off a few years ago(Mar' of '06), and since retiring(2 years now) they paid off(lump sum in Apr. '08 with a 401k withdrawal) their automobile to get out of debt completely. They used to get the pre-approved CC apps all the time after paying off the mortgage, but once they paid the auto loan off the CC offers stopped coming. Their credit scores were(when pulled in Aug. '06) 740/730/710(from memory) EQ/TU/EX respective before retirement and they have an average age of over 20 years on their two oldest CC's. They have no baddies nor late payments but a recent pull(May '08) of their scores showed a drop into the high 600's on the TU and EX reports, and a drop to 708 on their EQ report. They haven't taken out any new credit since retiring and paying off the auto loan, and a personal loan(paid) and a furniture purchase(paid) are the only other installment accounts showing.

All I can figure is that either a rebucket occurred when they paid off the auto loan, or the lack of active installment accounts caused the score drop. AFAIK they have low to no utilization on their CC's as they hate carrying balances and will PIF when the first bill comes. They were planning on getting a LOC through their bank for vacation purposes but this score drop has caused them to put that idea on hold. The main issue at work here is since they are now dependent on retirement income, they have to be careful with how they extend themselves with future credit purchases so interest rates are a big issue for them.

Anyone got any ideas on this one? Rebucket? Lack of active credit? Temporary drop maybe?

Re: Rebucketing: What's seen by creditors?

haulingthescoreup — Sun, 08 Jun 2008 14:14:30 GMT

@ChrisGA43 wrote:

....All I can figure is that either a rebucket occurred when they paid off the auto loan, or the lack of active installment accounts caused the score drop. AFAIK they have low to no utilization on their CC's as they hate carrying balances and will PIF when the first bill comes....

If they allow their balances to post on the statement and then pay (as any reasonable person would do), these balances are being reported to the CRA's, and so their reported util is higher.

Tell them that before they go for an LOC to pay off all their cards except one before the statements drop, in other words, 4-5 days before the date on their monthly statement. (They have to be sure not to use the card again until the $0 posts.) On that one other card, let it post a minuscule amount, $20 or so, certainly less than 5% of its credit limit. Once all these CC's report the new $0 balances and one tiny balance, this might bump their scores back up again. This will also result in fewer accounts with balances, which is another factor in scoring.

Two exceptions on the timing, if they have these cards: American Express will report the previous month's balance (so they might let that be the card that reports), and HSBC/ Orchard reports on the last business day of the month, reporting the balance as of that date.

I'm assuming that their most recent scores are FICO's. Have them look at the positives and negatives (EX shows negative only) on screen 2 of their reports. The negatives are listed in order of what is affecting their scores the most. This is a great resource for seeing what if anything might be fixable.

Re: Rebucketing: What's seen by creditors?

Junejer — Sun, 08 Jun 2008 14:47:57 GMT

What HTSU said, and they messed up their credit mix by paying off all the installment debt. Still, I think that if they follow HTSU's advice, they can get back into the mid 700s w/o adding an unnecessary credit piece.

Re: Rebucketing: What's seen by creditors?

haulingthescoreup — Sun, 08 Jun 2008 14:54:24 GMT

@Junejer wrote:
What HTSU said, and they messed up their credit mix by paying off all the installment debt. Still, I think that if they follow HTSU's advice, they can get back into the mid 700s w/o adding an unnecessary credit piece.

psychic is my hero. NO open mortgages, NO open installment loans, but scores in the 800's, all from revolving credit and long, squeaky clean history. So it's doable!

I figure I'll be there about two weeks before I move into the nursing home.

Re: Rebucketing: What's seen by creditors?

Anonymous — Sun, 08 Jun 2008 15:11:17 GMT

Hauling, I failed to mention that these scores were not obtained on this site, but rather through the use of the annual free reports obtained with a phone call. I am also aware that possibly two of the scores are considered FAKO's possiby, but the reports obtained in '06 were obtained in the same manner, so unless all three CB's have changed the way they develope their scores in the past two years, a score comparison between the two should warrant an accurate appraisal of their situation. I called my parents a few minutes ago and absolutely nothing has changed since the '06 report besides paying off the auto loan. No baddies or late payments of any kind. So if I'm interpreting you correctly it has to be something with the util on the CC's possibly? I called my mother and she assured me that no balances have ever carried past 30 days. The main card they use is an Amex card, and the other is a Visa(not sure about issuer) that stays in the drawer just for emergencies. So it more than likely has carried a zero balance for quite a long time as she didnt mention using it since the '06 report. Any idea on my first question about how, or if, buckets are discernable by creditors? If not, what use do they have otherwise I wonder?

Re: Rebucketing: What's seen by creditors?

haulingthescoreup — Sun, 08 Jun 2008 15:32:39 GMT

I don't think that most creditors have a clue about score buckets. If all they look at is the score, they wouldn't be able to tell one 680 from another. But most lenders do pull the reports as well, and they are able to evaluate the score in the context of the credit history.

The deal with the util is not so much whether your folks carry balances, which they don't, as what $$$ is reported to the CRA's. Except for HSBC, they just about all report the number that's on your statement (bill) each month. So even if they're PIF'ers, their util might be showing as high. For instance: they have a $10K credit limit, and their statement comes saying "You owe $3400." They whip out their checkbook or pay on line, then and there, and they don't owe a penny of interest. But the credit card company reported to the CRA's that they have a balance of $3400, meaning a util of 34% on that card.

This is goofy, IMO --I think that they should report the balance showing on your due date. But it is what it is, and paying BEFORE the statement drops is a quick way to get a boost.

As for the FAKO's, which they undoubtedly are: many of us find that FAKO's are higher than FICO's when FICO's are relatively low (mid 600's and below), but that the FAKO's are lower when the FICO's are in the high 690's and above. So their real scores might be a lot higher than what they're seeing. IMO, if they want to get a LOC, it's worth paying for the 3 scores. Google FICO discount code coupon, and you should be able to get at least 15% off.

My TrueCredit FAKO's are EQ 721 - TU 673 - EX 653. Real scores are in my siggy.

Back to the buckets: the point of buckets is that you are compared with other consumers with similar profiles. The point of them is that if we were all scrambling for scores, competing with 60-year-olds with perfect history and scores in the 840's, we would all be buried in the 400-500 sub-basement range until our baddies aged off. Buckets give lenders a chance to see how you are doing, considering your history. So if they look at your reports, and hmmm, you have a couple of old 30's, a 120-day late, and a collection, but your FICO score is 675, you must be doing something right, certainly better than many in your situation, so you might be a decent risk after all.

edit to add: and I don't think that they've been re-bucketed. I think that they just lost the benefit of having a loan in their score mix. I don't *think* that absence of installment is a separate bucket.

Message Edited by haulingthescoreup on 06-08-2008 08:32 AM

Re: Rebucketing: What's seen by creditors?

athensguy — Sun, 08 Jun 2008 23:29:26 GMT

Also, is it possible the Visa card has quit reporting and become inactive, or has even been closed?

Re: Rebucketing: What's seen by creditors?

Anonymous — Wed, 11 Jun 2008 17:30:12 GMT

erchambers,

the Visa is still reporting, albeit with a zero balance on a 5K limit. Highest usage was in '04 when they charged 2800 for a new dinette set, but the balance was paid within two months of the purchase. So utilization probably took a hit at the time of the charge in '04, but surely it's had time to recover in 4 years time....??

I've read the CC section, but I'm still not certain if making small charges on the Visa and paying like HTSU mentioned above wold do any good at this point. Any ideas?

Re: Rebucketing: What's seen by creditors?

athensguy — Wed, 11 Jun 2008 17:46:44 GMT

The reason to do the small charges is to keep it alive. For instance, my BoA card would not report any payment if I had a $0 statement. After a while a card will get deactivated and not count as open towards your score. I don't know if that is the case here, but I was just mentioning the possibility.

Re: Rebucketing: What's seen by creditors?

MidnightVoice — Wed, 11 Jun 2008 18:03:34 GMT

haulingthescoreup wrote:

This is goofy, IMO --I think that they should report the balance showing on your due date. But it is what it is, and paying BEFORE the statement drops is a quick way to get a boost.

That would just mean a different date I have to PIF before if I want a zero balance!

The thing is, they have to report something at some time, and I think the only alternative is the balance carried over. That would distinguish between piffers and balance carriers

Re: Rebucketing: What's seen by creditors?

Anonymous — Wed, 11 Jun 2008 18:06:59 GMT

So what's the magic usage frequency with CC's? Once a year? Twice?

The info in the Credit 101 thread and the CC section seems to differ depending on what type of card a person has in order to maximize their credit score. They use the Amex card probably 4 times a year and havent used the Visa in close to 4 years now. Some people advise sock drawering a card or two in order to keep accounts listed on their credit reports, but usage and PIF'ing seems to be a magical endeavor depending on who the card issuers is, versus when they actually report to the CB's as Hauling indicated above.

Re: Rebucketing: What's seen by creditors?

Junejer — Wed, 11 Jun 2008 18:37:17 GMT

To be safe, I would use at least every three months or so. Man, that's why I am stopping at 5 Visa/MC and a Lowe's card. I personally have a limited ability to keep all of my different rewards cards happy. Lately, it's been all about the gas/grocery rewards w/PenFed.