Credit Scoring Primer, pub.5.17.20

[K-in-Boston]

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@Anonymous wrote:

@K-in-Boston sounds pretty conclusive to me and you repeated it and re-confirmed it. Thank you for the data point, I will add it.

As for AoOA, it is a segmentation factor. However no one knows for sure where the threshold is. There have been thoughts that it is as low as 3.5 years as well as up to 25 years, as you state. Unfortunately I can't give an answer on that.

I do have a question though. Were all AU accounts reported at zero when they disappeared? And the reason I ask is if so, it could've been the reversal of the a AU AZ penalty.

Edit: For S and G, do you know what your AAORA was before and after those weird score changes?

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Well, this is weird.  So I didn't even know about the all zero penalty for AU accounts even when there are balances on primary cards until it was mentioned a few days ago.  I just went through all of my 2020 3B reports and most of 2019, and I can see a correlation there.  I'll just use EQ and TU for the examples.  There are 8 AU cards ranging in open dates from 1994 to 2017.  A 1994 Chase, 1995 Best Buy, and 2004 Citi have not appeared on EQ since 2018.  All scores FICO 8.  All AU accounts are open and have either constant or occasional activity.

• March 2019 - EQ 11 points lower than TU (808, 819) - Only $0 2017 Amex AU reporting on EQ.
• April 2019 -  EQ 10 points lower than TU (801, 811) - Only $0 2017 Amex AU reporting on EQ.
• May 2019 - EQ 5 points higher than TU (816,811) - 1995 Discover AU with balance and $0 2017 Amex reporting on EQ.
• June 2019 - EQ 10 points higher than TU (810,800) - 1995 Discover AU with balance and $0 2017 Amex reporting on EQ.

That four month period certainly makes a credible argument for an all zero AU penalty (penalty March and April, no penalty May and June).  Age of oldest account also took a dive from 1995 to 2001 in here and I know I have seen gains when they all fell off, so if the age of oldest account IS a factor, it's messing these up.  BUT... (there's always a but)... let's look at the rest of the year.

• July 2019 - EQ 2 points lower than TU - Only 2017 Chase AU with balance reporting on EQ.
• August 2019 - EQ 6 points higher than TU - Only 1995 Discover with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0 reporting.
• September 2019 - EQ 13 points higher than TU - Only 1995 Discover with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0 reporting.
• October 2019 - EQ 2 points lower than TU - Only 2017 Chase AU with balance reporting on EQ.
• November 2019 - EQ and TU same score - Only 2017 Chase AU with balance reporting on EQ.
• December 2019 - EQ 22 points higher than TU - No AU accounts reporting on EQ.
• January 2020 - EQ 13 points higher than TU - No AU accounts reporting on EQ.
• February 2020 - EQ 24 points higher than TU - No AU accounts reporting on EQ. 
• March 2020 - EQ 27 points higher than TU - No AU accounts reporting on EQ. 
• April 2020 - EQ 20 points higher than TU - Only 1995 Disco with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0, and 2017 Chase with balance reporting on EQ.
• May 2020 - EQ 25 points higher than TU - Only 1995 Disco with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0, and 2017 Chase with balance reporting on EQ.

So while we seem to have possibly proven the all zero AU earlier in the year being a likely culprit to the score differences, the next 11 months are kind of all over the place.  There are no "all AU accounts at $0" on months where one or more exist.  We have times where EQ is higher even with nearly the same oldest age of account as TU.  We have EQ being the same as TU when only a 2017 AU account with a balance is reporting and oldest account on EQ is much younger than TU.  Then we have EQ being significantly higher than TU with no AU accounts reporting and much newer oldest account, and then still being much higher than TU when 5 of the AU accounts come back and oldest account age is only a year less than TU.

I'm just as lost as I was before.  LOL  Pulling the reports and comparing them side by side, my reports change so much that I'm not even sure I can really pinpoint things.  I'd have to pull 2018 reports to see exactly what was going on from month to month when the other 3 AU accounts would also reappear and disappear again.  Some other day.  That took forever with lots of scrolling!

AAoRA I would need to manually calculate for each bureau so that would take time.  If looking at all of the above there are any specific months that you think might be helpful, I can certainly do it.  Would that include closed revolvers as well, or only open ones?

[Remedios]

@Anonymous, I gotta ask, are you drawing this conclusion from a recent single thread or is there more to it? 

When I had AU accounts, I've never observed this behavior.

The only thing that happened penalty wise was when only AU account reported a balance, then again, that's something that just about everyone reported when AU is the only one with balances.

You've seen that from line of questioning that goes "Are all your cards reporting $0.00, is only au reporting, is it only store card reporting" whenever someone reports "unexplained" loss in the absence of negatives. 

[Anonymous]

Ok, first I’ve got to sit down and study what you wrote, K-in-Boston. But it should include closed accounts.

@Remedios When I first started, I paid attention to the test espoused by CGID to determine whether AU accounts are counting. However, I realized over time that test was flawed due to the AU AZ penalty. I think I became convinced in the following thread:

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/AU-experiment-amp-score-drops-from-small...

Nevertheless, since then, I have confirmed and reconfirmed this principle many times over with many different members, helping them find the reason for “why am I missing these points?” I’d say that I have confirmed and re-confirmed it enough times that it’s past gold standard, if possible.

As a matter of fact, I’ve helped a few people with it just recently, though one has not yet put a balance back on the AU yet.

I would have to go look, but a recently a member actually just noted the phenomenon and I advised them what it was.

To be honest, I think it was an error in the algorithm. I don’t think it was intentional, but who knows for sure? It may have happened when they pulled the two scorecards for authorized users and included the anti-abuse algorithm.

What we believe we know is this: if all your AU revolvers report zero and you do not experience the penalty, then the account is flagged by the anti-abuse algorithm and is not counting towards anything in the algorithm’s eyes. If the AU accounts are not flagged and therefore counting, you will experience the penalty when all report zero.

I’ll respond as soon as I can to your post K-in-Boston.

[Remedios]

Nah, accounts I was AU on counted.  If they didnt count, things on my CR would have looked quite differently. 

Also, if they got caught in anti abuse algorithm, and weren't "counting", I wouldn't have experienced a loss when only AU account reported a balance.

Also nope on it being AZ penalty, because that one for me is around 25 points. With only AU reporting, 10 points loss, with the return of points when one of my cards reported a balance. 

They counted towards number of cards with balances, too, because I experienced loss when more than three would report, and that included combination of two AU accounts with one of mine. 

Additionally, when they were removed, my utilization temporarily increased, causing points loss. 

Cannot have them not count while present, but then somehow experience effects of losing them. All or nothing. 

Of course, I cannot test that now, so I'll leave it at that. 

[Anonymous]

Evidence/References for "AU cards at Zero = Separate Penalty":

May 2018: Re: Negative Reason Codes still present at 850 score
"A handful of posters have noted seeing a score drop on Fico 8 when all their AU cards report zero. This may be specific to TU. So, that's why I asked." - Thomas_Thumb

May 2018: Re: Negative Reason Codes still present at 850 score
"All AU accounts (three) were reporting a zero balance the most recent time TU dropped (850->844).
Two of those accounts are Chase, and they report $0 right after PIF, so they report zeros most of the time." - IV

July 2019: Re: A better understanding of AZEO ?
"So , I just checked my wife's fico account and she also lost 6-8 points because my primary reported 0 balance. She is an AU on my account which makes no sense." - Fico82

July 2019: Re: A better understanding of AZEO ?
"There's a fairly odd thing that I and a few other people here have observed with FICO 8 and AU accounts - there appears to be a minor negative effect in some cases if all AU accounts on the report are at $0.
It's as though primary accounts and AU accounts are tracked in two separate groups, with a no-usage (all-zero) penalty applied to each separately." - IV

August 2019: My score dropped 14 points and I can't figure out why! 
"The only change on my report was an account that I am an AU on was paid down to $0 from a 6 percent utilization. Is it possible that dropped my score, it is the only thing that changed on my report." - Egaffne2

November 2019: Re: 16pt drop on TU when AU CC was paid down to zero, DPs provided
"I've noticed this, too. I have one AU (CAP1 that's not listed in my sig) and whenever it posts a zero balance (and I have balances on my own cards, it doesn't matter whether it's AZEO or more than one) I lose ~15 pts. I think as soon as the AU posts a zero balance, it's almost like the entire AU card is being completely excluded. As soon as I report a balance on the AU card, the points I lost are returned. - Drwaz99

November 2019: AU experiment & score drops from small balance to $0 balance
"Two months ago I noticed my scores drop when my only AU account went from a small balance reported to a zero balance." - omgitsMatt

April 2020: Experian 15 point drop
"The only difference in the reports is that the card he is an AU on was paid to 0% (from 5% utilization). Also the CL was increased from 7K to 15k. Could that have caused the drop?" - llchapma

[Remedios]

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@Anonymous wrote:

Evidence/References for "AU cards at Zero = Separate Penalty":

May 2018: Re: Negative Reason Codes still present at 850 score
"A handful of posters have noted seeing a score drop on Fico 8 when all their AU cards report zero. This may be specific to TU. So, that's why I asked." - Thomas_Thumb

May 2018: Re: Negative Reason Codes still present at 850 score
"All AU accounts (three) were reporting a zero balance the most recent time TU dropped (850->844).
Two of those accounts are Chase, and they report $0 right after PIF, so they report zeros most of the time." - IV

July 2019: Re: A better understanding of AZEO ?
"So , I just checked my wife's fico account and she also lost 6-8 points because my primary reported 0 balance. She is an AU on my account which makes no sense." - Fico82

July 2019: Re: A better understanding of AZEO ?
"There's a fairly odd thing that I and a few other people here have observed with FICO 8 and AU accounts - there appears to be a minor negative effect in some cases if all AU accounts on the report are at $0.
It's as though primary accounts and AU accounts are tracked in two separate groups, with a no-usage (all-zero) penalty applied to each separately." - IV

August 2019: My score dropped 14 points and I can't figure out why! 
"The only change on my report was an account that I am an AU on was paid down to $0 from a 6 percent utilization. Is it possible that dropped my score, it is the only thing that changed on my report." - Egaffne2

November 2019: Re: 16pt drop on TU when AU CC was paid down to zero, DPs provided
"I've noticed this, too. I have one AU (CAP1 that's not listed in my sig) and whenever it posts a zero balance (and I have balances on my own cards, it doesn't matter whether it's AZEO or more than one) I lose ~15 pts. I think as soon as the AU posts a zero balance, it's almost like the entire AU card is being completely excluded. As soon as I report a balance on the AU card, the points I lost are returned. - Drwaz99

November 2019: AU experiment & score drops from small balance to $0 balance
"Two months ago I noticed my scores drop when my only AU account went from a small balance reported to a zero balance." - omgitsMatt

April 2020: Experian 15 point drop
"The only difference in the reports is that the card he is an AU on was paid to 0% (from 5% utilization). Also the CL was increased from 7K to 15k. Could that have caused the drop?" - llchapma

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Thanks, @Anonymous 

[Anonymous]

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@K-in-Boston wrote:

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@Anonymous wrote:

@K-in-Boston sounds pretty conclusive to me and you repeated it and re-confirmed it. Thank you for the data point, I will add it.

As for AoOA, it is a segmentation factor. However no one knows for sure where the threshold is. There have been thoughts that it is as low as 3.5 years as well as up to 25 years, as you state. Unfortunately I can't give an answer on that.

I do have a question though. Were all AU accounts reported at zero when they disappeared? And the reason I ask is if so, it could've been the reversal of the a AU AZ penalty.

Edit: For S and G, do you know what your AAORA was before and after those weird score changes?

---

Well, this is weird.  So I didn't even know about the all zero penalty for AU accounts even when there are balances on primary cards until it was mentioned a few days ago.  I just went through all of my 2020 3B reports and most of 2019, and I can see a correlation there.  I'll just use EQ and TU for the examples.  There are 8 AU cards ranging in open dates from 1994 to 2017.  A 1994 Chase, 1995 Best Buy, and 2004 Citi have not appeared on EQ since 2018.  All scores FICO 8.  All AU accounts are open and have either constant or occasional activity.

• March 2019 - EQ 11 points lower than TU (808, 819) - Only $0 2017 Amex AU reporting on EQ.
• April 2019 -  EQ 10 points lower than TU (801, 811) - Only $0 2017 Amex AU reporting on EQ.
• May 2019 - EQ 5 points higher than TU (816,811) - 1995 Discover AU with balance and $0 2017 Amex reporting on EQ.
• June 2019 - EQ 10 points higher than TU (810,800) - 1995 Discover AU with balance and $0 2017 Amex reporting on EQ.

That four month period certainly makes a credible argument for an all zero AU penalty (penalty March and April, no penalty May and June).  Age of oldest account also took a dive from 1995 to 2001 in here and I know I have seen gains when they all fell off, so if the age of oldest account IS a factor, it's messing these up.  BUT... (there's always a but)... let's look at the rest of the year.

• July 2019 - EQ 2 points lower than TU - Only 2017 Chase AU with balance reporting on EQ.
• August 2019 - EQ 6 points higher than TU - Only 1995 Discover with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0 reporting.
• September 2019 - EQ 13 points higher than TU - Only 1995 Discover with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0 reporting.
• October 2019 - EQ 2 points lower than TU - Only 2017 Chase AU with balance reporting on EQ.
• November 2019 - EQ and TU same score - Only 2017 Chase AU with balance reporting on EQ.
• December 2019 - EQ 22 points higher than TU - No AU accounts reporting on EQ.
• January 2020 - EQ 13 points higher than TU - No AU accounts reporting on EQ.
• February 2020 - EQ 24 points higher than TU - No AU accounts reporting on EQ. 
• March 2020 - EQ 27 points higher than TU - No AU accounts reporting on EQ. 
• April 2020 - EQ 20 points higher than TU - Only 1995 Disco with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0, and 2017 Chase with balance reporting on EQ.
• May 2020 - EQ 25 points higher than TU - Only 1995 Disco with balance, 1999 CapOne $0, 2001 BoA with balance, 2017 Amex $0, and 2017 Chase with balance reporting on EQ.

So while we seem to have possibly proven the all zero AU earlier in the year being a likely culprit to the score differences, the next 11 months are kind of all over the place.  There are no "all AU accounts at $0" on months where one or more exist.  We have times where EQ is higher even with nearly the same oldest age of account as TU.  We have EQ being the same as TU when only a 2017 AU account with a balance is reporting and oldest account on EQ is much younger than TU.  Then we have EQ being significantly higher than TU with no AU accounts reporting and much newer oldest account, and then still being much higher than TU when 5 of the AU accounts come back and oldest account age is only a year less than TU.

I'm just as lost as I was before.  LOL  Pulling the reports and comparing them side by side, my reports change so much that I'm not even sure I can really pinpoint things.  I'd have to pull 2018 reports to see exactly what was going on from month to month when the other 3 AU accounts would also reappear and disappear again.  Some other day.  That took forever with lots of scrolling!

AAoRA I would need to manually calculate for each bureau so that would take time.  If looking at all of the above there are any specific months that you think might be helpful, I can certainly do it.  Would that include closed revolvers as well, or only open ones?

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@K-in-Boston Unfortunately, I can't really determine much with the data you've given me and here's why. Even with the exact same data at each bureau, you will have different scores. I believe the design said + or - 20 points among the bureaus for score 8? Don't quote me on that, but I believe that's what I've read from @Revelate 's posts.

There are many scoring factors that have different signal strengths at different CRA's. The most prevalent example is accounts with a balance. Experian could care less usually, whereas Equifax and TransUnion penalize quickly.

So you can't really tell a lot by comparing the scores from different bureaus. They may offer clues, but we cannot rely upon them. I would need before and after data and scores per bureau to really give a good answer. But, it does appear the score changes you referenced seemed to be the AU AZ penalty.

And with the delays in bureaus updating the profiles, many times when you pull a 3B, as you are aware, certain accounts may have been updated on one whereas they have not been on the other, not to mention the differences in utilization, ages etc.

So I'm sorry, but I can't give a conclusive answer with just the data provided.

Now, if you go back and look at your alerts, you may be able to determine a pattern for the AU AZ penalty, but it's just not possible by comparing bureaus and their scores. 

I wish I could tell you more, but I don't have enough data. But if you would like to have all AUs report zero again, you can witness the phenomenon, again, assuming they are not flagged, and it appears they are not on your profile. But one way to make sure.

Remember when you do the calculations on AAORA, you will need to do them with and without AUs, if we are not 100% sure they are counting.

Last, are all your authorized user accounts from the same individual? If not, some may count and some may not.

[Duke_Nukem]

@Anonymous helped me discover the AU AZ penalty a couple of months ago.  I explained the drop in my DW's EX8 score in the post linked below, and if you read the next 6 posts or so you will find where BM7 explained the AU AZ penalty.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Mortgage-scoring-questions/m-p/5963289/highlight/true#M167587

I'm restarting my mortgage attempt for July/August timeframe, so already working on getting my only AU to report a small balance in the next week (that AU is currently at $0).  Both of my DD's are also AU on this same card, along with 3 more AU cards.  All AU's are currently at $0, so I plan on monitoring their daily reports with EX to see how adding a $5-10 balance on 1 of the AU's affects all of us.  I probably can't get a clear DP on my EX since I have 2 cards reporting the same day.  Plan on updating in a separate thread around 6/8.

[Anonymous]

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@Remedios wrote:

Nah, accounts I was AU on counted.  If they didnt count, things on my CR would have looked quite differently. 

Also, if they got caught in anti abuse algorithm, and weren't "counting", I wouldn't have experienced a loss when only AU account reported a balance.

Also nope on it being AZ penalty, because that one for me is around 25 points. With only AU reporting, 10 points loss, with the return of points when one of my cards reported a balance. 

They counted towards number of cards with balances, too, because I experienced loss when more than three would report, and that included combination of two AU accounts with one of mine. 

Additionally, when they were removed, my utilization temporarily increased, causing points loss. 

Cannot have them not count while present, but then somehow experience effects of losing them. All or nothing. 

Of course, I cannot test that now, so I'll leave it at that. 

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@Remedios Actually you would've experienced a loss if only one AU account reported. The penalties are independent for primary cards and authorized user cards. If either category all report zero there is a penalty if the AUs count.

25 points is huge for an AZ penalty. Was that when just your primary accounts reported zero or when both primary and authorized user accounts reported zero?

Wait, you said with only an authorized user account reporting, you dropped 10 points. That's your AZ penalty. I bet the 25 points were with them stacked? AZ on both?

I cannot conclusively state that if flagged by the anti-abuse algorithm, that they are not counting on every metric. I would assume that, but that is just an assumption.

The primary reason for AU accounts is to artificially inflate age, so I would think it would definitely not count there if flagged, but I have not tested nor have I seen any testing to see whether or not it would still affect number of accounts with a balance. 

As a matter of fact, that is a great idea for someone to test who has authorized user accounts that are flagged.

Edit: without before and after data it's really hard to tell. 

[Remedios]

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@Anonymous wrote:

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@Remedios wrote:

Nah, accounts I was AU on counted.  If they didnt count, things on my CR would have looked quite differently. 

Also, if they got caught in anti abuse algorithm, and weren't "counting", I wouldn't have experienced a loss when only AU account reported a balance.

Also nope on it being AZ penalty, because that one for me is around 25 points. With only AU reporting, 10 points loss, with the return of points when one of my cards reported a balance. 

They counted towards number of cards with balances, too, because I experienced loss when more than three would report, and that included combination of two AU accounts with one of mine. 

Additionally, when they were removed, my utilization temporarily increased, causing points loss. 

Cannot have them not count while present, but then somehow experience effects of losing them. All or nothing. 

Of course, I cannot test that now, so I'll leave it at that. 

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@Remedios Actually you would've experienced a loss if only one AU account reported. The penalties are independent for primary cards and authorized user cards. If either category all report zero there is a penalty if the AUs count.

25 points is huge for an AZ penalty. Was that when just your primary accounts reported zero or when both primary and authorized user accounts reported zero?

Wait, you said with only an authorized user account reporting, you dropped 10 points. That's your AZ penalty. I bet the 25 points were with them stacked? AZ on both?

I cannot conclusively state that if flagged by the anti-abuse algorithm, that they are not counting on every metric. I would assume that, but that is just an assumption.

The primary reason for AU accounts is to artificially inflate age, so I would think it would definitely not count there if flagged, but I have not tested nor have I seen any testing to see whether or not it would still affect number of accounts with a balance. 

As a matter of fact, that is a great idea for someone to test who has authorized user accounts that are flagged.

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When AU accounts and my own all reported 0, -25 points. 

If only AU reported balance -10 points. 

Last September (years after AU were removed), I ended up accidentally with all revolvers reporting 0 (forgot about chase), and there was 23 points loss, all came back within days after next account reported balance. 

I'm not doubting this data at all, I find it fascinating, but I'm  somehow puzzled on why my experience was different.