topic Re: What the F - - (Score drop) in General Credit Topics

What the F - - (Score drop)

SCAREDCROW — Sun, 03 May 2009 21:26:58 GMT

I just received a FICO alert, stating that my FICO score has dropped - 30 points, and the reason is the following;

This score decrease may be caused by this new reason:

You have not established a long revolving credit history.

What the he -- does that mean, and why would my score drop like this, when I have had all types of revolving, and other types of credit for over 15 years, and I still to this day am paying 'everything' on time.???? I did notice that it says THIS "NEW" REASON. I want to know what kind of game this is, and who is at the bottom of it.

Has anyone else seen this on their credit reports? I've heard that FICO sometimes "plants" these things to get people to buy the credit reports and try to find out what's up. This just does not make any sense at all.!!!!

Re: What the F - - (Score drop)

Anonymous — Sun, 03 May 2009 21:35:13 GMT

Scaredcrow -

Welcome to your new bucket. You are now (temporarily) a smaller fish in a larger (more credit affluent) bucket. And because your score is a comparative analysis and curve grading system against your bucket peers, you will experience a score drop in proportion to how you rate against the other bucket members.

FICO is not a linear progression. As you perfectly pay your debt and pay off debt, your debt ages, you obtain new types of debt, you have different AAoA and other factors that you are put into a class of similar CR's in order for FICO to numerically calculate your risk to lenders in comparison to the other bucketed CR's you are compared to.

Don't worry, you will recover and this is part of the FICO growing pains. Once your oldest account is over 19 years and your AAoA is over 6 years, you will see less of this rebucketing and find more linear score progression.

HOWEVER: Do check your CR carefully to make sure there hasn't been any unexpected changes, additions, or deletions of accounts, comments, history or other info on your CR. If there is none, then my bucket info applies IMO.

Re: What the F - - (Score drop)

SCAREDCROW — Sun, 03 May 2009 23:32:59 GMT

Thanks, but WHAT? New Bucket? AAoA? Over 6 years? WHAT?

Re: What the F - - (Score drop)

Anonymous — Sun, 03 May 2009 23:55:36 GMT

Picture a bucket. Now picture that you and your Credit report are in a bucket with many other Credit reports. Those reports are analyzed to find common risks, failures and successes in your credit habits as reported on your report.

You are "bucketed" based upon the content of your report. So, as your report changes with the age of your accounts, debts incurred or paid, number of accounts, amount of debt, etc. you may be placed into a different bucket which more closely matches your updated circumstances.

Your score is generated by comparing it to the other report data to determine the likelihood you will default.

How you are bucketed is based upon many, many factors, but some of the most important is the age of your first account, the average age of all your accounts, the amount of debt you have, the type of debt you have, the number of balances/loans you have, the type of derogatories you may have (charge offs, lates, collections, bankruptcy, liens, judgments, etc).

So, as the age of your accounts increase, your debt is paid down or goes up, the average age of accounts (AAoA) increases or decreases, you may find yourself "rebucketed" and since your score is generated in comparison to those in the bucket with you, your score will change since you have a new group of peers to be compared against.

This means that the ever changing nature of your report and the collective report data base means you can find score decreases at times as you rebucket even though nothing derogatory occurred. However, the loss in score will be temporary as you "age" in that bucket.

Bucket is a way to communicate this phenomena of how your score is generated against different comparative data as the content of your report changes. There are not really buckets or set stages, just that as your report changes, matures and ages, even with perfect history, you will incur some FICO decreases from time to time, which will correct themselves usually in 3 to 6 months.

FICO is similar to the academic method of grading on the curve, meaning that the highest grade in the class sets the standard for an A and everyone is graded in comparison to the top achievers. In your case, you will be graded on the curve to the high achieves of your bucket.

Known characteristics of "FICO high achievers" (760 and above) is that they on average have an oldest account of 19 years, average age of accounts of 6 to 12 years, average 7% utilization of their availabe revolving debt, on average have only 3 accounts (including mortgage and auto) with a balance on their report, have virtually no lates (but if they do more than 4 years old), virtually never have a collection, virtually never have a reported bankruptcy, etc.

As your report matures and improves, you will be graded against a better and better class or credit, so initially as you move up in buckets, you will be "low man on the totem pole" or "bottom of the bucket" so to speak. But you will rise as you age in the bucket.

Message Edited by txjohn on 05-03-2009 04:55 PM

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 00:02:35 GMT

@Anonymous wrote:
Picture a bucket. Now picture that you and your Credit report are in a bucket with many other Credit reports. Those reports are analyzed to find common risks, failures and successes in your credit habits as reported on your report.

You are "bucketed" based upon the content of your report. So, as your report changes with the age of your accounts, debts incurred or paid, number of accounts, amount of debt, etc. you may be placed into a different bucket which more closely matches your updated circumstances.

Your score is generated by comparing it to the other report data to determine the likelihood you will default.

How you are bucketed is based upon many, many factors, but some of the most important is the age of your first account, the average age of all your accounts, the amount of debt you have, the type of debt you have, the number of balances/loans you have, the type of derogatories you may have (charge offs, lates, collections, bankruptcy, liens, judgments, etc).

So, as the age of your accounts increase, your debt is paid down or goes up, the average age of accounts (AAoA) increases or decreases, you may find yourself "rebucketed" and since your score is generated in comparison to those in the bucket with you, your score will change since you have a new group of peers to be compared against.

This means that the ever changing nature of your report and the collective report data base means you can find score decreases at times as you rebucket even though nothing derogatory occurred. However, the loss in score will be temporary as you "age" in that bucket.

Bucket is a way to communicate this phenomena of how your score is generated against different comparative data as the content of your report changes. There are not really buckets or set stages, just that as your report changes, matures and ages, even with perfect history, you will incur some FICO decreases from time to time, which will correct themselves usually in 3 to 6 months.

FICO is similar to the academic method of grading on the curve, meaning that the highest grade in the class sets the standard for an A and everyone is graded in comparison to the top achievers. In your case, you will be graded on the curve to the high achieves of your bucket.

Known characteristics of "FICO high achievers" (760 and above) is that they on average have an oldest account of 19 years, average age of accounts of 6 to 12 years, average 7% utilization of their availabe revolving debt, on average have only 3 accounts (including mortgage and auto) with a balance on their report, have virtually no lates (but if they do more than 4 years old), virtually never have a collection, virtually never have a reported bankruptcy, etc.

As your report matures and improves, you will be graded against a better and better class or credit, so initially as you move up in buckets, you will be "low man on the totem pole" or "bottom of the bucket" so to speak. But you will rise as you age in the bucket.
Message Edited by txjohn on 05-03-2009 04:55 PM

txjohn,

that was awsome. You just gave me a 15 year lesson in a few short paragraphs. Thank you for taking the time to spell that out. You rock brother!

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 00:19:44 GMT

ditto!

When I first heard about buckets I was confused big time. Heck fico still confuses me every time I look at it. But this forum really helps me get it a little at a time.

I have learned so much here, and txjohn has helped me understand much better. I watch for his posts.

Right now I'm in the crap bucket

Re: What the F - - (Score drop)

SCAREDCROW — Mon, 04 May 2009 15:14:06 GMT

txjohn, thank you for that additional information. I followed some of your other links related to this so-called 're-bucketing' phenomenon, and also read the comments from other frustrated contributors. The whole thing sounds like a bunch of nonsense designed to continue to keep us in the dark and unable to fully control our credit reports. There is no rhyme or reason, formula, structure or logic that anyone has disclosed that clearly outlines how this works. I'm sure there are several other people out there in the same boat. Reasonable and intelligent people, who can read, have mathematical ability, common sense and logic, and who are still in the dark for an answer as to why someone with no derogotary records and a clean payment history, a substantial credit history and credit mix, should have a much lower score than someone else with derogatory records and maybe some missed payments, just because they are in another so-called "bucket". Just how many buckets are there? How many times can we expect to be "re-bucketed"? All things being equal, could I get hit with another score drop next month, because now THE BUCKET is 'technically' fuller? In that case, just how many am I being measured against, or am I competing with in any given bucket, until it flows over and it starts all over again? There is no logic to this, and I'm sure I'm not the only one who would really enjoy, and benefit from having it ALL clearly spelled out. Why doesn't FICO provide a class on this or something?

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 15:51:41 GMT

SCAREDCROW wrote:
txjohn, thank you for that additional information. I followed some of your other links related to this so-called 're-bucketing' phenomenon, and also read the comments from other frustrated contributors. The whole thing sounds like a bunch of nonsense designed to continue to keep us in the dark and unable to fully control our credit reports.

The buckets don't control our reports. Our reports control which bucket we are in.

There is no rhyme or reason, formula, structure or logic that anyone has disclosed that clearly outlines how this works.

You are right, all the exact formulas are not disclosed. Why? Well, would KFC sell as much chicken as they do today if they released the secret recipe?

I'm sure there are several other people out there in the same boat. Reasonable and intelligent people, who can read, have mathematical ability, common sense and logic, and who are still in the dark for an answer as to why someone with no derogotary records and a clean payment history, a substantial credit history and credit mix, should have a much lower score than someone else with derogatory records and maybe some missed payments, just because they are in another so-called "bucket".

I've never seen anyone with a long history, preferred mix, and no negatives have a much lower score than someone with derogatory records/late payments.

Just how many buckets are there?

I'm not sure if that has been figured out yet. Search for posts by Fused or Haulingthescoreup that contains words such as "bucket" "score buckets" and "rebucketed".

How many times can we expect to be "re-bucketed"?

You aren't re-bucketed a lot, from what I know. Each bucket has certain criteria, if you meet the criteria for bucket A better than you do for bucket B, then you'll move over to bucket A from bucket B.

All things being equal, could I get hit with another score drop next month, because now THE BUCKET is 'technically' fuller?

From my experience, doubtful.

In that case, just how many am I being measured against, or am I competing with in any given bucket, until it flows over and it starts all over again?

I'm not sure that there is a limit of how many people can be in one bucket. But maybe so, I am not an expert on them.

There is no logic to this, and I'm sure I'm not the only one who would really enjoy, and benefit from having it ALL clearly spelled out.

There is logic. To calculate how risky you are, you have to be compared to others. Are you less risky or more risky? If you were 18 years old and just starting out would you want to be compared to someone who was 50 and had 32 years of history behind them? Wouldn't be hardly fair. So, when someone is 18 and just starting out, thus has a short history, they are compared to others who are just starting out and have a short history. Just the same as someone who is 50 wouldn't want to be compared to someone who just started out.

You are compared to others who similar credit reports as you. There are many different criteria and I'm sure if you search enough over on the Understanding FICO Scoring board, you'll find what people suspect are the criteria for each buckets and how many buckets are suspected. But, I don't think this is anything set in stone, just based on what others have reported and what has been assumed.

Why doesn't FICO provide a class on this or something?

Check the credit education section, there may be something in there. I'm not sure. I'll do some looking around.

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 15:54:56 GMT

Just to add......being rebucketed doesn't always mean score drop. It could mean a score increase.

Just depends on what bucket you are moved into.

While being rebucketed sounds like a bad thing, long run it usually works out for the best.

Re: What the F - - (Score drop)

SCAREDCROW — Mon, 04 May 2009 17:04:14 GMT

Thanks again for the info. but I have to tell you, that I don't buy the "Secret Recipe" analogy. Why? because with that secret recipe, I and millions of others are being judged, catalogued and numbered, and from what I can tell, and others have shared from their experiences, the numbers aren't always right or make sense. Having said that - when the "Secret Recipe" is what is being used to decide what kind of interest rate someone will be charged on a mortgage to buy a home, or a car, or used to make decisions on whether someone is employable or not ... that "Secret Recipe" belongs to me, and every other person out there that is equally affected. Why does any of it have to be secret anyway. If people know that they get good marks when they pay their bills, and if they keep their CC utilization down to a certain %, and they have a reasonable mix of credit, and that all that adds UP, then what's so secret about fully disclosing the other specifics instead of playing guessing games. You know you can't do anything about time - (to use your examples) - if you are 18 years old, with little credit or just starting out, vs if you are 50 and have had credit for 30 years. So, if moving into these so-called buckets is a factor of time, then so be it. But, when you get a message about your credit report that says your credit score dropped 30 points, because you have don't have a long enough history of some type of credit (I forget exactly what the message was -it's at the beginning of this track), that doesn't make sense. This happened because I supposedly moved into another bucket with people who have certain credit characteristics and part of that is some type of revolving credit history. What if I never want to have revolving credit? If your analogy is accurate, when I was re-bucketed, I was placed in a category of similar people (similar consumers, or similar credit risks). If other's in that batch have revolving credit and I do not ... am I still similar for that comparison and weighing -I think not. And why should I be penalized for not fitting in to what is "dictated" for this bucket through some SECRET RECIPE. Look, if someone told me that when I get to year X of my history, if I have Y accounts in good standing, and I have Z lates, .... etc, that I am going to be "re-bucketed" or reclassified, and that in order to keep my credit score in it's current range or even improve it, I should have (perhaps) an extra account of some sort, or pay down something else, ..... etc.... then, those are disclosures, and tools that anyone can use to be a smarter, and more pro-active citizen in this crazy credit business. Otherwise, we are all blind.

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 17:11:59 GMT

FICO doesn't release the specifics because they spend the man hours and money doing the research and developing the formula. If they released the specifics, anyone could then duplicate the formula and sell it cheaper because they have no invested anything.

What would be the incentive to develop an accurate formula if you aren't going to be paid for it?

FICO developed a product that lenders trust and pay for. Doesn't matter if we like it or not.

Lenders aren't made to use FICO scores or even use our credit reports when determining what rate we will get, if we'll be approved, etc.

Here is some information regarding how scores are arrived at.

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Message Edited by sidewinder on 05-04-2009 12:11 PM

Re: What the F - - (Score drop)

Anonymous — Mon, 04 May 2009 17:15:34 GMT

Your frustration is understood and, yes, voiced by many.

There is a general understanding of FICO and what most importantly affects it. However, those are general parameters, not specific as to how they actually formulate each component.

If you maintain no derogs, you can expect to not be re-bucketed much after your oldest account is 19 years and your AAoA (average age of accounts) is 6 or more years. You won't have the "growing pain" type decreases associated with "moving up" the buckets. Your score changes will then mostly be based upon how you utilize your credit, debt loads, and payment history. The higher your score (760 plus) and the older your history, the more stable it becomes.

Have you looked at the various FICO resources. They do attempt to better explain how the process works.

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

What’s in your FICO® score

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History

Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed

Amounts Owed

Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History

Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity

New Credit

Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems

Types of Credit Used

Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

Please note that:

A FICO score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
Your FICO score only looks at information in your credit report.
However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
Your score considers both positive and negative information in your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.

Re: What the F - - (Score drop)

Anonymous — Tue, 05 May 2009 00:07:05 GMT

Courtesy of Mike14, here is a link with some info on bucketing. It is a heavy read but if you want to really get into the mechanics check this out.

http://www.fairisaac.com/NR/rdonlyres/B0C062C0-714C-4233-9AD8-BF9D0485AD48/0/Intro_Scorecard_Model_Builder_1991WP_EN.pdf