Credit Scoring 101 - START HERE!

[Anonymous]

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RobertEG wrote:

Many questions pervade on the effect of late payments on credit score, and how long they will last.

The following is taken from information presented by FairIsaac before the Federal Trade Commission in 1999.  Kinda aged, I know, but still a window into what the FICO model considers, and for how long. 

The payment history FICO category accounts for 30% of total FICO score, and thus a max of 255 pts.  FICO defines a "major derogatory" as any payment in arrears for 60+ days, a real no-no in the model of risk analysis. Risk, in the scoring model, is their statistical evaluation of the chance of one going 60+ again within the next one to two years.  So here is their risk analysis, as reported to the FTC in 1999:

Years since maj derog reported          %risk             thus, neg pts

0-1 yrs                                                96%                     -245

1-2yrs                                                 56%                     -143

2-3 yrs                                                44%                     -112

3-4yrs                                                 33%                     - 84

4+ yrs                                                 22%                     - 56

5-7 yrs                                                No data reported, so dont know

7+ yrs                                                 Drops off if normal revolv. account

This is heavy hit stuff!

Message Edited by RobertEG on 12-05-2007 06:41 PM

Message Edited by RobertEG on 12-05-2007 06:44 PM

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way cool info. thanks for sharing!

[MidnightVoice]

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RobertEG wrote:

  FICO defines a "major derogatory" as any payment in arrears for 60+ days, a real no-no in the model of risk analysis. Risk, in the scoring model, is their statistical evaluation of the chance of one going 60+ again within the next one to two years.  So here is their risk analysis, as reported to the FTC in 1999:

Years since maj derog reported          %risk             thus, neg pts

4+ yrs                                                 22%                     - 56

5-7 yrs                                                No data reported, so dont know

7+ yrs                                                 Drops off if normal revolv. account

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And today a derog dropped of DW's EQ report (collection, 6.75 years old) and she got a score increase of exactly what that predicts - 56 points

[Anonymous]

Im new so if all can bare with im trying to buy a house before 2009 if possible im fairly young just out of BK in 2005. I had the opportunity to get my score and they were very low as i expected from a chapter 7 BK. I have 5 credit cards and a auto loan and a installment loan none in which i have been late for and my score is not rising. I NEED HELP

3 collections/ no late payments ever

HSBC NV-300

Imagine-580

Salute-450

Creditonebank-200

Orchardbank-300

Autoloan-13000

installment-1000

score as of 12/01/07 eq 599/ex 519/tu 581

[Anonymous]

Please forward all replies to username-firsttimebuyer10

[haulingthescoreup]

Hi, firsttimebuyer --your best bet for help will be to start a separate thread, probably over on the General Credit forum.

[Eskimo55]

WOW ! At 52 years old this post only goes to prove you can teach an old dog new tricks! I thought I knew all of the important things about credit monitoring and repair but this has been a great lesson on the way to do it right when it comes to your all important credit score. Thanks for taking your time to put this information online it has truly helped me to do it the right way. Ted

[Tuscani]

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Eskimo55 wrote:
WOW ! At 52 years old this post only goes to prove you can teach an old dog new tricks! I thought I knew all of the important things about credit monitoring and repair but this has been a great lesson on the way to do it right when it comes to your all important credit score. Thanks for taking your time to put this information online it has truly helped me to do it the right way. Ted

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Glad you found it useful!

[Anonymous]

Hello,

I am new here. A few questions:

How much does narrative description codes impact fico score? I had financial problems in 2003 to 2004 for about 6 months. I had lots and lots of late payments. Total number of late pays is 40. I haven't had any recent late pays in 3 + years. My mortage shows with a red flag and as having a historical negative (along with all the paid off credit cards which also show they were negative at one time). My mort company says they aren't reporting any type of negative status on the account. Can I get this changed to improve my score?

Also I only have one credit card with a balance of 39.00 against a 500 limit. Will I improve my score if I open up a second secured card with a higher limit? Does a person need more than 1 credit card with low usage or is 1 enough?

PS-How come when your score jumps it always seems to fall shy of putting you into the next lower interest rate bucket?

TR 628 EQ 633 Exp 639

[haulingthescoreup]

Hi, angelathree --welcome to the forums! Can you copy/ paste your post, and start a new thread in General Credit? You will get a lot more reads there. Thanks!

[Anonymous]

Just wondering, I have a couple of accounts that have not been paid ( and they are over the 7 year mark) and I was under the presumption that after the 7 years were up they would not show up on the report. Well it seems that the accounts were sold and these accounts have a new "open" date and still show up on my report. How can I settle them and get them off my report??