topic Re: Need help in Understanding FICO® Scoring

Need help

ficonightmare — Mon, 25 Oct 2010 21:40:26 GMT

Ok so where to start?

Last year, my husband who has a fico score above 800, told me to check mine before we purchase an apartment,.I knew mine was going to be low because of 1 late payment (over 120 days) and another dispute I had with my Gap card. Also, I never used credit cards (other than my debit) except for the two my husband gave me by adding me to his accounts, so he's the primary account holder. Anyway, I check experian on 7/09 and was horrified, but not terribly shocked to see a score of 618.

Suffice it to say we decided on putting off buying.

Fast forward -In the last year I opened my own credit cards (2), paid on time, kept my debt low, and tried everything I could to raise that score. As of today, I'm 712 with experian, 711 with equifax, and 725 with transunion. BUT, now that I've been checking online I see that's not too good.

What else can I do to improve my FICO score? I'm in the middle of a dispute with one of the lenders (GAP) because I paid that card twice. They even issued me a refund but they refuse to take it off. It'll come off on it's own in one more year (11/11), but is there anything else I can do in the meantime to raise my score to above 750?

The reason this is so important to me is interest rates. Buying an apartment in Manhattan is very expensive- even with 40% down. So I'm trying to do anything, and everything to get the lowest interest rate possible.

Thanks in advance, and sorry for the long winded post.

Re: Need help

llecs — Tue, 26 Oct 2010 00:16:29 GMT

Welcome to the forums!

I'd suggest reading the following:

Common Abbreviations

Credit Scoring 101 - great for knowing what is in your credit score and to see how your score is impacted.

First off, unless your scores came from your lender, and assuming they came from the same source, then unfortunately they aren't FICO scores. Other than myFICO.com, you can get your EQ FICO from Equifax.com or from your lender. Other than myFICO.com, you can also get your TU FICO from transunioncs.com (note the -cs) and from your lender. Finally, as of last year, Experian no longer allows consumers to pull their own EX FICO score, but you can get it from your lender or on your checking statement if you happen to have a checking account with a CU in PA called PSECU. Any other score from any other source are not FICO scores, but a knock-off we call FAKOs.

Your FICO scores can easily be higher or lower than the ones you posted. If you happen to pull FICO scores similar to those, then know that 710-725 range is on the high end of the good/low end of the very good range. You'd be in good shape for a great rate. Also know that your lender will pull all 3 FICO scores for both you and your DH. The lender will then look at the middle score of the three and use the lowest of the two mid-scores as a basis for the rate.

For max points with the CCs, and assuming you only have these two reporting, get one to report $0 and the other to report a balance of under 9% of the CL. I noticed that your DH added you as an AU. AU accounts count in FICO scoring so, rephrasing, you'd want all but one CC to report $0 with the remaining reporting a balance of under 9%.

For your GAP card, you can always try sending a goodwill letter asking them to delete. It may or may not work but always worth a shot. Now if this is your oldest or one of your oldest TLs, then I wouldn't do anything. It's always possible to lose points if it gets deleted and it was one of your oldest TLs.

Re: Need help

ficonightmare — Tue, 26 Oct 2010 00:42:03 GMT

thanks so much for your response.

I got the Equifax and TransUnion score from this site (myfico.com) but went to experian.com for their score.

Thank you for the links and the info. as well. I've been going through all the threads on this forum like crazy for the last few hours.

Great site with loads of information.

I usually keep between a 12-15% balance on one card. Thought that was better. Thanks for the 9% tip. Will pay it down.

I also didn't realize that writing them a goodwill letter may cause me to lose points. I guess I'll wait for the 7 year mark.

One more newb question. Does my FICO score affect my DH at all? He's not an AU on my cards.

Re: Need help

Anonymous — Tue, 26 Oct 2010 07:06:54 GMT

I'm a Mortgage Loan officer and really, you shouldn't worry too much about your score. Based on where your score currently is, you should see no more than .125% worse rate than if you had a much higher score. Our best terms come at 740 for example with a "hit" for every 20 points below that. The "hit" sometimes is insignificant but the real key now a days is to stay above 700.

Re: Need help

llecs — Tue, 26 Oct 2010 14:19:27 GMT

@ficonightmare wrote:

thanks so much for your response.

I got the Equifax and TransUnion score from this site (myfico.com) but went to experian.com for their score.

Thank you for the links and the info. as well. I've been going through all the threads on this forum like crazy for the last few hours.

Great site with loads of information.

I usually keep between a 12-15% balance on one card. Thought that was better. Thanks for the 9% tip. Will pay it down.

I also didn't realize that writing them a goodwill letter may cause me to lose points. I guess I'll wait for the 7 year mark.

One more newb question. Does my FICO score affect my DH at all? He's not an AU on my cards.

I recently posted a thread about going from 70% util down to 3%. IME and recently, I went from 14% to 9% util on EQ and saw a 11 point bump. Then I went from 9% to 1% and saw a 3 point increase. On TU I went from 14% to 10% and gained only 3 points but went from 10% to 3% and gained 23 points. Every little bit helps.

If that GAP card is one of your oldest, I wouldn't do anything. You're in great shape as it is.

Your FICO score is calculated at the exact moment your report is pulled (via your lender or myFICO) and is based on what is reporting on your report at that moment. Generally speaking, your FICO score has no impact on your DH's or vice-versa. Now if you have a joint account or one of you is an AU off the other's account, then that'll certainly play into your FICO score or his. If you have a positive history on that account, then he does too. If you have high or low util on that card, then he does too. If you default, then that'll report on his too. So the FICO score has no impact on his but any accounts you have between each other do impact the other's report. Since meither of you have shared accounts, then there's no impact either way.

Re: Need help

ficonightmare — Tue, 26 Oct 2010 22:25:38 GMT

llecs, and mkm77. Thank you.

I'm still looking through all the threads and even checked my husbands score through myfico. he's still over 800 with TransUnion and Equifax. After what you wrote, I figured going to Experian and getting theirs was pointless.

So, I'm still going to try to get it somewhere near the 740-750 mark. Hopefully by January, and then we'll try to get pre-approved.

Out of curiousity, why do FAKO scores even exist? I had no idea that sites like freecreditreport etc. don't give you your FICO score. I was discussing it with a colleague today and they didn't either. In fact, I'm sure most people are clueless. Is there any point to FAKO at all?

Thanks again for all the help. Much appreciated.

Re: Need help

haulingthescoreup — Tue, 26 Oct 2010 23:36:13 GMT

@ficonightmare wrote:
llecs, and mkm77. Thank you.

I'm still looking through all the threads and even checked my husbands score through myfico. he's still over 800 with TransUnion and Equifax. After what you wrote, I figured going to Experian and getting theirs was pointless.
So, I'm still going to try to get it somewhere near the 740-750 mark. Hopefully by January, and then we'll try to get pre-approved.

Out of curiousity, why do FAKO scores even exist? I had no idea that sites like freecreditreport etc. don't give you your FICO score. I was discussing it with a colleague today and they didn't either. In fact, I'm sure most people are clueless. Is there any point to FAKO at all?

Thanks again for all the help. Much appreciated.

They make lots and lots of money for the companies who issue them.

They have to pay for all those commercials, you know.

Re: Need help

ficonightmare — Wed, 27 Oct 2010 12:48:46 GMT

That's pretty funny. But still wrong.

A commercial came on for freecreditreport.com last night and I was watching it closely. Trying to see if they mention, or write that they don't report your FICO score. Nope, nothing. False advertising in my opinion. Wonder if experian will refund me my 15 bucks for the useless info.

Re: Need help

Anonymous — Wed, 27 Oct 2010 14:02:02 GMT

@ficonightmare wrote:

That's pretty funny. But still wrong.

A commercial came on for freecreditreport.com last night and I was watching it closely. Trying to see if they mention, or write that they don't report your FICO score. Nope, nothing. False advertising in my opinion. Wonder if experian will refund me my 15 bucks for the useless info.

In the purest sense it's not really false advertising. They sell you exactly what they say they will; i.e a "credit score". What they neglect to say is that most lenders don't use the "scores" they sell.

Most definitely IMO misleading.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800, 10/10-813
TU - 10/10-774
You can do the same thing with hard work

Re: Need help

llecs — Wed, 27 Oct 2010 14:36:51 GMT

@ficonightmare wrote:

That's pretty funny. But still wrong.

A commercial came on for freecreditreport.com last night and I was watching it closely. Trying to see if they mention, or write that they don't report your FICO score. Nope, nothing. False advertising in my opinion. Wonder if experian will refund me my 15 bucks for the useless info.

Credit score trickery.

Freecreditreport used to have a FAQ section on their home page and it used to mention outright that they didn't offer FICO scores, but you'd still have to dig for that info. Now they made it harder to find. You actually have to start the registration process to find the FAQ and even then that are ambiguous as to whether or not they use a FICO score:

Why is this score different from the one I got somewhere else?

It's a common credit myth that there is only one way to calculate a Credit Score. Many lenders use their own customized calculations. All three bureaus offer different calculations, and there are multiple "FICO" score calculations. There are estimates that say there are over 1,000 different Credit Scores in use. For more information about different score models, we recommend you read this article on Experian.com. (http://www.experian.com/ask_max/max080807b.html)

The score calculation used on freecreditreport.com is the PLUS Score, which is the standard calculation offered by Experian.

While a PLUS score is a FAKO score, the average guy off the street inspired by a singing waiter wearing a pirate hat may not know that a PLUS score is not a FICO score especially with the mention of "multiple 'FICO' score calculations".

BTW, another notorious company is TrueCredit. They were honest about their score, but only after you paid them to sign up. At the bottom of their Score page, they mentioned their FAKO score (Vantage) was not a FICO and included a sentence or two but it was all greyed out and very difficult to see.

Re: Need help

ficonightmare — Thu, 28 Oct 2010 12:45:34 GMT

Yep, very misleading and wrong. Everywhere I checked (except for this site), people were quoting their FAKO scores without realizing that's not what banks look at.

Apparently my DH is a FICO High Achiever. I asked him how he got his score so high. He said no formula just being responsible. Keeps his debt low, and on those occasions where he needs to charge hight amounts (like vacations), he'll pay all/or most off in the next billing cycle because he hates carrying large balances. But he does use his Citi CC for everything because of the points. Once in awhile he'll use AMEX and Chase to keep them active.

It seems simple enough and yet, I haven't mastered it.

When I checked my report, it showed I had an AMEX card from 1995 that was closed in 2008 because it was inactive. i totally forgot I even had it. It was my emergency card that I haven't used since the late 90's. The account was in good standing but did I take a hit for it? And if I re-apply will it be an issue?

Re: Need help

llecs — Thu, 28 Oct 2010 13:24:27 GMT

@ficonightmare wrote:
When I checked my report, it showed I had an AMEX card from 1995 that was closed in 2008 because it was inactive. i totally forgot I even had it. It was my emergency card that I haven't used since the late 90's. The account was in good standing but did I take a hit for it? And if I re-apply will it be an issue?

Whether opened or closed, there's no impact per your utilization. Also, it'll continue to report until 2018 and that'll help with your length of history and AAoA. Moreover, Amex is quite desirable in that they will back date the opened date on all new, future CCs you open with the original open date of your first CC with them. I probably could have typed that better but any future Amex you open will have an open date of 1995.

Re: Need help

ficonightmare — Thu, 28 Oct 2010 13:42:45 GMT

IIecs, thanks.

So even if they closed it do to inactivity, I'm not taking a hit for it on my FICO score? Sorry for all the questions.

I don't plan on applying any time soon as I'm showing someone made an inquiry to TU in march 2010. I'm going to wait until that inquiry is off before getting AMEX again.

Re: Need help

llecs — Thu, 28 Oct 2010 14:01:42 GMT

@ficonightmare wrote:
So even if they closed it do to inactivity, I'm not taking a hit for it on my FICO score? Sorry for all the questions.

I don't plan on applying any time soon as I'm showing someone made an inquiry to TU in march 2010. I'm going to wait until that inquiry is off before getting AMEX again.

Your FICO likely isn't taking a hit at all. If this were any other CC, I'd say you are better to have it report open on the basis of utilization, but Amex (assuming this is a charge card since it's from 1995) charge cards factor in differently. On EX and EQ FICO scores, the current balance and "high balance" aren't factored in at all in your FICO score. So, even if it reported as open, there's no impact per utilization. The same applies to newer versions of your TU FICO score. However, the TU FICO version used still by many lenders and by myFICO.com does factor in Amex charge cards into your utilization. Since this CC is closed, it isn't factored into utilization. Amex will report a "high balance" for the basis for the CL in this TU FICO version. Amex will report the "high balance" and will adjust it from time to time (up or down). Since this CC had not been used for some time, and assuming it were still open, that high balance would have read $0 and it wouldn't help you anyway.

The other aspect to be aware of is your mix of credit. Open CCs factor into your mix whereas closed CCs do not. However, if you have other CCs, then don't worry about this.

This will continue to age and help your history. If you ever opt to apply for an Amex in the future, then you'll have extra bonus history.

Re: Need help

ficonightmare — Thu, 28 Oct 2010 14:48:44 GMT

I just contacted AMEX and apparently I had 2 cards. The Green and Optima. Both were closed. Mine (Optima) due to inactivity (which is not showing up at all on my TU report), The other one from 1995, was the amex green and I was an AU, was also closed due to inactivity. My parents had a habit of adding me when I was in my late teens/early 20's without letting me know just to build a credit history.

Both accounts were in good standing. They also said, and you were right about this, IIecs, was that if i applied today, they would backdate it to 1995 even though I was an AU at the time. My Optima card was opened later and closed in 2003. Weird that it's not showing up on TU. Checked EQ again and there it was.

Thanks again for all the help.