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General Scoring Primer and Version 8 Master Thread, rev.5.17.20

Super Contributor

General Scoring Primer and Version 8 Master Thread, rev.5.17.20

Please don’t merge. We started something like this, but it cannot be updated and maintained because original OP is unavailable.

 

Introduction- (There is a Table of Contents/Index in Post 8 to make it easier to find particular subject matter or to understand the flow. Link to TOC.) (Also acronym and other useful links in Post 8 and 10.)

 

Quick Reference

 

Category Optimal FICO Score 8 requirements

heavily weighted in

Payment History

100%, Zero baddies Zero. Score penalty fully removed after 7 years. 60D late or worse makes profile dirty.

Utilization

9.0% but above $5 on one revolver of 5; 1 Loan B/L 9%

Number of Accounts Reporting Balance

I'd recommend under 33% of revolvers, IMHO. This is a metric that is not weighted heavily in Score 8 and does vary by bureau and scorecard. EX less sensitive.

Raw Dollars Owed

Under $100

AoOA-Oldest account

Not a scoring factor. Segmentation factor for clean profiles. Threshold believed to be at 3 years.

AAoA

Max bonus believed to be at 7 years 8 months

Youngest revolver (AoYRA) formerly(AoYA)

Not a scoring factor. A segmentation factor for clean profiles. Penalty removed at 12 months AOYRA, so 12+ months.

Inquiries in Last Year

Zero. Score penalty removed at 365 days.

Spree Penalty

Believed to have a penalty if less than 90 days between new accts. Complete score penalty removed after 6 months? [Specifics unknown]

Total Number of Accounts/Mix

Not a scoring factor. Used as a segmentation factor for clean profiles. 5-6+ accounts/revolvers for Thick + 1 installment loan for max points. (Not known if the number has to be revolvers or if it can include loans.

 

Where did this come from?

 

@MWGardener19  was the inspiration for this thread. He researched and composed most of this first post, with corrections, alterations and edits by @Birdman7. However, MyFICO Contributor Birdman7 has not fact checked the majority of the information in MWGsrdener19's part of this first post, which is a background and overview. The mechanics start toward the end of this first post with Scorecard Basics by Birdman7.

 

Birdman7 began by cleaning up a small Reddit post MWGardener19 had brought from a writer who had gathered data from this forum through years of reading and had made a small synopsis. Birdman couldn't let the inaccuracies stand, and so much was missing, so he went crazy. This is where it ended up, pretty much a new creation, but the Reddit post was the starting point, so we are acknowledging that properly.

 

No doubt many will have additions, corrections and criticism. Nevertheless, this is meant as a primer and a reference and I hope to update it as we learn more. Please give your feedback.

 

MWGardener19:

 

Brief background

 

Fair Issac and Company - FICO - states that Score 8 is the most widely used credit scoring system. Score 8 is one of many credit score models that FICO created and lenders use to evaluate and score credit risk (Score 2, 3, 4, 8, 9; Bankcard 2, 3, 4, 5, 8, 9; Auto Score 2, 4, 5, 8, 9).

 

There are more scores, and we know that at least 2 new scores are expected to debut in 2020 (Score 10 and Score 10T). FICO began creating their systems over 60 years ago (1956). The FICO scoring system as we know it today is only about 30 years old (1989).

 

 FICO is a large, global, publicly owned company with over 4000 employees. It is worth noting that 88% of the $1billion in revenue that FICO generates comes from banking and insurance customers. 35% of that revenue is from international customers. Scores purchased by consumers are a small part of their business.

 

FICO scoring and these forums

 

As users of this forum have or will come to learn, there are certain observations that can be said about FICO scoring:

 

- we have come to know GENERALLY how FICO scoring works, AND

- we have come to know A LOT about how certain aspects of scoring works, BUT

- we have come to know that we do not know EXACTLY how all of FICO scoring works.

 

FICO's approach to performing credit scoring is proprietary, meaning that it is private. The folks at FICO knows how their scoring systems work. The rest of us take increasingly educated guesses at learning the finer points of those scoring models, and we come to forums like this to learn for ourselves how to understand, improve and manage our scores, and to help others to learn as well.

 

As of April of 2020, these forums have nearly 300,000 users and over 4 million posts. These forums provide and contain great value.  As users have also likely observed, many of the same questions are asked and answered again, and again.

 

The purpose of this thread is to try to capture what we know, what we think, and what we are still trying to learn more about.  Because there are more than 28 different FICO models that exist, the guidance and answers that apply to one scoring model may be different for another model. Rather than trying to gather all of the collective learning about all of the FICO scores in one thread, this thread will focus on one score: FICO Score 8. We will make notes about differences in other versions for certain metrics.

 

These forums have MANY VERY smart members with extraordinary depth.  It is my hope and intention that we try to capture our knowledge in one thread to make it easier for forum members - new and old - to have a single stop to get the most complete understanding of what we know about FICO Score 8. Although Score 8 was released in 2009, we are still learning more about it today.

 

At a high level, Score 8, as with other FICO scores, is used by lenders to understand credit risk. Credit risk measures how likely or unlikely it is for a prospective debtor to default on a credit obligation by 90 days in the following 24 months. Each FICO 8 score draws data from its respective bureau, Experian, Equifax and TransUnion to calculate a score. The Score 8 algorithm is slightly tweaked for each of the 3 bureaus. While scores from identical data across bureaus are close, they are not exact.

 

Score 8 software systems evaluate credit report data, and use very complex mathematics to calculate and report a credit risk score. (How complex, you ask? The underlying math considers Lorenz curves, Gini coefficients, normalized log Bernoulli Likelihood, multicollinearity testing, and other math that is way beyond simple addition, subtraction, multiplication and division.) [ I believe a lot of the mathematic mentioned are used to analyze datasets to create the scorecards (algorithms) used to generate scores. Fact check? BM7]

 

FICO Score 8 key differences

 

Score 8 was designed to be more sensitive to high revolving utilization than earlier versions. It excludes nuisance collections (under $100), and is more forgiving of isolated delinquencies compared to earlier versions, but all other accounts must be in good standing. Whereas earlier scoring versions were more customized for each specific bureau, an objective of Score 8 was to reduce disparity among the scores at the 3 bureaus. (Version 9 is supposed to have even less disparity.) You can still have a score difference of +\- 30 points in Score 8 among bureaus with identical data, per the esteemed Moderator Emeritus Revelate.

 

 So, how does scoring work in FICO Score 8?

 

Again, we do not know all aspects with precision. There are a number of things that have been learned. Many thanks to Reddit user rtanaka6, who captured many of Score 8 highlights from years reading this forum in a Reddit Post. It was the starting point for this, but this has really became a new creation. Also, note: this thread is dynamic. I will update it with credit given to posters who provide their expertise so we can recognize and thank them for helping us to get smarter.

 

 As with other FICO models, there are 5 categories or "ingredients" which are evaluated. Your credit report data is fed into the FICO "blackbox" at the respective CRA (Credit Reporting Agency) and is ran through the appropriate scorecard (algorithm). The scorecard evaluates your data based on these 5 areas and result in a numerical score and negative reason codes. Positive reason codes are meaningless and should be ignored, but negative reason codes are listed in order of precedence and can offer insight into the reasons for your score in any version. FICO Score 8 ratings and scores are:

 

Rating

Score Range

Exceptional (or excellent)

800 - 850

Very good

740 - 799

Good  

670 - 739

Fair  

580 - 669

Poor

300 - 579

 

The categories/ingredients that are evaluated from your credit report, and their weightings are:

 

A.

Payment History

35%

B.

Amount of Debt

30%

C.

Length of History

15%

D.

New Credit

10%

E.

Credit Mix

10%


Remember credit scores are connected with approvals, but are often not the only factor. Inquiries (more here) are used to: 1) generate your score and negative reason codes, 2) analyze your credit data, and 3) give notice to other lenders you have sought credit. This information is used to determine approvals, interest rates, terms, and starting credit lines. Credit scores matter, but are not the sole reason consideration. Lenders will also ask for data not contained in the CR data to consider, as well, such as income and housing expenses. Please note income is not reported to the bureaus and is not a part of scoring. Lenders consider that separately.

 

MWGardener19's edited work ends here/

Begin Birdman7's learning



Scorecard Basics

 

There are various scoring factors (metrics) within each category. The metric’s signal strength (weighting) varies and is determined by scorecard. Scorecards are algorithms by their simplest definition. Your scorecard is determined by segmentation factors and the scoring factors are weighted differently based on scorecard. The scorecards generate a score and negative reason codes from the CR data it's fed based on the scoring factors as weighted per the scorecard.

 

Score 8 has 12 scorecards: 8 clean and 4 dirty scorecards. Which scorecard you are assigned to depends on the segmentation factors. For clean profiles these segmentation factors include thick/thin (number of open and closed accounts); aged/young (age of oldest account); and no new account/new account (recency of new accounts in your credit report). For dirty profiles, I believe segmentation factors are severity and recency.

 

Scorecard assignment is a complex matter to be covered in another post on this thread, maybe another thread; there are many posts scattered throughout these forums that we will try to consolidate here. What is important to know about scorecards is that they impact how your specific score responds to information in your credit report and they are why your profile reacts differently than someone else's for the same event.

 

The scorecard to which you are assigned determines your minimum and maximum scores, which negative reason codes are applicable to you, and the signal strength (weighting) for the various different scoring metrics described below.

 

Each scorecard is geared to specific credit profiles. Scorecard reassignment (rebucketing) occurs when you change scorecards. This can result in a score boost or drop depending on the situation. For instance, when you go to a higher scorecard, you are basically moving from the top of one ladder to the bottom of another and would now be compared to people with better credit profiles. Therefore, often you will see a score drop. The reverse also holds true, but be aware there are many exceptions and scorecard theory is complex. What follows is an example of how different scoring factors have differing signal strengths depending on scorecard:

 

 

fico_segmented_scorecards.png

 

Worth repeating, there are 12 cards in Score 8. (The rumors of 14 are false, 2 were pulled over AU issues.) There are 8 clean and 4 dirty scorecards. Clean/Dirty is the first segmentation factor and determines the subsequent segmentation factor path. A clean profile is then segmented by: Thick/Thin, Aged/Young and then No New Account/New Account. We will go over these in more detail as we progress through the categories.

 

If instead a profile qualifies as dirty, we are not as clear. I believe the profile is then segmented based on severity and recency. Severity appears to be split into the 2 delinquency cards and the 2 PR (public record) cards.  Delinquency cards contain profiles with 60 day lates and any worse delinquencies other than public records. PR cards include profiles with collections, bankruptcy, or other public records, such as tax liens, plus any delinquencies. A judgement would also put you there, but they are no longer reported.

 

The below is my approximation of how the scorecards in FICO 8 are segmented:

 

scorecard_flowchart.png

 

For delinquencies (not collections) recency appears to go from the date of last update, if unpaid. If paid, recency appears to go from the date paid in full or settled. Therefore, once paid or settled, delinquency recency appears to be frozen. For collections, recency instead goes from the date it is opened, not updated.

 

So one could express their scorecard as clean/thick/aged/no new accounts or dirty/PR/recent. Scorecard theory could have its own thread and there are many threads you can search to learn more. You don't need to be an expert, just know this is part of why different profiles react differently to similar actions and that certain penalties exist in some cards that do not in others. For instance, there is no "new account" penalty in dirty cards, whereas it's a 10-20 point penalty in clean cards. So, one good reason to get cards while dirty. Utilization is also more important in clean cards, for example. Below is a slide from FICO describing Score 8 segmentation very generally:

 

 

fico_8_score_segmentation_chart.png

 

 

(Version 9 added a 13th scorecard for those with high revolving utilization. The specifics of how it works or what segments you into it are not yet known, just that it is for those with high revolving utilization.) (The '98 and '04 versions had 8 clean and 2 dirty, I believe the dirty were not segmented by recency.)

 

We will now examine each Category and its scoring and segmentation factors in detail, sequentially, in sections A-E, below.

 

f8_master-pie_chart_categories-400px-1_0_0.png

 

Last edited: 8.2.20 3:00pm.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
116 REPLIES 116
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Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

A.PAYMENT HISTORY CATEGORY (Clean/Dirty)

 

1. Derogatory Categories

 

This is the most important category. The algorithm looks for derogatories, (30, 60, 90, 120... CAs (Collections), BK, CFAs (consumer finance accounts), tax liens, or in Version 9, LM (loan modifications)  Link.  etc.. Ideal is that it finds absolutely none. If it finds even one isolated 30 day late, you will wear a significant penalty. A 60 day late is considered a major derogatory and will segment you into a dirty scorecard for 7 years on Score 8. (It appears a 60 day late only assigns you to a dirty card for 2 years on TU4 per recent testing by our esteemed Moderator Emeritus Revelate Link.  This appears to be confirmed for EX2, as well by MyFICO Contributor Ficoproblems247 Posts 10 and 17.  Jury is still out on EQ5. Note that the "new account" negative reason code does not exist on dirty cards, so its presence indicates a clean card.)

 

Creditors typically report a debtor 30, 60, 90, 120 days late and then the account may be charged off. (At 120 days late a chargeoff is typical for loans and at 180 days a chargeoff is typical for CCs. [See link in Post 7.])  A chargeoff  (CO) does not mean the debt is no longer owed or collectable, just that it isn’t expected to be collected and has been removed from the asset column of the creditor's balance sheet. At this point, the account is closed if it hasn’t already been. If the account still has a balance and is owned by the OC (Original Creditor), the TL (Tradeline) will reflect the outstanding balance.

 

Please note a CO is an accounting measure and does not appear to have a direct effect on your score. The score loss appears to be tied to the TPOD (total period of delinquency) Link, which is from the DOFD (date of first delinquency) until the last update if unpaid, or from DOFD until paid if paid. That's why when a chargeoff is regularly updated, the score continues to be suppressed, but if it's not being regularly updated, it does not continue to suppress score. Also why if you pay it way later when it hasn't been updating, you can see a drop.

 

If you have paid the balance on a chargeoff or subsequently do so, the TL should be updated to reflect the $0 balance and to change the Current Status from CO to paid or to paid, settled for less. If the debt is sold, the balance should also be updated to $0. These situations will affect utilization, see Section B, Amount of Debt and can also affect aging (TPOD) see Section A. 3., Aging, below.

 

One of the factors taken into account for the algorithm with bankruptcies are the number of accounts included in the bankruptcy I've read.

 

 

2. Collections/CA (Collection Authority)/Dunning Notice/DV (Debt Validation)

 

If you fail to pay a debt after chargeoff, it could be assigned or sold to a CA (Collections Authority). This is a separate and additional TL to the OC’s TL, and causes an additional penalty and scorecard reassignment to a PR card, if you had no other PRs. (Note: all OC’s don’t report a OC TL, such as cable/phone, but a collection can still appear and penalize.)

 

When first contacted by a CA, the CA is required to notify you in writing within 5 days of your DV (debt validation) rights. (This may be/typically is included in the first contact and is sometimes called a Dunning Notice.) You have 30 days to request DV. It should be sent CMRRR (certified mail return receipt requested). Until the CA responds to your DV, the CA is prohibited from attempting to collect and therefore cannot contact you (except filing judicial process, etc...). If the CA fails to timely respond or cannot validate the debt, it may delete the collection. If not, you may seek removal via dispute with the CRAs. If you let the 30 days pass without submitting a DV, you still may send one, but the CA is not required to respond and is not barred from continuing to attempt to collect.. So, don’t miss the 30 day time frame!

 

If the debt is sold to a CA, the OC TL balance should be updated to $0; if assigned, the balance should remain on the OC TL, as well as be listed in the separate and additional CA TL. But, be aware that if an OC’s TL is assigned to a CA, the CA is required to delete the collection TL IF the debt is recalled  by the OC. So, the preferred method of dealing with a collection is to attempt to negotiate with OC and have the OC recall it. This will require deletion of the collection, even though the OC’s CO TL may remain and be updated. To address the remaining the CO, see GST (Goodwill Saturation Technique).

 

However, if the OC TL is sold to a CA, then you must negotiate with the CA and the preferred course of action is to request a PFD (Pay for Delete) from the CA, which is where you basically negotiate with the hope of paying in return for deletion. Be aware this is against CRA policy and CAs may refuse; however, some will accommodate under various interpretations. It is common for a CA to be reluctant to put it in writing for obvious reasons. It's noteworthy that oral contracts are enforceable; they're just hard to prove if denied. Laws on recording phone calls vary by state, some require the other party be notified, some only require one party to be aware. Consult counsel/law in your jurisdiction. Link.  

 

For collections, "[a]s far as your FICO Score is concerned, two things are considered:

  • has a collections appeared on your credit report
  • when it was reported" Link. 

So, from the horse's mouth, whether or not it's paid is not even a consideration, scorewise! But a mortgage lender would wanna see it paid and obviously it looks better to prospective lenders if past ones were paid, even if late.

 

 

3. Aging

 

          a. Scoring

 

It is believed the delinquency penalty is reduced at certain thresholds, such as 6 months, 1 and 2 years for 30, 60, 90 and 120 day lates, but all baddies will affect score for 7 years on version 8, it appears. Recency and number of baddies is believed to play a critical role. Significant points are recovered by 2 years for 30 and 60 day lates. Some, but nowhere near as much, is recovered for 90 and 120 day lates.

 

Link to derogatory aging graph. (Credit: MyFICO Contributor ABCD2199.)

 

COs (chargeoffs) can be tricky. They are not like a 30 60, 90 or 120 day late that is then subsequently brought current, where the TPOD remains constant at 30, 60, 90, or 120. With a CO, TPOD continues to grow and suppress scores until it's paid...well, if regularly updated. If instead an OC fails to regularly update the OC TL, the algorithm doesn't know whether the delinquency period has grown, so TPOD is frozen and no further score suppression occurs; however, if the TL is updated at some later time, the algorithm realizes the TPOD has increased and you may be penalized appropriately to catch up, (TPOD catchup penalty) Link. Link. Link. (Credit: the esteemed MyFICO Legendary Contributor RobertEG.) This typically occurs when someone pays an old late, only to be surprised by a score ding. Could also occur when updated by a sale to a CA, when paying a CA where the debt was assigned, or from a dispute updating the delinquency, if the TL was not regularly updating. However, this drop can be offset or outweighed by changes in utilization or other changes.

 

There are 3 separate fields in particular that are relevant, Payment Status, Current Status Link and Date Updated. (Credit: Our esteemed MyFICO Legendary Contributor RobertEG.) Payment Status shows the highest level of delinquency that has ever occurred on the account (30-CO), Current Status shows the current status, whether CO, paid, or paid, settled for less, and Date Updated is obvious.

 

When a CO is regularly updated (Date Updated Field), it continues to suppress scores because the TPOD is increasing, similar to going from 30 to 60. Because the Current Status field remains CO, the algorithm knows it's still delinquent through the last update and calculates increasing TPOD (Date Updated Field - DOFD) and penalizes appropriately. Thresholds, if applicable, are not known. If the Date Updated field is not updated, the algorithm cannot determine TPOD has increased and therefore can't further suppress/penalize scores. (Be happy when they aren't updating, but know you may eventually pay the piper.)

 

When an update does occur, the OC updates the Date Updated field and TPOD is increased, if Current Status is still CO. Updates typically occur due to updating the Current Status field to paid or paid settled for less, or from a dispute, as stated above. Once paid, subsequent disputes should not cause dings because Current Status is paid and TPOD is therefore frozen. (Once a CO is paid, one can try the GST in hopes of having the OC remove the lates/account. Can't hurt, but might take 100 tries! Persistence.)

 

CAs are different and apparently do not appear to help score if you pay them, only if they are deleted. They do appear to age at some unknown threshold (scorecard reassignment recent > mature). "Your score weighs collections on your credit report according to when the collection occurred. Generally, the more recent the collection, the more it's going to hurt your FICO Score." Link. So over time a collection appears to reduce its penalty.

 

Tax Liens and BKs should also reduce penalty over time (also when you shift out of the recent PR scorecard into the mature PR scorecard). Judgments are no longer reported, but that could always change. They used to count.

 

          b. Removal

 

Regarding removal, the (FCRA) Fair Credit Reporting Act, §605(a) applies (15 USC § 1681c). Link.(page 22 by page, 28 by pdf.)

 

For open accounts, scattered lates are treated differently than strings of lates. With scattered lates, they are each removed at 7 years individually. With strings, it depends on bureau. "...Experian...excludes...delinquencies in a common “string”...at 7 years from [DOFD]...[t]he other two CRAs have no official, published policy interpretation, and have...excluded based on [DOFD] OR have treated each...delinquency as its own separate adverse item of information, and thus have not excluded...until each has reached...7 years..." [1] Link. Link 2.  The particular subsection for monthlies is a catch-all provision and lacks specificity. §605(a)(5), FCRA. Please note US Gov't insured/guaranteed student loans or national direct student loans have specially lengthened reporting periods. See sections 430A(f) and 463(c)(3) of the Higher Education Act of 1965, 20 U.S.C. 1080a(f) and 20 U.S.C. 1087cc(c)(3), respectively.

 

For a charged off account and/or an account that was sent to collections, the entire TL(s) (OC, and CA if applicable) must be removed at 7 years from the DOFD. See §605(a)(4), FCRA. A closed account with no delinquencies should stay for 10 years post-closing, but often disappears sooner. MyFICO Contributer SouthJamaica reports accounts being dropped after as soon as a year after being closed.

 

Paid tax liens are removed at 7 years from payment. §605(a)(3), FCRA. Bankruptcy is removed 10 years from date of entry of the order for relief or the date of adjudication. §605(a)(1), FCRA.

 

          c. CR Removal Quick Reference

 

So, §605(a)(1): BK - 10 years from order/adjudication

                     (3): Paid Tax Liens - 7 years from payment

                     (4): COs and CAs - 7 years from DOFD

                     (5): Catch-all for any/all other negative information - 7 years,

                            (starting date ambiguous).

 

          d. Judicial SOL (Statute of Limitations)

 

Note: Whether or not a debt is judicially actionable is based on the state's SOL (Statute of Limitations) of the jurisdictions in which the creditor could sue the debtor (The Plaintiff has the choice of forum with limited exceptions). This could be: 1. the state the creditor is incorporated/organized in, 2. the state you entered into the agreement in, 3. your home state, or, 4. if you have moved, your new home state. (Consult qualified counsel, Conflict of Laws and Jurisdictional Law are complex and beyond the scope of this thread and forum.) This Right of Action SOL is separate and distinct from the federal SOL that determines how long negative data may be reported on your CR by the CRAs, which is 7.5 years from the DOFD (Date of First Delinquency), FCRA. However, this is normally 7 years from the CO.

 

 

          e. Various

 

Additionally, on some clean, young (AoOA < 3 years) scorecards, small gains are seen with new revolvers/accounts at 3, 6, and 9 months of age at TU and, IIRC, at 3 months at one or both of the other CRAs. There actually seem to be step gains during those first 3 years. This may come from the Payment History category by number of month thresholds being passed with no negative payment history or others believe it may derive from the New Credit category factor AOYRA, but Birdman7 finds that less likely since AOYRA is a segmentation factor.

 

Loans can also give significant points over time without regard to installment utilization thresholds and "...loan age is an actor that influences score outside of B/L ratio on installment loans..." [2] Link.  (Credit: Thomas_Thumb) These points could also derive from this category or from the Aging category, an installment aging metric.

 

 

4. Multiple Delinquency Penalty

 

Score 8 is more forgiving of isolated lates. When it sees a pattern of lates across accounts, it imposes an additional penalty.

 

5. Recency

 

Score 8 seems to penalize you more heavily for recent delinquencies/derogatories. I believe this is due to the addition of the two new dirty scorecards that I believe segment based on recency.

 

Last edited: 8.2.20 11:49pm.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 2 of 117
Highlighted
Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

B. AMOUNT OF DEBT CATEGORY

 

1. Utilization

 

Here's a thread where one of our MyFICO Contributors examined revolving utilization: Link. 

 

MyFICO Contributor @CassieCard has also confirmed (proof) utilization less than or equal to one of 9%, 29%, 49%, 69%, or 89% thresholds works just fine to avoid the next higher interval [3], rather than the <8.9%, previously believed and still commonly referred to. (Debates over floating zero error)

 

Individual and aggregate utilization are scoring factors.

 

          a. Revolving

  1. The major recognized Aggregate revolving utilization thresholds occur at 9%, 29%, 49%, 69%, 89%, 100% (Some scorecards may also have lower thresholds.)
  2. The major recognized Individual revolving utilization thresholds occur at 29%, 49%, 69%, 89%, 100% (Some scorecards may also have lower thresholds.) (Individual utilization is usually but not always same as statement balance. Credit: SouthJamaica)

For max points, you should remain under the lowest thresholds. As you go up, penalties are assessed, more per threshold for aggregate than individual. See the following chart for a graphical example of the effects of revolving utilization: Chart.  Also see chart below:

 

 

Credit Scoring Utilization Chart - Aggregate Optimization - V1.1.0Credit Scoring Utilization Chart - Aggregate Optimization - V1.1.0

 

 

          b. Installment

 

- Installment utilization goes by aggregate installment utilization of all open installment loans (current total balances divided by the total original loan amounts) The largest threshold (biggest point award) comes when B/L is 9% threshold. This was discovered by our esteemed Moderator Emeritus Revelate and his strategy devised is worth 15-35 points (credit to MyFICO Contributor Saeren for top end of range of 35 points on an SSL.). See SSLT thread in post 7 for detailed information. A smaller award is believed to have a threshold ~65%. Long story short, acquire a long-term loan, paydown to 9%, tiny autopay for activity. Catch is, it requires a FI that doesn't advance the maturity date and won't work if you have other loans, as installment utilization is based on the aggregate..

 

Here is a detailed post from May 2020 of a member going through the process of acquiring an SSL and executing the strategy at Navy. SSLs are/were availableat SSFCU and PLs (Personal Loans) are believed to work at Alliant and USB.

 

-Be aware that while paying aggregate installment utilization to 9% gives a nice award, there is also evidence that time open can offer points for installment loans [2]. (Credit: Thomas_Thumb)

 

2. Number of Accounts/Revolvers Reporting Balance/AZEO

 

The number of revolvers/accounts reporting a balance are 2 separate scoring factors and may impact score, independent of utilization. The higher the number/percentage of revolvers/accounts with a balance, the higher the penalty. The signal strength of these penalties can be increased by the presence of recent inquiries (<12 months old). (Credit: Thomas_Thumb ). (Off topic, but this metric is much more influential for the mortgages scores, which are also believed to have lower thresholds.) 

 

There is debate as to whether raw number is where the thresholds lie or whether the thresholds are percentages or somehow both. This author tends to believe it is a percentage, but there could also be a certain number that triggers effect as well. Or, it could be a number on thin scorecards and a percentage on thick scorecards, we really don't know.

 

Many people believe Score 8 has a 33% threshold, a 50% and maybe a 75% and 88%. Link (Credit: BrutalBodyShots.) More testing is probably advised and hopefully other members can add data. (Oh, and just recently evidence has come to light by MyFICO Contributor Trudy that this metric may also include closed revolvers on EX2. See link. we must still replicate/verify on EX2 and then determine whether it is applies to Score 8.)

 

No matter how many revolvers you have, if you only have only one report a balance, then you will be at the lowest possible percentage that your profile will allow. This has given rise to the infamous AZEO (All Zero Except One) concept. You’ll often hear this recommended, especially for mortgage scores. It doesn’t mean you have to only let one revolver report a balance to be at your best scores, but it guarantees you will be below the lowest threshold possible for your profile for this metric (which may be one or more).

 

Additionally, AZEO is typically recommended as one card with a small balance. This actually potentially optimizes 3 metrics. Number of accounts with a balance, utilization, and the raw dollar amount metric. 

 

So, it’s a easy way to give good advice to achieve the best scores, but you may be able to have several revolvers with small balances report and still be at your best scores. You just have to test your individual profile. Also, you don't have to pay interest, just pay after it reports, but before the due date.

 

A note of caution about your AZEO card. Do use a national bankcard. Avoid retail cards, credit union cards, and charge cards, as they can cause unintended consequences.

 

Typically the more revolvers you have, the more you can have with a balance and still be at your best score. This author recommends at least 5 revolvers at AZEO, 1 loan with B/L equal to or under 9%, and no inquiries and no new accounts in the last 12 months for reaching your best scores on FICO 8 (for the mortgage scores, even longer than 12 months with no new accounts). Also noteworthy, this is a metric that is more reactive on TU and EQ. Many report no changes at EX.

 

While not counting towards utilization (except on EX2), true charge cards do count toward one's number of accounts with balance metric in Score 8. The reason it's not advised as your AZEO card is next.

 

3. All Zero Penalty-

 

When all revolvers report $0 balance, there is a scoring penalty of ~10-25 points. If one has AU cards (that are not discounted by the anti-abuse algorithm) and they all report $0 balances, the penalty will also occur, indepedently.

 

This idiosyncrasy allows you a method to test whether your authorized user accounts are being discounted by the anti-abuse portion of the algorithmon versions 8 & 9. (FICO included this to address TL renting.) Have all authorized user accounts report zero and see if you experience a scoring ding. If you do, they're counting. If not, they are not counting for 8 and 9, but they will still count for the mortgage scores. That part of the algorithm didn't exist back then, so they always count for mortgage scores, though lenders realize the score is artificially inflated.

 

To avoid AZ penalty and maximize scores, many people use AZEO, where only 1 revolver (and 1 AU account, if applicable) reports a small balance $5-$20. This penalty is a frequent post of why did I lose 15 points?

 

Charge cards are not revolvers and will not save you from the AZ penalty. Correct, they count for number of accounts with a balance, but will not prevent AZ penalty. That's because the AZ metric is based on revolvers. 

 

Oh yeah, be careful if you use Chase as an AZEO card and pay it to $0. They automatically off-cycle update $0 balances, so it can cause an unintentional AZ penalty. (Credit: SouthJamaica.) However, they can also be the perfect AZEO card as long as you leave a couple dollars when making payment! Also convenient if another card accidentally reports, as Chase will always report the $0, don't even have to ask.

 

4. COs

 

The exact mechanisms of how unpaid COs affect utilization are currently under study. We do know an unpaid chargeoff has a big effect on utilization. We're just trying to figure out exactly how it affects it. 

 

Chargeoffs with balances were considered maxed out cards by common wisdom, but this does not appear to be correct. Further study is ongoing and DPs are appreciated!!. 

 

See section A for other possible effects due to Payment History.

 

5.Raw Dollar Amount Metric 


We don't know where all the thresholds are, but we do know that score is influenced by the raw dollar amount owed for revolvers and maybe even installment loans. It's one of the few questions asked by the fico simulator to give you an idea of your score, and it's not asked for no reason, LOL. Like why is there a negative reason codes demonstrating its existence as well.

 

I believe the simulator indicates thresholds at $500, $1000, $5000, $10,000, and $20,000, IIRC. Take that for what it's worth, we haven't had enough control tests to know.

 

"Fico looks at both utilization and amount owed as separate metrics." Link.  (Credit: TT.) "The amount owed is considered in aggregate...If you review the Fico reason code list, you will see separate reason statements for amount owed vs utilization." Id.


Testing by HeavenOhio, CassieCard and others have shown some mortgage scores penalize when revolver balances cross certain dollar thresholds. This area is under study and will hopefully be updated, as more is learned.

 

Last Edited: 8.2.20 11:54pm.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 3 of 117
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Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

C. LENGTH OF HISTORY CATEGORY (Aged/Young)

 

There are many aging metrics and we have only recenly discovered many of them. Consequently, not a lot is known about some of these metrics. We hope members will become aware of the additional metrics and track them so we can acquire more DPs to better understand them.

 

1. AoOA - Age of Oldest Account is a segmentation factor in clean profiles

 

"AoOA is not a Fico scoring factor. It is a scorecard assignment segmenter. If an increase moves you to a different scorecard your score may change due to a shift in weighting of the factors used in scoring and the assigned min/max scores associated with the scorecard." [4] (Credit: Thomas_Thumb) Link 

 

An aged profile is more stable and preferred. Penalties are less severe, but awards are smaller. The Score 8 threshold was previously unknown and theorized to be between 10-15 years. But it has been found at 3 years! Link.   (It also appears EX2 segments at 2 years based on CassieCard's testing and data. Link.  ) Need TU4 and EQ5! Help!

 

Do not get it confused. There is only one threshold for AoOA per Version, it's a segmentation factor, and it causes scorecard reassignment; it is not a scoring factor. If you see a point gain at a suspicious AoOA threshold, it's probably an award from AoORA because that is probably the same as your AoOA. If a credit card is your oldest account, as it is for most people, AoOA=AoORA. These metrics therefore run the same for most people. The lack of realization of the role of AoORA has caused the delay of the determination of the thresholds for AoOA and AoORA.

 

2. AAoA - Average Age of Accounts is a scoring factor


It appears these awards are greater on non-aged (young) scorecards, meaning those whose oldest account is less than 3 years old for Score 8.

- Thresholds are typically found at half-year increments.
- 3-15 points annual increase
- Maximum AAoA for scoring is believed to occur at 7Y 8M.

 

There have been unconfirmed reports of thresholds at 2 and 2.5 years. There are likely thresholds at 5, 5.5, 6, 6.5, 7 and 7.5 years.

 

K-in-Boston has confirmed and reconfirmed a significant threshold at 7 years on a clean/thick/aged/new account profile. It is unknown whether the thresholds are the same across the scorecards, but in my personal opinion, I believe they are, though the awards will most likely be different.

 

Due to the recent discovery of AAORA and other ageing metrics playing a role, many DPs have been called into question. Hopefully Members will contribute more DPs now that this Primer makes them aware of the additional aging metrics to watch.

 

3. AOORA-Age of Oldest Revolving Account is a scoring factor under study

 


I have reason to believe this may offer points at 2, 4, 6, and 10 years:

 

 

aoora_slide.png

 

 

Since most people get a revolver first, typically AoORA = AoOA. Therefore gains can be mistaken for AoOA (the segmentation factor) when it's actually AoORA (the scoring factor) that is responsible.

There are negative reason codes that point to this metric on some variants and we know it exists. 2 similar clean young profiles with similar AoOA and other statistics have significantly different scores, why? One started with a card and the other started with a loan for their first year. AoORA DOES make a difference. Which one do you think had the higher score? The one who started with a revolver. 

 

4. AAORA- Average age of Revolving Accounts is a scoring factor- under study

 

There are negative reason codes that point to this metric on some variants, so we know it exists. Come on, contribute DPs, I can't do everything.....HELP!!!


5. AOOIA-Age of Oldest Installment Account is a scoring factor- under study- (may be oldest open installment)

 

There are negative reason codes that point to this metric on some variants, so we know it exists. Come on, contribute DPs, I can't do everything.....HELP!!! Link. 

We also know the oldest open installment loan age has significance.

 

5. AAOIA-Average age of Installment Accounts is a scoring factor- under study- (may be open ones)

 

There are negative reason codes that point to this metric on some variants, so we know it exists. Come on, contribute DPs, I can't do everything.....HELP!!! Link.

 

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

 

D. NEW CREDIT CATEGORY (New account/No New Account)

 

1. AoYRA - Age of Youngest Revolving Account (formerly thought to be AoYA) is a segmentation factor in clean profiles only.

 

If you don’t have a revolver under 12 months of age, you are in a "No New Account" scorecard. If you do have a revolver under 12 months of age, you are in a "New Account" scorecard. All other things constant, There’s a ~10-30 point difference.

 

In practice, this is one cause of losing points when you obtain a new revolver and it reports. If you already had one under 12 months, you will only see changes related to AAoA, AAORA and utilization when it reports; however, if you had none under 12 months of age, this causes a significant penalty as you experience scorecard reassignment, plus the potential changes mentioned a moment ago. Not to mention the initial HP, as discussed soon.

 

- The penalty for AoYRA applies to clean profiles during the first 12 months age of your youngest revolver; at 12 months penalty points are recovered via scorecard reassignment back to the No New Accounts scorecard.

 

Note: There is debate as to whether this metric also includes installment accounts; however, my testing and that of others has conclusively demonstrated to this author's satisfaction that installment accounts are not included in this metric. AmEx chargecards we don't know. Somebody who gets one and doesn't have a revolver under 12 months, please contribute DPs!!

 

2. Inquiries For detailed information on inquiries, please read the Inquiry Master Thread. (Remember I am skipping an exhaustive examination of inquiries because the information is in the linked thread, you need to read it. It is so important, it's incorporated by reference!)

 

- Hard Inquiries may count for 0-20 FICO points each, though they are typically <5 points on clean profiles, except for thin cards really. (MyFICO Contributor Cassiecard experienced a 20 point drop for one inquiry on a young/thin scorecard. Proof. ) I believe they cost a little more on dirty profiles. Either way around the 9th or 10th inquiry, you reach a saturation point and there's no further penalty. 

Be aware of the presence of a recent inquiry increases the signal strength of some scoring factors.

 

- Hard Inquiries are believed to be “binned.” This means there may be a score loss for the 1st, but not the 2nd, maybe for the 3rd, but not the 4th, etc..  Exact bins are not known and may vary by scorecard.

 

- Inquiry penalty points are returned at 365 days, unless it falls in a bin. Inquiries will remain on your report for a up to 25 months, but are only scoreable for 1 year.

 

The purpose of a HP rather than a SP from a creditor is to put the world on notice of your credit seeking behavior, so as to slow your roll and protect their interests, so that you do not overextend yourself or so that at least other lenders have their eyes wide open in lending to you. So be glad when you get an SP CLI.

 

          a. Buffering/De-duplication of Installment Inquiries

 

The point loss is immediate for most revolver HPs, but buffered (delayed) 30 days for installment HPs (IF coded correctly). In other words, the algorithm ignores any installment inquiries from the last 30 days when calculating score.


For Score 8, all installment HPs within 45 days of the first one are counted as 1 for scoring purposes by the algorithm (14 days for EX2). This is referred to as de-duplication and is designed to allow for rate-shopping. De-duplication does combine installment inquiries across types. A mortgage pull and an auto pull will not be de-duplicated. But 10 auto inquiries within 45 days will only penalize you as if it were 1, scorewise.

 

Please note that when applying for CCs, most lender computers simply see the raw number of inquiries, not de-duplicated. This causes computer denial for inquiry-sensitive lenders. A solution is not to apply to lenders that do not allow reconsideration (looking at you CapOne). If you apply and are denied for too many inquiries (credit-seeking), a quick call to UW explaining the multiple inquiries are from rate-shopping the same loan will usually have the app reconsidered manually.

 

Soft inquires are inquiries done for various reasons that have no scoring impact and can only be disclosed to the consumer. Examples include: promotional, AR (account review), consumer disclosure, insurance, employment. The type of SP determines the data given.


Promotional inquiries, for instance, do not give account information, just contact demographics. AR gives everything except for soft inquiries, consumer disclosure give everything,.

 

3. Spree Penalty "Too many accounts recently opened" reason code 

 

- too many new accounts opened within {0, 30, 60, 90?} days of opening an account may cause an additional "spree" penalty that has nothing to do with what is called the new account penalty. This penalty is believed to cease at 12 months - CassieCard - but all the details are not known. 

 

Note: "New Account penalty points" are from scorecard reassignment WHEN a new revolver reports and you had no revolver under 12 months of age upon it reporting (AAOA, AAORA, AoORA, and utilization changes all factor in at once along with everything else upon scorecard reassignment). Any losses from subsequent revolvers reporting while having one <12 months of age are from AAOA hits, AAORA hits, and/or utilization changes; these changes also occur in the former situation upon the first card reporting, but because the algorithm accounts for them in one swoop, it is impossible to determine exactly how much of a changes each factor contributes. However, if no aging or utilization thresholds are crossed, that makes educated guesses easier. 

 

The takeaway is there is no new account penalty for a 2nd or subsequent card within 12 months, though losses may come from other metrics (like the spree penalty). 

 

Getting another revolver 6 months later might not cost you a new account penalty, but it extends the time you are under it. As a result, this author recommends getting what you need in 12 month cycles. Get what you need before the first one reports, because you now have a 12 month penalty and no use in making it longer. Plus you may as well have the best score when you do app, so waiting 12 months allows that award, plus it lets your HPs and new accounts to age and the spree penalty to reset.

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

E. CREDIT MIX CATEGORY

 

1. Number of accounts is a segmentation factor. (Thick/Thin)

 

It is believed that if you have 6 or 7 accounts (could be revolvers) on your CR, you are in a Thick scorecard. A thick profile is preferred as penalties are less severe and the score is therefore more stable.

 

2. Mix

 

For Score 8 it is believed you are under penalty unless you have at least 3 revolvers and 1 installment loan on record, open or closed. Upon acquiring your first cards and loan, these penalties are reduced and points awarded. The amount is unclear as it occurs upon reporting, which changes many scoring factors and could result in scorecard reassignment, if you have no revolver under 12 months of age when it reports. When the scorecard reassignment results in a drop, it commonly referred to as the "new account" penalty, which can be exacerbated by aging hits. It can be reduced by increased TCL (Total Credit Limit), if it causes thresholds to be crossed. It can also be reduced by the "too few cards" penalty being reduced by your first few cards or by an award for your first loan (mix points). Changes in score can also result from the percentage of revolvers reporting a balance changing, if that changes when adding a revolver

 

3. Open/Closed timeframes

 

Closed accounts with delinquencies are removed at 7 years. Link.  Accounts that are closed with no delinquencies are "supposed to” remain on CR for 10 years, but not always. MyFICO Contributer SouthJamaica reports accounts being dropped after a year being closed, IIRC. So, while a closed loan satisfies the credit mix requirement for a loan, who knows when it will disappear? Plus, as discussed in Amounts Owed Section B, supra, having an open loan with B/L equal to or <9% offers 15-35 bonus points.

 

Last edited 8.3.20 12.33am.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 4 of 117
Highlighted
Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

F. DISPUTES

 

1. Direct Disputes

 

A direct dispute is an option a consumer has to dispute directly with the creditor. One would contact their creditor directly and file said dispute. Sometimes this can get a matter corrected without involving the CRAs, which is the distinction.

 

2. CRA dispute

 

A debtor also has the option of filing a dispute with any or all of the CRAs, which are then required to investigate or reinvestigate the allegations within 30 days, if they meet certain requirements.

 

When you do these by computer or even by hand, if they can scan it in with OCR, it's all handled by computers automatically. That is not to your benefit. In my opinion to give yourself the best chance, hand write your dispute include supporting documentation and mail it CMRRR. (certified mail return receipt requested.) keep copies of everything.

 

3. MOV (Method of Verification) Request

 

If a CRA dipute comes back denied, as most will, you have the right to submit a Method of Verification request which is essentially a request for a description of how the CRA verified your dispute as accurate. This is nice as your burden in 4 is to disprove the reasonableness of the investigation, so a description of how they concluded your account as accurate will go a long way in you showing how the investigation was not reasonable in 4. Check this for more info: Link. 

 

4. CFPB (Consumer Financial Protection Bureau)/Judicial remedies

 

If you can't get no satisfaction elsewhere, you may file a complaint with the CFPB or initiate a suit in court contesting the reasonableness of the CRAs investigation, if you meet the requirements. (Consult qualified counsel).

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

G. Locking vs. Freezing

 

Congress passed legislation requiring CRAs to allow consumers to freeze their CRs without charge. While frozen, no HPs are possible, BUT new accounts CAN be added. Consequently, a new line of credit is unlikely and ID theft is reduced because most creditors will not extend credit absent a HP. Another advantage is, it may cause one to rethink applying for credit, as it adds another step.

 

The CRAs, obviously wanting to avold the legislation, devised an alternate method, "locking" your CR. They monetized this and marketed it as easier than freezes, despite the fact that it is no better than freezing. In fact, locking affords the consumer less protection, as it is not subject to the legislation's protections and requirements for freezes. I believe all but Experian now offer locks for free.

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

H. NEGATIVE REASON CODES

 

Negative reason codes are generated by the fico algorithm at the same time as your score. These codes give a window into the reason for your score, the reason for score changes, and how you can improve your score. They are listed in the order of precedence. 

 

Positive reason codes are meaningless. The only things you can use to reliably tell what the algorithm itself is doing are score changes and negative reason codes, as they are the direct output from the algorithms.

 

A table of negative reason codes is posted below. They are for score 8 unless they have an "(M)" or an "(I)" meaning they are for the mortgage scores or the industry option scores. The table is very helpful as it tells you which codes do or do not exist in various versions. A great deal can be determined from this.

 

The table is very helpful as it tells you which codes do or do not exist in various versions. A great deal can be determined from this.

 

However, keep in mind that all negative reason codes for a particular version do not exist in every scorecard of that version. This is one of the clues as to what scorecard you may be in.

 

This topic could have its own thread, but we'll see if we can add a little bit in time.

 

Negative Reason Code Chart

 

 

EQ/TU/EX FICO 8 Reason Code List

Bold statements indicate possible variations in scoring between CRAs.

Reason Statement

EQ

TU

EX

Remarks

Account payment history is too new to rate

7

7

7

 

Amount owed on accounts is too high

1

1

1

Balance track

Amount owed on delinquent accounts

34

 

 

Balance track

Amount owed on revolving accounts is too high

11

11

11

Balance track

Amount past due on accounts

21

21

21

Balance track

Date of last inquiry too recent

 

19

 

Time track

Derogatory public record or collection filed

40

40

40

Codes 38,39,40

Lack of recent bank/national revolving information

15

15

15

 

Lack of recent installment loan information

32

4

32

 

Lack of recent revolving account information

16

16

16

 

Length of time accounts have been established

14

14

14

Time track

Length of time consumer finance company loans have been established

 

98

 

Time track

CFA Penalty

Length of time revolving accounts have been established

12

12

12

Time track

Level of delinquency on accounts

2

2

2

 

No recent bank/national revolving balances

 

29

 

 

No recent non-mortgage balance information

17

17

17

 

No recent revolving balances

24

24

24

 

Number of accounts with delinquency

18

18

18

 

Number of bank/national revolving accounts with balances

23

 

 

 

Number of established accounts

28

28

 

 

Payments due on accounts

 

 

46

 

Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high

10

10

 

Percent track

Ratio of balance to limit on bank revolving or other rev accts too high

 

 

10

Percent track

Proportion of loan balances to loan amounts is too high

33

3

33

Percent track

Serious delinquency

39

39

39

Codes 38,39,40

Serious delinquency, and public record or collection filed

38

38

38

Codes 38,39,40

Time since delinquency is too recent or unknown

13

13

13

Time track

Time since derogatory public record or collection is too short

20

20

20

Time track

Time since most recent account opening is too short

30

30

30

Time track

Too few accounts currently paid as agreed

19

27

19

Number accts

Too few accounts with recent payment information

31

 

 

Number accts

Too few bank/national revolving accounts

3

 

3

Number accts

Too many accounts recently opened

9

9

9

Number/time accts

Too many accounts with balances

5

5

5

Number accts

Too many bank/national revolving accounts

4

 

4

Number accts

Too many consumer finance company accounts

6

6

6

CFA penalty

Too many inquiries last 12 months

8

8

8

TU see Code 19

US FICO® Score Reason Codes 

 

 

 

1424PS 07/13 PDF


Edited: 8.3.20 12:37am.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 5 of 117
Highlighted
Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

TBA
For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 6 of 117
Highlighted
Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

Bibliography 

 

Aging delinquency strings versus monthlies:

Attribution for: "...Experian...excludes...delinquencies in a common “string”...at 7 years from [DOFD]...The other two CRAs have no official, published policy interpretation, and have...excluded based on [DOFD] OR have treated each...delinquency as its own separate adverse item of information, and thus have not excluded...until each has reached...7 years..."

[1]. RobertEG Jan 2020, Permalink. 

 

Attribution for "installment loans can give points over time irrespective of thresholds"...."As mentioned up thread and shown by a graph, loan age is an actor that influences score outside of B/L ratio on installment loans..."

[2]. Thomas_Thumb May 2017, Permalink 

 

Attribution for "Utilization less than or equal to one of 9%, 29%, 49%, 69%, or 89% works just fine to avoid the next higher interval."

[3]. CassieCard Feb 2020, Permalink 

 

Attribution for: AoOA is not a Fico scoring factor. It is a scorecard assignment segmenter. If an increase moves you to a different scorecard your score may change due to a shift in weighting of the factors used in scoring and the assigned min/max scores associated with the scorecard.

[4]. Thomas_Thumb Jan 2018, Permalink 

 

References/Permalinks:

 

Common abbreviations: https://ficoforums.myfico.com/t5/User-Guidelines-General/Common-Abbreviations/m-p/88458/highlight/tr...

 

 

Adding an installment loan -- the Share Secure technique: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Sec...

 

 

May 2020 example of SSL execution:
 

 

 

Tracking the First Year with Credit Cards: https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/The-All-At-Just-Under-8-99-Utilization-e...

 

 

All Zero Penalty to AZEO (credit angelwingz): https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/All-Zero-Penalty-to-AZEO/m-p/5926475/hig...

 

 

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

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/General-Scoring-Primer-and-Version-8-Mas...

 

 

If you are just starting your credit:

HOWTO: Get a +62 point FICO 8 jump on a clean file with thanks to @CassieCard

 

 

An Application of Credit Scoring: Developing a Scorecard Model : https://rpubs.com/chidungkt/442168

(An introduction to logistic regression and WOE/IV tables, with R code.)

 

 

Installment loan thresholds by Revelate:

 
 
Thomas_Thumb new credit points expected:
 
 
Example of 20-year-old hitting 800 with two years history:
 
 
SJ utilization breakdown regarding Statement balance timing:
 
 
PFDs can be done with OCs or CAs:
 
 
Charge off required at 120 days on loan and 180 days on revolver:
 
 
Explanation of how a charge off can drop score upon being paid if not regularly updated:

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Paid-charge-offs-score-dropping/m-p/5497524/...

 
 

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Collection-agencies-that-do-PFD/m-p/5675391

 

 

Which banks pull which CRA
 


 
2 year threshold for EX2 AoOA
 
 
 
A balance change can affect score a couple days before it’s reflected in the CMS front end.
 
 
 
Loan modification is a serious derogatory in fico 9
 

 

 

Accounts in dispute removal for mortgage:
 
 
 

 

 

Explanation of why you cannot rely on values calculated and displayed by CMSs' frontends AKA "Fluff" (Credit to BBS for coining the term, I believe):

 

https://ficoforums.myfico.com/t5/Credit-Card-Applications/Navy-Federal-Thread-for-CLI-and-Additional...

 


Last edited: 8.2.20 6:28pm.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 7 of 117
Highlighted
Super Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

GENERAL SCORING PRIMER AND VERSION 8 MASTER THREAD Rev. 5.17.20


POST 1

 

Table of Contents/Index Link

 

Intro                                                                                         

Where did this come from?

Quick Reference

Brief background

FICO scoring and these forums

FICO Score 8 key differences

Rating/Score range

So, how does scoring work in FICO Score 8?

 

Categories/Ingredients

 

A.

Payment History

35%

B.

Amount of Debt

30%

C.

Length of History

15%

D.

New Credit

10%

E.

Credit Mix

10%


Scorecard Basics

 

 

POST 2

 

A. PAYMENT HISTORY CATEGORY (Clean/Dirty)          

  1. Derogatory Categories
  2. Collections/CA/Dunning notice/DV
  3. Aging Derogatories

         a. Scoring

         b. Removal

         c. CR Removal Quick reference

         d. Judicial SOL (Statute of Limitations)

         e. Various

 

  4. Multiple Delinquency Penalty

 

  5. Recency

 

 

POST 3

 

B. AMOUNT OF DEBT CATEGORY                                     

  1. Utilization

          a. Revolving

      i. Aggregate
      ii. Individual
      b. Installment
  1. Number of Accounts/Revolvers Reporting Balance/AZEO
  2. All Zero Penalty
  3. CO
  4. Raw dollar amount metric

 

POST 4

 

C. LENGTH OF HISTORY CATEGORY (Aged/Young)   

  1. AoOA-Age of Oldest Account is a segmentation factor in clean profiles
  2. AAoA - Average Age of Accounts is a scoring factor
  3. AoORA-Age of Oldest Revolving Account is a scoring factor- under study
  4. AAoRA- Average age of Revolving Accounts is a scoring factor- under study
  5. AoOIA-Age of Oldest Installment Account is a scoring factor- under study
  6. AAoIA-Average age of Installment Accounts is a scoring factor- under study

 

 

D. NEW CREDIT CATEGORY (No New account/New Account)   

  1. AoYRA - Age of Youngest Revolving account (Segmentation Factor)
  2. Inquiries

           a. Buffering/De-duplication of Installment Inquiries

 

     3. Spree Penalty - "Too many accounts recently opened" reason code

 

 

E. CREDIT MIX CATEGORY

  1. Number of accounts is a segmentation factor. (Thick/Thin)
  2. Mix.
  3. Open/Closed timeframes

 

POST 5

 

F. DISPUTES                 
                                                              

  1. Direct dispute.
  2. CRA dispute.
  3. MOV Request
  4. CFPB/Judicial remedies

 

 

G. LOCKING VS. FREEZING

  1. Locking
  2. Freezing.

 

H. NEGATIVE REASON CODES

 

     - Negative Reason Code Chart

 

 

POST 6

 

TBA


POST 7

 

Bibliography                                                                         

 

    -References/Permalinks


POST 8

 

TOC/Index                                                                             

 

Notes:

 

Post 10- Additional helpful info!

 

Return to beginning of thread. 

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

Notes:

 

A very special thanks to @CassieCard for assisting with technical issues, research, attribution, adding great links and information, the presentation of this thread, encouragement and much more. Would not have been anywhere near as nice, comprehensive, and robust without her help. Thank you! And thank you for your continued help in keeping this updated and a wonderful resource for all members. 

 

The above posts are from what I have learned from this forum and from my own testing. They represent the best knowledge we have, but that doesn't mean there may not be errors. There is quite a bit we still don't know and probably never will. Nevertheless, I have done my best to present the best information possible IMHO.

 

If you find errors, please LMK. If you think something should be added, LMK. If you think something is unclear or needs clarification, LMK.

 

Thank you to all our members for helping each other and keeping this forum strong!

 

Also, I would like to give proper attribution for theories and discoveries. Please LMK if one of the findings is yours. If so, LMK and provide the link and I will add it.

 

To be added:

 

1. Any requests?

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________

 

Last edited: 8.3.20 11:40am.

For a collection of our current FICO scoring wisdom, updated as we learn, read the following. Watch the revision dates on the bottom of the first 8 posts as they are regularly updated: Link to Scoring Primer.

RIP:







Updated June 2020, unless otherwise noted. I took an HP on EX, will reflect on next update.

(Forgive typos, mobile.)(Everything said is Just IMHO.)

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? Severity and recency? (clean/dirty), Number of accounts, both open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AOYRA-Age of Youngest Revolving Account (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new account, with open loan on record.
If you don't know where you fall, just detail any baddies, your number of open and closed accounts, AoOA, AOYRA and whether you have a loan on record.

For utilization questions, list individual and aggregate utilizations, revolving and installment, please.
Message 8 of 117
Highlighted
Moderator Emeritus

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

Fantastic and thank you and also everyone else that has helped put it together or contributed.

 

Couple of things:

 

You define some acronyms inline but others like TL aren't; actually it might make sense to just make an acronym list as well, maybe the important ones and then link to the forum acronym list if it can be found again haha.  Probably in helpful threads pinned somewhere.

 

Speaking of information organization, might I suggest a table of contents and then break things into sections in individual posts akin to the Helpful Threads posts when we consolidated stickies?  Also collect like information, aging and associated metrics metrics on one page, derogatories on another, derogatory remediation separate... they are all kind of jumbled together now or at least that's how it read to me on first glance.  Apologies I only pick on such things because I am having to write a pseudo ISO compliant document right now for one of my gigs and structure matters.

 

Actually on second read it isn't as muddled as I thought but it's written in essay format, you might want to switch some of the order up like put the optimal values front in center near the top instead of at the end where it lands today.  That might allow to put more detailed information which would lose the casual reader further down thread.

 

I think we know some additional details for scorecard segmentation, vis a vis lates segment different than public records seemingly and actually a 30D late is a minor delinquency and sorts top 8 in every FICO model I have seen.

 

Did I miss a reference on FICO 8 patterns?  Namely: "With too many 30 day lates within a period of time, you’ll go to a dirty card. It’s unknown how many it takes, though." ?

 

I will try to read through more carefully later, in my own documentation hell right now and I need a nap too.




        
Message 9 of 117
Highlighted
Valued Contributor

Re: General Scoring Primer and Version 8 Master Thread rev.5.17.20

[DELETED because the reason code chart and reference links were moved to Posts #5 and #7.]

Tracking the first year with credit cards: 13 contiguous monthly reports of 28 FICO scores with reason statements for each one.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

myFICO Premier subscriber since December 2018.

Message 10 of 117
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