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FICO due to no mortgage and credit card only debt

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FICOdawg
Member

Re: FICO due to no mortgage and credit card only debt

Maybe TOO good of a business as it's gotten the attention of their customers who basically are forced to accept whatever FICO charges.    Hence the lawsuits and increased scrutiny.   FICO score cost have gone up severl hunred percent in just a couple years.    Nearly every mortgage in the US requires lender to use the FICO score which that cost essentially gets passed through the consumer in borrowing fees.

Message 51 of 83
FICOdawg
Member

Re: FICO due to no mortgage and credit card only debt

I think I've given a compelling case study on how a FICO score can be horribly flawed for assessing risk.   I am going to assume that the FICO model uses at least some inference to income via the loan amounts and credit limits.      

 

It's very easy to think of examples that break the scoring model and that happens because their models are broad and lack specificity.      Consumers are lumped into an amorphous blob of data and there will be those like me who essentially get a score that's full predictive.   

 

What I'd like to know is does the RATE of repayment impact the score or it it only based on the balance thresholds.   The ability to chop away at a balance quickly should be a risk indicator on the ability to manage debt.  

 

Message 52 of 83
Thomas_Thumb
Senior Contributor

Re: FICO due to no mortgage and credit card only debt

Fico and VantageScore (10T and 4.0 excepted) are calculated from a point in time credit file pull. In other words, the state of accounts at that time are fed into an algorithm that outputs a corresponding score. Balance history is not part of these algorithms so obviously rate of paydown has no influence.

 

Fico  10T and Vantage Score 4.0 use trending. So, rate of paydown may influence score as would a trend showing increased revolving debt/utilization.

 

By law these credit scoring models can not consider income. They focus on credit management behavior. High utilization represents leveraged credit and should drop score particularly as it relates to unsecured revolving credit. 

 

The OP's current state represents elevated risk which is correctly reflected by a drop in Fico score.

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 53 of 83
FICOdawg
Member

Re: FICO due to no mortgage and credit card only debt

I'm curious what the requirement is for reporting balances by credit cards.   My actual balance is lower in all cases than what is showing in my Experian report.    I paid off a Paypal credit account with $4k in one shot and still not updated to show 0 balance.    

 

 

Message 54 of 83
Rogue46
Established Contributor

Re: FICO due to no mortgage and credit card only debt

I don't not believe there is any requirement for the creditors to report balances, I have found certain creditors report more frequently then others.





Message 55 of 83
GZG
Valued Contributor

Re: FICO due to no mortgage and credit card only debt


@FICOdawg wrote:

I'm curious what the requirement is for reporting balances by credit cards.   My actual balance is lower in all cases than what is showing in my Experian report.    I paid off a Paypal credit account with $4k in one shot and still not updated to show 0 balance.    

 

 


if they report, it must be accurate, that's it. 

 

there's nothing that says they need to report payments in X number of days, has it be longer than a full billing period since that payment? 

Starting FICO 8:
Current FICO 8:



0/6, 2/12, 7/24
Message 56 of 83
FICOdawg
Member

Re: FICO due to no mortgage and credit card only debt

It was mid December.     Annoying as I'm sure if I had made a purchase it would magically appear quickly.     I don't need to get a loan but was hoping to see the score impact in isolation.    Also paid down one of my other cards so the next update should bump the score.   I'm hovering at 700 so want to see how quickly my score jumps as the balance goes away.

Message 57 of 83
Patient957
Frequent Contributor

Re: FICO due to no mortgage and credit card only debt

@FICOdawg 

Most issuers update the balance at the statement cut.  Experian's free service can take a week or so after that to refect the update, in my experience.  Not sure if it happens faster for paid subscribers or not.

Message 58 of 83
DebbsSeattle
New Contributor

Re: FICO due to no mortgage and credit card only debt

Get a personal Loan to pay down credit cards to below 28.9%. Personal loan should be in the same installment category as mortgages, albeit unsecured. Stretch the payments out to keep DTI low. My credit union is offering 9.9% right now...check yours. Get the loan higher than amount you need and month #1 , make a large payment to bring your loan balance to less than 88.9% of originating balance. Then make minimum plus 20% on personal loan payments and max out debt repayment available funds to cover credit cards equally by %. When you credit score pops enough to apply for another card (say 740+) choose a long term balance transfer card offer. Hopefully you get a big fat credit limit with your high income and transfer balances to reduce each cards utilization to below 8.9%. In meantime, request credit limit increases on existing accounts that you have Paid to zero. Keep paying down debt equally across all revolving cards until you can get them paid off...then hit the personal loan with everything you got. Consider making monthly cutbacks in lifestyle expenses and toss more to debt each month. I make half of what you do and still have $1200 in a mortgage payment and I find $4-$5k a month to put towards debt repayment. Find your motivation and make it happen. The outcome is all in your hands. Go get it, you got this!

Message 59 of 83
NetWorthTheWait
New Member

Re: FICO due to no mortgage and credit card only debt

I'm new here and trying to learn. I too have no mortgage - haven't had one for 20 years - and didn't have an auto loan for many years (until recently). I have been dinged for my lack of credit mix. I get why income is not counted but why should you get dinged for not having installment loans?!

Message 60 of 83
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