How is payment history calculated?

[Anonymous]

Lets say both Bob and Jill had no credit history and decided to start building credit at the same time.. 

In january 2017 Bob opens 3 credit cards and 1 installment loan while Jill opens 3 installment loans and 7 credit cards.. 

In january 2018 both Bob nad Jill have had no late payments, both have a total credit line of $5,000 across all cards AZEO and $2,000 across all loans with the same remaining % left on the loans, say all loans were 7% 3 year loans so they all pay down at the same rate.. 

Who will have a better credit score? 

The only real difference being Bob made 48 ontime payments in 1 year while Jill made 120.. Jill definately has a higher count of ontime payments.. Will they score differently and how?

Now what if in febuary 2018 both made one 30 day late payment on a credit card.. Would this effect Jill's score less as 1 late payment would be a much lower % of 1/120 than Bobs 1/48?

Jill definately has a heavier AAOA..

What other scoring differences do you predict between their 2 scores? 

After a full year, is their any part of Jills score that would be inferior to Bobs score? What about after 2 years? 

For the sake of this discussion lets say bob and jill were both easily able to obtain all of these accounts..

If this credit has been aged 1 year who's credit would you want to have? Bob or Jills?

After 2 years?

[Anonymous]

Their scores would be extremely similar.

Number of on-time payments are irrelevant to scoring (48 verses 120 for example) although fluff CMS like what you'd see from Credit Karma would lead one to believe it matters.  What matters is that there are no late payments.  One late payment on both of the profiles you suggested would have a similar impact. 

What really matters here is "thin" verses "thick" file.  The one profile you suggested has 4 acccounts, the other 10.  I think most would feel that 4 accounts means it's no longer "thin" but I'd like to hear other opinions on that.  Assuming it isn't considered "thin" there wouldn't be much difference between the 4 account profile and the 10 account profile in terms of scoring.  Some suggest that there could be a slight benefit of AZEO on 5+ cards as opposed to 3+ cards, but if that's the case you're only talking a few points so it's not really worth discussing.

I'm not sure what you mean by "heavier" AAoA.  A bit more bulletproof, sure, but the AAoA on both profiles would be identical as they started at the same time and did not add any new accounts since starting.  The addition of new accounts would cause less of an AAoA drop on the thicker file though of course.  After any extended period of time (1 year, 2 years, etc) the thicker profile may be considered stronger overall for this reason, although that wouldn't really be reflected in scoring.

One downside to the thicker profile that you gave is that ACL (average credit limit) across revolvers is significantly less.  You said $5000 in total credit limits, so across 7 cards that's an ACL of a little over $700, where the person with only 3 credit cards at least has an ACL of $1600-$1700 as opposed to a bunch of toy limits. 

[Anonymous]

By "heavier aaoa" I meant exactly what you said about adding new accounts in the future.. 

Does ACL have much if any effect on scoring? 

Where is the sweet spot you want your credit limits to be? 

I just gave those numbers to try to keep everything equal in the reports except for the amount of accounts and amount of on time payments made.. 

[Anonymous]

ACL has no effect on FICO models but other scoring models, such as Vantage or the models used by the insurance industry, do care about size of credit limits.

My memory with the insurance models is that they begin penalize you when your ACL is below about $10,500 (roughly).

[Anonymous]

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@Anonymous

Does ACL have much if any effect on scoring? 

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Not on scoring, but it definitely creates a different look upon a manual review and/or when considering things like CLIs, new credit card SLs, etc.  A fewer amount of cards with higher limits is almost always a better "look" than a lot of cards with smaller limits from my experience.