Credit Scoring Primer, pub.5.17.20

[Anonymous]

Remember ABORT?!

[Anonymous]

---

@Anonymous wrote:

Remember ABORT?!

---

Yeah....Average Balance on Revolving Tradelines. I still haven't been able to find that graphic on a slide anywhere.

My ABORT values went up this month, though.

[Anonymous]

@Slabenstein   I wrote this based on our recent discussion of revolving activity vs none. 

for instance, the Amounts Owed category has several metrics/characteristics, such as:

Aggregate Revolving Balance,

Aggregate Revolving utilization,

Highest Individual Revolving utilization,

number of AWB,

Aggregate % owed on loans,

& possibly balance thresholds on loans.

The following is just a total guess to give an example of how I think a partial Scorecard for the Amounts Owed category might work for one scorecard: I guess it would have what? 165 points? 30% of 550?

Revolving Balance

$0=0 (AZ loss)

$1-$xxxx retail only=+8

$1-$4500BC(with retail ok)=+15

$4501-11,500BC=+9

$11,501-xxxBC=0

Aggregate Revolving Utilization

0%-<9.5%=+55
9.5%-<29.5%=+35
29.5%-<49.5%=+20

49.5%-<69.5%=0

69.5%-<89.5%=-25
89.5%-<100%=-45

Highest Individual Revolving Utilization

0%-<29.5%=+55
29.5%-<49.5%=+45

49.5%-<69.5%=40
69.5%-<89.5%=+35
89.5%-<100%=+30

Number of AWB

1-2/<20%=+20

3-4/<30%=+11
<50%=0

>50%=-6

Aggregate % owed on loans:

<10%= +35

10%-65%= +10

66%-100%=-10

these numbers are total guesses and do not correlate to any data points found and if they did, it would be dumb luck, lol. And they obviously would be different for each of the 12 scorecards anyway, but I did this to give an example of how scorecards work and how each category contributes to final score. 

notice how if everything's optimized, the score contribution would be 180 points, which is beyond the 165 allowed for this category. So there is some buffer. This is my theory anyway and it's subject to be revised based on new information. 

@Slabenstein Edited. X2

[Anonymous]

I should probably adjust that to have some balance thresholds for loans, as well. But I have no idea what numbers to put for it either, but I guess it doesn’t matter because everything is a guess anyway. But you get my point in understanding how it works, right? Or at least my theory. maybe I'll go back and add those. 

Basically my theory is each of the 5 categories contribute respectively up to their maximum contribution. This can vary by Scorecard, but is typically the percentages laid out in the fico graphs, (see each category in posts 1-5). So if scoring is from 300 to 850, that gives 550 points earnable, right? So each category has its share of the 550 based on the percentages in the graph:

1. Payment History 35% - 192.5 points
2. Amount of Debt 30% - 165 points
3. Length of History 15% - 82.5 points
4. New Credit 10% - 55 points
5. Credit Mix 10% - 55 points

Total 100% 550 points + 300 point constant= 850.

So say each category has 5 or 6 scoring factors/characteristics. If there’s a deficiency in one, another one can make up for it within that category, but the category can contribute no more than its maximum, so it cannot technically contribute to make up for scoring factors in other categories.

This is of course just my theory and may be totally incorrect. But for now it's my theory and I'm trying to explain it so members can understand how the scorecards work:

each category comes up with its contribution towards the total score. That's why inquiries for instance have to stop taking points at a certain point, the whole category is only worth 55 points, so it has to stop taking points somewhere, which most most people is around 9 or 10, I think.

but basically if you look at the scoring factors for each category, you can see how each category contributes its points towards your score. You can see why payment history is so important, because it's worth so many points.

you can also see, I would argue, that you are being awarded points for having revolving activity rather than being penalized when you don't have revolving activity.

And I think the above kind of demonstrates different scoring factors come together and work together and interact with each other to get a score. Also in post 1 is an awesome sample partial scorecard from a fico slide that is awesome. 

hope this helps in understanding. 

Edit: keep in mind scoring factors have different weightings per scorecard within their respective category. And categories can actually have different percentages in some scorecards, such as thin and who knows? maybe young or dirty?

[Anonymous]

---

@Anonymous wrote:

Basically my theory is each of the 5 categories contribute respectively up to their maximum contribution.

 I like it. It seems to fit so far with the data points provided by so many people here, plus that FICO slide on Score Factors showing the maximum points achievable for a specific characteristic.

Is it possible to get an 850 without any installment loans - open or closed - other than mortgage? I don't think this has been shown anywhere. Most people have at least an auto loan, I think.

We know that a mortgage isn't required to obtain an 850.

From Tom Quinn, Vice President of Scores at FICO:

• "There is no requirement to have an open mortgage to get an 850 score." (Permalink)
• "There is no characteristic in FICO Scores that penalize a user for not having a mortgage loan." (Permalink)

[Horseshoez]

---

@Anonymous wrote:

Is it possible to get an 850 without any installment loans - open or closed - other than mortgage? I don't think this has been shown anywhere. Most people have at least an auto loan, I think.

---

LOL, some of us don't have car loans (and have no plans to have one any time soon).  

[Anonymous]

---

@Horseshoez wrote:

---

@Anonymous wrote:

Is it possible to get an 850 without any installment loans - open or closed - other than mortgage? I don't think this has been shown anywhere. Most people have at least an auto loan, I think.

---

LOL, some of us don't have car loans (and have no plans to have one any time soon).  

---

I've had 2 new, not pre-owned midrange SUVs and never had an auto loan/lease. Mostly because I'm a workaholic without children that doesn't spend a lot of money on 'stuff'. I also kept the last one for 12 years before giving it away.

I did start my credit history with a credit builder/secured loan, though. I'm just not sure if someone can get an 850 without an open/closed installment loan on file.

[Horseshoez]

---

@Anonymous wrote:

---

@Horseshoez wrote:

---

@Anonymous wrote:

Is it possible to get an 850 without any installment loans - open or closed - other than mortgage? I don't think this has been shown anywhere. Most people have at least an auto loan, I think.

---

LOL, some of us don't have car loans (and have no plans to have one any time soon).  

---

I've had 2 new, not pre-owned midrange SUVs and never had an auto loan/lease. Mostly because I'm a workaholic without children that doesn't spend a lot of money on 'stuff'. I also kept the last one for 12 years before giving it away.

I did start my credit history with a credit builder/secured loan, though. I'm just not sure if someone can get an 850 without an open/closed installment loan on file.

---

Yeah, I have a 15 year old car which I plan on keeping for many years still.  Why?  Because, as my wife and I joke, "We never learned how to drive cars with automatic transmissions", and cars with 3-pedals under the dash are getting very hard to come by; especially nicer mid-sized sedans like my old Acura TL.

Regarding the whole 850 and no car loan thing; I'm going to give it a pretty good try; next year, after my Chapter 13 falls off, my wife and I are going to work on getting a mortgage for a new home, and beyond that, we pretty much have no real use for credit beyond what we already have.  Said another way, we're gardening for a year, will apply for a mortgage, and then garden for the indefinite future. 

[Anonymous]

---

@Anonymous wrote:

---

@Horseshoez wrote:

---

@Anonymous wrote:

Is it possible to get an 850 without any installment loans - open or closed - other than mortgage? I don't think this has been shown anywhere. Most people have at least an auto loan, I think.

---

LOL, some of us don't have car loans (and have no plans to have one any time soon).  

---

I've had 2 new, not pre-owned midrange SUVs and never had an auto loan/lease. Mostly because I'm a workaholic without children that doesn't spend a lot of money on 'stuff'. I also kept the last one for 12 years before giving it away.

I did start my credit history with a credit builder/secured loan, though. I'm just not sure if someone can get an 850 without an open/closed installment loan on file.

---

@Anonymous it may be possible on an aged enough profile. Otherwise I would have to defer to TT or Rev. But if it were possible without a open or closed loan on CR, then you'd have to have a lot of age imho. 

[Anonymous]

@Anonymous: Here's another compliment from a Moderator of r/CRedit on Reddit. ( Link to post )

Looks like they want to make a sticky post for the Primer!

And check out the 4th comment below.