Thick vs Thin file ?

[cuthatcard]

I really don't get this but guess it has to do with : number of accounts ,  age of accounts , AAOA etc . 

My EX file currently has my age at 28 yrs, showing no open accounts even though I have 2 ( Care Credit & QS1 ) that's not reported yet. The other CRA 's have me at about 12.5 yrs AAOA with 2 open accounts ,  Care Credit there, QS1 ,  not yet. 

Lived off cash for the past 12-15 yrs or so with no CC's, have 2, pd installment loans showing pd that are about 12 yrs old, no baddies, 3 closed CC's, no baddies on them. 

Just wondering what my file is considered ? 

[Anonymous]

Hello CutThatCard!  Great questions.

Thinness vs. Thickness is defined solely in terms of the number of accounts you have on your profile.  Closed or open, they are treated the same, and age is not part of that assessment.  Just total number of accounts.

A profile with 1 account is extremely thin.  2 is a bit thicker, 3 is thicker still etc.  So you will hear people describe Fred with 20 accounts as having a much thicker profile than Bob with 5.

It looks like FICO, however, makes some kind of binary classification (yes or no, night or day, black or white) that describes a profile as either thin or thick.  Thin (but clean profiles) are scored seperately from thick ones.  I have heard different answers as to where the dividing line is.  It might be 4 -- i.e. 4 or more accounts defines you as thick.  I think 5 would be a very safe number.  A target goal for anyone building his credit is to eventually get out of the "thin" scorecard.  I say "eventually" as a way of stressing that I think people shouldn't add junk accounts just to deal with this.  Anyone can get 5 accounts total fairly quickly by methodically adding accounts that you actually want and will use.

I believe that Thomas Thumb knows more about how other scoring systems place the cutoff for "thick."  For example I think with Vantage you need a few more accounts than you do for FICO.  And it's worth observing that FICO has many different models abd versions, so it's possible that with FICO 9 the dividing line is 5 whereas with an older model maybe it was 4 or 3.

You also ask questions about profile age.  The age of your profile (like thickness) has to do with the actual accounts that are showing on your report.  Not what you think should be on there -- just what is in fact on there.  Profile age is defined as the age of the oldest account -- closed or open.  A word of caution here: ignore the summary software provided by Credit Karma when it comes to profile age (and also average age of accounts).  CK counts only open accounts, which is not how FICO works or how Vantage works.  I really like CK, but you need to ignore what it says about age.

Profile age (age of oldest account) is different from average age of accounts (AAoA) -- and you used the two terms somewhat interchangeably in your post.  AAoA is what it sounds like.  If you had two accounts that were one year old and one that was 7 years old, you'd have an AAoA of 3.  (1 + 1 + 7 = 9.  9 divided by 3 accounts total = 3.)  Although your AAoA would be 3, your profile age would be 7.

It sounds like you have no open installment loans.  Is that right?  If so, we can suggest a cool way to increase your score a lot and also add one more account (helping you with the thickness issue).  Let us know if you want to hear more.

Congrats for taking steps to add two credit cards to your profile!  Best wishes...

[Thomas_Thumb]

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@cuthatcard wrote:

I really don't get this but guess it has to do with : number of accounts ,  age of accounts , AAOA etc . 

My EX file currently has my age at 28 yrs, showing no open accounts even though I have 2 ( Care Credit & QS1 ) that's not reported yet. The other CRA 's have me at about 12.5 yrs AAOA with 2 open accounts ,  Care Credit there, QS1 ,  not yet. 

Lived off cash for the past 12-15 yrs or so with no CC's, have 2, pd installment loans showing pd that are about 12 yrs old, no baddies, 3 closed CC's, no baddies on them. 

Just wondering what my file is considered ? 

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Thin profile classification for Fico 08 is likely five accounts or less based on what I have read. As CGID mentioned, all accounts on file are considered (open+closed). If you have more than five accounts and at least two types of accounts, it's a safe bet to consider your file as "not thin". Yes, indications are that Fico 08 classifies files as thin or not thin.

Side note: Status of accounts being open vs closed can impact Fico 08 score. The commonly mentioned example is added value associated with an open installment loan.

File age classification is based on age of oldest account on file. This influences scorecard assignment. A file's AAoA is a factor in Fico model scoring - just not scorecard assignment. The interesting thing about scorecards is: each card has its own weighting assignments for scoring of subfactors that make up the five primary scoring categories.

VantageScore 3.0 appears to require more accounts and more account types for file thickness and mix than does Fico.

[Anonymous]

Take your cue from TT.  He believes at least six is safer than at least five.

He and I both allude to adding an open installment loan if you don't have one.  It will help you move toward a thicker profile and will also raise your score a bunch.  There's actually a whole "technique" for this.  You can read about it here.  You just need to read the first couple posts:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

[cuthatcard]

Thanks for the insight, very, very informative!

On my EQ and TU files I have a CC that is open and is 10 yrs old. Just have another (Care Credit ) that I just opened and will have QS1 showing soon. 3 showing closed.
None (at this point ) on EX but old closed ones, therein the 28 yrs with them.

I see, now, that my AAoA will drop once my new lines begin showing and will age once they age, correct ?


Thanks again!

[Anonymous]

Yes, as new accounts come on your AAoA will drop.  And then since all accounts will continue to age, your AAoA will begin going back up at a 1-for-1 rate, i.e. every year that goes by your AAoA will go up by one (until you next add a new account).  Bear in mind that closed accounts typically drop off of your report exactly ten years after they were closed.  When very old accounts drop off of a person's report, these also cause a drop to AAoA.  And if the account that is dropping off is also your oldest account, then this will also affect the factor called "Age of Oldest Account."

[Anonymous]

I'm very new to credit and I found this thread very helpful. Thanks for asking the question cuthatcard and thanks for your answer creditguyindixie.

[Anonymous]

Welcome!

[RobertEG]

I concur with the prior responses.

In the literature on credit scoring, the lowest number I have seen for the common differentiation between thick and thin is 3 trade lines.

The absolute number is used as a factor in scorecard segmentation trees, which use Yes/No logic for certain criteria to make decisions as to consumer placement into scorcard "segments," which are then used to determine which algorithm (scorecard) a consumer is to placed in and scored under.

Each FICO version has approx. 12 different scorecards, each determined by a multi-criteria logic tree.

This placement is commonly called "bucketing" in this forum.

Logic trees for scorecard placement also use other subjective category criteria, such payment history designation as "dirty" or "clean" to make segmentation decisions, with "dirty" representing the presence of any major derogs, and "clean" representing the absence of any major derogs.