topic Re: Does amount of the CA affect your score? in Understanding FICO® Scoring

Does amount of the CA affect your score?

compassion101 — Sun, 10 Jun 2012 20:38:53 GMT

Trying to confirm if the amount of a CA affects your score? Does a CA for $3k affect scoring more than one for $300? Do ones under $100 not affect the scoring or is that only for the FICO08?

Also does anyone know what affect age has on the CA? Obv score increases as it gets older, but any milestones/guides as to how it is effected?

Re: Does amount of the CA affect your score?

pizzadude — Sun, 10 Jun 2012 20:47:53 GMT

@compassion101 wrote:
Trying to confirm if the amount of a CA affects your score? Does a CA for $3k affect scoring more than one for $300? Do ones under $100 not affect the scoring or is that only for the FICO08?

Also does anyone know what affect age has on the CA? Obv score increases as it gets older, but any milestones/guides as to how it is effected?

There's no FICO whammy for the amount of the collection, a $300 and $3000 collection are equally damaging. And you're right about FICO08 ~ it disregards collections under $100.

Re: Does amount of the CA affect your score?

RobertEG — Sun, 10 Jun 2012 20:50:49 GMT

As to the limited issue of affect on FICO score, the amount is not factored in.

However, as for the broader implication of affect on your credit, of which FICO score is only one part, it does matter.

Upon a manual review of your CR, the amount of unpaid debt would almost certainly be a factor in any creditor decision-making.

Additionally, the type of collection can be an issue. Many creditors will look at, for example, medical collections a bit differently, realizing that it is common for collections to pop up in the medical area due to the diverse billing that accompanies many medical prodecures, and the common lack of consumer knowledge that such debts even exist until a collection is reported.

It's not all just about a three-digit number.

Re: Does amount of the CA affect your score?

compassion101 — Sun, 10 Jun 2012 23:28:56 GMT

pizzadude wrote

There's no FICO whammy for the amount of the collection, a $300 and $3000 collection are equally damaging. And you're right about FICO08 ~ it disregards collections under $100.

The FICO scores that lenders generally see and the ones we get from myfico, are not fico08 usually amirite? So the <$100 CA would be included in the score calculation?

Re: Does amount of the CA affect your score?

compassion101 — Sun, 10 Jun 2012 23:31:57 GMT

@RobertEG wrote:
As to the limited issue of affect on FICO score, the amount is not factored in.
However, as for the broader implication of affect on your credit, of which FICO score is only one part, it does matter.
Upon a manual review of your CR, the amount of unpaid debt would almost certainly be a factor in any creditor decision-making.

Additionally, the type of collection can be an issue. Many creditors will look at, for example, medical collections a bit differently, realizing that it is common for collections to pop up in the medical area due to the diverse billing that accompanies many medical prodecures, and the common lack of consumer knowledge that such debts even exist until a collection is reported.

It's not all just about a three-digit number.

I understand, and I'm working on overall picture, not just a number. I'm certain mortgages look at the full report, but in many/most credit card apps am i wrong to think they usually look at just your score?

Re: Does amount of the CA affect your score?

RobertEG — Mon, 11 Jun 2012 00:47:34 GMT

Generally, the lower the amount of credit being extended, the less the time and resources will be expended to evaluate the risk.

I am sure many lower-end and secured cards dont look much, if at all, beyond the simple FICO risk evaluation score.

Many creditors use their own "pass/fail" algorithms to evaluate issue of new or extended credit. What criteria they use may not be the same as FICO scoring, and may indeed include amount of unpaid debt as a factor.

Re: Does amount of the CA affect your score?

pizzadude — Mon, 11 Jun 2012 01:44:08 GMT

@compassion101 wrote:
pizzadude wrote

There's no FICO whammy for the amount of the collection, a $300 and $3000 collection are equally damaging. And you're right about FICO08 ~ it disregards collections under $100.
The FICO scores that lenders generally see and the ones we get from myfico, are not fico08 usually amirite? So the <$100 CA would be included in the score calculation?

That's correct ~ myFico sells TU98 and EQ04, so all collections are included.

Re: Does amount of the CA affect your score?

Revelate — Mon, 11 Jun 2012 01:52:45 GMT

@RobertEG wrote:
Generally, the lower the amount of credit being extended, the less the time and resources will be expended to evaluate the risk.
I am sure many lower-end and secured cards dont look much, if at all, beyond the simple FICO risk evaluation score.

Many creditors use their own "pass/fail" algorithms to evaluate issue of new or extended credit. What criteria they use may not be the same as FICO scoring, and may indeed include amount of unpaid debt as a factor.

Not entirely certain on that one, judgements can be scary for secured credit card issuers if there's a legal right for someone to come in and possibly sieze the deposit.

There are probably some that don't, but most of the major lenders who also issue a secured card, will certainly look at the data. There's no reason not to: it's still a credit pull, and it still has to be entered into their loan servicing system... why build a second route (which is more money likely in both capital and labor costs) just for secured card approvals, instead of running it through the standard process but with different underwriting criteria? That said, it's possible someone's UW criteria in their systems is just if FICO > this, approve, but having worked in several different financial institutions in some cases supporting their loan origination systems, I'm nearly 100% confident there's more involved with all of them than this.