Huh? Is 36 Years Really a Short Credit History?

[EW800]

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@Revelate wrote:

Short history = AAOA

AOYA has a different reason code.

Have stated in the past: any of the short history ones (basic short, revolving, or installment) are 3 reason codes which cannot be argued with and therefore cannot be sued over... so basically if there's nothing left worthy of complaining about, that's basically what you get.  I don't know that they ever go away until your reason codes get supressed.

Code for: sit on your hands = 850 eventually.

Which FICO model / bureau did you get this on EW?  Actually I don't recall your profile bud (it's been a while) are any of those AU accounts out of curiosity on an edge case and FICO 8/9?

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Sorry about the delayed response.  It is from my MyFICO 3B report.  It shows these reason codes for EXP and EQ, but not TU.  My TU report is much cleaner, as my old foreclosure and CC settlement just dropped thanks to EE.  In regard to AU, no none of my accounts are AU.  My wife and daughter are AU's on a couple of my revolvers, however I am the primary on all of the accounts.  

It regard to my youngest account, it would be about 15 months, when I opened an Amex Delta account.  

Update:  I forgot to add that in regard to which scoring model, it is showing udner the standard FICO 8's.  

Thanks for all the great input!  

[iv]

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@Anonymous wrote:

I wonder to what extent the reason code generator may get really wonky and unreliable when a person has a near perfect profile.  We are trying to infer how the generator works in part from contributors like iv and TT and even folks like BBS and myself (all of whom have 850s or near 850s).

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Part of what we see there may be a less-extreme version of the issue with trying to optimise LN insurance scores...

It's well established from LN's detailed reason code list, that many factors are mutually exclusive: optimizing one particular factor directly forces a different factor to not be optimized, and vice-versa.

It's entirely possible that a milder version of that is present in FICO scoring - for example, the revolving utilization sub-score may actually have a breakpoint at 0%.  Yes, we all know that 0% revolving util is "bad"... but that's because it triggers a DIFFERENT sub-score issue (lack of revolving credit use), the signal of which would completely swamp whatever effect 1%->0% might in theory have. (Imagine if more detailed monthly reporting changed how "recent revolving credit use" was evaluated... allowing 0% to report without triggering the negative reason.)

But the way the reason codes are generated is to list, in descending order, the current factors that are not completely optimized... even if "optimizing" them would in turn cause different negative scoring effects. So if literally everything else is optimal, the (unobtainable) 1%->0% impact might be the only thing available to report as a code.

This is also likely a primary reason for most (but not all) systems suppressing the reason codes above a certain score - they do become fairly meaningless.

[Thomas_Thumb]

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@iv wrote:

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@Thomas_Thumb wrote:

 How old does oldest installment loan need to be for no negative - 15 years?

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Nope, more than that!

I'm still seeing "You have not established a long installment credit history." - "People who have longer credit histories and do not frequently open new accounts generally pose less risk to lenders. In your case, the age of your oldest installment loan and/or the average age of your installment loans is relatively low."  on EQ BC 5 with the oldest still-reporting installment being a closed mortgage that's 16.5 years old. Newest mortgage is 3 years, newest installment loan is 1 year.

I'm also seeing "You have not established a long revolving and/or open-ended account credit history." - "People with longer credit histories who infrequently open new accounts generally pose less risk to lenders. In your case, the age of your oldest revolving and/or open-ended account and/or the average age of your revolving and/or open-ended accounts is relatively low." on TU BC 4 with the oldest still-reporting revolving line about to hit 22 years. Newest revolver is about 3.5 years.

So perhaps it also factors in NEWEST in each category? Or does a separate AAoA per category?

The mentions of "...do not frequently open new accounts..." and "...who infrequently open new accounts..." in the reason codes does seem to imply that recent account ages matter.

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I believe each account type/category is looked at for AAoA and AoOA when referring to established time being too short.

Note how Fico specifically calls out "open ended accounts" (AMEX charge and certain store cards which have 1 month payment terms). The distinction between revolver and open is telling. My high useage reason code on the older Fico versions is often associated with AMEX balance and B/HB. The newer Fico 8 and Fico 9 models don't look at B/HB as a scoring attribute. My AU card can trigger the high use reason statement as well but again only on the older Fico algorithms.

@CGID Total of CC balances on my 3B summary table is listed at $620. My account details show a balance of $114 on a HB of $2804 for AMEX which translates to 4.1% UT. However, AU account detail shows a balance of $5707 on a $34,900 CL (16.4% UT)

- It appears that the AU card being over 9% UT may have been the trigger on the older Fico models for "heavy use of available revolving credit".

- It also looks like aggregate balance ($5707 + $620) triggered "amount owed on your revolving and/or open-ended accounts is too high".

*** This supports the viewpoint that Fico looks at absolute $$ amount owed in addition to UT% ***

The summary table aggregate balance excludes the AU balance but is including the AMEX balance. Therefore, the displayed aggregate UT% does not factor in the AU card - which is what I see on how Fico 8 and Fico 9 treat the AU card. Note: Oldest account is my AMEX charge (34 years) but, my Discover credit card is 29 years. For my mortgage (12.5 years) AoOA = AAoA; only one loan on file.

Classic Fico 8 and Fico 9 scores weathered all the negative factors listed in my prior post without flinching. More interestingly, although EQ Fico 04, TU Fico 04 and EX Fico 04 scores all took a big hit, EX Fico 98 went up. [EQ 04 (804 => 777), TU 04 (823 => 801), EX Fico 04 (830 => 809); EX Fico 98 (839 => 842).]

Why the different behavior in Fico 04 (drop) vs Fico 98 (increase)?

[Anonymous]

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@iv

So perhaps it also factors in NEWEST in each category? Or does a separate AAoA per category?

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See, this is why I think age of youngest account(s) in different categories matter.  If you have installment loan(s) that are 16+ years old and closed, clearly the negative reason statement pointing to lack of established installment loan history isn't pointing to that account.  To me, it can only be referencing the 1 year old installment loan or whatever your youngest one is.  That's the only thing that would make any sort of sense to me.

[Revelate]

Hrm, nice idea re: multiple AAOA's calcs for multiple types of accounts.  Not sure how we can test that other than if the reason code goes away for some bit and someone opens up a couple secured whatevers or something.

Might be youngest account but I kinda doubt it, but I suppose that's the same thing as multiple AAOA's.  I always presumed they were oldest because they cannot be argued with and you only get them when there's basically nothing worthy of complaining about (all reason codes in the top tier brackets are grain of salt worthy).

If you don't have them BBS I suspect that rules out youngest as far as AAOA goes.

[Thomas_Thumb]

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@Anonymous wrote:

I wonder to what extent the reason code generator may get really wonky and unreliable when a person has a near perfect profile.  We are trying to infer how the generator works in part from contributors like iv and TT and even folks like BBS and myself (all of whom have 850s or near 850s).

To give you a very specific example, in this thread TT gives a ranked listing of the negative reasons affecting his score.  Fairly high on that list is:

The amount owed on your revolving accounts is too high [AU card is the culprit]

and

You've made heavy use of your available revolving credit @[suspect AU card  utilization @ 17% ($5,707/$34,900) is the trigger, aggregate utilization even with AU included is at 5%]

Trouble is that his CC utilization is clearly 1% (probably something like 0.3% in fact).  It's simply not possible that he is making heavy use of his available revolving credit. [relates to AU card spend which is not included in the utilization calculation/display]

Before we try to infer the details of how FICO handles age, it seems like we'd need to explain the much bigger elephant in the room of TT's reason statements regarding his CC util. 

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I wanted to circle back around and address CGID's comments in more detail. See notes added above and the below table which assigns most likely causes to each reason statement. Clearly Fico is able to identify mortgage and Auto loans specifically and breaks these out in profile attribute analysis.

The older Fico 04 model really does not like seeing more than three revolver/open ended accounts reporting balances for my profile.

[Revelate]

Good find on the FICO 04 industry options, but they changed the reason codes in FICO 8, and from what I've seen FICO 04 Classic models don't care about installment ratios at all.  Industry options can and do care about more/different things than Classic and as such I'm leery of suggesting that they are conclusive on more commonly used scoring models.

I do know that at least some of the FICO 8 industry options do break out auto loans to your point though, just not sure that's the case in the base scores and actually I'm pretty certain it is not based on all the data I got testing with auto loan, SSL, and now mortgage.

[Thomas_Thumb]

The reason statements in the above table were listed in my 4/2018 report. The likely causes are based on actual profile data.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Huh-Is-36-Years-Really-a-Short-Credit-Hi...

The only time lack of an Auto loan has come up as a negative is in relation to Auto industry enhanced Fico versions. That's been discussed here and in other threads. It's last on the list so even for Auto enhanced impact is minimal.

The primary focus of the above tables is:

1. A relative assessment of impact of loan related reason statements in comparison to other attributes.

2. Determining probable cause for receiving "short credit history" and "not having established a long installment credit history" reason statements based on statement wording and file data.

3. Show the impact of the AU card balance on the older Fico models.

These attributes are in play for Classic and Industry enhanced Fico versions with Fico 98, Fico 04 and Fico 08.

See link below for a 2014 reason code list from Experian. The ones listed on my 3B report are all on this list.

https://figfcu.com/documents/fico/FICO%c2%ae%20Score%20Factors%20Guide%20-%20Experian.pdf

Here is another link. This list mentions: "Proportion of loan balances to loan amounts is too high" as a reason code in use for EQ Beacon 5 (which is EQ Fico Classic 04) and TU Fico Classic 04. Impact on score may be minimal but, the installment loan attribute appears to be in play on both Fico 98 and Fico 04

https://crecreditservices.com/resources/education/fico-score-factor-codes/

[Revelate]

So why did my FICO 04 Classic scores not move at all when tested with a real credit report and heavily monitored during that time whereas FICO 8 and FICO 2 did?  This wasn't shaky data, gold standard with one balance moving a few dollars each month and nothing else going on during the run up to my mortgage.

There are reason codes (like the no activity on an auto loan) that show up in enhanced score reason codes which don't exist in the classic model, that's why I suggest it may be similar.  Reason codes may not show up (minor as you say) but score shifts absolutely do... and I've been down to 3 reason codes before on FICO 04 models and that one never shows up as a fourth either which is why I'm severely skeptical that it exists at all in the Classic versions.

I guess it doesn't matter much, much like revolving utilization less is better when it comes to what you owe on your installment accounts.

[Anonymous]

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@Revelate

There are reason codes (like the no activity on an auto loan) that show up in enhanced score reason codes which don't exist in the classic model, that's why I suggest it may be similar.  Reason codes may not show up (minor as you say) but score shifts absolutely do... and I've been down to 3 reason codes before on FICO 04 models and that one never shows up as a fourth either which is why I'm severely skeptical that it exists at all in the Classic versions.

I guess it doesn't matter much, much like revolving utilization less is better when it comes to what you owe on your installment accounts.

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I agree 100%.  My auto loan going from open to reported closed resulted in slight (~4 points) drops on the Classic 8 models with an open mortgage still present on my file.  I don't have a negative reason statement pointing to the lack of an auto loan, nor do I recall anyone ever pointing to seeing one on the Classic 8 model, but without question having one verses not having one can impact score slightly. 

If there are negative reason statements out there that on a certain file are only present due to adversely impacting score 1 point (or zero points, if we believe in fluff/filler codes) then IMO a factor such as no auto loan present that may be impacting score more than that (say 4-5 points) should be included.  Of course this would only be on really solid files where there are few reason statements to begin with and those few aren't impacting score much in the first place.