AZ vs AZEO vs AZE2+ (i.e. - 1 in 3 or less)

[expatCanuck]

Summarizing what (I believe) I've learned here:

1) AZEO will optimize all scores (assuming < 8.9% overall util and < (I forget the percentage) single card util).

2) AZEO is definitely better than AZ (by 11-22 points, with 16 typical).

3) For (almost) every FICO score, AZEO is better than AZE2+ (which we'll define as having the same overall util constraint and the same single card util constraint as AZEO, but up to 1 in 3 cards can report a balance (e.g. - if you've got 6-8 cards, 2 could report; 9-11, 3 ... etc., tho' I suspect the model might get out of whack if one possesses a whack number of cards). [One exception (and likely a reasonable explanation) -- on my TU record, the AZE2+ Auto8 score was 1 point better than the AZEO Auto8 score]

That said, my experience was that AZEO improved all of my scores except the FICO Score 8.  All of the Mortgage, Auto and Bankcard scores were better with AZEO than AZE2+.

I'm wondering whether, for Bankcard/Mortgage/Auto scores, there'd be an significant/beneficial difference between AZ and AZE2+?  Given what I've read, I'd wager that AZE2+ scores would be better, but I have no data.  Yet.

Anyone know?

[Anonymous]

I think you've got a pretty good grasp of it, although I'd reconsider Point 3. 

I wouldn't say that AZEO is better than AZE2 for "almost every" FICO score.  If someone has 6+ revolvers (which many do) chances are that AZE2 would result in the same score as AZEO.  One thing is for sure though, AZEO definitely maximizes score... so while AZE2 may not lower score at all, going to AZE2 wouldn't ever raise a score above what AZEO would accomplish, of course assuming the AZEO card is being "counted" by the algorithm.  There are people that have reported AZE3, AZE4 etc. that based on their profile haven't seen a score drop in going to that from AZEO.

[Anonymous]

So to answer your last question... yes, it is known for sure that all existing FICO models (all flavors and all versions, including BE, Auto and version 9) penalize all cards at zero.

A few questions for you:

(a)  When you say that FICO 8 was the exception, you are refering to FICO 8 Classic, right?  And when you you call it an exception, you mean that AZEO failed to give you a boost over AZE2+.... but you are not saying that AZEO caused a score drop over AZE2+... correct?

(c)  Can you tell us a bit more about the details of your particular profile when you were testing this?  Specifically, how many open revolving tradelines did you have?  Were all of them true credit cards in your own name, or were some of them LOCs, charge cards, AU cards, etc?  Exactly how many cards reported a positive balance in your test of AZE2+?  And how many open installment accounts did you have?

(d)  Do you have any derogs on any of your three reports?  What is the age of your oldest account on each report?  (Knowing this will help us see if you might be in a scorecard where AZEO might behave differently.

Even without knowing the answers to all the questions above, it's not strange at all for FICO 8 classic to give you less benefit for pure AZEO than (say) 2 out of 6 cards reporting.  Some people have seen no benefit even with more cards than that.  FICO 8 Classic seems to be one of the least sensitive models to the question of the number of open accounts reporting a balance.

[Anonymous]

PS.  One real possibility is that in FICO 10 and afterward there will no longer be any penalties for a profile with all cards at zero -- assuming that there has been recent card activity.  The reason that there has always been a penalty for all cards at zero is that for all most all of FICO's history, the credit bureau data gave it no way to distinguish Bob, who had not made a credit card purchase on any cards for the last 25 months, from George, who had recently used multiple cards but just happened to have paid all cards to zero.  When Bob's profile is free from all derogs and has a very low utilization it doesn't mean as much as George -- of course Bob is being a good scout, because he never uses his cards at all.  Thus George ought to have a higher score, since he's shown that he can use his cards and still have a great looking profile.

But in the last several years the CRA data has been richer (called trended data) and it may enable FICO for future models to distinguish Bob from George, and thus the All Zero penalty may get eliminated (whenever FICO can make this distinction).

[expatCanuck]

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CreditGuyInDixie wrote:

So to answer your last question... yes, it is known for sure that all existing FICO models (all flavors and all versions, including BE, Auto and version 9) penalize all cards at zero.

A few questions for you:

(a)  When you say that FICO 8 was the exception, you are refering to FICO 8 Classic, right?  And when you you call it an exception, you mean that AZEO failed to give you a boost over AZE2+.... but you are not saying that AZEO caused a score drop over AZE2+... correct?

Correct - my classic FICO Score 8s were the same at AZE2+ and AZEO (EQ 750 / TU 798 / EX 723).  With AZEO, the Mortgage scores were better (9-16 points), the Bank scores were better (7-33 points), and (except for TU Auto 8) the Auto scores were better (3-35).

(c)  Can you tell us a bit more about the details of your particular profile when you were testing this?  Specifically, how many open revolving tradelines did you have?  Were all of them true credit cards in your own name, or were some of them LOCs, charge cards, AU cards, etc?  Exactly how many cards reported a positive balance in your test of AZE2+?  And how many open installment accounts did you have?

I have 6 lines (all true credit cards) reporting (in my name) and a mortgage (joint with SWMBO).  With AZE2+, 2 cards reported a balance (one under 1%, the other under 4%).  Going to AZEO, I paid the 'under 4%' account to 0 (leaving $10 owing against a single CL of $14K, with a reported aggregate CL of $68K).  No installment accounts. 

(d)  Do you have any derogs on any of your three reports?  What is the age of your oldest account on each report?  (Knowing this will help us see if you might be in a scorecard where AZEO might behave differently.

One derog - a 30-day late from Feb 2011 on EQ and EX.  The oldest account on each CRA is 18y, give or take a month.

Even without knowing the answers to all the questions above, it's not strange at all for FICO 8 classic to give you less benefit for pure AZEO than (say) 2 out of 6 cards reporting.  Some people have seen no benefit even with more cards than that.  FICO 8 Classic seems to be one of the least sensitive models to the question of the number of open accounts reporting a balance.

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[Anonymous]

Very helpful... thanks! 

PS.  Just for terminology sake, you actually do have an installment account.  That's your mortgage.  All loans are installment accounts.  Additionally, some things other than a loan are also categorized as installment account, e.g. an auto lease.

PPS.  It's not certain that the only thing that matters here is percentage of cards showing a balance.  For one reason, the negative reason statement associated with this typically says "too many accounts showing a balance."  Not too many revolving accounts, but simply too many accounts.  Thus having several loans could conceivably affect this area of your score.  Note also that the language does not suggest a ratio or comparison -- and other FICO reason statements often do.  Naturally FICO might use a ratio as its sole method of implementing it, but it might also consider the simple integer number of accounts as well.

My memory is that contributor Thomas Thumb and I both think that simple integer number may matter in some cases.  I have received the "too many accounts" reason statement when I have had four accounts showing a balance and a very low ratio of cards (< 20% of my cards showing a balnce).

In your case you went from 3 accounts out of 7 showing a balance to 2 accounts out of 7.  Three accounts was still a small number, and less than 50% is still a small ratio. 

[expatCanuck]

"Too many accounts ... ".

Hmmm.  It'll be interesting to see what happens to my scores when our $60K construction loan (a HELoan), funded early in December, is reported.

[atarvuzdar]

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wrote:

I think you've got a pretty good grasp of it, although I'd reconsider Point 3. 

I wouldn't say that AZEO is better than AZE2 for "almost every" FICO score.  If someone has 6+ revolvers (which many do) chances are that AZE2 would result in the same score as AZEO.  One thing is for sure though, AZEO definitely maximizes score... so while AZE2 may not lower score at all, going to AZE2 wouldn't ever raise a score above what AZEO would accomplish, of course assuming the AZEO card is being "counted" by the algorithm.  There are people that have reported AZE3, AZE4 etc. that based on their profile haven't seen a score drop in going to that from AZEO.

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Pretty much agree.

With 9 CCs, 1 mortgage and 1 student loan the only CRA that blinks when I go from AZEO to AZE2 is TU (lose 1 point). EQ gives me max points for AZE4, as does EX. Interestingly, when I had 10 open CCs, EX gave me max points for AZE5 (50% accounts reporting balance) and EQ dinged me (2 points) at that same %.

I'm sure it's all profile dependent, but figured I'd share for the DPs.