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Credit agency variances & general questions

New Member

Credit agency variances & general questions

 

Hi All - Thank you in advance to anyone who has thoughts to share. I'll try to be concise. Despite a high degree of overall financial understanding (I'm a corporate tax attorney and CPA), the consumer credit world is opaque and often confusing. My goal is to better understand why my scores are what they are and what to expect going forward. I see my Experian score through USAA, where I bank, and TransUnion via Discover. I've used myFICO in the past as well.

 

1. My Experian score is 667 and TransUnion is 714. This strikes me as a rather wide gap, especially since I don't see any difference in the data they are pulling. Is this possibly not an apples-to-apples comparison? E.g., one is a 'Fico 8' (this is what Discover provides) while the Experian report is something else? They also have moved differently in the past 6 months, with TransUnion up around 15 and Experience down around 15. The only real credit events in that time would be credit card usage.

 

2. Since I was a teenager (I'm now 32) I've been an authorized user on a couple of my parents' credit cards. Payment information on those cards shows up on all 3 of my reports. I don't think these are impacting my score - I know they shouldn't be since I have no ownership of the accounts - but it's hard to tell. There are no late payments on those cards, but for instance, my mom is using most of her Discover card balance. Could those cards be impacting my score at all? I don't actually use them anymore, so I'm free to do whatever makes sense for credit purposes.

 

3. My only installment loans right now are student debt. I will however need a car or two at some point - both my wife and I have vehicles that are around 10 years old. Any thoughts on strategy? I have enough income (~200,000 annually) to theoretically pay in cash if I saved up, at least for one of them, but would appreciate input given my credit situation. I certainly wouldn't agree to a high rate.

 

Responses are appreciated on any aspect of what I shared; I don't mean to be a high-maintenance first time poster! Thanks,

 

John

 

 

3 REPLIES
Community Leader
Super Contributor

Re: Credit agency variances & general questions


inertiatic_esp wrote:

 

Hi All - Thank you in advance to anyone who has thoughts to share. I'll try to be concise. Despite a high degree of overall financial understanding (I'm a corporate tax attorney and CPA), the consumer credit world is opaque and often confusing. My goal is to better understand why my scores are what they are and what to expect going forward. I see my Experian score through USAA, where I bank, and TransUnion via Discover. I've used myFICO in the past as well.

 

I just googled USAA free credit score and it looks to me as though the score being supplied to you uses the VantageScore 3.0 model, whereas the score you are getting from Discover uses FICO 8 Classic.  THey are very different models and many people get strikingly different results when the two models are run on the same data on the same day on the same credit bureau.

 

1. My Experian score is 667 and TransUnion is 714. This strikes me as a rather wide gap, especially since I don't see any difference in the data they are pulling. Is this possibly not an apples-to-apples comparison? E.g., one is a 'Fico 8' (this is what Discover provides) while the Experian report is something else? They also have moved differently in the past 6 months, with TransUnion up around 15 and Experience down around 15. The only real credit events in that time would be credit card usage.

 

Even if the exact same scoring model were being used (e.g. FICO 8 Classic say) there are many other reasons that you might get different results.  One reason is that the scores you are getting are not being pulled on the exact same day and time, and therefore the data is very likely different, even if the two bureaus appear to have exactly the same accounts.  Another is that even people very experienced with credit reports can fail to note a way that two bureaus are collecting slightly different data -- there might be a stray account or inquiry that you aren't seeing that is on one but not the other.  Finally, each bureau has a slightly different version of any particular FICO model, designed specifically for its own data -- this too can create difference even when the data are absolutely identical.

 

2. Since I was a teenager (I'm now 32) I've been an authorized user on a couple of my parents' credit cards. Payment information on those cards shows up on all 3 of my reports. I don't think these are impacting my score - I know they shouldn't be since I have no ownership of the accounts - but it's hard to tell. There are no late payments on those cards, but for instance, my mom is using most of her Discover card balance. Could those cards be impacting my score at all? I don't actually use them anymore, so I'm free to do whatever makes sense for credit purposes.

 

Absolutely.    Your question is fine -- but the fact that you are asking it means that there are major things about credit scoring that you don't understand.  You have just explained that you have credit card accounts appearing on your report that are almost completely maxxed out, but you think that probably wouldn't have any bad effect on your score.  Quite the contrary -- when credit cards appear on your report with very high levels of debt that is one of the biggest things that harms your score.

 

Two things would benefit you a lot.  (1)  Start learning a lot about how credit scoring works.  (You can start with the Learn About Scores button at the top of the screen here.)  You need to learn real basic stuff.  Don't rely on simply what people tell you on the Forum -- find fundamental credit scoring overviews that explain all the basics.  (2)  In the meantime, develop a plan for how to drastically reduce the amount of CC debt that is reporting on your three reports.  You'll need to learn how to control the balance that is reported to the CRAs on each of your cards.  People here can help you with that.  You may end up deciding to remove yourself as AU from all cards that report with high balances, for example.

 

One of the things that will help people here help you is knowing how many credit cards of your own that you have, and of these how old the oldest card is.  Also do you see any particular reason you couldn't pay down all of your own CC debt to to a very small amount?  I am sensing that would be easy, given how you describe your income.

 

3. My only installment loans right now are student debt. I will however need a car or two at some point - both my wife and I have vehicles that are around 10 years old. Any thoughts on strategy? I have enough income (~200,000 annually) to theoretically pay in cash if I saved up, at least for one of them, but would appreciate input given my credit situation. I certainly wouldn't agree to a high rate.

 

You describe the auto purchase issue as something you'd want to do at some point -- which sounds like it doesn't need to happen in the next 3-4 months.  Given that, I'd work with people here on improving your scores a lot.  Once you know how high you can get them, then you'll be able to plan whether you want to get a car loan.  It will just be a practical money decision at that point.  One thing I would personally not do is save money for the car at the expense of saving for retirement.  Interest rates for auto loans are low right now, and if you can get your scores up there's no reason you can't get a car and also sock substantial money away toward retirement.

 

Responses are appreciated on any aspect of what I shared; I don't mean to be a high-maintenance first time poster! Thanks,

 

John

 

 


 

Message 2 of 4
New Member

Re: Credit agency variances & general questions

Thank you for that response, very detailed and helpful. Certainly I need to do homework on my own - I've done some in the past but perhaps not from the best sources. Below is a list of the credit cards on my reports, with the pertinent details:

 

Credit cards of my own:

 

- USAA: opened 10/2013. Limit 10,500, has been increased twice automatically, I assume due to level of use. Balance is 1,500 currently, I could use it less if I wanted, but the increases have helped my score . . . 

 

- Discover: opened 5/2015. Limit 1,390 . . . so far I've only used it for a 0% balance transfer promotion, small balance.

 

- Macy's card: opened 10/2013. $600 limit, no balance. My wife occasionally uses it when there's an extra discount for doing so.

 

Cards on which I'm an AU (none of the described activity is by me):

 

- Amex: charge card, opened 1982. It's used extensively for business purposes (~30,000 per month) but no balance carries from one month to the next.

 

- Chase Mastercard: opened 2000. Limit 1,900, $0 balance, basically not in use.

 

- Discover: opened 2000. Limit 20,000, used extensively, recent balance has been in the ~15,000 range.

 

Remaining accounts in the report are student loans, which also is something I'm trying to read up on regarding consolidation. 

 

Message 3 of 4
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Community Leader
Super Contributor

Re: Credit agency variances & general questions

There will be a lot of people who will be glad to walk you through some key stuff regarding the relationship between card use, amounts reported to the CRAs, when the card reports to the CRA, a concept called "credit card utilization", and so on.  SouthJamaica is a contributor here who has a real gift for breaking that stuff down in an easy to understand way, so maybe SJ will see your post and chime in.

 

I'll give you a few more thoughts before I turn in for the night.  See below.  Also, very helpful would be to know whether you have pulled your credit reports before.  Not scores, but reports.  If so, when is the last time you did that, which bureaus did you look at, what tools did you use to pull the reports, and how comfortable are you understanding what is on them?

 


inertiatic_esp wrote:

Thank you for that response, very detailed and helpful. Certainly I need to do homework on my own - I've done some in the past but perhaps not from the best sources. Below is a list of the credit cards on my reports, with the pertinent details:

 

Credit cards of my own:

 

- USAA: opened 10/2013. Limit 10,500, has been increased twice automatically, I assume due to level of use. Balance is 1,500 currently, I could use it less if I wanted, but the increases have helped my score . . . 

 

You don't need to use your cards less (as far as your credit score goes -- obviously controlling spending is a good thing for money management)  A college student with only one credit card with a $300 limit can neverthless spend $2000 a month on it and have a great score.  The key idea is learning how to controll the balance that gets reported to the credit bureau.  This happens once a month, and for most cards it is the day after the statement prints with the amount reported being the "amount owed" at the top of your statement.

 

The credit limit increases have not in themselves helped your score.  What they did is make that $1500 that was being reported a smaller portion of your credit limit.  But if you had paid your card down to (say) $50 shortly before the statement printed, then the amount that would be reported would be very small and again you'd have a very small ratio of debt reported to credit limit.  That's why the college student in the example above can pay his $300 limit card down to $10 before it prints and secure a very low "credit card utilization."

 

Thus it is fine that you got the CL increases, but all they are is a tool of convenience.  FICO does not give you an extra points for having a big CL.

 

- Discover: opened 5/2015. Limit 1,390 . . . so far I've only used it for a 0% balance transfer promotion, small balance.

 

- Macy's card: opened 10/2013. $600 limit, no balance. My wife occasionally uses it when there's an extra discount for doing so.

 

Cards on which I'm an AU (none of the described activity is by me):

 

There are two reasons to be an AU on a card.  One is its intended purpose -- the primary card user wants a loved one (son, wife, etc.) to be able to use his card and make purchases with it.  The owner of the card is authorizing someone else to use it: thus authorized user or AU.  The second reason is its tangential credit benefit.  Here the owner of the card makes someone an AU so that the account will appear on the AU's reports, so that the (son, wife, etc.) will get all the benefits of having this record.  Here the scenario is just the opposite: the ideal AU situation (in the second sense) is one where the AU never makes a single charge on it and for the most part neither does the primary owner (of if he does he pays the card down before it reports).  The account sits on the owner's and the AU's reports, with a balance of $0 or the occasional small balance.

 

You do not want to be on mom and dad's cards for the first reason.  You are in your 30s, have your own job, and make well over 200k a year. 

 

So you should examine whether these cards are helping you out in the second sense,  And here they are far from ideal.  The owners are running up vast charges on them, which to the FICO algorithm looks like you are doing that.  You are running up vast debt and it is being reported each month to the CRA, e.g. a charge card with a $30,000 balance, or a credit card that is nearly maxxed out. 

 

The fact that the 30k Amex balalnce is later paid off is not taken into about by FICO currently.  All it can see is that you are running up big bills (bills which could have been hidden from FICO if the owner paid them off before the statement printed).

 

Note also that you do have a very well-behaved AU account in this sense: namely the Chase Mastercard.  It sits on your report with a small or $0 balance pretty much all the time.  Great!  It's the other two that are worrisome.

 

- Amex: charge card, opened 1982. It's used extensively for business purposes (~30,000 per month) but no balance carries from one month to the next.

 

- Chase Mastercard: opened 2000. Limit 1,900, $0 balance, basically not in use.

 

- Discover: opened 2000. Limit 20,000, used extensively, recent balance has been in the ~15,000 range.

 

Remaining accounts in the report are student loans, which also is something I'm trying to read up on regarding consolidation. 

 


 My advice is to take a hard look at that Chase Mastercard.  If you are lucky, it will have a very old age to it.  In that case, keep that one around for a few years, while you are beuilding up you scores.  But the other two AU cards, which are reporting huge nearly maxxed out states, I would find a way to get removed from those.  Then as far as as your credit cards, try to do the following a couple months,  Make all the cards on your report read as though they were $0 balance.  All except one card which can report a small amount , like $100

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