Interesting tidbit about Score Calculations

[Anonymous]

An excerpt from an article on Bankrate.

"Your credit score doesn't actually change. That is, your score doesn't really increase or decrease because it's calculated fresh each time you, a lender or business requests it. Don't take my word for it. FICO's consumer affairs manager, Barry Paperno, explained in a recent Q-and-A with Bankrate that "scores are calculated each time they're requested, as opposed to being calculated and stored somewhere and then retrieved."

Interesting to me because I actually pay for score monitoring which appears to be a waste of money.  My score is not changing unless it's requested.  Any thoughts?

[marty56]

I do not know how a score monitoring service works internaly but from my own exprience they seem to work ok, altough the report seems to lag behind the day the acutual event occurs.  IMHO they have to scan your CR on some regualr basis and look for changes or possibly use triggers on your report.

Anyway they must be configured correctly to work which is usually done by setting your target score 1 point above your current score. 

[Walt_K]

---

@marty56 wrote:

I do not know how a score monitoring service works internaly but from my own exprience they seem to work ok, altough the report seems to lag behind the day the acutual event occurs.  IMHO they have to scan your CR on some regualr basis and look for changes or possibly use triggers on your report.

Anyway they must be configured correctly to work which is usually done by setting your target score 1 point above your current score. 

---

If you're using the ScoreWatch service, you want to set it at your current score.  Otherwise, you won't necessarily be notified if your score decreases.  Not sure about other services.

[crunching_numbers]

---

@Anonymous wrote:

An excerpt from an article on Bankrate.

"Your credit score doesn't actually change. That is, your score doesn't really increase or decrease because it's calculated fresh each time you, a lender or business requests it. Don't take my word for it. FICO's consumer affairs manager, Barry Paperno, explained in a recent Q-and-A with Bankrate that "scores are calculated each time they're requested, as opposed to being calculated and stored somewhere and then retrieved."

Interesting to me because I actually pay for score monitoring which appears to be a waste of money.  My score is not changing unless it's requested.  Any thoughts?

---

Credit monitoring/score monitoring products work by checking the data in your credit report and picking up specific changes. For Score Watch those are things like a new accounts reporting, a balance increase, or an inquiry.  If the service detects one of the covered changes, it triggers an alert, and recalculates your score.  In other words, it monitors your score by monitoring the data that creates your score.  With the Score Watch product, if you did not recieve any alerts to changes in a 7 to 10 day period, it goes out and recalculates your FICO score, and lets you know the result. Often this result is a message that there was no change in your score.  It is NOT looking at scores other people have requested and alerting you, but rather scanning and recalculating. 

[Goal810]

---

@Anonymous wrote:

An excerpt from an article on Bankrate.

"Your credit score doesn't actually change. That is, your score doesn't really increase or decrease because it's calculated fresh each time you, a lender or business requests it. Don't take my word for it. FICO's consumer affairs manager, Barry Paperno, explained in a recent Q-and-A with Bankrate that "scores are calculated each time they're requested, as opposed to being calculated and stored somewhere and then retrieved."

Interesting to me because I actually pay for score monitoring which appears to be a waste of money.  My score is not changing unless it's requested.  Any thoughts?

---

This is fascinating! Others have explained that score watch works fine because they monitor underlying changes to your credit and calculate score based on that, but this is not the main point that occurred to me when I read the quotation. The implication is that scores do not change in the sense that they go up or down. They are re-calculated based on the current information. So for someone who is trying to calculate scores and understand how the computations are made, this is a key point. I always thought that my score was adjusted up or down by new information, not re-calculated.

Not sure that I am making sense here...

[AndySoCal]

A couple of things. A credit monitering service is a useful tool to have. The first thing is you can use it make sure your credit histroy is complete and their are no errors. The seocnd function of a credit monitering service is notify you of changes to your creidt history. Like inquiries, new accounts etc.  These can be an early warning sign of a bigger problem.  I have a  credit monitering service all I am interested in knowing from them is if some thing changes and to make sure my credit history is accurate and complete. Regarding the credit score the credit monitering service has the ability to be notified of changes to your credit histroy. Once it is notfied of the change it can request the score to be calculated. ( or a process similiar in nature)  Keep in mind any time a lender updates your credit history at the bureau it has potential to change yor score.

[Anonymous]

This is advice and actually what I have done, set my alert to my current score. I appreciate the advice. I believe monitoring is great for someone like me who is in the process of rebuilding but knowing my score isn't changing unless something occurs or changes is interesting. For some reason I assumed my score was recalculating daily.

[crunching_numbers]

---

@Anonymous wrote:
This is advice and actually what I have done, set my alert to my current score. I appreciate the advice. I believe monitoring is great for someone like me who is in the process of rebuilding but knowing my score isn't changing unless something occurs or changes is interesting. For some reason I assumed my score was recalculating daily.

---

Aging of your accounts is part of the scoring model. Thus, there is the potential for time alone to cause a change in your score. Your score is a snapshot of the data at any given moment. When the data does not change, the score does not change.  Ther are active and passive events that can change your FICO score. An active change would be a reduction in your debt causing lower overall debt and lower utilization.  A passive event would be your youngest account aging to the one year mark, or an inq falling off the FICO calculation because a year has passed.  Time affects AAoA, age of oldest account, when a baddie leaves your report, time since the baddie occurred.  Your score is calculated from raw data whenever it is needed so that is is completely accurate for that exact moment, for the exact data in your report. Monitoring services watch events, and then recalculate when an event occurs, or at a certain time interval. 

[crunching_numbers]

---

@Goal810 wrote:

---

@Anonymous wrote:

An excerpt from an article on Bankrate.

"Your credit score doesn't actually change. That is, your score doesn't really increase or decrease because it's calculated fresh each time you, a lender or business requests it. Don't take my word for it. FICO's consumer affairs manager, Barry Paperno, explained in a recent Q-and-A with Bankrate that "scores are calculated each time they're requested, as opposed to being calculated and stored somewhere and then retrieved."

Interesting to me because I actually pay for score monitoring which appears to be a waste of money.  My score is not changing unless it's requested.  Any thoughts?

---

This is fascinating! Others have explained that score watch works fine because they monitor underlying changes to your credit and calculate score based on that, but this is not the main point that occurred to me when I read the quotation. The implication is that scores do not change in the sense that they go up or down. They are re-calculated based on the current information. So for someone who is trying to calculate scores and understand how the computations are made, this is a key point. I always thought that my score was adjusted up or down by new information, not re-calculated.

Not sure that I am making sense here...

---

I get you.  Yes, you are on the right track. This is why bucketing can suddenly occur. It assigns a bucket based of the current data. That bucket may be different from the bucket last used to calculate your scores. For example, a clean report and a report with a 60d late will most likely not be in the same bucket, and a thin file will not be in with a person with 20 cards and 15 year history. If the 60d late is goodwilled away, that person will not only get adjusted for losing the 60 day late, but a completely different logarithm will be used for their score. The effect is that completely different calculations have occurred to the same person on two consecutive days. The FICO change is less predictable because you were being compared to people with baddies, and you might have had looked awesome in comparison, but now you are being compared to a different group where your data is just average, not stellar.

[Anonymous]

This whole idea is exactly why I don't feel that FICO should be required to provide us with a credit score.  They aren't saving any information about us.  Theys imply take the information fed into the computer about one particular report, run it through a formula, and spit out a number.  That information is completely anonymous to FICO.  They only provide the formula.