Bucketing Question

[Anonymous]

I have been reading the posts and discovered the term bucketing. I understand that no one really has a full understanding on how this works or what the tiers are.

I have some baddies ranging from 30 days to 90 days. These were all from various closed accounts that will hit the 7 year mark this year and next. I only have 2 revolving accounts that have both been open for the past 3 years. One is an Orchard secured and the other is Jared's.  I also just opened this past month an unsecured cc with my credit union and financing through Honda.

Will opening these new accounts warrant a re-bucketing with the baddies I have?

Orchard Secured CC - 1K CL

CU Unsecured CC - 6K CL

Jared's - 5.5K - CL

Honda Financing - 10K

[p-]

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@Anonymous wrote:

I have been reading the posts and discovered the term bucketing. I understand that no one really has a full understanding on how this works or what the tiers are.

I have some baddies ranging from 30 days to 90 days. These were all from various closed accounts that will hit the 7 year mark this year and next. I only have 2 revolving accounts that have both been open for the past 3 years. One is an Orchard secured and the other is Jared's.  I also just opened this past month an unsecured cc with my credit union and financing through Honda.

Will opening these new accounts warrant a re-bucketing with the baddies I have?

Orchard Secured CC - 1K CL

CU Unsecured CC - 6K CL

Jared's - 5.5K - CL

Honda Financing - 10K

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It's hard to say, but one thing is clear:  Developing trade lines of any type with good payment history, and using PFD or GW to remove bad payment history will improve your score.  At the top credit tiers things like AAOA will affect you, but where you are right now just getting some good history and removing baddies will get you into a better bucket.

Imagine instead of buckets, branches of a tree.  If you have collections, you are in this branch, if not, the other.  Then, if you have lates you are in this secondary branch, and so on.  As you move throughout the tree, your score is limited by the main and secondary branches you are on.  Sometimes, when you move from one major branch to another, you might see a small temporary drop in score, as you may have been at the max score on your old branch and are moving to another.

The best fix is to establish good accounts with perfect payment history, and eliminate bad ones.  Once you get that done you can move on to gardening your limits, AAOA, etc.

Good luck!

[RobertEG]

Good analogy, p-!

While what criteria moves you from being scored under one FICO algorithm vs another is an unpublished proprietary trade secret of Fair Isaac, there is ample information to at least identify the major "branches" referred to.

Credit files are categorized, in a broad sense, as "clean" or "dirty."  Dirty files are those having one or more major derogs, or several minor derogs.  Consumers can reasonably expect a "rebracketing," or move from one scoring algorithm to another, if their file turns from dirty to clean, or visa-versa.  I would not expect major rebracketing occur due to the deletion, for example, of one collection if other major derogs remain.  But the deletion of a collection that is the only reported jmajor derog will most likely result in rebracketing.  The precise details and criteria are simply unknown.

Credit files are also broadly categorized as "thin" or "thick."  Thin files have only a few TLs.  It also appears that FICO uses a thin categorization for the absence or presence of multiple revolving lines of credit, which are a major factor in scoring utilization of credit.  It is difficult to move into a thick file scoring bracket without the presence of multiple revolving lines of credit in a consumer credit file.

Just knowing that certain overall credit file categorizations enter into the determination of credit scoring is helpful, but is very difficult to quantify.