FICO Scoring Craziness

[Junejer]

I was debating whether or not to start a thread on this subject and was mostly convinced not to until I just got a scoring update from EQ +2 to 840 for no apparent reason (not looking the gift horse in the mouth, by the way).

New account is my BoA car loan at 9 months. AAoA is 7yrs7mos. Not ancient and not young either. Oldest account 15yrs7mos.

I guess they're going to hold Genesis Finance against me for the next 10 years. Not going to turn down 2.99% plus all kinds of other rebates. Something really needs to be done about considering these types of loans to be CFAs.

Seeking credit. I have one INQ on EQ from August. I initially wanted to go through PenFed for the loan, but 5%+ was the going rate at that time. I chose the lower rate option.

Accounts with balances. I have an AU account showing a balance of $10 and three CCs showing balances of $41. $92 and $298. I have noticed that EQ is quite a bit more sensitive to AZEO than EX is. EX is non-plused when I report up to AZE4. In a few days, I will report AZEO with a balance of just $41. I'll see what happens to the score then. I'm on a quest to get to 850, but don't think I will ever get there with Genesis Finance showing.

While I have your attention, allow me to rant a bit about the all zero penalty. I think it is really stupid, regardless of how many profiles have been studied to determine that one is more likely to run up a ton of debt with all zero balances. There needs to be a reasonable cutoff. All zero, you're a risk AZEO with $5 reporting you're the best kind of credit risk--baloney!!! It should be based on some sort of percentage of overall available credit or some sort of meaningful dollar amount. It's a game (that is clearly working in their favor) to keep us zealots microfocused on our credit reports and spending money on CMS, etc. I'm sorry, but there just is no defense for the all zero penalty. At least, I haven't heard an argument that has swayed my thinking.

[Junejer]

After further digging, the reason for the two-point bump is because the $92 balance is now reporting $0. Now AZE2.

[GApeachy]

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@Junejer wrote:

At least, I haven't heard an argument that has swayed my thinking.

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You gotta give them something to score..............

Two gymnasts competing for highest score.

The first gymnast is a 5x gold medalist.

The second gymnast first time competitor.

First Gymnast, Gold Medalist, sprains ankle during warm up is forced to sit out entire competition.

Second Gymnast, First Time Competitor,  falls off balance beam, sprains ankle, manages remount to finish last of 4 routines.

How many gymnasts earned a score?

Who does not maintain score standing?

[Junejer]

Nice try and understand your thinking. I am giving them something to score. I have "x amount" of credit available in my denomenator and am using my credit wisely by  paying it off in full each month (without the games). And, they still score your report with $0/X, they just decide to ding you for it and then tell us that $1/X makes me that much more of a better credit risk.

[GApeachy]

Well I don't like it either, it goes against the grain but If you're using 0% of your credit you're not showing the algorithm you are handling your credit.  You're not giving the algorithm anything to score. 

What's the saying around here?  Fico has no memory? So it appears you have to continuously give something to get something in return from absentminded Fico algorithm.

[SouthJamaica]

Reporting a zero balance does not indicate you are not using your credit. There are various fields in the credit report which indicate that you have used your credit during the month.

Neither the all zero penalty in revolving credit nor the no open loan penalty in installment credit make any sense from a risk avoidance standpoint, which is supposedly the reason for FICO scores.  Having paid off all of one's loans, and having paid off all of one's credit cards, makes the borrower less risky, not more risky.

I have a hunch that FICO is not just about risk, it's also about reward. It attempts to locate the more profitable potential customers, and weed out the less profitable.

These 2 penalties, IMHO, are put in there on the 'reward' side, to weed out folks who don't like to owe money, because they are perceived as less profitable potential customers.

[Thomas_Thumb]

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@Junejer wrote:

I was debating whether or not to start a thread on this subject and was mostly convinced not to until I just got a scoring update from EQ +2 to 840 for no apparent reason (not looking the gift horse in the mouth, by the way).

New account is my BoA car loan at 9 months. AAoA is 7yrs7mos. Not ancient and not young either. Oldest account 15yrs7mos.

I guess they're going to hold Genesis Finance against me for the next 10 years. Not going to turn down 2.99% plus all kinds of other rebates. Something really needs to be done about considering these types of loans to be CFAs.

Seeking credit. I have one INQ on EQ from August. I initially wanted to go through PenFed for the loan, but 5%+ was the going rate at that time. I chose the lower rate option.

Accounts with balances. I have an AU account showing a balance of $10 and three CCs showing balances of $41. $92 and $298. I have noticed that EQ is quite a bit more sensitive to AZEO than EX is. EX is non-plused when I report up to AZE4. In a few days, I will report AZEO with a balance of just $41. I'll see what happens to the score then. I'm on a quest to get to 850, but don't think I will ever get there with Genesis Finance showing.

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Amen to EX and their insensitivity to # of cards with balances. EQ, particularly their score 5 version, has a strong bias toward fewer is better mentality.

Fico 8 and Fico 9 don't require flawless files to get 850. A CFA won't prevent reaching that objective by itself. You just need to have near flawless execution on other scoring elements. Fortunately you have an open installment loan.

The new loan is likely triggering the short credit history reason statement - It needs to age. First, get the account above 12 months then further age it to 3 years to show a sustained installment loan payment history.

Now is the time to stop seeking new credit and age your most recent inquiry and account both past 12 months.  Practicing AZE1 should help move you closer to 850 - just remember it is always better to report AZE2 than AZ.

If you don't need the AU card, consider having it canceled and removed from your file. Then you won't have to worry about the AU $0 penalty.

[GApeachy]

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@SouthJamaica wrote:

There are various fields in the credit report which indicate that you have used your credit during the month

Neither FNBO nor GoodSam (Comenity) reflect my pymt this month.  Doesn't indicate I used their credit. I paid off both cards before due date and nowhere are the pymts reflected in my Exp credit report.....and I believe therein lies the problem. 

Perhaps not all cra's report the exact same way....perhaps that's why FICO scores the way it does. 

You can have a higher fico when you're consistently borrowing & paying than the person with many tl's amounting to a lot of unused available credit.

Which in my case looks like I didn't use credit for June on those two cards plus one au card (Lowe's).  

[SouthJamaica]

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@GApeachy wrote:

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@SouthJamaica wrote:

There are various fields in the credit report which indicate that you have used your credit during the month

Neither FNBO nor GoodSam (Comenity) reflect my pymt this month.  Doesn't indicate I used their credit. I paid off both cards before due date and nowhere are the pymts reflected in my Exp credit report.....and I believe there lies the problem. 

Perhaps not all cra's report the exact same way....perhaps that's why FICO scores the way it does. 

You can have a higher fico when you're consistently borrowing & paying than the person with many tl's amounting to a lot of unused available credit.

Which in my case looks like I didn't use credit for June on those two cards plus one au card (Lowe's).  

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I disagree. I rarely look at the full printed hard copy reports, but when I did, I saw that there were 3 or 4 fields for each account from which you could determine that there had been activity in that cycle.

[Thomas_Thumb]

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@Junejer wrote:

Nice try and understand your thinking. I am giving them something to score. I have "x amount" of credit available in my denomenator and am using my credit wisely by  paying it off in full each month (without the games). And, they still score your report with $0/X, they just decide to ding you for it and then tell us that $1/X makes me that much more of a better credit risk.

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I'd illustrate the gymnastics analogy a little differently relative to the so called AZ penalty.

Let's say a competitor's score for the balance beam event (Fico score category) is based on execution of 6 manditory +2 optional elements in the gymnast's routine.

Side note: the gymnast's score for the competition (Fico 8 score) is based on combined total of 4 events - beam, floor, bars and vault.

What is the "no recent revolving activity penalty" like? I say it is like successfully completing a stumble free sequence (no elevated utilization) across the balance beam but leaving out the spin (recent revolving activity). Balance beam event => amounts owed category, pass sequence => credit cards, spin => revolving utilization.

Lack of revolving activity (no spin) means management of revolving credit (the spin) could not be properly evaluated. It is unknown if the gymnast (credit user) would have stumbled (reported sub optimal utilization) if the spin (a revolving balance) were completed (reported).

Now let's say another, less accomplished, gymnast performs the same sequence during their routinr but includes the spin. There is no fall (high aggregate utilization) but a slight wobble on the spin was noted (32% utilization on a card). Which gymnast would have the lesser penalty?

No doubt, the athlete (revolving credit holder) that demonstrated (showed) the spin (revolving activity). If, on the other hand, the athlete fell (maxed out card or failed to pay balance) while executing the spin (showing card use) the score penalty could be more severe than a no recent use penalty.